ELIZABETH ARDEN CORPORATE GOVERNANCE > GUIDELINES AND PRINCIPLES

These Corporate Governance Guidelines and Principles were adopted by the Board of Directors (the "Board") of Elizabeth Arden, Inc. (the "Company") on March 10, 2004, as amended on February 4, 2009.

These Corporate Governance Guidelines and Principles are intended as a component of the flexible governance framework within which the Board, assisted by its committees, directs the affairs of the Company. While they should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as in the context of the Company's Articles of Incorporation and By-Laws, they are not intended to establish by their own force any legally binding obligations.

      I.        DIRECTOR RESPONSIBILITIES

The role of the Board is to direct the affairs of the Company in the interests of the shareholders, including their interest in optimizing financial returns and the value of the Company over the long term.


                    A.        Board Role

The Board fulfills its role (directly or by delegating certain responsibilities to its committees) by:


                                     1.        providing advice and counsel to the Company's Chief Executive Officer ("CEO") and principal senior executives;

                                     2.        selecting, regularly evaluating, fixing the compensation of, and, where appropriate, replacing the CEO;

                                     3.        overseeing the conduct of the Company's business and strategic plans to evaluate whether the business is being properly managed;

                                     4.        reviewing and approving the Company's financial objectives and major corporate plans and actions;

                                     5.        reviewing and approving major changes in auditing and accounting principles and practices;

                                     6.        providing oversight of internal and external audit processes and financial reporting;

                                     7.        providing oversight of risk assessment and protection processes and processes designed to promote legal compliance; and

                                     8.        performing, such other functions as the Board believes appropriate or necessary, or as otherwise prescribed by rules or regulations.

 

                    B.        Care, Candor and Avoidance of Conflicts

The Company's directors recognize their obligation individually and collectively as the Board to pay careful attention and be properly informed. This requires regular attendance at Board meetings and preparation for Board meetings, including the advance review of circulated materials. The directors also recognize that candor and the avoidance of conflicts in fact and in perception are hallmarks of the accountability owed to the shareholders. Directors have a personal obligation to disclose a potential conflict of interest to the Chairman of the Board prior to any Board decision related to the matter and, if the Chairman in consultation with legal counsel determines a conflict exists or the perception of a conflict is likely to be significant, to recuse themselves from any discussion or vote related to the matter.

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     II.        EXECUTIVE SESSIONS and PRESIDING DIRECTOR

The independent directors shall have the opportunity to meet without members of management or other directors present in executive session, at the end of each Board or Board committee meeting, and as otherwise determined by such directors. The agenda for the executive sessions shall be established by the Lead Independent Director and such executive sessions shall follow such procedures as determined by the independent directors. The authority in such sessions to act on behalf of the Company or the Board on any matters requires an express delegation of authority by the Board.

The Board shall appoint from among the independent directors of the Board a Lead Independent Director who shall act as the principal liaison between the independent directors of the Board and the Chairman of the Board and who shall have the additional responsibilities set forth in a Charter of the Lead Independent Director approved by the Nominating and Corporate Governance Committee and the Board. The Lead Independent Director shall have a term of three (3) years, subject to removal by the Board at any time for any reason.

    III.        FORMAL EVALUATION OF THE CHIEF EXECUTIVE OFFICER

The Board has delegated to the Compensation Committee the task of evaluating the CEO annually and reporting its recommendations to the Board. The Chairperson of the Compensation Committee communicates the Board's conclusions to the CEO.

The evaluation is based on objective criteria including performance of the business, accomplishment of long-term strategic objectives, development of management, etc. The evaluation is used by the Compensation Committee in determining the CEO's compensation.

   IV.        MANAGEMENT DEVELOPMENT and SUCCESSION PLANNING

The CEO reports at least annually to the Board on the Company's program for management development and on succession planning, which the Board views as closely related issues. In its consideration of these issues, it is the policy of the Board to consider issues related to CEO and senior executive selection and performance.

In addition, there is available on a continuing basis, and the Board and CEO periodically discuss, the CEO's recommendation as to a successor in the event of the sudden resignation, retirement or disability of the CEO.

    V.        DIRECTOR QUALIFICATION STANDARDS

                    A.        Selection and Evaluation of Board Members and Nominees

The Board is responsible for recommending director nominees to shareholders for election. The Board has delegated the screening process to the Nominating and Governance Committee.

The Nominating and Governance Committee is responsible for reviewing with the Board, at least annually, the appropriate skills, characteristics and experience represented on the Board in light of the Company's strategic direction, opportunities and risks, as well as the perceived needs of the Board at that point in time and having regard for the most recently conducted Board performance evaluation. As part of the Board's program for succession planning and director recruitment, the Nominating and Corporate Governance Committee will maintain and evaluate, at least annually, the current Board composition based on directors' experience, qualifications, competencies, judgment, diversity, age, and skills in order to allow the Board to focus on identifying and attracting new members that would most benefit the Board at a particular point in time. The Nominating and Corporate Governance Committee maintains a list of potential Board candidates for future consideration based on obtaining input from various sources and conducting evaluations of such candidates.

The Nominating and Governance Committee also considers recommendations for Board candidates submitted by shareholders using the same criteria it applies to recommendations from the Committee, directors, members of management and other sources. Shareholders may submit recommendations by writing to the Committee at: Nominating and Governance Committee, c/o Elizabeth Arden, Inc., 2400 SW 145 Avenue, 2nd Floor, Miramar, FL 33027.

Invitations to serve as a nominee are extended by the Board itself via the Chairman of the Board and the Chairman of the Nominating and Governance Committee.

                    B.        Board Independence

A majority of the Board shall consist of independent directors as defined the interpretative materials of the Nasdaq Stock Market, Inc. ("Nasdaq") and the U. S. Securities and Exchange Commission (the "SEC").

                    C.        Commitment and Limits on Other Activities

Directors' service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Directors are asked to advise the Chairman of the Board and the Chairman of the Nominating and Governance Committee in advance of accepting an invitation to serve on another board.

                    D.        Advance Resignation for Failure to Achieve Required Majority Vote

In accordance with the Company's By-Laws, if none of the Company's shareholders provides the Company notice of an intention to nominate one or more candidates to compete with the Board's nominees in a director election, or if the Company's shareholders have withdrawn all such nominations by the tenth day before the Company first makes available to shareholders (either by mailing or making available on the internet) its notice of meeting for such meeting, a nominee must receive more votes cast for than against his or her election in order to be elected or re-elected to the Board. The Board shall nominate for election or re-election as director only candidates who agree to tender, promptly following the annual meeting at which they are elected or re-elected as director, irrevocable resignations that will be effective upon the Board's acceptance of such resignation after such candidate's failure to receive the required vote at the next annual meeting at which such candidate faces re-election. In addition, the Board shall fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with these Corporate Governance Guidelines and Principles.

If an incumbent director fails to receive the required vote for re-election, the Nominating and Corporate Governance Committee will determine whether to recommend that the Board accept the Director's resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Nominating and Corporate Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director's resignation.

 

   VI.        DIRECTOR ORIENTATION AND CONTINUING EDUCATION

The Board has delegated to the Nominating and Governance Committee the task of designing, with Company management, an appropriate orientation program for new directors that includes background material, meetings with senior management and visits to Company facilities. The Committee also explores, makes available, designs and provides continuing education opportunities for directors, from time to time.

  VII.        DIRECTOR COMPENSATION AND STOCK OWNERSHIP

The Compensation Committee recommends to the Board for approval general principles for determining the form and amount of director compensation and subject to such principles, evaluates from time to time the status of Board compensation in relation to comparable U.S. companies (in terms of size, business sector, etc.), reporting its findings and recommendations to the Board for approval.

 VIII.        BOARD AGENDA, MATERIALS, INORMATION AND PRESENTATIONS

The Chairman of the Board and the Lead Independent Director, with input from senior members of management and the other directors of the Company, establish the agenda for each Board meeting. A schedule of agenda subjects to be discussed for the ensuing year is issued at the beginning of each year (to the degree these can be foreseen). Each director is free to suggest the inclusion of item(s) on the agenda.

Information and data that is important to the Board's understanding, of the business is distributed in writing to the Board generally five to seven days before the Board meets, although this is not a strict standard, so as to allow for unusual circumstances. Management should ensure that material is as brief as possible while still providing the desired information.

As a general rule, Board meeting time is reserved for discussion. Presentations on specific subjects may be forwarded to the directors in advance so that directors may prepare, Board meeting time may be conserved, and discussion time may be focused. It is recognized, however, that there may be occasions when an important issue arises without time for written background materials to circulate or the subject matter is not appropriate for written materials, such that more presentation time will be required.

   IX.        DIRECTOR ACCESS TO SENIOR MANAGERS AND INDEPENDENT ADVISERS

Directors have complete access to senior management and to the Board's advisors. Directors are expected to use good judgment to ensure that this contact is not distracting to the business operation of the Company, and that independent advisors are used efficiently.

The Board welcomes regular attendance of senior managers at Board meetings. Should the Chairman and CEO wish to suggest that a senior manager attend on a regular basis, such suggestion is made to the Board for its concurrence. The Board encourages management to bring managers into Board meetings who can provide additional insight into the items being discussed because of personal involvement in these areas.

    X.        COMMUNICATIONS WITH THE PUBLIC

If public comments from the Board are appropriate, they should come from the Chairman of the Board who speaks for the Board.

   XI.        BOARD COMMITTEES

The Board currently has three committees: Audit, Compensation and Nominating and Corporate Governance. Membership on such committees is limited to independent directors. The Board retains discretion to form new committees or disband current committees depending upon the circumstances.

The Nominating and Governance Committee recommends, after consultation with the Chairman of the Board and CEO, and with consideration of the desires of individual directors, the appointment of directors to various committees and the appointment of committee chairperson, for Board approval.

  XII.        CORPORATE GOVERNANCE GUIDELINES

The Nominating and Governance Committee reviews these Guidelines periodically and recommends amendment to the Board as necessary.

 XIII.        COMMUNICATING WITH THE BOARD

Shareholders are invited to communicate to the Board or its committees by writing to: Secretary, c/o Elizabeth Arden, Inc., 2400 SW 145 Avenue, 2nd Floor, Miramar, FL 33027.

XIV.        RECOVERY OF PERFORMANCE-BASED COMPENSATION

In the event there is a material restatement of the Company's financial results filed with the Securities and Exchange Commission due to fraud or intentional misconduct, the Compensation Committee of the Board will review the performance-based compensation and incentives received by executive officers who are found to be personally responsible for the fraud or intentional misconduct that caused the need for the restatement. To the extent permitted by applicable law, the Compensation Committee will seek, through the exercise of their business judgment, the recovery of any such compensation and incentives as the Compensation Committee determines are in excess of the performance-based compensation and incentives that would have been received by such officers based on the restated financial results. Executive officers will be determined by the Board.