STEINER LEISURE LIMITED - Steiner Leisure Ltd.

STEINER LEISURE LIMITEDMay 5, 2008Dear Shareholder:You are cordially invited to attend the annual meeting of shareholders of Steiner Leisure Limited, whichwill be held in the Aragon Room at The Biltmore Hotel, 1200 Anastasia Avenue, Coral Gables, Florida 33134 onThursday, June 12, 2008, at 1:00 p.m. local time.Details of the business to be conducted at the annual meeting are given in the attached Notice of AnnualMeeting and Proxy Statement.Whether or not you attend the annual meeting, it is important that your shares be represented and voted atthe meeting. Therefore, I urge you to sign, date and promptly return the enclosed proxy in the enclosed postage paidenvelope. If you decide to attend the annual meeting, you will, of course, have the opportunity to vote in person.Sincerely,Clive E. WarshawChairman of the BoardBowne ID # g12968-5.pdf 1 May 2, 2008 12:16:27

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STEINER LEISURE LIMITED_______________NOTICE OF ANNUAL MEETING OF SHAREHOLDERSTO BE HELD ON JUNE 12, 2008_______________To the Shareholders:The annual meeting of the shareholders of Steiner Leisure Limited will be held in the Aragon Room at theBiltmore Hotel, 1200 Anastasia Avenue, Coral Gables, Florida 33134 on Thursday, June 12, 2008, at 1:00 p.m. localtime for the following purposes:1. To elect three Class III directors to serve for terms of three years;2. To ratify the appointment of Ernst & Young LLP as the Company's independent auditors for the fiscal yearending December 31, 2008; and3. To transact such other business as may properly come before the meeting or any adjournment orpostponement thereof.Only shareholders of record at the close of business on April 18, 2008 are entitled to notice of, and to voteat, this meeting and any adjournments or postponements thereof.Pursuant to new rules promulgated by the Securities and Exchange Commission, we have elected toprovide access to our proxy materials both by sending you this full set of proxy materials, including a proxy card,and by notifying you of the availability of our proxy materials on the Internet. This proxy statement and our fiscalyear 2007 Annual Report to Shareholders are available on our web site at www.steinerleisure.com.Additionally, and in accordance with the new rules, you may access our proxy statement and annual reportat http://www.steinerleisure.com/files/sll/SLL_Proxy2008_AnnualReport2007.pdf, which does not have “cookies”that identify visitors to the site.May 5, 2008By Order of the Board of DirectorsRobert C. BoehmSecretaryPLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN ITPROMPTLY IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TOATTEND THE JUNE 12, 2008 ANNUAL MEETING. IF YOU ATTEND THE MEETING, YOUMAY VOTE YOUR SHARES IN PERSON IF YOU WISH, EVEN IF YOU PREVIOUSLYRETURNED YOUR PROXY.Bowne ID # g12968-5.pdf 3 May 2, 2008 12:16:27

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STEINER LEISURE LIMITEDSuite 104ASaffrey SquareNassau, The Bahamas_______________PROXY STATEMENT_______________This Proxy Statement and the accompanying proxy card are being furnished to shareholders of SteinerLeisure Limited, a Bahamas international business company (the "Company"), in connection with the solicitation ofproxies by the Company's board of directors from holders of the Company's outstanding common shares, (U.S.) $.01par value per share (the "Common Shares"), for use at the annual meeting of shareholders of the Company to be heldon Thursday, June 12, 2008, in the Aragon Room at the Biltmore Hotel, 1200 Anastasia Avenue, Coral Gables,Florida 33134 at 1:00 p.m. local time and at any adjournments or postponements thereof (the "Annual Meeting"), forthe purpose of considering and acting upon the matters set forth in the accompanying Notice of Annual Meeting ofShareholders.Only holders of record of Common Shares as of the close of business on April 18, 2008 (the "RecordDate") are entitled to notice of, and to vote at, the Annual Meeting. At the close of business on that date, theCompany had 16,254,108 Common Shares issued and outstanding. Holders of Common Shares are entitled to onevote on each matter considered and voted upon at the Annual Meeting for each Common Share held of record as ofthe Record Date. Common Shares represented by a properly executed proxy, if such proxy is received in time andnot revoked, will be voted at the Annual Meeting in accordance with the instructions indicated on such proxy. If noinstructions are indicated, shares represented by proxy will be voted "for" the election, as directors of the Company,of the nominees named in the proxy to serve as the Class III directors until the 2011 annual meeting of shareholders,"for" approval of the ratification of the appointment of Ernst & Young LLP ("Ernst & Young") as independentauditors for the Company for fiscal year 2008 and in the discretion of the proxy holders as to any other matter whichmay properly be presented at the Annual Meeting.This Proxy Statement and the accompanying proxy card are first being mailed to Company shareholders onor about May 5, 2008.Any holder of Common Shares giving a proxy in the form accompanying this Proxy Statement has thepower to revoke the proxy prior to its use. A proxy can be revoked (i) by an instrument of revocation delivered priorto the Annual Meeting to the Secretary of the Company, (ii) by a duly executed proxy bearing a later date than thedate of the proxy being revoked or (iii) at the Annual Meeting, if the shareholder is present and elects to vote inperson. Mere attendance at the Annual Meeting will not serve to revoke the proxy. All written notices of revocationof proxies should be addressed as follows: Robert C. Boehm, Secretary, c/o Steiner Management Services, LLC, 770South Dixie Highway, Suite 200, Coral Gables, Florida 33146.The holders of a majority of Common Shares issued and outstanding on the Record Date, whether presentin person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.The affirmative vote of a plurality of the votes cast at the meeting will be required for the election of theClass III directors. Approval of Proposal Two requires the affirmative vote of the holders of a majority of theoutstanding Common Shares entitled to vote and be represented at the Annual Meeting in person or by proxy. Aproperly executed proxy marked "Withhold Authority" with respect to the election of one or more directors will notbe voted with respect to such director or directors, although the Common Shares represented by the proxy will betreated as "present" and "entitled to vote." For the purpose of determining the vote required for approval of ProposalTwo, Common Shares held by shareholders who abstain from voting will be treated as being "present" and "entitledto vote" on the matter and, thus, an abstention has the same legal effect as a vote against the matter.A "broker non-vote" refers to Common Shares represented in person or by proxy by a broker or nomineewhere such broker or nominee (i) has not received voting instructions on a particular matter from the beneficialBowne ID # g12968-5.pdf 5 May 2, 2008 12:16:28

owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on suchmatter. In the case of a broker non-vote, such shares will not be treated as "present" and "entitled to vote" on thematter and, thus, a broker non-vote or the withholding of a proxy's authority will have no effect on the outcome ofthe vote on the matter.PROPOSAL ONE - ELECTION OF DIRECTORSThe number of directors of the Company, as determined by the board of directors pursuant to theCompany's Amended and Restated Articles of Association (the "Articles"), is seven. In accordance with the Articles,the board of directors of the Company consists of three classes: Class I, Class II and Class III, consisting of two, twoand three directors, respectively. One of the three classes is elected each year to succeed the directors whose termsare expiring. The Class III directors are to be elected at the Annual Meeting, the Class I directors are to be elected atthe 2009 annual meeting of shareholders and the Class II directors are to be elected at the 2010 annual meeting ofshareholders. Directors hold office until the annual meeting for the year in which their terms expire and until theirsuccessors are elected and take office, unless, prior to that date, they have resigned or otherwise left office.The board has determined that four directors, Ms. Cohen and Messrs. Finkelstein, Harris and Preston, areindependent directors as defined in the rules of the Nasdaq Stock Market (the "Nasdaq Rules").At the Annual Meeting, the Class III directors are to stand for election to the board to serve until the 2011annual meeting of shareholders. The nominees for election as Class III directors at the Annual Meeting are LeonardI. Fluxman, Michèle Steiner Warshaw and Steven J. Preston, who are presently directors of the Company. Each ofthe nominees was nominated by the board based on the recommendation of the Governance and NominatingCommittee.If any of the nominees is unable or unwilling to serve as a director, proxies may be voted for a substitutenominee designated by the present board. The board of directors has no reason to believe that any of the nomineeswill be unable or unwilling to serve as a director.If Mr. Preston, the sole independent director standing for election at the Annual Meeting, fails to be electedat the Annual Meeting, the board would, as soon as practicable, appoint an additional independent director to serveuntil the 2009 annual meeting of shareholders so that the Company would be in compliance with the Nasdaq Rules'requirement that the Company have a majority of independent directors.Bowne ID # g12968-5.pdf 6 May 2, 2008 12:16:282

The following table sets forth the names and ages (as of the date of the Annual Meeting) of the directors,the class (and year that class stands for election) to which each director has been elected, the positions and offices, ifany, held by each director with the Company and the year during which each became a director of the Company.Name Age Positions with the Company Director SinceClass IIIDirectors Holding Office Until 2008Leonard I. Fluxman 50 President and Chief Executive1995Officer and DirectorMichèle Steiner Warshaw 62 Executive Vice President of1995Cosmetics Limited and DirectorSteven J. Preston 56 Director 1997Class IDirectors Holding Office Until 2009Clive E. Warshaw 66 Chairman of the Board 1995David S. Harris 48 Director 2004Class IIDirectors Holding Office Until 2010Cynthia R. Cohen 55 Director 2006Charles D. Finkelstein 56 Director 1997Leonard I. Fluxman has served as President and Chief Executive Officer of the Company since January2001, and as a director since November 1995. From January 1999 through December 2000, he served as Presidentand Chief Operating Officer of the Company. From November 1995 through December 1998, he served as ChiefOperating Officer and Chief Financial Officer of the Company. Mr. Fluxman joined the Company in June 1994, inconnection with the Company's acquisition of Coiffeur Transocean (Overseas), Inc. ("CTO"), which operated abusiness similar to that of the Company's predecessor, Steiner Group Limited, subsequently known prior to itsdissolution as STGR Limited ("Steiner Group"). Mr. Fluxman served as CTO's Vice President - Finance fromJanuary 1990 until June 1994 and as its Chief Operating Officer from June 1994 until November 1996. Mr.Fluxman, a certified public accountant, was employed by Laventhol and Horwath from 1986 to 1989, during aportion of which period he served as a manager. Mr. Fluxman is a resident of the United States.Michèle Steiner Warshaw has served as a director of the Company since November 1995 and as a seniorofficer of its Cosmetics Limited subsidiary since November 1996. From January 1996 through December 2001, sheserved as Executive Vice President of the Company. From November 1995 through December 1995, Ms. Warshawserved as the Company's Senior Vice President - Development. From 1967 until November 1995, Ms. Warshawheld a variety of positions with Steiner Group, including assisting in the design and development of shipboardfacilities and services. Ms. Warshaw is a resident of The Bahamas. Ms. Warshaw is the wife of Clive E. Warshaw.Steven J. Preston has served as a director of the Company since April 1997. Since March 1997, Mr. Prestonhas served as an independent financial consultant and since April 2003 he has been involved in real estatedevelopment. From 1974 through February 1997, Mr. Preston served with Arthur Andersen LLP ("ArthurAndersen"), including, from September 1985, as a tax partner. From 1995 until 2002, Arthur Andersen provided taxadvice to the Company and served as the Company's independent auditors. Mr. Preston was the partner in charge ofArthur Andersen's engagement to provide tax advice to the Company prior to his departure from that firm. Mr.Preston is a resident of the United States.Clive E. Warshaw has served as Chairman of the Board of the Company since November 1995. FromNovember 1995 to December 2000, Mr. Warshaw also served as Chief Executive Officer of the Company. Mr.Warshaw joined Steiner Group in 1982 and served as the senior officer of the Maritime Division of Steiner Groupfrom 1987 until November 1995. Mr. Warshaw is a resident of The Bahamas. Mr. Warshaw is the husband ofMichèle Steiner Warshaw.Bowne ID # g12968-5.pdf 7 May 2, 2008 12:16:283

David S. Harris has served as a director of the Company since June 2004. He has served as President ofGrant Capital, Inc., a private investment company, since January 2002. From May 2001 until December 2001, Mr.Harris served as a Managing Director in the investment banking division of ABN Amro Securities LLC ("ABN").From September 1997 until May 2001, Mr. Harris served as a Managing Director and Sector Head of the Retail,Consumer and Leisure Group of ING Barings LLC, a financial institution ("ING"). The operations of ING withwhich Mr. Harris was associated were acquired by ABN in May 2001. From 1986 to 1997, Mr. Harris served invarious capacities as a member of the investment banking group of Furman Selz LLC. Furman Selz LLC wasacquired by ING in September 1997. Mr. Harris, through the firms with which he was then employed, providedinvestment banking services to the Company from time to time from 1996 through July 2001. In 2001, the Companyreceived financing from an affiliate of ABN while Mr. Harris worked for ABN. Mr. Harris is a director of RexStores Corporation, a retailer of consumer electronics and appliances. Mr. Harris is a resident of the United States.Cynthia R. Cohen has served as a director of the Company since April 2006. She is the founder andPresident of Strategic Mindshare, a strategy consulting firm serving retailers and consumer product manufacturerssince 1990. From 1987 to 1990, Ms. Cohen was a partner in management consulting with Deloitte & Touche LLPand its predecessor. Ms. Cohen is a director of bebe Stores, Inc., a specialty apparel retailer, Hot Topic, Inc., a teenapparel retailer, and Equity One, a real estate investment trust that owns retail shopping centers in various parts ofthe United States. Ms. Cohen is a resident of the United States.Charles D. Finkelstein has served as a director of the Company since February 1997. Since January 2001,he has served as President of Faber Coe & Gregg, Inc., which operates shops offering gifts, sundries and newspapersand other publications in airports, train stations, hotels and other venues in various parts of the United States. Since1985, Mr. Finkelstein has served as general counsel, secretary and a director of that company. Mr. Finkelstein is aresident of the United States.Recommendation of the Board of DirectorsThe board of directors recommends that the shareholders vote "FOR" the election of Leonard I.Fluxman, Michèle Steiner Warshaw and Steven J. Preston as Class III Directors.Meetings and Committees of the Board of DirectorsThe Company's board of directors met six times during 2007.The board of directors has an Audit Committee, a Compensation Committee and a Governance andNominating Committee. Each of these committees operates under a written charter adopted by the board which setsforth the scope of the responsibilities of that committee. Copies of those charters are available for review on theCompany's web site at www.steinerleisure.com. These three committees consist solely of directors who areindependent as defined in the Nasdaq Rules. Ms. Cohen and Messrs. Harris and Preston are the members of theAudit and Compensation Committees. Ms. Cohen and Messrs. Finkelstein and Preston are the members of theGovernance and Nominating Committee. Mr. Preston serves as Chair of the Audit Committee, Mr. Harris serves asChair of the Compensation Committee and Ms. Cohen serves as Chair of the Governance and NominatingCommittee.The Audit Committee is responsible for overseeing internal accounting controls and accounting, auditingand financial reporting matters, including the engagement of independent auditors and the review of financialstatements included in the Company's Securities and Exchange Commission ("SEC") filings. The Audit Committeealso is responsible for the review of proposed transactions between the Company and related parties. The report ofthe Audit Committee appears below, under "Audit Committee Report." The Audit Committee met seven timesduring 2007.The Compensation Committee is responsible for approving the compensation arrangements for executiveofficers and certain other officers of the Company and the members of the board of directors and for establishingpolicies relating to that compensation. Under the Compensation Committee charter, adopted in April 2007, thecommittee also is responsible for recommending the compensation of the Company's directors. The board ofdirectors is responsible for determining compensation of board members. Those compensation determinations havebeen made based on discussions with management and review of information from Towers Perrin, an independentBowne ID # g12968-5.pdf 8 May 2, 2008 12:16:284

compensation consultant. As described below, under "Executive Compensation - Compensation Discussion andAnalysis," Towers Perrin has been retained by the Compensation Committee to provide advice on executive officercompensation.The Compensation Committee also is responsible for granting awards and taking other actions with respectto the Company's Amended and Restated 1996 Share Option and Incentive Plan, which has expired other than withrespect to outstanding awards thereunder (the "1996 Option Plan"), and 2004 Equity Incentive Plan (the "EquityPlan"). The Compensation Committee met five times during 2007. For further information on the CompensationCommittee's consideration and determination of executive officer compensation, see "Executive Compensation –Compensation Discussion and Analysis," below.The Governance and Nominating Committee is responsible for monitoring and overseeing matters ofcorporate governance and selecting, evaluating and recommending to the Board qualified candidates for election orappointment to the Board. The Governance and Nominating Committee met five times during 2007.In 2007, each of the board members attended more than 75 percent of all of the board meetings andmeetings of the committees of which such director was a member.All board members are expected to attend the Company's annual meetings of shareholders. At the 2007annual meeting, six of the seven board members were in attendance.Shareholder Communications with the Board of DirectorsShareholders desiring to communicate with the board of directors or a particular director may send a letterto the Company's Secretary, c/o Steiner Management Services, LLC, 770 South Dixie Highway, Suite 200, CoralGables, FL 33146. The mailing envelope must contain a clear notation indicating that the enclosed letter is a"Shareholder-Board Communication" or "Shareholder-Director Communication." All such letters must identify thesender as a shareholder and clearly state whether the intended recipients are all of the members of the board or oneor more specified directors. The Secretary will make copies of all such letters and circulate them to the appropriatedirector or directors, as the case may be.Code of EthicsThe board of directors has adopted a Code of Business Conduct and Ethics for the Company, which isapplicable to all officers, directors and employees of the Company and its subsidiaries, including the Company'sChief Executive Officer and Chief Financial Officer. The Code of Business Conduct and Ethics is available forreview on the Company's website at www.steinerleisure.com.Director Nomination ProceduresThe Governance and Nominating Committee has adopted procedures to be followed in connection withnominations to the board. A copy of the Nomination Procedures can be found on the Company's website atwww.steinerleisure.com.The Governance and Nominating Committee will consider all qualified candidates identified by varioussources, including members of the board, management and shareholders. Candidates for directors recommended byshareholders will be given the same consideration as those identified from other sources.The Governance and Nominating Committee is responsible for reviewing each candidate's biographicalinformation, meeting with each candidate and assessing each candidate's independence, skills and expertise based ona number of factors, including the following criteria relating to the traits, abilities and experience of potentialdirector candidates:• whether the candidate is of high ethical character, has high integrity and has the ability to make analyticalinquiries and exercise sound business judgment;Bowne ID # g12968-5.pdf 9 May 2, 2008 12:16:285

• whether the candidate serves or previously served as a chief executive officer or chief financial officer of apublic company or has comparable experience leading a complex organization;• whether the candidate is accomplished in his or her field, with special consideration being given to thosewho are experienced in the industries in which the Company is engaged or proposes to engage;• whether the interplay of the candidate's knowledge, expertise, skills and experience with that of the othermembers of the board would build a board that is effective, collegial and responsive to the needs of theCompany;• the absence of any conflicts with the interests of the Company; and• whether the candidate would be willing and capable to take the time to actively participate in meetings ofthe board and its committees and related activities.Based on its assessment of a candidate's qualifications, the Governance and Nominating Committee makesrecommendations to the board of directors regarding director candidates.Shareholders who wish to propose a nominee for director at the 2009 annual meeting of shareholdersshould send written notice to the Company's Secretary by the date specified below in this Proxy Statement in thesecond paragraph under "Shareholder Proposals for 2009 Annual Meeting" (the "General Proposal Requirements").Each written notice must set forth, in addition to the General Proposal Requirements: (i) the name and address of theshareholder who is making the nomination; (ii) the number of Common Shares beneficially owned by theshareholder and a representation that the shareholder is a holder of record of Common Shares entitled to vote at suchannual meeting of shareholders and intends to appear in person or by proxy at the meeting and nominate the personspecified in the notice; (iii) the name of the director candidate; (iv) a complete statement of the candidate'squalifications (including education, work experience, knowledge of the Company's industry, membership on otherboards of directors and civic activities); (v) a description of all arrangements or understandings between theshareholder and the candidate and/or any other person or persons pursuant to which the nomination is to be made bythe shareholder; (vi) such other information regarding a candidate as would be required to be included in a proxystatement, including information with respect to a candidate's independence as defined in the Nasdaq Rules andinformation regarding the candidate's attributes that the board would need to consider in order to assess whethersuch candidate would qualify as an "audit committee financial expert" as defined in the regulations of the SEC; and(vii) the candidate's consent to serve as a director of the Company if elected.Chairman of the Board CompensationCOMPENSATION OF DIRECTORSDuring 2007, Mr. Warshaw received compensation for serving as Chairman of the Board pursuant to afive-year employment agreement with the Company, effective January 1, 2007. That agreement was negotiatedbetween Mr. Warshaw and the Compensation Committee. Under that agreement, for 2007, Mr. Warshaw received abase salary of $92,000, a $1,500 fee for each meeting of the board and board committee (where invited by thatcommittee) he attended, payment of health insurance premiums and an annual equity award of 2,373 restrictedCommon Shares ("restricted shares") under the Equity Plan (which plan is described below under "ExecutiveCompensation - 2004 Equity Incentive Plan").The amounts of the annual awards of restricted shares awarded under Mr. Warshaw's employmentagreement are determined by dividing $100,000 by the closing price of a Common Share on the date of theagreement (for 2007) and on each anniversary date of the agreement during its term. These restricted shares haveterms similar to the restricted shares described below under "Equity Compensation" but also have acceleratedvesting in the event of certain terminations of Mr. Warshaw's employment with the Company other than for cause.As is the case with all directors, Mr. Warshaw is entitled to reimbursement of expenses incurred inconnection with fulfilling his duties. This agreement also provides for a payment of one year’s salary to Mr.Warshaw in the event he terminates the agreement after a material breach thereof or reduction in compensation orBowne ID # g12968-5.pdf 10 May 2, 2008 12:16:286

enefits by the Company, a change in control of the Company (which term has the same meaning in the employmentagreements for the named executives (as defined below under "Executive Compensation - EmploymentAgreements") who have such agreements) or if the Company terminates the agreement without cause. Under thisagreement, Mr. Warshaw is also subject to confidentiality and non-competition requirements similar to those underthe employment agreements with the named executives.Cash CompensationEach director who is not an employee of the Company or any subsidiary of the Company (a "Non-Employee Director") is entitled to receive an annual retainer payment of $34,000. Each of Ms. Cohen and Mr.Harris, as Chair of the Compensation Committee and Governance and Nominating Committee, respectively, isentitled to receive an additional $6,000 annual retainer. Mr. Preston, as Chair of the Audit Committee, is entitled toreceive an additional $12,000 annual retainer. Each Non-Employee Director also receives $1,200 for each meetingof the board of directors attended and for each meeting of a board committee (of which he or she is not a member)attended at the request of that committee and $850 for each committee meeting attended (for committee members),except for the Chair of each committee, who receives $1,100 for each committee meeting attended. For 2007, Ms.Warshaw received fees for board and committee meeting attendance at the same rate as the Non-EmployeeDirectors. For 2008, Ms. Warshaw is entitled to receive $1,500 for each such meeting of the board of directors orcommittee attended.Ms. Warshaw receives certain additional compensation from the Company as described below, under"Certain Transactions – Compensation of Michèle Steiner Warshaw."Equity CompensationIn 2007, each Non-Employee Director and Ms. Warshaw received, under the Equity Plan, an award of anumber of restricted shares determined by dividing $50,000 by the closing price of a Common Share on the date ofthe 2007 annual meeting of shareholders (the "Closing Price"). In addition, each Non-Employee Director whoserved as chair of a board committee received on the date of the 2007 Annual Meeting a number of restricted sharesdetermined by dividing $10,000 by the Closing Price. These restricted shares vest on the first anniversary of the dateof grant except that, in the event of a change in control of the Company (as defined in the Equity Plan) or the deathof the director, the shares vest immediately. These shares are subject to forfeiture upon the termination of service onthe board other than removal by the board without cause. Non-Employee Directors have no rights as shareholderswith respect to the restricted shares until those shares vest.The same annual equity award as described above for 2007 has been approved to be awarded to the Non-Employee Directors and Ms. Warshaw on the date of the Annual Meeting.Director Compensation TableThe following table sets forth information with respect to the compensation for 2007 of the Company'sdirectors, other than Mr. Fluxman, who receives no compensation for serving on the board.NameFeesEarnedor Paidin Cash($) (1)ShareAwards($) (2)OptionAwards($) (3)All OtherCompensation($) (4)Cynthia R. Cohen ...................... $62,900 $55,125 $ 1,965 $ -- $119,990Charles D. Finkelstein ............... 45,450 49,732 -- -- 95,182David S. Harris ......................... 59,500 59,677 -- -- 119,177Steven J. Preston ....................... 69,400 59,677 -- -- 129,077Clive E. Warshaw ..................... 92,000 3,562 282,451 24,257 (5) 402,270Michèle Steiner Warshaw ......... 7,200 49,732 -- 82,793 (6) 139,725Total($)Bowne ID # g12968-5.pdf 11 May 2, 2008 12:16:287

_____________(1) These amounts represent the cash meeting fees and annual cash retainers. Mr. Warshaw's payment representsthe base salary under his employment agreement. Ms. Warshaw did not receive an annual cash retainer in 2007.These payments are described in the narrative preceding this table.(2) This column reflects the dollar amount recognized for financial statement reporting purposes for 2007 inaccordance with FAS 123R (excluding forfeiture estimates) for awards of unvested restricted shares received in2007 and prior to that year. The methodologies and assumptions utilized in the valuation of these equity awards(as well as the awards referenced in note (3), below) are set forth in Note 2(n) to the Consolidated FinancialStatements of Steiner Leisure Limited and its Subsidiaries, contained in the Company's Annual Report onForm 10-K for the year ended December 31, 2007.Mr. Finkelstein and Ms. Warshaw each received an award of 1,011 restricted shares (with a grant date fair valuecomputed under FAS 123R of $50,000) in June 2007. Ms. Cohen and Messrs. Harris and Preston each receivedan award of 1,213 restricted shares (with a grant date fair value computed under FAS 123R of $60,000) in June2007. These restricted share awards are described in the narrative preceding this table. Each of these directorsheld the unvested restricted shares associated with the June 2007 awards as of December 31, 2007. All equityawards to directors after April 2006 (consisting solely of restricted shares) were made pursuant to the EquityPlan.(3) No options were granted to the directors during 2007. Amounts reported in this column represent the dollaramount recognized for financial statement reporting purposes for 2007 in accordance with FAS 123R(excluding forfeiture estimates) for awards of share options prior to 2007.As of December 31, 2007, the following directors held the following number of share options: Ms. Cohen - 518;Mr. Finkelstein - 8,813; Mr. Harris - 6,000; Mr. Preston - 4,000; Mr. Warshaw - 25,002; and Ms. Warshaw -3,000.(4) Directors and their immediate families are entitled to receive certain complimentary spa services at facilities ofthe Company and discounts on products of the Company. No other compensation required to be disclosed inthis table was received by directors other than Mr. Warshaw and Ms. Warshaw. The amounts reflected in thiscolumn were determined in the manner described in note (3) to the Summary Compensation Table, below.(5) This amount includes payment of health insurance premiums of $22,465 and the value of spa services receivedby Mr. Warshaw at Company facilities in the amount of $1,736 and samples of Company products received byMr. Warshaw in the amount of $56.(6) Ms. Warshaw serves as Executive Vice President of the Company's Cosmetics Limited subsidiary. This amountincludes payments to Ms. Warshaw for her services in that capacity in 2007 (salary of $80,000). Ms. Warshawalso received spa services at Company facilities in the amount of $2,737 and samples of Company products inthe amount of $56.Bowne ID # g12968-5.pdf 12 May 2, 2008 12:16:288

AUDIT COMMITTEE REPORTThe Audit Committee consists of three members, Steven J. Preston, Chair, Cynthia R. Cohen and David S.Harris. The board of directors has determined that each of the Audit Committee members is independent of theCompany as defined in the Nasdaq Rules. The board also has determined that each member of the Audit Committeequalifies as an "Audit Committee Financial Expert" within the meaning of applicable SEC regulations.Management has the primary responsibility for the Company's internal controls, the financial reportingprocess and preparation of the consolidated financial statements of the Company. The independent auditors areresponsible for performing an independent audit of the Company's consolidated financial statements in accordancewith auditing standards generally accepted in the United States and issuing a report thereon. The independentauditors are also responsible for auditing the Company's internal control over financial reporting as of December 31,2007, based on criteria established in Internal Control – Integrated Framework, issued by the Committee ofSponsoring Organizations of the Treadway Commission, and issuing a report thereon. The Audit Committee'sresponsibility is to oversee these processes.The Audit Committee reviewed and discussed with management and the Company's independent auditors,Ernst & Young, the Company's internal control over financial reporting as of December 31, 2007 and the Company'saudited consolidated financial statements for the fiscal year ended December 31, 2007. Management represented tothe Audit Committee that the Company's consolidated financial statements were prepared in accordance withaccounting principles generally accepted in the United States. Management also represented to the Audit Committeethat, as of December 31, 2007, the Company's internal control over financial reporting was effective. The AuditCommittee also discussed with the Company's independent auditors the matters required to be discussed byStatement on Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement onAuditing Standards No. 90 (Audit Committee Communications).The Audit Committee received from the independent auditors the written disclosures and letter required byIndependence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) on (i) that firm'sindependence as required by the Independence Standards Board and (ii) the matters required to be communicatedunder generally accepted auditing standards. The Audit Committee also has discussed with the independent auditorstheir independence from the Company and has considered whether the provision of non-audit services to theCompany is compatible with the independence of the auditors.Based upon the review and discussions referenced above, the Audit Committee recommended to the boardof directors that the audited consolidated financial statements of the Company be included in the Company's AnnualReport on Form 10-K for the year ended December 31, 2007.Members of the Audit Committee:Steven J. Preston, ChairCynthia R. CohenDavid S. HarrisNotwithstanding anything to the contrary set forth in any of the Company's previous filings under theSecurities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), thatmight incorporate future filings, including this Proxy Statement, in whole or in part, the Audit Committee Reportshall not be incorporated by reference into any such filings.Bowne ID # g12968-5.pdf 13 May 2, 2008 12:16:289

Fees Paid to Auditor2006:The following table sets forth the fees incurred by the Company to Ernst & Young for fiscal years 2007 and2007 2006Audit Fees .......................................................................................................... $1,122,768 $1,144,462Audit-Related Fees ............................................................................................ 80,000 387,344Tax Fees ............................................................................................................ 9,000 9,214All Other Fees .................................................................................................... -- 13,724Total .................................................................................................................. $1,211,768 $1,554,744Audit Fees. These fees were for services that included the audit of the Company's annual financialstatements and review of quarterly financial statements and services that are normally provided by the independentauditors in connection with statutory and regulatory filings. For 2007 and 2006, a significant portion of the servicesincluded the audit of the Company's internal controls over financial reporting. These services also included adviceon audit and accounting matters that arose during, or as a result of, the audit or the review of interim financialstatements and statutory audits required by non-U.S. jurisdictions.Audit-Related Fees. For 2007, these fees were in connection with the due diligence services performed inconnection with consideration of a potential transaction. For 2006, these fees were in connection with the requiredaudits of the Utah College of Massage Therapy after it was acquired by the Company and advisory servicespertaining to agreed upon procedures relating to a resort spa.Tax Fees. These fees were for tax advice and preparation of certain tax filings and tax returns.Other Fees. For 2007, there were no such fees. For 2006, these fees were for services in connection withthe relocation of the Company's Asian resort spas' administrative office.Pre-Approval Policies and Procedures for Audit Services and Permitted Non-Audit ServicesThe Audit Committee has adopted a policy and related procedures requiring its pre-approval of all auditand non-audit services to be rendered by Ernst & Young. These policies and procedures are intended to ensure thatthe provision of such services does not impair Ernst & Young's independence. These services may include auditservices, audit-related services, tax services and other services. The policy provides for the annual establishment offee limits for various types of audit services, audit-related services, tax services and other services, within which theservices are deemed to be pre-approved by the Audit Committee. Ernst & Young is required to provide to the AuditCommittee back-up information with respect to the performance of such services.The Audit Committee has delegated to its Chair the authority to pre-approve services, up to a specified feelimit, to be rendered by Ernst & Young and requires that the Chair report to the Audit Committee any pre-approvaldecisions made by the Chair at the next scheduled meeting of the Audit Committee.All services performed by Ernst & Young for the Company for 2007 were pre-approved by the AuditCommittee.Bowne ID # g12968-5.pdf 14 May 2, 2008 12:16:2910

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERSThe following table sets forth certain information, as of April 10, 2008, regarding the beneficial ownershipof the Common Shares of (i) each director and each executive officer of the Company identified below under"Executive Compensation," (ii) all directors and all executive officers of the Company as a group and (iii) eachperson known by the Company to be the beneficial owner of more than five percent of the outstanding CommonShares (based on a review of filings with the SEC). All of the individuals listed are executive officers and/or, as thecase may be, directors of the Company. The address for the directors and the identified executive officers is theaddress of the Company's administrative affiliate, Steiner Management Services, LLC, 770 South Dixie Highway,Suite 200, Coral Gables, FL 33146. Unless otherwise indicated, the beneficial owner had sole voting and dispositivepower with respect to the shares.Amount andNature ofBeneficialOwnership(#)Percent ofClass(%)Name and Address of Beneficial OwnerClive E. Warshaw ................................................................................................ 1,218,289(1) 7.48%Leonard Fluxman ................................................................................................. 178,479(2) 1.09Stephen Lazarus ................................................................................................... 12,575(3) *Glenn Fusfield ...................................................................................................... 12,555(4) *Robert C. Boehm .................................................................................................. 79,536(5) *Sean C. Harrington ............................................................................................... 16,304(6) *Michèle Steiner Warshaw .................................................................................... 4,279(7) *Cynthia R. Cohen ................................................................................................. 1,797(8) *Charles D. Finkelstein .......................................................................................... 10,092(9) *David S. Harris ..................................................................................................... 7,535(10) *Steven J. Preston .................................................................................................. 4,000(11) *Directors and executive officers as a group (15 persons) ..................................... 1,623,503(12) 9.78Baron Capital Group, Inc. and Reporting Group ................................................. 1,040,078(13) 6.40FMR LLC ............................................................................................................. 1,680,000(14) 10.34Franklin Resources, Inc. and Reporting Group .................................................... 2,089,485(15) 12.86Kayne Anderson Rudnick Investment Management, LLC .................................. 1,053,303(16) 6.48Pictet Asset Management SA ............................................................................... 845,427(17) 5.20Wellington Management Company, LLP ............................................................ 1,449,364(18) 8.92_____________* Less than one percent(1) Includes 25,002 shares issuable upon exercise of options currently exercisable, or exercisable within 60days after April 10, 2008 (hereinafter, "currently exercisable"). Does not include shares owned by MichèleSteiner Warshaw, Mr. Warshaw's wife and a director of the Company, as to which Mr. Warshaw disclaimsbeneficial ownership.(2) Includes 139,570 shares issuable upon exercise of currently exercisable options.(3) Includes 7,667 shares issuable upon exercise of currently exercisable options.(4) Includes 3,833 shares issuable upon exercise of currently exercisable options and 3,334 restricted sharesthat vested on April 25, 2008.(5) Includes 71,938 shares issuable upon exercise of currently exercisable options.(6) Includes 10,666 shares issuable upon exercise of currently exercisable options.(7) Includes 3,000 shares issuable upon exercise of currently exercisable options. Does not include sharesowned by Clive E. Warshaw, Ms. Warshaw's husband and the Chairman of the Board of the Company, asto which Ms. Warshaw disclaims beneficial ownership.(8) Includes 518 shares issuable upon exercise of currently exercisable options.(9) Includes 8,813 shares issuable upon exercise of currently exercisable options.(10) Includes 6,000 shares issuable upon exercise of currently exercisable options.(11) Represents 4,000 shares issuable upon exercise of currently exercisable options.(12) Includes 350,515 shares issuable upon exercise of currently exercisable options and 3,334 restricted sharesthat vested on April 25, 2008.Bowne ID # g12968-5.pdf 15 May 2, 2008 12:16:2911

(13) According to a Schedule 13G dated February 12, 2008 filed by Baron Capital Group, Inc. ("Baron"),BAMCO, Inc. (“Bamco”), Baron Capital Management, Inc. (“BCMI”), Baron Growth Fund, Inc. (“BGFI”)and Ronald Baron, (i) each of Baron and Ronald Baron has shared voting power with respect to 940,078shares and shared dispositive power with respect to all of the shares, (ii) Bamco has shared voting powerwith respect to 927,578 shares and shared dispositive power with respect to 1,027,578 shares, (iii) BCMIhas shared voting and shared dispositive power with respect to 12,500 shares and (iv) BGFI has sharedvoting power and shared dispositive power with respect to 877,978 shares. The address for the foregoingentities and individual is 767 Fifth Avenue, New York, NY 10153.(14) According to a Schedule 13G dated February 13, 2008 filed by FMR LLC (the successor to FMR Corp.)("FMR"), FMR has no voting power with respect to the shares and sole dispositive power with respect tothe shares. The address of FMR is 82 Devonshire St., Boston, MA 02109.(15) According to a Schedule 13G dated December 7, 2007 filed by Franklin Resources, Inc. ("Franklin"),Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Templeton Investments Corp. (“FTIC”), (i) FTIChas sole voting power and sole dispositive power with respect to 1,594,756 shares and (ii) TempletonInvestment Counsel, LLC has sole voting power with respect to 485,059 shares and sole dispositive powerwith respect to 494,729 shares. The address of the above entities is One Franklin Parkway, San Mateo, CA94403.(16) The address of Kayne Anderson Rudnick Investment Management, LLC is 1800 Avenue of the Stars, 2 ndFloor, Los Angeles, CA 90067.(17) The address of Pictet Asset Management SA is 60 Route Des Acacias, Geneva 73, Switzerland CH-12 11.(18) According to a Schedule 13G dated February 14, 2008 filed by Wellington Management Company, LLP("Wellington"), Wellington has shared voting power with respect to 1,048,824 shares and shareddispositive power with respect to all of the shares. The address of Wellington is 75 State Street, Boston,MA 02109.Compensation Discussion and AnalysisEXECUTIVE COMPENSATIONSet forth below is a discussion of the Company's executive compensation programs pursuant to which thecompensation described in the tables and accompanying notes below was paid.OverviewThe Compensation Committee of the board of directors is responsible for reviewing and approving allcompensation for the named executives and other executive officers of the Company.The Company provides a competitive executive compensation program, the objectives of which are toattract, retain and reward employees whose performance and contributions add to the Company's success. Thiscompensation approach targets total compensation at the 75th percentile of a group of companies identified with theassistance of the Compensation Committee's independent compensation advisor, with the opportunity to earnadditional compensation for strong Company-wide and, in certain cases, business unit, performance. At that level ofcompensation, the Committee believes that its executive compensation program is effective at attracting, retainingand rewarding executive officers responsible for leading the Company in the achievement of its business goals. TheCompany believes that this approach is consistent with its ultimate goal of maximizing shareholder value.The compensation payable to four of the named executives is based on the employment agreementsdescribed below under "Employment Agreements." Those agreements, among other things, establish minimum basesalaries (in each case the salary in effect as of the effective date of each agreement), the performance targets for nonequityincentive compensation and general rights to receive equity awards. The employment agreement for theChief Executive Officer also establishes the minimum amounts of annual awards of certain equity compensation.Mr. Harrington does not currently have (and for 2007 did not have) an employment agreement with theCompany. He and the Company are currently in discussions with respect to such an agreement. The performancetargets upon which Mr. Harrington's non-equity incentive compensation was based for 2007 are reflected in note (1)to the "2007 Grants of Plan-Based Awards" table, below.Bowne ID # g12968-5.pdf 16 May 2, 2008 12:16:2912

Compensation PhilosophyThe Compensation Committee believes that the Company's goal of maximizing shareholder value dependsto a significant extent on the Company's ability to attract and retain qualified executive officers. In order to do so,the Compensation Committee believes that the Company is required to offer attractive compensation packages.The Compensation Committee also believes that shareholder value is enhanced by aligning the interests ofits executive officers with the interests of its shareholders. In the opinion of the Compensation Committee, thecompensation arrangements for the named executives and other executive officers of the Company promote such analignment of interests by offering (i) non-equity incentive compensation in the form of cash bonuses tied to specifiedCompany and business unit performance targets and (ii) the opportunity to receive equity awards under the EquityPlan, including equity incentive awards tied to specified Company and business unit performance targets.These forms of at-risk incentive compensation opportunities represent a very significant portion of the totalcompensation to the executive officers of the Company and are linked directly to the Company's performance.Total compensation is targeted with a mix of both cash and equity-based compensation. The CompensationCommittee chooses cash compensation to be competitive for recruitment and retention of top talent. TheCompensation Committee chooses equity-based compensation for similar reasons, but also to create a linkagebetween shareholder reward and executive reward. The committee believes that the portion of equity-basedcompensation, vesting over three years, creates this linkage. This is especially true viewed over successive years; atany given time, zero, two-thirds or one-third of shares awarded, as the case may be, are not yet vested. The relativeamounts of each element are based on input from the Compensation Committee’s independent compensation advisorand the collective judgment of the Compensation Committee.The Compensation Committee further believes that an executive officer's total compensation opportunityshould be commensurate with position and responsibility. Accordingly, the proportion of total compensationattributable to variable, at-risk elements increases with successively higher levels of responsibility at the Company.Thus, the most senior executive officers of the Company who are responsible for the development and execution ofthe Company's strategic plans have the largest portion of their compensation tied to variable incentives, includingequity-based compensation, in which ultimate value is dependent on changes that impact shareholder value.The determination of the target amount of equity awards for each of the named executives for 2007 wasbased on taking the total amount of targeted compensation (i.e., the compensation payable if all of the performancetargets applicable to incentive awards are achieved) for such individual that was deemed appropriate by theCompensation Committee and subtracting from that amount the proposed base salary and targeted short-termincentive compensation. The aggregate value of the two equity award components was intended to equal theremainder from that subtraction.Components of Compensation - OverviewThe Company's compensation program for its executive officers consists of four components: base salary,non-equity incentive compensation in the form of cash bonuses, awards of restricted shares and performance shares(through January 2006, equity awards included share options) under the Equity Plan, and various employee benefits(including, among other things, automobile allowances, medical and disability insurance and 401(k) plan benefits).The program places a significant percentage of the Company's executive officers' compensation at risk, rewardingthe executives if the performance of the Company warrants such a reward and, accordingly, encouraging thebuilding of shareholder value.Categories of Named Executives' CompensationThe Compensation Committee views the general parameters of compensation for the named executives inthree categories. The first compensation category is for the Chief Executive Officer. This category reflects theoverall responsibilities of the senior executive officer of the Company and the applicable compensation isdetermined accordingly.Bowne ID # g12968-5.pdf 17 May 2, 2008 12:16:2913

The second category, for Messrs. Boehm, Fusfield and Lazarus, reflects, for Messrs. Boehm and Lazarus,that their respective responsibilities entail work for the Company itself as well as for each of its divisions, and forMr. Fusfield, responsibilities as chief operating officer of the Company's principal business unit (Maritime). Foreach of these three individuals, the base salary and the threshold percentages for the achievement of the performancetargets relating to non-equity incentive compensation (potential cash bonus) are the same. Equity grants (restrictedshares) and equity incentive compensation (performance shares) for each of those three named executives includesthe same number of shares to be awarded, or potentially awarded, if the performance targets are achieved. Thedifference in the scope of operating responsibilities between Messrs. Boehm and Lazarus, on the one hand, and Mr.Fusfield, on the other, is reflected in the fact that Mr. Fusfield's non-equity incentive compensation and equityincentive compensation are weighted substantially toward the achievement of specified performance targets by theMaritime Division. Those compensation components for Messrs. Boehm and Lazarus, as well as for Mr. Fluxman,are tied exclusively to Company-wide performance.The third category, for Mr. Harrington, also reflects the fact that he is the senior operating officer of aCompany business unit (Elemis Products). While that business unit is smaller than the Maritime Division, the basesalary of Mr. Harrington, who is based in the United Kingdom, is higher than that of Messrs. Boehm, Fusfield andLazarus. This difference reflects primarily the British Pounds Sterling (in which Mr. Harrington is paid) to U.S.Dollar (in which the Company pays its U.S. - based employees) exchange rate. This higher base salary alsoprovides the potential for a higher (in U.S. Dollars) non-equity incentive bonus, provided that the pertinentperformance targets are met or exceeded. Mr. Harrington's non-equity incentive compensation performance targetthresholds are the same as those for Messrs. Boehm, Fusfield and Lazarus, and Mr. Harrington's equity incentivecompensation includes the same number of shares to be awarded, or potentially awarded, if the performance targetsare achieved, as for those individuals. As is the case with Mr. Fusfield, the performance targets on which Mr.Harrington's non-equity incentive compensation and equity compensation are based are weighted heavily toward theachievement of specified performance targets of Mr. Harrington's business unit.Compensation Determination ProcessThe Compensation Committee makes compensation determinations for the named executives and the otherexecutive officers of the Company annually, typically in the fourth quarter of the year preceding the year inquestion. In connection with those determinations for 2007, the Compensation Committee receivedrecommendations from the Chief Executive Officer of the Company and advice from Towers Perrin, an outsidecompensation consultant (the "Consultant"). The Chief Executive Officer's involvement in the compensationdetermination process was limited to making such recommendations.The Compensation Committee retained the Consultant at the Company's expense, to provide objective,independent analysis and advice to the committee with respect to compensation of the named executives and otherexecutive officers of the Company. The Consultant was retained in each of 2005 and 2006 to assess thecompetitiveness of the compensation of those officers so that appropriate compensation levels for 2006 and 2007,respectively, could be determined. The Consultant also had been retained to provide advice with respect tocompensation of the Company's executive officers in 2003. Other than as described above, the Consultant was notasked to provide any other services for the committee or the Company.The Consultant was advised of the Company's compensation philosophy of providing total compensationfor the named executives in amounts placing them, as a group, in the 75th percentile of total compensation ofofficers in similar positions at comparable companies. For 2007, the Consultant reviewed base salary, annualincentives and long-term incentives of officers in positions similar to those of the Company's executive officers,with a variety of companies, including, for Mr. Harrington, United Kingdom-based companies.In connection with its report to the Compensation Committee in 2005 relating to potential executivecompensation for 2006, the Consultant identified a peer group of 14 companies (which were identified in the proxystatement for the Company's 2007 annual meeting of shareholders) on which its advice was based. For 2007, basedon discussions with the Consultant, the Compensation Committee determined that a broader view of othercompanies' compensation approaches with respect to officers in positions similar to the named executives wouldbetter reflect the labor market and provide more accurate data on which the committee could make its compensationdecisions. Accordingly, the Consultant's advice was based on its analysis of the Consultant's database of 800companies and the database of another outside compensation consultant, consisting of 2,500 companies. TheBowne ID # g12968-5.pdf 18 May 2, 2008 12:16:2914

compensation information determined from an analysis of those databases was adjusted to reflect the difference inthe revenues of the Company as compared to those companies. The committee has determined that, due to the variednature and multitude of the companies on which the Consultant relied in its analysis, it would not be materiallyuseful or practicable to include a list of those companies in this discussion.Components of Compensation - AnalysisBase Salary. Base salary is subject to the "floor" established in the employment agreements for eachnamed executive with such an agreement (the salary in effect as of the effective date of the agreement). As part ofthe Compensation Committee's determination of overall compensation for the named executives, consideration isgiven to percentage increases in base salaries.Overall, salary targets for the named executives and other executive officers are set based on theCompany's budgets for the upcoming year (which budgets are required to be approved by the CompensationCommittee to the extent they affect compensation of executive officers). Typically, there is a general percentageincrease in base salary for all the named executives, with individual variances based on relative performance (merit)or the need to bring the base salary of one or more individuals to peer levels.For 2007, the percentage increase was 6.0% for Mr. Fluxman and 7.5% for the other named executives.This was part of the total compensation package for the year and was intended to bring their total compensation intoline with what the Compensation Committee deemed appropriate in light of the advice of the Consultant. The largerincrease in base salary for the named executives other than Mr. Fluxman reflected the recommendation of Mr.Fluxman that those executives be recognized for the Company's strong performance in 2006.Short-term Incentive Compensation. In addition to base salary, the employment agreements for the namedexecutives provide them with the opportunity to earn additional cash compensation if the annual Company and, inthe case of Messrs. Fusfield and Harrington, annual business unit, targets are met or exceeded. The types ofperformance targets for, and the threshold, target and maximum amounts of, these awards are established in theemployment agreements for the named executives, where applicable, and for Mr. Harrington, for 2007, by theCompensation Committee. These awards are mathematically interpolated between threshold and maximum amountsand, in general, no positive or negative discretion is applicable to the award determination.The Company-wide performance measure for non-equity incentive compensation awards is the earningsper share of the Company. For Messrs. Fluxman, Boehm and Lazarus, the performance target for receipt of nonequityincentive compensation is the achievement of the budgeted earnings per share of the Company for the year inquestion. The Committee believes that the targeted earnings per share budgeted for 2007 was an appropriateperformance target in light of the challenges to achieve the growth reflected in that amount in all of the Company'sbusiness units, including the significant budgeted growth in some of the Company's business units.For Messrs. Fusfield and Harrington, that performance target also is a basis for the receipt of non-equityincentive compensation, but that performance target only constituted, for 2007, 15% and 20%, respectively of thetarget bonus for each of those individuals. The balance of the performance targets for the non-equity incentivecompensation for Messrs. Fusfield and Harrington were based on the net income of the operating units which theylead. For Mr. Fusfield, those operating units were the Company's Maritime Division, upon which most of hispotential short-term incentive compensation was based, and the Company's day spa in Coral Gables, Florida (the"Day Spa"), upon which a small portion of such potential compensation was based. For Mr. Harrington, theoperating units were those conducting operations of the Company relating to its Elemis Limited subsidiary.The committee believes that the net income performance target amount for the Maritime Divisionrepresented a challenging performance target because, among other things, it reflected a budgeted increase in growthfor that division, notwithstanding the fact that commission payments under agreements with cruise lines, thedivision's principal cost element, was scheduled to increase for 2007.The committee believes that the amount of the Day Spa performance target was appropriate in light of thechallenges to achieving that target in light of the competition, increasing costs and other factors affecting thatbusiness. For 2007, the budgeted net income target for those operations was not achieved.Bowne ID # g12968-5.pdf 19 May 2, 2008 12:16:2915

Similarly, the net income performance target amount for Elemis Limited-related operations for 2007represented a challenging target to achieve because it reflected significant budgeted growth in those operations. For2007, the budgeted net income target for those operations was not achieved.The Compensation Committee believes that weighting this incentive compensation heavily towardsearnings per share closely aligns the interests of the named executives with those of the shareholders because thatperformance measure often can be a key factor in determining shareholder value. The committee believes that theuse of the net income performance measure with respect to operating unit performance also is appropriate inaligning the interest of the named executives with those of the shareholders, since net income is the key determinantof earnings per share.These considerations also are reflected in the fact that the performance targets with respect to the long-termincentive compensation for 2007, described below, are similar to those for the 2007 short-term incentivecompensation.Long-Term Incentive Compensation. Long-term incentive compensation awards are designed to reward thenamed executives and other Company officers and employees for achievement of Company goals, which ultimatelyresult in increased shareholder value. These awards are equity-based to align the long-term interests of executiveofficers (and other award recipients) with those of shareholders. These awards are made by the CompensationCommittee under the Equity Plan. Certain information with respect to the Equity Plan is set forth below under"2004 Equity Incentive Plan."Annual equity incentive awards are typically made in the fourth quarter at the time that base salaries for thenamed executives and other executive officers of the Company for the following year are determined.Until the January 2006 equity award (which substituted for the award that normally would have been madein the fourth quarter of 2005), these annual equity awards consisted of share options and, beginning with the awardmade for 2005, restricted shares. Those awards vest in equal installments over three years and increase in valueonly, and to the extent that, the market price of the Common Shares increases.The December 2006 (for 2007) long-term equity incentive awards consisted of two components. Theprincipal component of the award was performance shares, the vesting of which (over three years) is dependent onthe achievement of performance targets similar (but, excluding with respect to Mr. Fusfield, the operations of theDay Spa) to those described above under "Short-Term Incentive Compensation." Those shares constitutedapproximately 70% of the targeted number of shares that comprised these long-term equity awards. The remainingapproximately 30% of the long-term incentive compensation awards for 2007 consisted of restricted shares that vestin equal installments over three years without regard to performance targets.While the Compensation Committee believes that both of these forms of long-term incentive compensationalign the interests of the named executives with those of the shareholders, the variance in the amounts of these twoforms of equity compensation reflect the Compensation Committee's intention of tying a significant portion of thenamed executives' compensation directly to specified company and business unit performance. This intention of theCompensation Committee was also reflected in the equity incentive awards made in December 2007 (for 2008) tothe named executives, which consist of the same types of awards, and in the same relative percentage amounts asthose made for 2007. The non-Company-wide performance target for 2008 for each of Messrs. Fusfield andHarrington is the operating income of the operations of the respective Company business unit (but, excluding withrespect to Mr. Fusfield, the operations of the Day Spa) for which he is responsible (with certain adjustments in thecase of Mr. Harrington). The Compensation Committee believes that this performance measure is appropriatebecause it closely aligns the performance of the respective business unit with the day-to-day operational influence ofits leader.Other Equity AwardsThe Compensation Committee also awards long-term equity compensation in the form of restricted shares,which vest equally over three years, in connection with the recruitment and retention of executive officers of theCompany. In 2007, the committee awarded restricted shares to Mr. Fusfield upon his entering into a newBowne ID # g12968-5.pdf 20 May 2, 2008 12:16:2916

employment agreement with the Company. Equity awards also have been made to certain executive officers at thetimes they commenced employment with the Company.Applicability of Section 162(m)Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the "Code"), limits theannual corporate federal income tax deduction for compensation paid to the named executives to $1,000,000, unlessthe compensation qualifies as "performance based" and has been approved in advance by a vote of the Company'sshareholders. For 2007, the deductibility of the compensation of one of the named executives was subject to thislimitation on deductibility primarily because of certain grants of equity that are subject to this limitation. Thislimitation did not require the Company to pay U.S. federal income tax in 2007, however, because (i) a significantportion of the Company's income is not subject to U.S. income tax and, therefore, a significant portion of the namedexecutives' compensation is allocable to income not subject to U.S. income tax and (ii) there were sufficient netoperating losses available to the Company for that year to offset such loss of deductibility. The Company believesthat performance-based equity awards made under the Equity Plan, commencing with those made in December2007, will not be subject to the limitations under Section 162(m).Compensation Committee ReportThe Compensation Committee has reviewed and discussed the foregoing Compensation Discussion andAnalysis ("CD&A") with management and, based on such review and discussions, the Compensation Committeerecommended to the board that the CD&A be included in this Proxy Statement.Members of the Compensation CommitteeDavid S. Harris, ChairCynthia R. CohenSteven J. PrestonBowne ID # g12968-5.pdf 21 May 2, 2008 12:16:2917

since that discount price exceeded the cost to the Company of the products, there was no incremental cost to theCompany in connection with such purchases and, therefore, those transactions are not required to be reported inthis table.(4) For 2007, represents an automobile allowance of $20,000, contribution to a 401(k) plan account of $9,000,disability insurance premiums of $6,835, medical insurance premiums of $6,663, reimbursement of lifeinsurance premiums of $1,395, spa services for Mr. Fluxman and his immediate family at Company facilities inthe amount of $5,167 and payment of home business telephone and Internet line charges of $1,584. For 2006,represents an automobile allowance of $20,000, contribution to a 401(k) plan account of $8,400, disabilityinsurance premiums of $6,835, medical insurance premiums of $5,864, term life insurance premiums of $1,790,spa services for Mr. Fluxman and his immediate family at Company facilities in the amount of $2,807,reimbursement of home business telephone and Internet line charges of $1,205 and samples of Companyproducts in the amount of $127.(5) For 2007, represents an automobile allowance of $10,000, contribution to a 401(k) plan account of $9,000,disability insurance premiums of $5,304, medical insurance premiums of $6,663, reimbursement of lifeinsurance premiums of $707, spa services for Mr. Lazarus and his immediate family at Company facilities inthe amount of $513 and reimbursement of home Internet line charges of $297. For 2006, represents anautomobile allowance of $10,000, contribution to a 401(k) plan account of $8,400, disability insurancepremiums of $4,521, medical insurance premiums of $5,864, spa services for Mr. Lazarus and his immediatefamily at Company facilities in the amount of $269, reimbursement of home Internet line charges of $407 andsamples of Company products in the amount of $127.(6) For 2007, represents an automobile allowance of $10,000, contribution to a 401(k) plan account of $9,000,disability insurance premiums of $3,868, medical insurance premiums of $6,663, reimbursement of lifeinsurance premiums of $680 and spa services for Mr. Fusfield and his immediate family at Company facilitiesin the amount of $3,387. For 2006, represents an automobile allowance of $10,000, contribution to a 401(k)plan account of $8,400, disability insurance premiums of $3,308, medical insurance premiums of $5,864, spaservices for Mr. Fusfield and his immediate family at Company facilities in the amount of $1,785 and samplesof Company products in the amount of $127.(7) Through December 31, 2007, Mr. Boehm served as Senior Vice President and General Counsel of theCompany.(8) For 2007, represents an automobile allowance of $10,000, contribution to a 401(k) plan account of $9,000,disability insurance premiums of $2,647, medical insurance premiums of $3,166, payments of $8,869 in lieu ofmedical insurance payments for a portion of the year when medical insurance was not paid, reimbursement oflife insurance premiums of $2,802, a payment of $12,326 for unused vacation time, spa services for Mr. Boehmand his immediate family at Company facilities in the amount of $2,630, reimbursement of home Internet linecharges of $515 and samples of Company products in the amount of $35. For 2006, represents an automobileallowance of $10,000, contribution to a 401(k) plan account of $8,400, disability insurance premiums of $2,647,payments in lieu of medical insurance premiums of $15,205, a payment of $11,760 for unused vacation time,spa services for Mr. Boehm and his immediate family at Company facilities in the amount of $1,018,reimbursement of home Internet line charges of $536 and samples of Company products in the amount of $127.(9) Mr. Harrington's cash compensation was paid in British Pounds Sterling. All such amounts, as well as thevalues of non-cash items reported under "All Other Compensation," are presented in U.S. Dollars based on theaverage exchange rate for each of 2007 and 2006, as applicable.(10) For 2007, represents an automobile allowance of $21,619, contribution to a private pension arrangementmaintained by Mr. Harrington of $20,034, medical insurance premiums of $3,455, spa services forMr. Harrington and his immediate family at Company facilities in the amount of $995, reimbursement of homeInternet line charges of $360 and samples of Company products in the amount of $56. For 2006, represents anautomobile allowance of $23,515, contribution to a private pension arrangement maintained by Mr. Harringtonof $17,145, medical insurance premiums of $2,933, spa services for Mr. Harrington and his immediate family atCompany facilities in the amount of $171, reimbursement of home Internet line charges of $486 and samples ofCompany products in the amount of $127.Bowne ID # g12968-5.pdf 23 May 2, 2008 12:16:3019

Employment AgreementsThe Company has entered into employment agreements with four of the named executives, as describedbelow. Mr. Harrington and the Company are in discussions with respect to an employment agreement for him toreplace the employment agreement that previously expired. Mr. Harrington is currently being paid a salary at theannual rate of approximately $434,180 (based on the British Pounds Sterling to U.S. Dollar exchange rate on April10, 2008). For 2008, the Compensation Committee has approved a bonus formula for Mr. Harrington with the sameperformance measures (with different targets) as in effect for 2007.All of the named executives' agreements provide for, among other things: (i) the termination of theemployee by the Company upon the occurrence of specified events relating to the employee's conduct; (ii) anagreement from the employee not to compete with the Company, not to disclose certain confidential information ofthe Company and not to solicit employees of the Company to leave their employment with the Company; (iii) thecontinuation of compensation payments to a disabled named executive until such officer has been unable to performthe services required of him or her for specified periods of time; (iv) an automobile allowance; (v) payments to beused for the purchase of a disability insurance policy and term life insurance; (vi) payments upon death or disability;(vii) 401(k) plan payments; (viii) health insurance (or payments in lieu thereof); and (ix) payments in lieu of unusedvacation time (up to certain limits). The budgets containing targeted performance on which bonuses may be earnedunder the employment agreements are required to be approved for such purpose by the Compensation Committee.These bonuses are subject to reduction of up to 25% by the Compensation Committee in the event of certain failuresby a named executive to follow Company policy. For each of the named executives, the base salary under theseagreements, generally, has been increased by the Compensation Committee as of each first of January during theterms thereof.Under their employment agreements, the named executives are entitled to receive certain payments fromthe Company and the acceleration of certain equity awards in the event such a named executive's employment withthe Company terminates under various circumstances, including termination by a named executive after a change incontrol of the Company.Under the employment agreements for the named executives, a "change in control" is deemed to occur if (i)over a twelve (12) month period, a person or group of persons acquires shares of the Company representing thirtyfivepercent (35%) of the voting power of the Company or a majority of the members of the board is replaced bydirectors not endorsed by the members of the board before their appointment or (ii) a person or group of persons(other than a person or group of persons controlled, directly or indirectly, by shareholders of the Company) acquiresforty percent (40%) or more of the gross fair market value of the assets of the Company over a 12-week period.If the employment agreement of a named executive is not renewed on terms at least as favorable as in thatagreement, that named executive also would be entitled to certain payments. The types of terminations and theamounts payable for each are described below under "Potential Payments on Termination, Including After a Changein Control."The named executives and their immediate families also are entitled to receive certain complimentary spaservices at facilities of the Company and samples of, and discounts on, products of the Company.Leonard Fluxman. In March 2006, the Company entered into a five-year employment agreement withLeonard Fluxman, effective as of January 1, 2006. The agreement provides for a minimum annual base salary of$575,000 and, as amended effective January 2007, an annual bonus of 50% of Mr. Fluxman's then base salary uponthe attainment of 90% of the budgeted earnings per share of the Company for the year in question and additionalbonuses based on the Company's exceeding that 90% threshold, including exceeding the budgeted earnings per shareup to a maximum bonus equal to 200% of Mr. Fluxman's base salary.The agreement also provides for a grant, on the date thereof, of 30,000 restricted shares pursuant to theEquity Plan, which vest at the rate of one-third thereof on each of the first three anniversaries of the date of grant,and the granting to Mr. Fluxman, as part of the annual grant of equity to officers and certain other employees of theCompany, of not less than 21,000 options to purchase Common Shares (which vest at the rate of one-third thereof oneach of the first three anniversaries of the date of grant, subject to acceleration in certain events) and 26,000performance shares. The unvested portions of any of the performance shares or options granted to Mr. FluxmanBowne ID # g12968-5.pdf 24 May 2, 2008 12:16:3020

during the term of the agreement would be immediately forfeited in the event Mr. Fluxman's employment isterminated for cause or he voluntarily resigns his employment. Those options and performance shares would vestimmediately upon (i) Mr. Fluxman's death or disability, (ii) Mr. Fluxman's retirement, (iii) termination of Mr.Fluxman's employment without cause or for illness or (iv) Mr. Fluxman's termination of his employment for GoodReason (which includes a change in control), as defined in the employment agreement. The agreement also givesMr. Fluxman the right under certain circumstances to require the Company to purchase any shares of the Company'sSteiner Education Group, Inc. subsidiary ("SEG") held by Mr. Fluxman at the time of the termination of Mr.Fluxman's employment with the Company.The agreement provides that if Mr. Fluxman is required to pay, on or following a change in control, anyexcise tax pursuant to the Code, or any interest or penalties with respect to such excise tax, with respect to paymentshe receives from the Company (the "Payments"), the Company is required to pay to or on behalf of Mr. Fluxman anadditional payment (a "Gross-Up Payment") in an amount such that after payment by Mr. Fluxman of all taxesimposed on the Gross-Up Payment, Mr. Fluxman retains an amount of the Gross-Up Payment that will be equal tothe excise tax imposed upon the Payments.Stephen Lazarus. The Company entered into a five-year employment agreement, effective August 21,2006, with Stephen Lazarus, Executive Vice President and Chief Financial Officer of the Company. That agreementprovides for the payment of an annual base salary of not less than $280,000. In addition, under an amendment to theagreement effective January 1, 2007, Mr. Lazarus is entitled to receive a bonus of 25% of his then base salary uponthe attainment of 90% of the budgeted earnings per share of the Company for the year in question and additionalbonuses based on the Company's exceeding that 90% threshold, including exceeding the budgeted earnings per shareof the Company, up to a maximum bonus equal to 100% of base salary.The agreement also provides for a grant on the date thereof of 10,000 restricted shares pursuant to theEquity Plan, which vest equally on the first three anniversaries of the date of the grant (subject to acceleration incertain events), and the right to be granted equity awards, as part of the Company's annual grant of awards toofficers and other employees.Glenn Fusfield. In April 2007, the Company entered into a five-year employment agreement with GlennFusfield, Executive Vice President and Chief Operating Officer - Maritime of the Company, effective January 1,2007. Under his agreement, Mr. Fusfield is entitled to receive an annual base salary of not less than $301,000 and abonus comprised of three components. Under the first component, Mr. Fusfield is entitled to receive a bonus equalto 20% of his then base salary upon the attainment of 90% of the budgeted net income of the Company's MaritimeDivision for the year in question and additional bonuses based on that division's exceeding that 90% threshold,including its exceeding the budgeted net income. Under the second component, Mr. Fusfield is entitled to receive abonus of 3.75% of his then base salary upon the attainment of 90% of the budgeted earnings per share of theCompany for the year in question and additional bonuses based on the Company's exceeding that 90% threshold,including exceeding its budgeted earnings per share. Under the third component, Mr. Fusfield is entitled to receivean amount equal to 1.25% of his then base salary upon the attainment of 90% of the budgeted net income of the DaySpa for the year in question and additional bonuses based on Day Spa's exceeding that 90% threshold, includingexceeding its budgeted net income.The maximum bonus receivable under each of the three components is an amount equal to twice thethreshold amount indicated above for such component.The agreement also provides for a grant on the date thereof of 10,000 restricted shares pursuant to theEquity Plan, which vest equally on the first three anniversaries of the date of the grant (subject to acceleration incertain events), and the right to be granted equity awards, as part of the Company's annual grant of awards toofficers and other employees.Robert C. Boehm. The Company entered into a five-year employment agreement, effective January 1,2008, with Robert C. Boehm, Executive Vice President and General Counsel of the Company. That agreement,which replaced an agreement that expired by its terms on December 31, 2007, provides for the payment of an annualbase salary of not less than $331,100. In addition, Mr. Boehm is entitled to receive a bonus on the same terms asapplicable to the bonus payable to Mr. Lazarus. For 2007, the same bonus formula applied to Mr. Boehm under hisBowne ID # g12968-5.pdf 25 May 2, 2008 12:16:3021

prior agreement, as amended. Under the prior agreement, most of the benefits and restrictions described above asapplicable to the current employment agreements with the four named executives were applicable to Mr. Boehm.The agreement also provides for a grant on the date thereof of 10,000 restricted shares pursuant to theEquity Plan, which vest equally on the first three anniversaries of the date of the grant (subject to acceleration incertain events), and the right to be granted equity awards, as part of the Company's annual grant of awards toofficers and other employees.2004 Equity Incentive PlanUnder the Equity Plan, directors, officers and certain other employees of, and consultants to, the Companymay be granted a variety of long-term incentives, including non-qualified share options, incentive share options,restricted and unrestricted shares, share appreciation rights, exercise payment rights and performance share awards.The Equity Plan is administered by the Compensation Committee of the board of directors. Under the Equity Plan,the Compensation Committee determines, in its discretion, among other things, who will receive awards, when theawards will be granted, the number of shares or cash (no cash awards have been granted to date) involved in eachaward, the time or times when any options will become exercisable or restrictions on shares will lapse, anyperformance targets applicable to awards and, subject to certain conditions, the price and duration of options.Equity awards granted under the Equity Plan may vest in specified installments. The term of any optionmay not exceed ten years from the date of grant. Payment of the exercise price of options may be made by certifiedor bank cashier's check, by tender of Common Shares having a fair market value equal to the option exercise priceor by any other means acceptable to the Compensation Committee.The Equity Plan provides that in the event of a change in control of the Company, all share options grantedunder the Equity Plan will automatically become fully exercisable.In December 2007, an annual grant of restricted shares and/or, as the case may be, performance shares wasmade to the named executives and certain other employees of the Company. The restricted shares and performanceshares vest equally over a three-year period, but the performance shares vest only if certain specified Companyperformance targets are attained. Holders of those performance shares and restricted shares do not have voting,dividend or other rights of shareholders until the restrictions lapse with respect to those shares.The Non-Employee Directors, Ms. Warshaw and Mr. Warshaw, received annual grants of restricted sharesin 2007 under the Equity Plan.A total of 1,500,000 Common Shares have been reserved for issuance under the Equity Plan, although thatnumber is subject to adjustment for share dividends, share splits, recapitalizations and certain other events. Theexpiration date of the Equity Plan, after which awards may not be made thereunder, is June 16, 2014. Except as maybe required under any applicable regulatory rules, the board of directors may amend or discontinue the Equity Planwithout the consent of participants or the Company's shareholders, provided that no such action may adverselyaffect awards previously granted without each recipient's consent.Bowne ID # g12968-5.pdf 26 May 2, 2008 12:16:3022

Equity Compensation Plan InformationThe following information is as of December 31, 2007:Number of Securities tobe Issued UponExercise of OutstandingOptions, Warrants andRights(a)Weighted-AverageExercise Price ofOutstandingOptions, Warrantsand Rights(b)Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plans(Excluding SecuritiesReflected inColumn (a))(c)Equity Compensation Plans Approvedby Security Holders (1)............................. 992,021 $31.90 1,569,749Equity Compensation Plans Not Approvedby Security Holders (2)............................. 11,000 98.00 89,000Total.............................................................. 1,003,021 $32.63 1,658,749_____________(1) The number of securities to be issued upon exercise of outstanding options, warrants and rights includes sharesissued under the (i) 1996 Option Plan, (ii) Equity Plan and (iii) the Amended and Restated Non-EmployeeDirectors' Share Option Plan, which expired in June 2006 (other than with respect to awards made under thatplan that continue to be outstanding).(2) The securities represent options covering shares of the common stock of SEG (a subsidiary of the Companywholly-owned other than with respect to the shares underlying the options described below), issued under thatentity's 1999 Stock Option Plan (the "SEG Plan"). The only grant of awards under the SEG Plan was a grant, atthe time of adoption of the plan, of options to five senior officers of the Company (two of those officers havesince left the Company and their options have been cancelled). These options vested in equal annual amountsover three years, have terms of ten years and are forfeited upon certain terminations of employment of an optionholder with the Company. These options are exercisable upon the occurrence of certain events, including theoccurrence of a specified date (in 2009). No such events have yet occurred. The exercise price of the options isthe fair market value of the shares on the date of the grant. The Company has no intention of issuing any otherawards under the SEG Plan.Bowne ID # g12968-5.pdf 27 May 2, 2008 12:16:3023

2007 Grants of Plan-Based AwardsThe following table sets forth information concerning 2007 awards to the named executives of (i) cash incentivebonuses pursuant to their respective employment agreements and (ii) equity awards under the Equity Plan.GrantNameDateLeonard I.Fluxman ......... --12/4/200712/4/2007StephenLazarus .......... --12/4/200712/4/2007GlennFusfield .......... --4/25/200712/4/200712/4/2007Robert C.Boehm ........... --12/4/200712/4/2007Sean C.Harrington ...... --12/4/200712/4/2007_____________Estimated Future Payouts Under Non-EquityIncentive Plan Awards (1)Threshold($)$304,771----75,250----75,250------75,250----100,169(5)--Target($)$609,541----150,500----150,500------150,500----200,338(5)--Maximum($)$1,219,082----301,000----301,000------301,000----400,676(5)----Estimated Future Payouts Under EquityIncentive Plan Awards (2)Threshold(#)--29,193---9,391------9,391----9,391----9,391--Target(#)--29,193----9,391------9,391----9,391----9,391--Maximum(#)--43,790----14,087------14,087----14,087----14,087--All OtherShareAwards:NumberofShares ofStock orUnits (#)(3)----12,752----4,102--10,000--4,102----4,102----4,102Grant DateFair Valueof ShareAwards (4)--$1,210,926528,953--389,539170,151--488,900389,539170,151--389,539170,151--389,539170,151(1) The amounts reported in these columns represent the threshold, target and maximum amounts of cash bonusespayable to the named executives for 2007 under their respective employment agreements. The performancemeasures for the bonuses for the named executives other than Mr. Harrington are set forth, above, under"Employment Agreements." For 2007, Mr. Harrington was entitled to receive bonus payments under twoperformance measures. Under the first measure, Mr. Harrington was entitled to receive a bonus equal to 20% ofhis base salary upon the attainment of 90% of the net income from certain operations (the "Elemis-RelatedOperations") relating to the Company’s Elemis Limited subsidiary ("Elemis") and additional bonuses based onthat 90% threshold being exceeded, including exceeding the targeted net income from the Elemis-RelatedOperations. Under the second measure, Mr. Harrington was entitled to receive a bonus of five percent of hisbase salary upon the attainment of 90% of the budgeted earnings per share of the Company for 2007 andadditional bonuses based on the Company’s exceeding that 90% threshold, including exceeding its budgetedearnings per share. The actual cash bonus payment for 2007 for each named executive is reported in the "Non-Equity Incentive Plan Compensation" column of the "Summary Compensation Table," above.(2) The amounts reported under this heading with the grant date of December 4, 2007 represent performance sharesgranted as part of the annual grant of equity to executive officers and other officers and employees of theCompany (the "Annual Award"). This award vests in three equal installments on March 3, 2009, December 4,2009 and December 4, 2010, provided that the specified performance targets for 2008 are met. If 95% (for theSLL Target (as defined below)) or 90% (for the other performance measures), as the case may be with respectto a particular performance target, is met, the threshold award is earned and if the performance target isexceeded, the amount of shares awarded is increased, up to an amount equal to 150% of the target number ofshares. For Messrs. Fluxman, Lazarus and Boehm, the performance measure is the achievement of specifiedearnings per share of the Company (the "SLL Target"). For Mr. Fusfield, the performance measures include theachievement of the budgeted operating income of the Company’s Maritime Division (two-thirds of the targetBowne ID # g12968-5.pdf 28 May 2, 2008 12:16:3024

number of shares) and the achievement of the SLL Target (one-third of the target number of shares). For Mr.Harrington, the performance measures include the achievement of the budgeted operating income of Elemis(two-thirds of the target number of shares, as adjusted) and the achievement of the SLL Target (one-third of thetarget number of shares). The terms of this award provide (i) that vesting of the shares would be accelerated inthe event of the death or retirement of the named executive, termination of employment of the named executiveby the Company without cause, termination of employment by the named executive for "good reason" asprovided in the employment agreement for such named executive and a change in control of the Company and(ii) for forfeiture of the shares in the event of termination of employment, except as provided in clause (i).The holders of the performance shares and restricted shares reported in this table have no rights as shareholdersof the Company until the shares vest.(3) The amounts reported under this heading with the grant date of December 4, 2007 represent restricted sharesgranted as part of the Annual Award. The amounts reported under this column with the grant date of April 25,2007 represent restricted shares that were granted in connection with the new employment agreement enteredinto on that date between the Company and Mr. Fusfield. These restricted shares vest equally on the first threeanniversaries of the date of grant and have the same accelerated vesting and forfeiture provisions as theDecember 4, 2007 grant of performance shares described in note (2), above.(4) The amounts reported in this column represent the dollar amounts recognized by the Company as expenses forfinancial reporting purposes for 2007 in accordance with FAS 123R (without estimates of forfeiture) forperformance shares and restricted shares granted to the named executives in 2007. The methodologies andassumptions utilized in the valuation of these equity awards are set forth in Note 2(n) to the Steiner LeisureLimited and Subsidiaries Consolidated Financial Statements contained in the Company's Annual Report onForm 10-K for the year ended December 31, 2007.(5) Mr. Harrington's cash compensation is paid in British Pounds Sterling. These amounts are presented in U.S.Dollars based on the average exchange rate for 2007.Bowne ID # g12968-5.pdf 29 May 2, 2008 12:16:3125

Outstanding Equity Awards at Fiscal Year-End 2007Number ofsecuritiesunderlyingunexercisedoptions(#)ExercisableName(1)Leonard I. Fluxman ...... 4,11363,95717,00040,5007,000--Stephen Lazarus ........... ----Glenn Fusfield ............. ----Robert C. Boehm ......... 35,0009,13120,140----Sean C. Harrington ...... 3,3333,6661,834--_____________Option awardsNumber ofsecuritiesunderlyingunexercisedoptions(#)Unexercisable(1)--------14,000--7,666--7,666--------7,666------3,666--Optionexerciseprice($)30.5613.1014.1927.6737.63--37.63--37.63--12.3913.1014.1937.63--14.1927.6737.63--Optionexpirationdate3/11/200912/11/201212/11/201312/5/20141/30/2016--1/30/2016--1/30/2016--9/23/201212/11/201212/11/20131/30/2016--12/11/201312/5/20141/30/2016--Numberof sharesor units ofshares thathave notvested(#)----------40,581 (4)--13,286 (6)--16,620 (8)--------6,620 (10)------5,621 (11)Marketvalue ofshares orunits ofsharesthathave notvested($) (2)----------$1,792,057--586,710--733,939--------292,339------248,223Share awardsEquityincentiveplanawards:numberofunearnedshares,units orotherrightsthathave notvested(#) (3)----------73,412 (5)--25,393 (7)--25,393 (9)--------25,393 (7)------21,961 (12)Equityincentiveplanawards:market orpayoutvalue ofunearnedshares,units orotherrightsthathave notvested($) (2) (3)----------$3,241,874--1,121,355--1,121,355--------1,121,355------969,798(1) All options in this table vest in equal installments on the first three anniversaries of the date of grant (which is the dayprior to the date that is ten years before the expiration date for each option), subject to acceleration in the event of achange in control of the Company or the death of the holder, and have ten-year terms. In each case, the exercise price ofthe options is equal to the average of the high and low prices of a Common Share on the grant date.(2) The amounts in this column were determined by multiplying the number of Common Shares by $44.16, the closing priceof a Common Share on December 31, 2007.(3) The number of shares and the market value thereof reflected in these columns, respectively, are based on the number ofshares that may be awarded if the threshold performance targets are met.(4) Of these shares, 10,000 vested on March 24, 2008 and an additional 10,000 vest on March 24, 2009; 3,914 vest onDecember 5, 2008 and 3,915 vest on December 5, 2009; 4,251 vest on December 4, 2008, 4,250 vest on December 4,2009 and 4,251 vest on December 4, 2010.(5) Of these shares, 8,666 vested on January 31, 2008 and an additional 8,667 vest on January 31, 2009, as a result of the2006 performance target for the vesting of these shares having been achieved; 9,859 vested on March 5, 2008 and 9,859vest on each of December 5, 2008 and December 5, 2009, as a result of the 2007 performance target for these shareshaving been exceeded; and 9,731 vest on each of March 4, 2009, December 4, 2009 and December 4, 2010, if the 2008performance target for the vesting of these shares are achieved. The total of these amounts is greater than the amountreflected in the table because the latter reflects the amount of shares to be granted if the performance target in question isachieved, whereas the former reflects an amount in excess of the target amount of shares due to the performance targethaving been exceeded for 2007 (which excess amount was not yet determined or approved by the CompensationCommittee as of December 31, 2007, the date of the table).Bowne ID # g12968-5.pdf 30 May 2, 2008 12:16:3126

(6) Of these shares, 3,333 shares vest on each of August 21, 2008 and August 21, 2009, 1,259 shares vest on each ofDecember 5, 2008 and December 5, 2009 and 1,368 (rounded to the nearest whole number) vest on each of December 4,2008, December 4, 2009 and December 4, 2010.(7) Of these shares, 3,676 vested on January 31, 2008 and an additional 3,677 vest on January 31, 2009 as a result of the2006 performance target for the vesting of these shares having been achieved; 3,172 shares vested on March 5, 2008 and3,172 vest on each of December 5, 2008 and December 5, 2009, as a result of the 2007 performance targets for thevesting of these shares having been exceeded; and 3,131 (rounded to the nearest whole number) vest on each of March 4,2009, December 4, 2009 and December 4, 2010, if the 2008 performance targets for the vesting of these shares areachieved. The total of these amounts is greater than the amount reflected in the table because the latter reflects theamount of shares to be granted if the performance target in question is achieved, whereas the former reflects an amountin excess of the target amount of shares due to the performance target having been exceeded for 2007 (which excessamount was not yet determined or approved by the Compensation Committee as of December 31, 2007, the date of thetable).(8) Of these shares, 1,259 vest on each of December 5, 2008 and December 5, 2009; 3,334 (rounded to the nearest wholenumber) vested on April 25, 2008 and 3,334 vest on each of April 25, 2009 and April 25, 2010; and 1,368 (rounded tothe nearest whole number) vest on each of December 4, 2008, December 4, 2009 and December 4, 2010.(9) Of these shares, 3,676 vested on January 31, 2008 and an additional 3,677 vest on January 31, 2009 as a result of the2006 performance targets for the vesting of these shares having been achieved; 3,825 shares vested on March 5, 2008,3,824 vest on December 5, 2008 and 3,825 vest on December 5, 2009, as a result of the 2007 performance targets for thevesting of these shares having been exceeded; and 3,131 (rounded to the nearest whole number) vest on each of March 4,2009, December 4, 2009 and December 4, 2010, if the 2008 performance targets for the vesting of these shares areachieved. The total of these amounts is greater than the amount reflected in the table because the latter reflects theamount of shares to be granted if performance targets in question are achieved, whereas the former reflects an amount inexcess of the target amount of shares due to the performance targets having been exceeded for 2007 (which excessamounts were not yet determined or approved by the Compensation Committee as of December 31, 2007, the date of thetable).(10) Of these shares, 1,259 vest on each of December 5, 2008 and December 5, 2009 and 1,368 (rounded to the nearest wholenumber) vest on each of December 4, 2008, December 4, 2009 and December 4, 2010.(11) Of these shares, 759 vest on December 5, 2008 and 760 vest on December 8, 2009; and 1,368 (rounded to the nearestwhole number) vest on each of December 4, 2008, December 4, 2009 and December 4, 2010.(12) Of these shares, 3,676 vested on January 31, 2008 and an additional 3,677 vest on January 31, 2009 as a result of the2006 performance targets for the vesting of these shares having been achieved; 638 vested on March 5, 2008 and 638vest on each of December 5, 2008 and December 5, 2009 as a result of the 2007 performance targets for these shareshaving been only partially achieved; and 3,131 (rounded to the nearest whole number) vest on each of March 4, 2009,December 4, 2009 and December 4, 2010, if the 2008 performance targets for the vesting of these shares are achieved.The total of these amounts is lower than the amount reflected in the table because the latter reflects the amount of sharesto be granted if performance targets in question are achieved, whereas the former reflects an amount below the targetamount of shares due to a performance target not having been met for 2007 (which amount was not yet determined orapproved by the Compensation Committee as of December 31, 2007, the date of the table).Bowne ID # g12968-5.pdf 31 May 2, 2008 12:16:3127

2007 Option Exercises and Shares VestedNameNumber ofsharesacquired onexercise(#) (1)Option awardsValuerealized onexercise($) (2)Number ofsharesacquired onvesting(#) (3)Share awardsValuerealized onvesting($) (4)Leonard I. Fluxman ................................. 102,253 $1,533,768 26,082 $1,145,104Stephen Lazarus ....................................... 3,833 58,760 11,271 493,769Glenn Fusfield ......................................... 7,667 102,788 7,937 347,973Robert C. Boehm ..................................... 3,833 64,760 7,937 347,973Sean C. Harrington .................................. -- -- 6,604 291,406_____________(1) For each named executive, this number represents the total number of shares underlying options that wereexercised.(2) The amounts in this column represent the difference between (i) the aggregate market price of the underlyingshares on the date of exercise of the options (calculated by using the price of a Common Share on the NasdaqStock Market at the time of exercise of the options) and (ii) the aggregate exercise price for the exercisedoptions. The options were exercised using net share settlement (shares that otherwise would have been receivedupon the exercise of options were used to cover the exercise price and were withheld to pay income tax).(3) The amounts in this column represent the restricted shares and performance shares that vested for each namedexecutive in 2007. Upon vesting, where applicable, the restrictions associated with these shares lapsed. Theamounts in this column do not take into account shares surrendered to satisfy the named executives' taxwithholding obligations upon the vesting of restricted shares.(4) The amounts in this column were calculated by multiplying the number of shares that vested in 2007 for eachnamed executive by the closing price of a Common Share on the Nasdaq Stock Market on the date of vesting.The amounts in this column do not take into account amounts paid by the named executives by means ofsurrender of shares to satisfy tax obligations upon the vesting of restricted shares.Potential Payments on Termination, Including After a Change in ControlThe information below reflects the incremental compensation that may be received by the namedexecutives (or their beneficiaries, as applicable) under their employment agreements and under certain insurancepolicies, premiums for which are paid by the Company, upon the termination of employment: (i) by the Companywithout cause, (ii) by the individual for cause, (iii) after a change in control of the Company, (iv) upon a nonrenewalof the agreement after its expiration, (v) on death, (vi) in connection with a disability, and (vii) inconnection with an illness (each a "Termination Event").The information below assumes that the Termination Event occurred on December 31, 2007, the last day ofthe Company's last fiscal year. Among the amounts reflected below are those based on the price of the CommonShares. For this purpose, the value of the shares is the $44.16 closing price of a Common Share on the NasdaqStock Market on December 31, 2007, the last trading day of the year.The amounts set forth in the table below (i) do not include any unpaid accrued amounts of compensationthat would have been payable to the named executives as of December 31, 2007, whether or not a TerminationEvent had occurred and (ii) are payable in a lump sum, except as indicated in the notes to the table.Bowne ID # g12968-5.pdf 32 May 2, 2008 12:16:3128

CashPayment$ (1)ShareOptions$ (2)RestrictedShares$ (3)ExciseTaxGross-up$ (4)LifeInsuranceProceeds$ (5)DisabilityInsuranceProceeds$ (6)NameLeonard I. Fluxman (7)Termination without cause by Company ........... $ 3,807,107 $91,420 $5,033,931 -- -- -- $ 8,932,458Termination for cause by Employee .................. 3,724,744 -- 5,033,931 -- -- -- 8,758,675Change in Control (8) ......................................... 12,510,408 91,420 5,033,931 $5,334,907 -- -- 22,970,666Non-renewal of employment agreement (9) ...... 1,219,083 -- -- -- -- -- 1,219,083Death .................................................................. 1,225,746 91,420 5,033,931 -- $5,000,000 -- 11,351,097Disability ............................................................ 1,241,581 91,420 4,268,506 -- -- $2,760,000 8,361,507Illness .................................................................. 659,494 -- 4,268,506 -- -- -- 4,928,000Stephen LazarusTermination without cause by Company ........... 964,936 50,059 1,708,065 -- -- -- 2,723,060Termination for cause by Employee .................. 1,728,844 -- 1,708,065 -- -- -- 3,436,909Change in Control (8) ......................................... 1,728,844 50,059 1,708,065 -- -- -- 3,486,968Non-renewal of employment agreement (9) ...... 451,500 -- 1,708,065 -- -- -- 2,159,565Death .................................................................. 458,164 50,059 1,708,065 -- 900,000 -- 3,116,288Disability ............................................................ 458,164 -- 1,383,356 -- -- 3,375,000 5,216,520Illness .................................................................. 171,468 -- 1,383,356 -- -- -- 1,554,824Glenn FusfieldTermination without cause by Company ........... 962,063 50,059 1,855,294 -- -- -- 2,867,416Termination for cause by Employee .................. 1,924,126 -- 1,855,294 -- -- -- 3,779,420Change in Control (8) ......................................... 1,924,126 50,059 1,855,294 -- -- -- 3,829,479Non-renewal of employment agreement (9) ...... 451,500 -- 1,855,294 -- -- -- 2,306,794Death .................................................................. 458,164 50,059 1,855,294 -- 1,000,000 -- 3,363,517Disability ............................................................ 458,164 -- 1,855,294 -- -- 1,475,600 3,789,058Illness .................................................................. 170,031 -- -- -- -- -- 170,031Robert C. Boehm (10)Termination without cause by Company ........... 325,813 50,059 1,413,694 -- -- -- 1,789,566Termination for cause by Employee .................. -- -- 1,413,694 -- -- -- 2,525,819Change in Control (8) ......................................... 602,000 50,059 1,413,694 -- -- -- 2,065,753Non-renewal of employment agreement (9) ...... 301,000 -- -- -- -- -- 301,000Death .................................................................. 478,429 50,059 1,413,694 -- 1,000,000 -- 2,942,182Disability ............................................................ 177,429 -- -- -- -- 548,000 725,429Illness .................................................................. 177,429 -- -- -- -- -- 177,429_____________(1) Pursuant to the terms of their employment agreements with the Company, the named executives, other than Mr.Harrington, who did not have an employment agreement with the Company as of December 31, 2007, areentitled to the following cash payments upon the indicated Termination Events:Mr. Fluxman: (i) without cause by the Company: the aggregate of his then base salary, the cash incentive bonusthat would have been payable for the year in which the termination occurred (the "Payable Bonus"), the cost ofthe benefits to which he was then entitled as of the termination date (the "Benefits Amount"), and hisautomobile allowance, each for the longer of 30 months or the remainder of the term of the employmentagreement (the "Remaining Term") (payable upon the earlier to occur of Mr. Fluxman's death or the six-monthanniversary of the termination date); (ii) for cause by Mr. Fluxman: the aggregate of his then base salary for thelonger of 24 months and the Remaining Term, the Payable Bonus for the Remaining Term and the BenefitsAmount for the Remaining Term (payable upon the later of 60 days after the year in which the terminationoccurred and six months after the termination date); (iii) change in control: an amount equal to the greater of theamount payable for termination for cause by Mr. Fluxman and 2.99 times Mr. Fluxman's "Base Amount" withinthe meaning of Section 280G of the Code (the amount indicated in the table above assumes the latter is greater)(payable upon the later of 60 days after the year in which the termination occurred and six months after thetermination date); (iv) non-renewal of employment agreement: the aggregate of his then base salary and thePayable Bonus (payable upon the earlier to occur of Mr. Fluxman's death and six months after the terminationdate); (v) death: the aggregate of his then base salary, the Payable Bonus and the cost of health and dentalinsurance as then in effect for a period of one year (payable in bi-weekly installments for one year, commencingwithin 10 days after the date of death, except that the Payable Bonus payments begin 60 days after the date ofdeath); (vi) disability: the aggregate of his then base salary, the Payable Bonus and the Benefits Amount for oneyear (payable beginning 60 days after the termination date and payable bi-weekly for one year thereafter); and(vii) illness: the aggregate of the Payable Bonus and Benefits Amount (payable upon the later of 60 days afterthe end of the year in which such termination occurs and six months following such termination).Total$29Bowne ID # g12968-5.pdf 33 May 2, 2008 12:16:31

Mr. Lazarus: (i) without cause by the Company: an amount equal to twice the aggregate of his then base salary,the Payable Bonus, the Benefits Amount and his automobile allowance (payable upon the earlier to occur of Mr.Lazarus's death and the six-month anniversary of the termination date); (ii) for cause by Mr. Lazarus: theaggregate of his then base salary for the longer of 24 months and the Remaining Term, the Payable Bonus forthe Remaining Term and the Benefits Amount and his automobile allowance for the Remaining Term (payableupon the later of 60 days after the year in which termination occurred (the "60-Day Period") and six monthsafter the termination date); (iii) change in control: same as termination for cause by Mr. Lazarus; (iv) nonrenewalof employment agreement: the aggregate of his then base salary and the Payable Bonus (payable uponthe earlier of death and six months after termination); (v) death: the aggregate of his then base salary, thePayable Bonus and the cost of health and dental insurance as then in effect for a period of one year (payable tendays after the date of death, except that the Payable Bonus is payable in bi-monthly installments for one yearafter the date of death); (vi) disability: the aggregate of his then base salary, the Payable Bonus and the BenefitsAmount for one year (payable bi-monthly for one year beginning 60 days after the termination date); and (vii)illness: the aggregate of the Payable Bonus and Benefits Amount (payable upon the later of 60 days after theyear in which termination occurs and six months after the termination date).Mr. Fusfield (i) without cause by the Company: an amount equal to twice the aggregate of his then base salary,the Payable Bonus, the Benefits Amount and his automobile allowance (payable upon the earlier to occur of Mr.Fusfield's death and the six-month anniversary of the termination date); (ii) for cause by Mr. Fusfield: same astermination for cause by Mr. Lazarus; (iii) change in control: same as termination for cause by Mr. Lazarus; (iv)non-renewal of employment agreement: the aggregate of his then base salary and the Payable Bonus (payableupon the earlier of death and six months after termination); (v) death: the aggregate of his then base salary, thePayable Bonus and the cost of health and dental insurance as then in effect for a period of one year (payable tendays after the date of death, except that the Payable Bonus is payable in bi-monthly installments for one yearafter the date of death); (vi) disability (termination by the Company): the aggregate of his then base salary, thePayable Bonus and the Benefits Amount for one year (payable bi-monthly for one year beginning 60 days afterthe termination date); and (vii) disability (termination by Mr. Fusfield): the aggregate of the Payable Bonus andthe Benefits Amount for one year (payable upon the later of 60 days after the year in which termination occursand six months after the termination date).Mr. Boehm: (i) without cause by the Company: the aggregate of his then base salary for the longer of 12 monthsand the Remaining Term, an amount equal to the average of his cash bonuses for the three preceding years (the"Average Bonus") for each year in the Remaining Term and the cost of his health insurance provided by theCompany for a period of one year after termination (payable within ten days after the termination date); (ii) forcause by Mr. Boehm: the aggregate of his then base salary for the Remaining Term and the Average Bonus(payable within ten days after the termination date); (iii) change in control: the aggregate of (x) the greater ofhis then base salary for the Remaining Term and twice that base salary, and (y) the Average Bonus for theRemaining Term (payable within ten days after the date of notice of termination); (iv) non-renewal ofemployment agreement: his then base salary (payable within 15 days after the termination date); (v) death: theaggregate of his base salary and the Average Bonus (base salary payable within 60 days after the date of deathand the Average Bonus payable in bi-weekly installments for one year after the date of death); (vi) disability:the Payable Bonus (payable within the 60-Day Period); and (vii) illness: the Payable Bonus (payable within the60-Day Period).(2) These amounts represent the value of unvested options subject to accelerated vesting as a result of theTermination Event in question as of December 31, 2007, the assumed termination date. That value is derivedby multiplying the difference between the exercise price of the options and the closing price of a CommonShare on the Nasdaq Stock Market on December 31, 2007, the last trading day of the year, by the number ofoptions in question.(3) These amounts represent the value of unvested restricted shares and performance shares subject to acceleratedvesting as a result of the Termination Event in question as of December 31, 2007. That value is derived bymultiplying the number of accelerated shares by the closing price of a Common Share on the Nasdaq StockMarket on December 31, 2007.(4) Upon a change in control, the named executives may be subject to excise tax imposed under Section 4999 of theInternal Revenue Code with respect to payments received from the Company. Under Mr. Fluxman’s30Bowne ID # g12968-5.pdf 34 May 2, 2008 12:16:32

employment agreement, the Company has agreed to reimburse him for the excise tax, as well as any excise andincome taxes and any interest or penalties thereon payable as a result of the excise tax reimbursement. Theamounts in the table are based on an excise tax rate of 20% and a federal income tax rate of 35% and includeemployment taxes.(5) Represents proceeds of a term life insurance policy, the premiums for which are paid by the Company.(6) Represents, for each named executive, the total of the monthly proceeds payable through age 65 under adisability insurance policy for which the Company reimburses the named executive for premium payments.Amounts under this heading represent the total maximum benefit for each named executive, even where theCompany only pays a portion of such benefit.(7) In addition to the termination payments set forth in this table, Mr. Fluxman is entitled to certain payments inconnection with his ownership of options to purchase shares of SEG. The exercisability of those optionsaccelerates in the event of, among other things, a change in control of SEG. In addition, under certaincircumstances upon the termination of employment of Mr. Fluxman with the Company, Mr. Fluxman has theright to require the Company to purchase the shares of SEG held by Mr. Fluxman at the time of suchtermination. The value of such shares would be agreed upon between Mr. Fluxman and SEG based on certainspecified methodology. Because the shares of SEG are not (and were not as of December 31, 2007) publiclytraded, and otherwise there has been no formal valuation thereof, no valuation with respect to such optionacceleration or share purchase is set forth in this table.(8) The named executives are entitled to the cash payments described above in note (1) upon a change in control ofthe Company, but only if the named executive terminates his employment upon or after the change in control.The named executives have rights to accelerated vesting of equity awards in the event of a change in control ofthe Company without further action on their part. For share options, restricted shares (other than those grantedin 2004) and performance shares, acceleration occurs upon a change in control under the terms of the respectiveequity plans, grant agreements and/or, as the case may be, employment agreements.(9) These payments apply if the applicable agreement is not renewed on terms no less favorable than the existingagreement (for at least one year for Mr. Boehm). Payments upon non-renewal extend by one year the term ofthe post-employment non-competition obligation applicable to the named executive, other than in the case ofMr. Boehm's agreement.(10) These amounts are based on Mr. Boehm’s employment agreement with the Company that expired on December31, 2007. He entered into a new employment agreement with the Company effective January 1, 2008.Compensation Committee Interlocks and Insider ParticipationMessrs. Harris and Preston and Ms. Cohen served as members of the Compensation Committee throughout2007. None of the members of the Compensation Committee has ever been an employee of the Company and noneof them has had a relationship, other than service on the board of directors, requiring disclosure in this ProxyStatement under applicable SEC regulations. None of the executive officers of the Company has served on thecompensation committee of any other entity, any of whose directors or executive officers served either on theCompany's board of directors or on the Compensation Committee.Section 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires the directors and certain officers of the Company, and personswho own more than 10% of a registered class of the Company's equity securities to file reports of ownership andchanges of ownership with the SEC. Such persons are required to furnish the Company with copies of all Section16(a) reports they file.Based upon a review of such forms furnished to the Company and upon representations from certainpersons subject to the reporting requirements of Section 16(a), the Company is not aware of any person who did nottimely file reports required by Section 16(a) of the Exchange Act during 2007, except that Form 4 reports on behalfof the following individuals were not timely filed: Leonard I. Fluxman, one report with respect to one transaction;31Bowne ID # g12968-5.pdf 35 May 2, 2008 12:16:32

Glenn Fusfield, one report with respect to one transaction; and Clive Warshaw, one report with respect to onetransaction (indirect ownership – restricted share award to wife).CERTAIN TRANSACTIONSThe Audit Committee of the board of directors is responsible for review and approval of transactionsbetween the Company or its subsidiaries, and related parties. For this purpose, a "related party" is any officer,director, nominee for director, 5% shareholder or any employee (other than, for employees who are not directors orexecutive officers, where the amount of the transaction does not exceed $50,000 ("Other Employee Transactions"))of the Company and their immediate family members.The Audit Committee has adopted the above policy in writing. Pursuant to the Audit Committee'sdirection, the Company has also adopted a written policy setting forth procedures related to approval by seniormanagement of Other Employee Transactions.To the extent practicable, related party transactions are presented to the Audit Committee prior to theirconsummation. When reviewing and evaluating a related party transaction, the Audit Committee may consider,among other things, any effect a transaction may have upon a director's independence, whether the transactioninvolves terms and conditions that are no less favorable to the Company than those that could be obtained in atransaction between the Company and an unrelated third party and the nature of the related party's involvement inthe transaction. Management will notify the Audit Committee not less frequently than quarterly of new related partytransactions of which they are aware and any material changes to any previously approved, conditionally approvedor ratified related party transactions. The Company has adopted procedures to implement the foregoing policies.United Kingdom LeaseEffective June 24, 2000, Elemis entered into a 20-year lease with Harrow Weald Limited ("HWL"),whereby Elemis leases approximately 12,500 square feet of space in the London borough of Harrow used for theoperations of Elemis and the Company's United Kingdom training operations (the "Lease"). HWL is an entity ownedby the children of Clive E. Warshaw and Michèle Steiner Warshaw. The annual rent is subject to increase after thefifth, tenth and 15th years of the Lease term based on market conditions. In addition to other obligations of Elemisunder the Lease, rent payments totaled approximately $319,570 for 2007, based on the average British PoundsSterling to U.S. Dollar exchange rate in effect for that year. For the first five years of the Lease term, the rentreflected the agreement of HWL to reduce by 50% the annual rent. The second five-year term commenced in June2005. In addition to the end of the 50% rent reduction in June 2005, rent was adjusted at that time as required underthe terms of the Lease using the changes in a United Kingdom retail price index as the guideline, as approved by theAudit Committee. For 2008, the total rent will be approximately $315,230, based on the British Pounds Sterling toU.S. Dollar exchange rate in effect on April 10, 2008. The Company believes that the terms of the Lease are no lessfavorable to the Company than would have been obtained from an unrelated party.Compensation of Robert SchaverienRobert Schaverien serves as the Managing Director of Steiner Training Limited ("Training"), a UnitedKingdom subsidiary of the Company responsible for the training of shipboard employees. Mr. Schaverien is the sonin-lawof Clive E. Warshaw and Michèle Steiner Warshaw. For 2007, Mr. Schaverien received a salary ofapproximately $220,480, a bonus of approximately $152,966, an automobile allowance of approximately $22,691and the following other benefits and perquisites in the approximate aggregate amount of $4,156: payment of medicaland dental insurance premiums, reimbursement for home Internet line charges and samples of Company products.The dollar amounts for the perquisites and personal benefits described above for Mr. Schaverien and, whereapplicable, for Ms. Warshaw, below, were determined as described in note (3) to the "Summary CompensationTable," above, under "Executive Compensation."In December 2007, Mr. Schaverien was granted, as part of the annual equity award to executive officersand certain other employees of the Company, (i) 1,039 restricted shares that vest equally over three years, and whichhave a grant date fair value of $43,472 and (ii) 2,853 restricted shares that vest equally on each of March 3, 2009,December 4, 2009 and December 4, 2010 (provided that certain specified performance targets are met for 2008) andwhich have a grant date fair value of $119,370.32Bowne ID # g12968-5.pdf 36 May 2, 2008 12:16:32

The grant date fair value for each of these awards is the dollar amount recognized by the Company forfinancial statement reporting purposes for 2007 in accordance with FAS 123R (excluding forfeiture estimates). Themethodologies and assumptions utilized in the valuation of these equity awards are set forth in Note 2(n) to theConsolidated Financial Statements of Steiner Leisure Limited and its Subsidiaries, contained in the Company'sAnnual Report on Form 10-K for the year ended December 31, 2007.The Company and Mr. Schaverien have entered into an employment agreement that expires onDecember 31, 2009. That agreement provides for the payment of an annual base salary of not less thanapproximately $208,840 and a bonus comprised of three components for 2008, described below. Under the firstcomponent, Mr. Schaverien is entitled to receive a bonus of 15% of his base salary upon the attainment by Trainingof 90% of its budgeted operating income (subject to a specified adjustment) for the year in question, as approved bythe Compensation Committee, and additional bonuses based on Training’s exceeding that 90% threshold, up to amaximum bonus of 60% of base salary. For 2007, the above bonus component was based on the net income ofTraining. Under the second component, Mr. Schaverien is entitled to receive a bonus of five percent of his basesalary upon the attainment of 90% of the budgeted earnings per share of the Company, as approved by theCompensation Committee, for the year in question and additional bonuses based on the Company's exceeding that90% threshold, including exceeding its budgeted earnings per share. For 2007, the performance target was the sameas for 2008. Under the third component, Mr. Schaverien is entitled to receive an amount equal to five percent of hisbase salary upon the attainment of 90% of the budgeted net revenue of the Company's Maritime Division for theyear in question, as approved by the Compensation Committee, and additional bonuses based on that division’sexceeding that 90% threshold, including exceeding its budgeted net revenue. For 2007, the performance measurewas budgeted net income of the Maritime Division and the threshold amount of the bonus was 15% of base salary.The balance of Mr. Schaverien’s agreement has terms that are the same or similar to those of theemployment agreements in effect for the named executives. For 2008, Mr. Schaverien will receive a base salary ofapproximately $250,113 and other benefits similar to those described above.The compensation amounts for 2007 and for the employment agreement are based on the average BritishPounds Sterling to U.S. Dollar exchange rate for 2007. The compensation amount for 2008 and the minimum basesalary amount are based on the British Pounds Sterling to U.S. Dollar exchange rate on April 10, 2008. Because heis an executive officer of the Company, the compensation payable to Mr. Schaverien (including the targets uponwhich his bonus is based) is required to be approved by the Compensation Committee of the board of directors inaddition to the Audit Committee.Compensation of Patty FluxmanSince June 11, 2006, Patty Fluxman, the wife of Leonard I. Fluxman, President and Chief ExecutiveOfficer and a director of the Company, has served, pursuant to a two-year agreement with the Company approved bythe Audit Committee, as Senior Human Resources Specialist for the Company’s Steiner Management Services LLCsubsidiary. In that capacity, she receives an annual salary of $103,500 and is not entitled to any other compensationfrom the Company. Under her agreement with the Company, Ms. Fluxman coordinates the Company's equity awardprograms and otherwise provides assistance with respect to human resources matters as requested from time to timeby the Chief Financial Officer of the Company.Compensation of Michèle Steiner WarshawMichèle Steiner Warshaw serves as Executive Vice President of the Company's Cosmetics Limitedsubsidiary. That subsidiary owns rights with respect to a number of products sold by the Company. Ms. Warshaw isa member of the board of directors of the Company and is the wife of Clive E. Warshaw. Pursuant to a five-yearemployment agreement with the Company effective January 1, 2007, Ms. Warshaw is entitled to receive a basesalary of $80,000, a fee of $1,500 for each meeting of the board of directors and a committee thereof (where invitedby that committee) attended and an annual award under the Equity Plan of restricted shares of the Company in anamount determined by dividing $50,000 by the closing price of the Company’s common shares on the date of suchaward.This agreement also provides for a payment of one year’s base salary to Ms. Warshaw in the event sheterminates the agreement after a material breach thereof or reduction in compensation or benefits by the Company, a33Bowne ID # g12968-5.pdf 37 May 2, 2008 12:16:32

change in control of the Company (which term has the same meaning as in the employment agreements for thenamed executives who have employment agreements) or if the Company terminates the agreement without cause.Under this agreement, Ms. Warshaw also is subject to confidentiality and non-competition requirements similar tothose under the employment agreements with the named executives.For 2007, Ms. Warshaw received the aforesaid, as well as certain perquisites and compensation as adirector of the Company, as described in the "Director Compensation Table" under "Compensation of Directors,"above.34Bowne ID # g12968-5.pdf 38 May 2, 2008 12:16:32

PROPOSAL TWO - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORSThe Audit Committee has selected Ernst & Young as independent auditors of the Company for the fiscalyear ending December 31, 2008, subject to ratification by the shareholders. Ernst & Young was first engaged asindependent auditors for the Company in June 2002.Ernst & Young has provided certain non-audit services to the Company as described above, under "AuditCommittee Report."Although ratification by the shareholders of the appointment of independent auditors is not legally required,the board of directors believes that such action is desirable. If the appointment of Ernst & Young is not ratified, theAudit Committee may consider other independent auditors for the Company. However, due to the difficulty andexpense of making any change of auditors so long after the beginning of the current fiscal year, it is likely that theappointment would stand for 2008 unless the Audit Committee found other good reason for making a change.A representative of Ernst & Young will be present at the Annual Meeting and will have an opportunity tomake a statement if he or she desires to do so, and is expected to be available to respond to appropriate questionswhich the shareholders might have.Recommendation of the Board of DirectorsThe board of directors recommends that the shareholders vote "FOR" ratification of the selection ofErnst & Young as independent auditors of the Company for the 2008 fiscal year.OTHER MATTERSAs of the date of this Proxy Statement, the board of directors knows of no other matters that will be broughtbefore the Annual Meeting. In the event that any other business is properly presented at the Annual Meeting, it isintended that the persons named in the enclosed proxy will have authority to vote such proxy in accordance withtheir judgment on such business.EXPENSE OF SOLICITATION OF PROXIESThe cost of soliciting proxies will be borne by the Company. In addition to solicitation by mail,solicitations may also be made by telephone, telegram, facsimile, email or in person by directors, officers oremployees of the Company, who will receive no additional compensation for such services. In addition, theCompany will reimburse brokers and other shareholders of record for their expenses in forwarding proxy materialsto beneficial owners.SHAREHOLDER PROPOSALS FOR 2009 ANNUAL MEETINGProposals that shareholders wish to have considered for inclusion in the proxy statement for the 2009annual meeting of shareholders must be received by the Company on or before January 5, 2009. Shareholders arerequired to follow the procedure set forth in Rule 14a-8 of the Exchange Act. Proposals should be directed to RobertC. Boehm, Secretary, c/o Steiner Management Services, LLC, 770 South Dixie Highway, Suite 200, Coral Gables,Florida 33146.In order for a shareholder proposal to be submitted outside the processes of Rule 14a-8, the Company'sArticles of Association provide that for business to be properly brought before future annual meetings by ashareholder, in addition to other applicable requirements, the shareholder must be present at the meeting and writtennotice thereof must be received by the Company's Secretary not less than 75 days nor more than 120 days prior tothe anniversary date of the immediately preceding annual meeting (the "Anniversary Date"), or between February12, 2009 and March 29, 2009. If the annual meeting is to be held more than 30 days before or more than 60 daysafter the Anniversary Date, such notice must be received not later than the later of the 75th day prior to the annualmeeting or the tenth day following the day on which the public announcement of the annual meeting date is firstmade by the Company. The shareholder's notice to the Company must include (i) a brief description of the business35Bowne ID # g12968-5.pdf 39 May 2, 2008 12:16:32

to be brought before the meeting and the reasons therefor, (ii) the shareholder's name and address, as they appear inthe Company's books, (iii) the number of shares beneficially owned by the shareholder and the names of any otherbeneficial owners of such shares, (iv) any material interest of the shareholder in such business, and (v) the namesand addresses of other shareholders known by the shareholder to support such proposal and the numbers of sharesbeneficially owned by such other shareholders.DELIVERY OF DOCUMENTSThe SEC permits companies and intermediaries, such as a brokerage firm or a bank, to satisfy the deliveryrequirements for proxy statements and annual reports with respect to two or more security holders sharing the sameaddress by delivering only one proxy statement and annual report to that address. This process, which is commonlyreferred to as "householding," can effectively reduce the Company's printing and postage costs. Under householding,each shareholder would continue to receive a separate proxy card or vote instruction card. Certain shareholderswhose shares are held in "street name" (i.e., in the name of a brokerage firm or other intermediary) and who haveconsented to householding will receive only one set of annual meeting materials per household. If a shareholder'shousehold received a single set of annual meeting materials this year, that shareholder can request to receiveadditional copies of these materials by calling or writing the shareholder's brokerage firm, bank or other nominee.Shareholders that own their shares in street name, can request householding by calling or writing their brokeragefirm, bank or other nominee.ANNUAL REPORTA copy of the Company's 2007 Annual Report to Shareholders (which includes the Company's annualreport on Form 10-K, without exhibits, for fiscal year 2007) is being mailed with this Proxy Statement to eachshareholder entitled to vote at the Annual Meeting. Additional copies of the Annual Report or Form 10-K may beobtained, without charge, by any shareholder, by writing or calling Robert C. Boehm, Secretary, c/o SteinerManagement Services, LLC, 770 South Dixie Highway, Suite 200, Coral Gables, Florida 33146, telephone(305) 358-9002.By Order of the Board of DirectorsRobert C. BoehmSecretaryMay 5, 200836Bowne ID # g12968-5.pdf 40 May 2, 2008 12:16:32

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STEINER LEISURE LIMITED - Steiner Leisure Ltd.

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