Edgar Filing: MACE SECURITY INTERNATIONAL INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2003 Commission File No. 0-22810

MACE SECURITY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

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Delaware 03-0311630
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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1000 Crawford Place, Suite 400, Mt. Laurel, NJ 08054
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (856) 778-2300

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 ("the Exchange Act") during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-K is not contained in this form, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
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The aggregate market value of the voting stock held by non-affiliates
of the Registrant on June 30, 2003 was approximately $9,101,866. Such aggregate
market value was computed by reference to the closing price of the common stock
as reported on the Nasdaq National Market on June 30, 2003. For purposes of
determining this amount only, Registrant has defined affiliates as including (a)
the executive officers and directors of Registrant on June 30, 2003, and (b)
each stockholder that had informed Registrant that it was the beneficial owner
of 10% or more of the outstanding common stock of Registrant on June 30, 2003.

The number of shares of Common Stock, par value $.01 per share, of the
Registrant outstanding as of April 26, 2004 was 13,282,805.

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INDEX TO FORM 10-K/A - PART III

PART III - Item 11 Executive Compensation

Explanatory Note

This Annual Report on Form 10-K/A constitutes Amendment No. 1 to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 2003.
This Annual Report on Form 10-K/A is being filed solely to amend Item 11,
Executive Compensation, of the Registrant's Annual Report on Form 10-K for
fiscal year ended December 31, 2003, as was previously filed with the Commission
to add the following information.

PART III - ITEM 11. EXECUTIVE COMPENSATION

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Company's Board of Directors consisted of
directors Louis D. Paolino, Jr., Richard B. Muir, and Constantine N. Papadakis,
Ph.D. Mr. Muir resigned due to other business commitments from the Board of
Directors as well as his position on the Compensation Committee effective
October 15, 2003. Louis D. Paolino, Jr. is the Company's Chairman, Chief
Executive Officer, and President. No executive officer of Mace served as a
director or compensation committee member of any entity of which Messrs.
Paolino, Muir, or Papadakis was an executive officer or director.

Compensation Committee Report on Executive Compensation

The following report of the Compensation Committee is required by the rules of
the Securities and Exchange Commission to be included in the Company's Proxy
Statement or the Company's Annual Report on Form 10-K and addresses the
Company's executive compensation policies for the fiscal year ended December 31,
2003. This report shall not be deemed incorporated by reference into any filing
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), by virtue of
any general statement in such filing incorporating this Form 10-K by reference,
except to the extent that the Company specifically incorporates the information
contained in this section by reference, and shall not otherwise be deemed filed
under either the Securities Act or the Exchange Act.

General. The Company's compensation policies for executives are intended to
further the interests of the Company and its stockholders by encouraging growth
of its business through securing, retaining, and motivating management employees
of high caliber who possess the skills necessary to the development and growth
of the Company.

The Company's current compensation package consists of two components: base
salaries and stock options. Together these elements comprise total compensation
value. The total compensation paid to the Company's executive officers is
influenced significantly by the need (i) to attract management employees with a
high level of expertise, and (ii) to motivate and retain key executives for the
long-term success of the Company and its stockholders.

The fiscal year ended December 31, 2003, was a challenging year for the Company.
In 2003, Mace focused its management efforts on maximizing operating profits in
an economy which had suffered a downturn. Managements efforts were also focused
on developing the Company's security electronics surveillance business.
Additionally, the financing and re-financing of the Company's long-term debt
demanded significant time and attention. The Compensation Committee considered
these numerous factors and the Company's financial results in formulating its
executive compensation policies and practices for fiscal 2003. The Committee
also considered the Amper, Politziner and Mattia, P.C. study of compensation
levels dated May 2003 for each executive position when determining compensation.
The May 2003 compensation study by Amper, Politziner and Mattia, P.C. concluded
that the total compensation packages for the top four executive officers fell
below the peer group's 25th percentile. After considering all factors and
through negotiation of a new employment agreement by Mr. Paolino, an annual base
salary increase was given to Louis D. Paolino, Jr. in the amount of $50,000
bringing Mr. Paolino's base salary to $400,000.

Other than the annual salary increase given in 2003, Mr. Paolino, had not been
given a salary increase from the date he was hired by the Company in 1999.
Additionally on July 14, 2003, options to purchase 150,000 shares of the
Company's common stock were granted each of Louis D. Paolino, Jr., Robert M.
Kramer and Gregory Krzemien and on November 14, 2003 options to purchase 100,000
shares of the Company's common stock were granted to Ronald R. Pirollo. The
options have an exercise price of the market price at the date of grant.

Base Compensation. The Committee established annual base salary levels for its
executives based on competitive data, level of experience, position,
responsibility, and individual and Company performance. The Committee has used
comparative data provided by Amper, Politziner and Mattia, P.C. The Company has
maintained total compensation levels for executives below the median in the
range of survey data, which included companies providing consumer services on a
national basis. The primary terms of the employment agreements of Robert M.
Kramer, Gregory M. Krzemien, and Ronald R. Pirollo expired on March 26, 2003.
Messrs. Kramer and Krzemien are working on a month-to-month at will-basis. Mr.
Pirollo or the Company may terminate Mr. Pirollo's employment at any time.

Stock Options. The Company grants stock options to its executive management
under its employee stock option plans. Option grants are intended to offer
significant returns if the Company is successful and, therefore, create
significant incentives to devote the effort called for in order to implement the
Company's strategic plan. The Compensation Committee believes that executives'
interests are directly tied to enhanced stockholder value. Thus, stock options
are used to provide the executive management team with a strong incentive to
perform in a manner that should result in the long-term success of the Company.

Performance Bonuses. The Company maintains the option to supplement base
compensation with awards of performance bonuses in the form of cash and/or stock
options to reward efforts undertaken by its key executive officers which are
extraordinary in nature.

Chief Executive Officer Compensation. Mr. Paolino, in his capacity as Chairman
of the Board, Chief Executive Officer, and President, participates in the same
compensation programs as the other executive officers. The Committee increased
Mr. Paolino's compensation on August 12, 2003 to $400,000. The Committee
believes that Mr. Paolino's compensation is competitive with the amount paid by
companies in similar industries and competitive situations, as supported by a
competitive compensation analysis conducted by Amper, Politziner and Mattia,
P.C. and the Compensation Committee's review of Mr. Paolino's salary in the
context of (i) the Company's performance and growth, and (ii) compensation
packages of chief executive officers at comparable companies.

The Compensation Committee of the Board of Directors

Louis D. Paolino, Jr.
Constantine N. Papadakis, Ph.D.

Stock Performance Graph

The following line graph and table compare, for the five most recently concluded
fiscal years, the yearly percentage change in the cumulative total stockholder
return, assuming reinvestment of dividends, on the Company's common stock with
the cumulative total return of companies on the NASDAQ Stock Market and an index
comprised of certain companies in similar service industries (the "Selected Peer
Group Index").(1)

(1) The Selected Peer Group Index is comprised of securities of Lo-Jack
Corporation and Precision Auto Care, Inc.There can be no assurance that
the Company's stock performance will continue into the future with the
same or similar trends depicted by the graph above. The Company neither
makes nor endorses any predictions as to future stock performance.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG MACE SECURITY INTERNATIONAL, INC.,
THE NASDAQ MARKET INDEX, AND SELECTED PEER GROUP

December 31,
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1998 1999 2000 2001 2002 2003
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Mace Security International, Inc. 100.00 244.44 53.69 50.96 61.93 61.93
NASDAQ Market Index 100.00 176.37 110.86 88.37 61.64 92.68
Selected Peer Group 100.00 56.42 60.80 43.95 40.00 65.56
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The Performance Graph set forth above shall not be deemed incorporated by
reference into any filing under the Securities Act or the Exchange Act by virtue
of any general statement in such filing incorporating this proxy statement by
reference, except to the extent that the Company specifically incorporates the
information contained in this section by reference, and shall not otherwise be
deemed filed under either the Securities Act or the Exchange Act.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, the Company has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

MACE SECURITY INTERNATIONAL, INC.

By: /s/ Gregory M. Krzemien
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Gregory M. Krzemien
Chief Financial Officer and Treasurer

DATED the 28th day of April, 2004.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated:

Name Title Date

/s/ Louis Paolino,Jr. Chairman of the Board, 4/28/04
------------------------------- Chief Executive Officer,
Louis D. Paolino, Jr. President and Director
(Principal Executive Officer)

/s/ Gregory M. Krzemien Chief Financial Officer 4/28/04
------------------------------- and Treasurer (Principal
Gregory M. Krzemien Financial Officer)

/s/ Ronald R.Pirollo Chief Accounting Officer and 4/28/04
------------------------------- Corporate Controller (Principal
Ronald R. Pirollo Accounting Officer)

* Director, Vice President 4/28/04
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Matthew J. Paolino

* Director 4/28/04
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Constantine N. Papadakis, Ph.D.

* Director 4/28/04
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Mark S. Alsentzer

* Director 4/28/04
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Burton Segal

* Gregory M. Krzemien, pursuant to a Power of Attorney executed by each of the
directors and officers noted above and included in the signature page of the
inital filing of this Annual Report, buy signing his name hereto, does hereby
sign and execute this Amendment No. 1 to Form 10-K Annual Report on behalf of
each of the persons noted above, in the capacities indicated, and does hereby
sign and execute this Amendment No. 1 to Form 10-K Annual Report on his behalf
in the capacities indicated.

/s/ Gregory M. Krzemien
Gregory M. Krzemien