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Name and title: Christopher K. Kay, general counsel, corporate secretary and executive vice president of operations. Age: 50 Fun and games: With almost 1,600 stores worldwide, annual sales of $11.3 billion and a rank of 168 on the Forbes 500, Toys ‘R’ Us Inc. is one of the largest retailers of toys, children’s apparel and baby products in the world. Toys ‘R’ Us is comprised of five major divisions: Toys ‘R’ Us, Babies ‘R’ Us, Kids ‘R’ Us, Imaginarium and Geoffrey Stores. Each of these stores, except for Geoffrey Stores, has an online store as well. Toys ‘R’ Us employs approximately 55,000 employees during the year, but its payroll swells to 90,000 during the holiday season. New HQ: General Counsel Kay brokered the deal that helped Toys ‘R’ Us acquire its new corporate headquarters in Wayne, N.J., about 25 miles west of New York City. Located on 192 acres, the headquarters, which overlooks Point View Reservoir, is centered in two main buildings with a combined total of 502,000 usable square feet. Toys ‘R’ Us acquired the complex in September 2001 and employees have been moving in since March, having vacated its Montville, N.J., headquarters. Magic eight ball: When Kay arrived at the company in August 2000 as the company’s first general counsel, he and other new board members saw their arrival as an opportunity to update all company policies, including corporate governance. They wished to give “specificity and clarity” to corporate governance policy in light of the “ever-evolving business world,” Kay said. This process began before the recent onslaught of corporate scandals. The board, led by Kay, formally adopted the new corporate governance standards in January 2002. Kay, providing a simple example, said that the old corporate governance policies did not require that material for board meetings be distributed a week beforehand, and now they do. A significant change that Toys ‘R’ Us enacted was that a “substantial majority” of the board must be comprised of independent directors. There is also an orientation program that board members must go through. Finally, Kay and his legal team arrange for continuing-education programs for board members to keep them appraised of new laws or regulations. Responsibilities: As executive vice president of operations, Kay oversees 10 departments within the company. These departments include the real estate group, guest services, labor utilization, risk management and government relations. As general counsel, Kay and his legal team organized an issuance of common stock and equity link securities in May 2002. He also completed a registration with the Securities Exchange Commission, which allows Toys ‘R’ Us to sell up to $800 million of debt securities. Litigation: Kay also oversees all litigation. Toys ‘R’ Us is currently facing a potential class action wage-and-hours lawsuit in California state court. The case is currently in the discovery phase. An unknown number of employees, who are attempting to create a class, are suing the company because, they argue, Toys ‘R’ Us promoted employees to store manager positions only because doing so enabled the company to avoid paying overtime. The promotion resulted in employees receiving salaries rather than hourly wages and, subsequently, lower pay. Kay argues that these employees are trying to gain the benefits provided to both hourly and salaried workers. Toys ‘R’ Us is currently suing Step Two S.A., a Spanish company, for allegedly breaching its trademark on Imaginarium stores and products. In 1999, Toys ‘R’ Us purchased Imaginarium and its trademarks, some years after Step Two had opened Imaginarium stores in Spain. Although located in Spain, customers in the United States can purchase Imaginarium products from Step Two’s Web site and have them shipped stateside. Toys ‘R’ Us is suing to prevent Step Two from selling and marketing its products in the United States, because, they claim, Step Two’s Imaginarium products infringe on the trademarks that it acquired when it purchased Imaginarium in 1999. Finally, Kay said that Toys ‘R’ Us has sued numerous companies who have tried to use the “R Us” part of the company’s name. In February 2003, Toys ‘R’ Us won an appeal in the 3d U.S. Circuit Court of Appeals to allow discovery in U.S. district court in New Jersey. In March 2001, Toys ‘R’ Us sued Bondage Toys R Us for trademark infringement. Jonathan Hudis, a partner at Oblon, Spivak, McClelland, Maier & Neustadt in Arlington, Va., and outside counsel for Toys ‘R’ Us , would not comment on the outcome of the case. “So long as people use the Internet and use the ‘R Us’ logo, we will prosecute them,” Kay said. The team: Kay’s legal unit is composed of 16 lawyers and six paralegals. When Kay arrived, the company employed only a few lawyers. Kay tried to understand the company’s needs and decided that a strong corporate legal team would most benefit Toys ‘R’ Us. As a result, the legal department handles almost all of its legal affairs in-house. Though not wanting to talk dollars and cents, Kay said the shift resulted in a “healthy trim of the legal counsel budget.” Outside counsel: Because of its reliance on in-house counsel, Kay said he usually uses outside counsel only for very complex matters, such as Securities and Exchange Commission filings and securities matters. He uses New York’s Simpson Thacher & Bartlett for such work. Rise to the top: Kay was a trial lawyer before joining Toys ‘R’ Us. After receiving his J.D. from Duke University Law School in 1977, he worked at Shughart Thomson & Kilroy in Kansas City, Mo., and later at Swann & Haddock, then Foley & Lardner, both in Orlando, Fla. In 1996, he left Foley to start a firm called Kay, Groneck & Latham, also in Orlando. At the firm, he won a $188 million judgment against the state of Florida in a taxpayer class action, then reported as the largest-ever judgment against the state of Florida. After joining Toys ‘R’ Us as general counsel in August 2000, he was named executive vice president of operations in February 2002. Family: Kay and his wife, Kris, have one daughter, Lauren, 20, who is a junior at Syracuse University. Last book and movie: Good to Great: Why Some Companies Make the Leap . . . and Others Don’t, by Jim Collins, and Terminator 3. -Aaron Lauchheimer

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