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August 6,
2009
Mr. Gary
R. Todd
Reviewing
Accountant
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549
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RE:
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Bel
Fuse Inc.
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Form 10-K for the fiscal year ended
December 31, 2008
File No. 0-11676
Dear Mr.
Todd:
This
letter constitutes the response by Bel Fuse Inc. (“Bel” or the “Company”) to
your letter to Bel dated July 30, 2009 concerning our Form 10-K for the year
ended December 31, 2008. For your convenience, we have restated your
comments in full and have responded to each item in a corresponding
manner.
Form
10-K for the period ended December 31, 2008
Item
11. Executive Compensation, page 49
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1.
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In
your response to comment 4, you indicate that you “maintain lower base
salaries as compared to those offered by your peers.” Please
clarify whether you will disclose how you determine where below your peer
salaries you set compensation, such as through the use of a specific
benchmark or otherwise. In addition, and to the extent that
actual compensation differs from a benchmark, your disclosure should
include the reasons for this.
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Company
Response The Company does not believe clarifying disclosures are
warranted, as the peer group information reviewed by Bel’s Board of Directors is
for informative purposes only and does not constitute a benchmarking activity of
any type. The compensation philosophy utilized by the Board
incorporates a highly variable bonus component which fluctuates based on our
financial results. The Board understands that this methodology
differs from the typical benchmarking that our peer group companies utilize in
setting their executive base salaries, and as a result, our overall compensation
packages may vary significantly from our peer group from year to year, based on
our financial results. The Board believes that this compensation
philosophy benefits the Company and its shareholders, as it allows us to control
overhead costs in times of volatile product demand.
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2.
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We
note your response to comment 5. Please clarify if your
disclosure will indicate:
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·
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Whether
the CEO, CFO, and Vice President of Operations are the persons who make
the decision to grant bonuses;
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·
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Which
specific quarterly results you evaluate in your decision to grant bonuses
and the weight assigned to each if more than one result is used;
and
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·
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How
you determine the number of weeks pay that each executive officer
receives.
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Company
Response
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In
response to the Staff’s comment, the Company has modified its sample disclosure
as it relates to the 2009 proxy is as follows. The Company will
include this enhanced disclosure in future proxy filings.
Bonus
We
do not have a bonus plan for any of our associates. Instead,
financial results are monitored on a quarterly basis by the CEO, the Vice
President of Finance and the Vice President of Operations. Management
utilizes net income as the financial measure in evaluating the Company’s
performance as compared to prior quarters. Based on the quarterly
review, a bonus accrual may be established by the Compensation Committee based
on recommendations from the CEO, the Vice President of Finance and the Vice
President of Operations. At the end of each year in which a bonus
accrual has been established, the Compensation Committee receives
recommendations from the Chief Executive Officer with respect to the payment of
specific bonuses to specific individuals, based upon the overall size of that
year’s bonus pool as well as individuals’ respective participation in achieving
team objectives throughout the year. The decision to grant bonuses is ultimately
made by the Company’s Compensation Committee. The target bonus
payment for Bel’s key executives (including the Named Officers, in addition to
other key executives) is 4-6 months of their annual salary; however, this varies
dependent upon the bonus pool established during the year and may vary by
individual based on extenuating circumstances.
In
2007, we sold 4.0 million shares of common stock of Toko, Inc. on the open
market which resulted in a gain of approximately $2.5 million, net of investment
banker fees and other expenses in the amount of $0.8 million. With
this profit, Bel’s Board of Directors decided to accrue $0.5 million from
operating income for the payment of bonuses to our associates, with bonus
payments made in January 2008. This bonus pool was allocated among
executives, management, technical and administrative employees of the Company
based on number of weeks pay, in accordance with their respective contributions
to our corporate performance. Specifically, $122,500 of the $0.5
million bonus pool was allocated to our Named Officers and reflected eight weeks
pay for each executive officer, with the exception of Andrew Wong, who received
six weeks pay as bonus.
Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters, page 49
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3.
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We
note your response to our prior comment 6. Please tell us why
you believe it was appropriate to exclude from the beneficial ownership
table the two shareholders whose voting rights were
suspended. Please cite any authority upon which you
rely.
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Company
Response
The
Company initially excluded from the beneficial ownership table the two
shareholders whose voting rights were suspended, as we did not want the table to
be misleading to investors, as those shareholders, while beneficially owning in
excess of 5% of the Company’s Class A voting stock, did not have the associated
voting power at the May 2009 Annual Meeting. Upon further review of
Item 403(a) of Regulation S-K, the Company agrees that these two shareholders
were in fact beneficial owners in excess of 5% of the Company’s Class A Common
Stock and should have been included in the beneficial ownership table as set
forth in the proxy. In the event these circumstances exist when
issuing our 2010 proxy statement, the beneficial ownership table will appear as
follows (2009 proxy information was used below for illustrative
purposes):
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Name
and Address of
Beneficial
Owner
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Amount
and Nature
of
Beneficial
Ownership
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Percent
of
Class
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Percent
of Class
Whose
Voting Rights
Were Not
Suspended
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Sybil
Bernstein
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251,132
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11.5%
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16.3%
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206
Van Vorst Street
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|||
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Jersey
City, NJ 07302
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Royce
& Associates, LLC
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221,666
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10.2%
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14.4%
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1414
Avenue of the Americas
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| New York, NY 10019 | |||
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FMR
Corp.
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369,793
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17.0%
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0.0%
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82
Devonshire Street
Boston,
MA 02109
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GAMCO
Investors, Inc. et al.
One
Corporate Center
Rye,
NY 10580-1435
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262,600
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12.1%
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0.0%
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In
connection with our response, the Company acknowledges that:
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·
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The
Company is responsible for the adequacy and accuracy of the disclosure in
the filing;
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·
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Staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the
filing; and
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·
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The
Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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Should
you have any questions with respect to any of the responses set forth below,
please feel free to contact the undersigned or Colin Dunn, Vice President of
Finance, at 201-432-0463.
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Very
truly yours,
/s/ Daniel
Bernstein
Daniel
Bernstein
President
and Chief Executive Officer
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cc: Peter
H. Ehrenberg, Esq.