September
8, 2009
Mr. Jay
Mumford
Senior
Attorney
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.
Form
10-K for the fiscal year ended December 31, 2008
File
No. 0-11676
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Dear Mr.
Mumford:
This
letter constitutes the response by Bel Fuse Inc. (“Bel” or the “Company”) to
your letter to Bel dated August 27, 2009 concerning our Form 10-K for the
year ended December 31, 2008. For your convenience, we have restated
your comment in full.
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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We
note your response to comment 4 in our July 30, 2009 letter that peer
group information is “for informative purposes only.” Your
proposed disclosure in the July 13, 2009 letter states that your
“compensation philosophy is to maintain lower base salaries as compared to
those offered by our peers….” As such, please expand your
proposed disclosure to explain how you evaluate what are “lower base
salaries,” whether you compared yourself to the 50th
percentile benchmark, a range of benchmarks or otherwise. Also,
with regards to determining whether you are using benchmarks, please note
that Question 118.05 of the Compliance and Disclosure Interpretations to
Regulation S-K defines a benchmark as “using compensation data about other
companies as a reference point on which – either wholly or in part – to
base, justify or provide a framework for a compensation
decision.”
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Company
Response The Company does not engage in
benchmarking. While peer group information is periodically reviewed
by management, it is for informative purposes only and does not constitute a
benchmarking activity of any type (in accordance with the definition described
above). The Company does not correlate its executive base salaries
with those of its peers. Bel’s Board of Directors, upon the
recommendation from Bel management, seeks to limit annual increases in base
salaries and to supplement the overall compensation package with annual bonuses
in amounts that are primarily dependent upon the Company’s financial performance
for the period.. This has been Bel’s methodology in past and current
periods as a way to control overhead costs in times of volatile product demand.
So while the peer group data is reviewed, the results of that review are
irrelevant to the ultimate decisions made with regards to Bel’s executive
compensation levels. The peer compensation data is not used as a
reference point on which to base, justify or provide a framework for
compensation decisions. As Bel does not engage in any sort of
benchmarking activities, the proposed disclosure within the Compensation
Discussion and Analysis section of future filings has been modified to eliminate
this confusion. For your convenience, additions to the 2009 proxy
disclosure have been underlined and deletions from the 2009 proxy disclosure
have been noted separately below:
Overview
We
are engaged in a very competitive industry worldwide, with relatively low
barriers to competitive entry in the electronic products market. Just as stock
prices in our industry tend to be volatile, our customers’ demand for our
products varies significantly from year to year. We have only limited visibility
as to future customer requirements. For this reason, we have found it
necessary to keep our overhead relatively low so that we can operate effectively
even when demand for our products weakens. In the area of compensation, we seek
to control salaries as best we can and focus our incentives on other elements
that can vary from year to year with our performance. Our goal is to compensate
our Named Officers at levels that will enable us to retain their services while
retaining control over our overhead.
Our
performance-based elements of compensation are salary, bonuses and long-term
stock incentive compensation. Other non-performance elements of
compensation consist of retirement benefits, certain other plan benefits and
certain perquisites. In order to effectively
control overhead costs in times of volatile product demand, our executive
compensation philosophy is to limit annual increases in base salaries and to
supplement the overall compensation package with annual bonuses in amounts that
are primarily dependent upon the Company’s financial performance for the
period.
We
compete in our industry on the basis of product performance, quality,
reliability, depth of product line, customer service, technological innovation,
design, delivery time and price. Our compensation structure is intended to
reward and incentivize the types of performance which improve our ability to
excel in these areas, as well as performance which enhances our overall
financial stability and global presence.
Salary
We
pay salaries to our Named Officers in order to provide a base compensation to
them for their day-to-day responsibilities in managing our business. We do not
rely upon consultants to set our salaries, to establish salary ranges or to
provide advice regarding other compensation matters, nor do we engage in any
benchmarking activities. The Company views base
salary simply as a fixed component of overall compensation, with a large
variable portion being derived from annual bonuses as described
below.
In
terms of overall compensation, our Chief Executive Officer receives salary
recommendations from our U.S. management team and our Far East management team.
Our Chief Executive Officer then formulates his own recommendations which he
presents to our Compensation Committee. Our Chief Executive Officer does not
participate in the deliberations regarding his own salary, but does participate
in discussions regarding salary levels for our other Named Officers. Salary levels are typically
reviewed in December, and adjusted from time to time after taking into account
overall Company performance as well as team performance. As noted in
the Summary Compensation Table, the Chief Executive Officer did not recommend,
and the Compensation Committee did not approve, increases in base salaries for
2008. This decision was made after taking into account the current
macroeconomic conditions and the Company’s operating results. During
2008, management has made a number of decisions to implement cost savings
strategies and reduce overall overhead. The decision to keep executive base
salaries in line with the prior year is consistent with those current business
strategies.
The
following wording was previously contained in the 2009 proxy statement and has
been deleted from the proposed disclosure above:
Salary
levels are typically determined in December for the following year. Adjustments
for the following year are related to performance during the year being
reviewed, overall company performance and cost-of-living
considerations.
We
compare our salaries and other elements of compensation against the salaries and
other compensation measures of other public companies in our industry by
reviewing the proxy statements of such other companies. However, we do not
prepare formal benchmarking studies.
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.
| Very truly yours, | |||
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/s/ Daniel Bernstein | |
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Daniel
Bernstein
President
and Chief Executive Officer
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cc: Peter
H. Ehrenberg, Esq.