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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14a--101)
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
K&G MEN'S CENTER, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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K&G MEN'S CENTER, INC.
1225 CHATTAHOOCHEE AVENUE, NW
ATLANTA, GEORGIA 30318
PHONE: (404) 351-7987
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 1998 Annual Meeting of Shareholders of K&G Men's Center, Inc. (the
"Company") will be held at 11:00 a.m. on Friday, June 5, 1998 at the Company's
headquarters at 1225 Chattahoochee Avenue, NW, Atlanta, Georgia 30318. The
meeting is called for the following purposes:
(1) To approve an amendment to the Company's Articles of Incorporation to
increase from 20,000,000 to 40,000,000 the number of shares of Common
Stock the Company is authorized to issue;
(2) To approve an amendment to the Company's 1995 Stock Option Plan for
Employees to increase the number of shares of the Company's common
stock reserved for grant under the plan from 843,750 to 1,100,000;
(3) To elect the Company's Class III directors to serve a three-year term
expiring in 2001 in accordance with the Company's Articles of
Incorporation;
(4) To ratify the appointment of Arthur Andersen LLP by the Board of
Directors of the Company as the independent public accountants of the
Company; and
(5) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 1, 1998 as
the record date for the purpose of determining the shareholders who are entitled
to notice of and to vote at the meeting and any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF EACH OF THE ABOVE PROPOSALS.
By Order of the Board of Directors,
/s/ John C. Dancu
John C. Dancu
Assistant Secretary
May 5, 1998
Atlanta, Georgia
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD SO THAT YOUR SHARES WILL BE
REPRESENTED AT THE MEETING.
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K&G MEN'S CENTER, INC.
1225 CHATTAHOOCHEE AVENUE, NW
ATLANTA, GEORGIA 30318
PHONE: (404) 351-7987
May 5, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of K&G Men's Center, Inc. (the "Company"), which will be held at 11:00 a.m. on
Friday, June 5, 1998 at the Company's headquarters at 1225 Chattahoochee Avenue,
NW, Atlanta, Georgia.
The principal business of the meeting will be (i) to approve an amendment
to the Company's Articles of Incorporation to increase from 20,000,000 to
40,000,000 the number of shares of Common Stock the Company is authorized to
issue, (ii) to approve an amendment to the Company's 1995 Stock Option Plan for
Employees to increase the number of shares of Common Stock reserved for grant
under the plan from 843,750 to 1,100,000, (iii) to elect the Company's Class III
directors to serve a three-year term expiring in 2001 in accordance with the
Company's Articles of Incorporation, and (iv) to ratify the appointment of
Arthur Andersen LLP by the Board of Directors of the Company as the independent
public accountants of the Company. During the meeting, we will also review the
results of the past fiscal year and report on significant aspects of our
operations during the first quarter of fiscal 1998.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the enclosed proxy card in the postage prepaid envelope
provided so that your shares will be voted at the meeting. If you decide to
attend the meeting, you may, of course, revoke your proxy and personally cast
your votes. On behalf of the entire Board of Directors, I urge you to vote FOR
approval of each of the proposals.
Sincerely yours,
/s/ Stephen H. Greenspan
Stephen H. Greenspan
Chairman, President and
Chief Executive Officer
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K&G MEN'S CENTER, INC.
1225 CHATTAHOOCHEE AVENUE, NW
ATLANTA, GEORGIA 30318
PHONE: (404) 351-7987
PROXY STATEMENT
This Proxy Statement is furnished by and on behalf of the Board of
Directors of K&G Men's Center, Inc. (the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company to be held 11:00 a.m. on Friday, June 5, 1998, at the Company's
headquarters at 1225 Chattahoochee Avenue, NW, Atlanta, Georgia, and at any
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the enclosed proxy card will be first mailed on or about May 5,
1998 to the Company's shareholders of record on the Record Date, as defined
below.
THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
SHARES ENTITLED TO VOTE
Proxies will be voted as specified by the shareholder or shareholders
granting the proxy. Unless contrary instructions are specified, if the enclosed
proxy card is executed and returned (and not revoked) prior to the Annual
Meeting, the shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company represented thereby will be voted (i) FOR the approval
of an amendment to the Company's Articles of Incorporation to increase from
20,000,000 to 40,000,000 the number of shares of Common Stock the Company is
authorized to issue, (ii) FOR the approval of an amendment to the Company's 1995
Stock Option Plan for Employees to increase the number of shares of Common Stock
reserved for grant under the plan from 843,750 to 1,100,000, (iii) FOR the
election of Class III directors of the nominees listed in this Proxy Statement,
and (iv) FOR the ratification of the appointment of Arthur Andersen LLP by the
Board of Directors as the independent public accountants of the Company. The
submission of a signed proxy will not affect a shareholder's right to attend and
to vote in person at the Annual Meeting. A shareholder who executes a proxy may
revoke it at any time before it is voted by filing with the Secretary of the
Company either a written revocation or an executed proxy bearing a later date or
by the attending and voting in person at the Annual Meeting.
Only holders of record of Common Stock as of the close of business on May
1, 1998 (the "Record Date") will be entitled to vote at the Annual Meeting. As
of the close of business on the Record Date, there were 10,142,420 shares of
Common Stock (the "Shares") outstanding. Holders of Shares authorized to vote
are entitled to cast one vote per Share on all matters. The holders of a
majority of the Shares entitled to be voted must be present or represented by
proxy to constitute a quorum. Shares as to which authority to vote is withheld
and abstentions will be counted in determining whether a quorum exists.
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Approval of the proposed amendment to the Company's Articles of
Incorporation requires the affirmative vote of a majority of the Shares
outstanding. Abstentions will be counted in determining the minimum number of
votes required for approval and will, therefore, have the effect of votes
against such proposal.
Under Georgia law, directors are elected by the affirmative vote, in person
or by proxy, of a plurality of the shares entitled to vote in the election at a
meeting at which a quorum is present. Only votes actually cast will be counted
for the purpose of determining whether a particular nominee received more votes
than the persons, if any, nominated for the same seat on the Board of Directors.
Approval of proposed amendment to the Company's 1995 Stock Option Plan for
Employees and the ratification of the appointment of Arthur Andersen LLP as the
independent public accountants of the Company, as well as any other matter that
may properly come before the Annual Meeting, requires the affirmative vote of a
majority of the Shares represented in person or by proxy at the Annual Meeting
and entitled to vote on such matter. Abstentions will be counted in determining
the minimum number of votes required for approval and will, therefore, have the
effect of votes against such proposal.
PROPOSAL I - AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
Article IV of the Company's Amended and Restated Articles of Incorporation
currently provides that the Company has the authority to issue twenty-two
million (22,000,000) shares, of which twenty million (20,000,000) shares, having
a par value of One Cent ($.01) per share, shall be designated as "Common Stock,"
and two million (2,000,000) shares, having a par value of One Cent ($.01) per
share, shall be designated as "Preferred Stock." This proposal presents a
proposed amendment to the Company's Amended and Restated Articles of
Incorporation that, if adopted, would increase the number of shares of Common
Stock the Company is authorized to issue from twenty million (20,000,000) to
forty million (40,000,000) shares. This amendment would not change the number
of authorized shares of Preferred Stock designated in Article IV of the
Company's Amended and Restated Articles of Incorporation. The proposed
amendment to Article IV, and the form of the resolution to be presented to the
shareholders, is set forth in Appendix A.
If this proposal is adopted, the Board of Directors will be vested with the
authority to provide for the issuance of the additional authorized shares
without further shareholder approval, except to the extent required by law or by
a security exchange or stock market on which the Common Stock is listed or
traded at that time. The Company's Common Stock is currently traded on the
Nasdaq National Market. Existing shareholders do not have preemptive rights to
subscribe for or to purchase additional shares of Common Stock. The additional
shares of Common Sock for which authorization is sought shall have the same
rights and privileges that are afforded to the existing Common Stock, as
outlined in Article IV, Section B, of the Company's Amended and Restated
Articles of Incorporation.
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As noted above, Article IV of the Company's Amended and Restated Articles
of Incorporation presently authorizes the issuance of 20,000,000 shares of
Common Stock. As of the Record Date, there were 10,142,420 shares of Common
Stock issued and outstanding. There are also 843,750 and 75,000 shares of
Common Stock, respectively, currently reserved for issuance under the 1995 Stock
Option Plan for Employees and under the K&G Men's Center, Inc. Director Stock
Option Plan. Accordingly, as of the Record Date, there were 8,938,830 shares of
Common Stock available for future issuance. The Company currently has a
proposal pending to increase the number of shares reserved under the 1995 Stock
Option Plan for Employees by an additional 256,250 shares, which would reduce
the number of shares available for future issuance from 8,938,830 to 8,682,580.
If both the proposal to amend the Company's Amended and Restated Articles of
Incorporation and the proposal to amend the 1995 Stock Option Plan for Employees
are adopted, the Company would have 28,682,580 shares of Common Stock available
for future issuance.
The Company's Board of Directors recommends the increase in the authorized
shares of Common Stock to provide the Company with additional shares and more
flexibility for future share issuances in connection with stock splits,
offerings of Common Stock, stock options, business combinations and other
potential business purposes. The Company does not have any current plans or
agreements for the future issuance of additional shares of Common Stock other
than a proposal to increase the number of shares reserved for future issuance
under the Company's 1995 Stock Option Plan for Employees from 843,750 to
1,100,000 shares.
Issuance of additional shares of Common Stock, depending upon their timing
and situation, may dilute earnings per share and decrease the book value per
share of outstanding shares. Such additional shares may also cause each
shareholder's percentage ownership in the Company to be proportionally reduced.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF PROPOSAL I ABOVE.
PROPOSAL II - AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION
PLAN FOR EMPLOYEES TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER
The Company's Board of Directors has approved and recommended for
submission to the Shareholders for their approval, a proposal to amend the
Company's 1995 Stock Option Plan for Employees (the "Plan"), to increase the
number of shares reserved for grant under the Plan from 843,750 to 1,100,000.
This proposed amendment is necessary to reserve a sufficient number of shares of
Common Stock under the Plan to allow the Company to grant future stock options
to key employees. The proposed amendment to the Plan, and the form of the
resolution to be presented to the Shareholders, is set forth in Appendix B.
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The purpose of the Plan is to provide additional compensation to key
employees of the Company, to secure and retain their services and to promote
their personal interest in the welfare of the Company by giving them an
opportunity to invest in the future success of the Company.
Since the inception of the Plan, the Compensation Committee of the
Company's Board of Directors has granted options to purchase 571,200 shares of
Common Stock under the Plan out of the 843,750 shares presently reserved for
issuance thereunder. Of these options granted, 18,660 shares have been
recaptured by the Plan from employees who have terminated employment with the
Company. As such, there are 291,210 shares of Common Stock available for future
grant under the terms and conditions of the Plan.
The following table presents certain information required by the Securities
and Exchange Commission (the "SEC") relating to the number of shares of non-
qualified stock options granted to certain employees and certain groups of
employees or directors under the Plan as of March 30, 1998. The Company has not
granted any incentive options under the Plan.
NON-QUALIFIED
NAME AND POSITION OPTIONS GRANTED
----------------- ---------------
Stephen H. Greenspan
Chairman, President and
Chief Executive Officer 37,500
John C. Dancu
Chief Operating Officer and
Chief Financial Officer 72,500
Martin Schwartz
Senior Vice President and
General Merchandising Manager 57,750
R. Scott Saban
Vice President of Management Information
Systems and Store Construction 47,625
All current executive officers as a group
(4 persons) 215,375
All current directors who are not
executive officers as a group
(4 persons) (1) --
All non-executive employees as a group
(61 persons) 302,434
- ------------
(1) Directors who are not executive officers are not eligible to participate in
the Plan. These four Directors are eligible to receive options to purchase
shares of the Company's Common Stock under the K&G Men's Center, Inc.
Director Stock Option Plan. As of March 30, 1998, 27,500 options to
purchase shares had been granted to the four non-officer Directors under
this plan.
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PLAN SUMMARY AND OTHER INFORMATION
Administration. The Board of Directors of the Company shall appoint two or
---------------
more of its members to a committee (the "Committee") that will administer the
Plan on behalf of the Company. As required under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), for compensation to be treated as
performance-based compensation, the Committee shall at all times be comprised
only of "outside directors" as that term is used in Section 162(m) of the Code
and the regulations thereunder.
Subject to the express provisions of the Plan, the Committee shall have
complete authority, in its discretion, to determine:
(a) the key employees of the Company and any subsidiaries to whom, the
times when and the prices at which it shall grant stock options;
(b) the type of options to be granted, i.e., either incentive stock
options as defined in Section 422 of the Code ("Incentive Stock Options" or
"ISOs") or nonqualified stock options to which Section 421(a) of the Code
does not apply ("Nonqualified Stock Options" or "NQOs") (collectively, the
"Options");
(c) the total number of Options to be granted to an optionee (an
"Optionee" or collectively the "Optionees");
(d) the time and duration of the period of exercisability of each
Option and the vesting period of each Option;
(e) the number and class of shares of common stock of the Company
subject to each Option; and
(f) the terms and conditions for exercise and payment of each Option.
The Committee also shall have complete and conclusive authority to (i)
interpret the Plan; (ii) prescribe, amend and rescind rules and regulations
relating to it; (iii) determine the terms and provisions of the stock option
agreements that the Company enters into with Optionees (the "Agreement" or
collectively the "Agreements"), the terms of which need not be identical; and
(iv) make all other determinations necessary or advisable for the administration
of the Plan.
Compliance with Code for Incentive Stock Options. All ISOs granted
------------------------------------------------
pursuant to this Plan are intended to comply with Section 422 of the Code, and
all provisions of the Plan and all ISOs granted thereunder shall be construed in
such a manner as to effectuate that intent.
Limitation on Incentive Stock Option Amounts. The Committee may not grant
--------------------------------------------
an ISO to the extent the aggregate fair market value, determined at the time the
Committee grants the ISO, of Shares with respect to which an Optionee may
exercise ISOs for the first time during any calendar year under this and any
other plan of the Company exceeds $100,000. If the limitation is exceeded, the
Incentive Stock Options that cause the limitation to be exceeded shall be
treated as Nonqualified Stock Options.
Exercise of Option by Optionee. An Optionee may exercise his or her Option
------------------------------
and purchase Shares upon exercise of such Option only by giving the Company a
notice in writing of
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his or her intent to exercise such Option with respect to a specific number of
Shares. The notice shall contain such representations and warranties regarding
compliance with applicable federal and state securities laws as the Committee
may reasonably request. The Optionee may pay the purchase price in full upon
the exercise of an Option and the Company shall not issue or deliver Shares
until full payment therefor has been made. Payment of the purchase price shall
be made in cash or, alternatively, if the applicable Agreement so allows, by
delivery to the Company of a number of shares of capital stock of the same class
as the Shares that are the subject of the Option having fair market value on the
date of exercise, as the Committee in its sole discretion determines, equal to
the purchase price or in combination with cash equal to the exercise price;
provided, however, that the delivery of shares of capital stock in payment of
all or a portion of the exercise price by the Optionee subject to Section 16(b)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), may
only be made with Shares the Optionee has owned for at least six months prior to
the date of the exercise of the Option.
Until the Company issues a stock certificate reflecting the Shares accruing
to the Optionee upon the exercise of the Option, the Optionee shall have no
rights as a shareholder with respect to the Shares issuable pursuant to the
Option. The Company shall make no adjustment to the Shares for any dividends or
distributions or other rights for which the record date is prior to the issuance
of that stock certificate, except as this Plan otherwise provides.
Withholding Taxes. Whenever the Company proposes or is required to issue
-----------------
Shares to an Optionee who is or was an employee of the Company or a Subsidiary,
or his legatee or legal representative under the Plan, pursuant to the exercise
of a NQO granted under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state or local withholding tax requirements before the delivery of any
certificate or certificates for such Shares. An Optionee may pay the
withholding tax (a) by making payment in cash, (b) if the applicable Agreement
provides, by electing to tender to the Company the smallest number of whole
shares of capital stock of the Company that, when multiplied by the fair market
value of the shares of Common Stock of the Company of that class determined as
of the Tax Date (as defined below), is sufficient to satisfy federal, state or
local, if any, withholding taxes arising from exercise of the NQO; provided,
however, that the delivery of shares of capital stock in payment of all or a
portion of the exercise price by an Optionee subject to Section 16(b) of the
Exchange Act may only be made with shares the Optionee has owned for at least
six months prior to the date of the exercise of the Option, or (c) by electing
to have the number of Shares the Optionee is to receive upon exercise reduced by
the number of Shares determined in (b) above (an Optionee's election to tender
or offset as described in (b) or (c) above is referred to as a "Withholding
Election"). An Optionee may make a Withholding Election only if the following
conditions are met:
(i) the Withholding Election must be made no later than the date on
which the amount of tax required to be withheld is determined (the "Tax
Date) by executing and delivering to the Company a properly completed
notice of withholding election in the form the Committee prescribes;
(ii) any Withholding Election is irrevocably given; and
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(iii) if a class of the Company's capital stock is registered under
Section 12 of the Exchange Act and if the Optionee is considered by the
Committee to be subject to Section 16(b) of the Exchange Act, the
Withholding Election is delivered to the Company sufficiently in advance of
the Tax Date as the Committee determines is necessary or appropriate to
satisfy the conditions of the exemption provided under Rule 16b-3
promulgated under the Exchange Act.
Assignability. Except as Section 5(e) or (g) of the Plan permits, neither
-------------
the Option nor any of the rights and privileges thereof accruing to an Optionee
shall be transferred, assigned, pledged or hypothecated in any way, whether by
operation of law or otherwise, and no such Option, right or privilege shall be
subject to execution, attachment or similar process.
The Right of the Company to Terminate Employment. No provision in the Plan
------------------------------------------------
or any Option shall confer upon any Optionee any right to continue in the
employment of the Company or any Subsidiary or interfere in any way with the
right of the Company or Subsidiary to terminate his employment at any time.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF PROPOSAL II ABOVE.
PROPOSAL III - ELECTION OF DIRECTORS
Pursuant to the Company's Amended and Restated Articles of Incorporation,
at the Annual Meeting, each of the two members of Class III of the Board of
Directors will be proposed for election for a three-year term expiring upon the
third following Annual Meeting of Shareholders and upon the election and
qualification of their respective successors. At each succeeding Annual Meeting
of Shareholders, successors to the class of directors whose term expires at that
Annual Meeting of Shareholders will be elected for a three-year term.
All Shares represented by properly executed proxies received in response to
this solicitation will be voted for the election of the directors as specified
therein by the shareholders. Unless otherwise specified in the proxy, it is the
intention of the persons named on the enclosed proxy card to vote FOR the
election of each of the nominees listed in this Proxy Statement to the Board of
Directors. Each nominee has consented to serve as a director of the Company if
elected. If at the time of the Annual Meeting, the nominee is unable or
declines to serve as a director, the discretionary authority provided in the
enclosed proxy card will be exercised to vote for a substitute candidate
designated by the Board of Directors. The Board of Directors has no reason to
believe that the nominee will be unable or will decline to serve as a director.
Shareholders may withhold their votes from the nominee by so indicating in the
space provided on the enclosed proxy card.
Set forth below is certain information furnished to the Company by each
director nominee. Each nominee currently serves as a director of the Company.
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NOMINEE FOR ELECTION - TERM EXPIRING 2001 - CLASS III
STEPHEN H. GREENSPAN
AGE: 57
STEPHEN H. GREENSPAN founded the Company in December 1989, and has served
as its Chairman of the Board, President and Chief Executive Officer since the
Company's incorporation. He has more than 30 years of experience in the apparel
industry. In addition to owning and operating K&G and other apparel retailers,
during his career as an entrepreneur in the apparel industry, Mr. Greenspan has
owned and operated companies that liquidated the remaining merchandise of
failing retail businesses, and he has also served as a manufacturer's
representative for various apparel lines.
W. PAUL RUBEN
AGE: 57
W. PAUL RUBEN has been a Director and Secretary of the Company since its
incorporation in June 1990. Mr. Ruben is primarily a private investor.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION AS A DIRECTOR OF EACH OF THE NOMINEES NAMED ABOVE.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
JOHN C. DANCU
AGE: 38
JOHN C. DANCU has served as Chief Financial Officer of the Company since
March 1995. Effective March 1997, he became the Company's Chief Operating
Officer and a Director of the Company. Prior to joining the Company, from May
1986 to March 1995, Mr. Dancu was an investment banker in the corporate finance
department of The Robinson-Humphrey Company, Inc., ultimately serving as a First
Vice President. In this capacity, Mr. Dancu was involved in numerous public and
private financings and merger and acquisition transactions involving companies
in the retail industry.
JAMES W. INGLIS
AGE: 54
JAMES W. INGLIS has been a director of the Company since March 1997. Mr.
Inglis is currently an independent business consultant. From 1996 to 1998, Mr.
Inglis served as the Chief Operating Officer, Senior Vice Present and Director
of The Maxim Group, a publicly-held retailer of floor coverings. From 1983 to
1996, Mr. Inglis served in various capacities with The Home Depot, Inc.,
including most recently as its Executive Vice President of Strategic Development
and as a member of its board of directors.
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CAMPBELL B. LANIER, III
AGE: 47
CAMPBELL B. LANIER, III has served as a Director of the Company since May
1995. Mr. Lanier serves as Chairman of the Board and Chief Executive Officer of
ITC Holding Company, Inc. ("ITC Holding") and has served as a director of ITC
Holding (or its predecessor companies) since the company's inception in 1985.
In addition, Mr. Lanier is an officer and director of several ITC Holding
subsidiaries. Mr. Lanier also is a director of Innotrac Corporation, which
provides customized, technology-based marketing support services; Chairman of
the Board and a director of ITCDeltaCom, Inc., which provides retail and
wholesale telecommunications services; a director of KNOLOGY Holdings, Inc., a
broadband communications services company; a director of MindSpring Enterprises,
Inc., an Internet access provider; a director of National Vision Associates,
Ltd., a full service optical retailer; and a director of Powertel, Inc., a
personal communications services company. Mr. Lanier also is a special limited
partner in the South Atlantic Venture Fund II, Limited Partnership and South
Atlantic Venture Fund III, Limited Partnership and he is a Managing Director of
South Atlantic Private Equity Fund IV, Limited Partnership.
DONALD W. BURTON
AGE: 54
DONALD W. BURTON has been a director of the Company since February, 1997.
Since 1981, Mr. Burton has served as Chairman and Managing General Partner of
South Atlantic Venture Funds. Mr. Burton has been the general partner of The
Burton Partnership, Limited Partnership since January 1979. Mr. Burton serves
on the Board of Directors of ITCDeltaCom, Inc., KNOLOGY Holdings, Inc.,
Powertel, Inc.(each of which is described above), MTL Inc., a tank truck carrier
company, The Heritage Group of Mutual Funds and several private companies. Mr.
Burton also serves as a director of the National Venture Capital Association.
Prior to founding the South Atlantic Venture Funds, Mr. Burton was a General
Partner of Fidelity Ventures, Limited, Boston, Massachusetts. See "-Beneficial
Ownership of Common Stock."
The Company's Board of Directors held six meetings during the fiscal year
ended February 1, 1998 ("fiscal 1997"). In contemplation of the Company's
initial public offering, which was completed in January 1996, the Board of
Directors formed an Audit Committee and a Compensation Committee. The Board has
not established a Nominating Committee. No director attended less than 75% of
the aggregate number of meetings of the Board and the committees of the Board on
which he served that were held during his term as a director of the Company.
The Audit Committee of the Board of Directors is responsible for reviewing
and making recommendations regarding the Company's employment of independent
auditors, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. It presently consists of
Messrs. Lanier and Burton, with Mr. Burton serving as Chairman. The Audit
Committee met on April 23, 1997 to discuss the results of the Company's fiscal
1996 audit. The Audit Committee also met on February 10, 1998 to discuss the
progress of the Company's fiscal 1997 audit. It presently intended that Messrs.
Lanier and Burton will continue to serve on the Audit Committee after the Annual
Meeting.
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<PAGE>
The Compensation Committee of the Board is responsible for making
determinations regarding compensation arrangements for executive officers and
other members of management of the Company, including approving the annual
incentive compensation plans of the Company and the Company's awards to
executive officers under each incentive plan. It consists of Messrs. Lanier and
Inglis, with Mr. Lanier serving as Chairman. The Compensation Committee met
four times during fiscal 1997 to discuss various compensation issues, including
compensation payable to the Company's executive management for fiscal 1997 and
the issuance of Stock Options under the Plan. It is presently intended that
Messrs. Lanier and Inglis will continue to serve on the Compensation Committee
after the Annual Meeting.
The Company's Board of Directors is comprised of six members. The Company
currently does not pay director's fees, although it does reimburse directors for
expenses incurred in connection with attendance at meetings of the Board of
Directors or committees thereof. The Company has implemented a Director Stock
Option Plan which provides for automatic grants of options to purchase Common
Stock to be made periodically to non-management directors.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the Board
of Directors and presently include Messrs. Greenspan, Dancu, Martin Schwartz and
R. Scott Saban. Set forth below is certain information furnished by each of
Messrs. Schwartz and Saban. For additional information concerning Messrs. Dancu
and Greenspan, see "Additional Information Concerning the Board of Directors"
and "Nominees for Election," respectively.
MARTIN SCHWARTZ
AGE: 56
MARTIN SCHWARTZ has served as K&G's General Merchandising Manager since he
joined the Company in February 1991. Effective January 1996, he assumed the
additional title of Senior Vice President. Prior to joining the Company, from
October 1986 to January 1991, Mr. Schwartz served as Senior Vice President,
General Merchandising Manager - Merchandising and Marketing for a division of
Woolworth & Co., and from May 1984 to September 1986, he served as Vice
President and General Merchandise Manager for the menswear and children's
departments of Montgomery Ward. Mr. Schwartz has over 30 years of experience in
the retail industry, and has also served in various merchandising capacities
with Dayton Hudson, Macy's, Federated and Rich's.
R. SCOTT SABAN
AGE 32
R. SCOTT SABAN served as the Vice President of Operations and Management
Information Systems of the Company from January 1995 to April 1998. Effective
April 1998, Mr. Saban assumed the title and responsibilities of Vice President
of Management Information Systems and Store Construction. Prior to January 1995,
Mr. Saban served as the Company's Management Information Systems Director and as
an Assistant Store Manager. Mr. Saban is the son-in-law of Mr. Greenspan.
10
<PAGE>
EMPLOYMENT AGREEMENTS
In May 1995, the Company entered into a five-year employment agreement with
each of Messrs. Greenspan and Schwartz. Under his agreement, the Company agreed
to employ Mr. Greenspan as its Chairman of the Board and the President at a
salary of $120,000 per year plus such other benefits as are made available to
other senior executives of the Company. The agreement provides that if Mr.
Greenspan is terminated by K&G other than for "cause," as defined in the
agreement, he is entitled to severance compensation equal to 100% of his then-
current annual salary. The agreement contains provisions that purport to
restrict Mr. Greenspan's ability to compete with the Company or solicit its
employees for a specified period following the termination of his employment.
Mr. Schwartz' employment agreement is similar in form except that it (i)
provides for Mr. Schwartz to be employed as the Company's General Merchandising
Manger at a salary of $114,000 per year plus such other benefits as are made
available to other senior executives of the Company, and (ii) entitles Mr.
Schwartz to severance compensation equal to 200% of his then-current annual
salary in the event of termination of his employment other than for "cause."
In March 1995, the Company entered into a two-year employment agreement
with Mr. Dancu under which he is employed as K&G's Chief Financial Officer.
Effective March 1997, Mr. Dancu assumed the additional duties of Chief Operating
Officer and his salary was set at $150,000 per year plus such other benefits as
are made available to other senior executives of the Company. Mr. Dancu's
employment agreement, pursuant to its terms was automatically extended for a
year in March 1997 and March 1998, and his salary was set at $165,000 per year
as of April 1, 1998. The agreement provides that if Mr. Dancu is terminated by
K&G other than for "cause," he is entitled to 50% of his then-current annual
salary plus amounts accrued to date to Mr. Dancu under any bonus or incentive
compensation programs then in effect. The agreement contains provisions that
purport to restrict Mr. Dancu's ability to compete with the Company or solicit
its employees for a specified period following the termination of his
employment. In connection with the execution of Mr. Dancu's employment
agreement, each of the Company's then-existing shareholders granted Mr. Dancu an
option to purchase a number of shares of Common Stock equal to 4.5% of the
respective stock holdings of each such shareholder. These options, which relate
to an aggregate of 354,373 shares and exercisable at $2.54 per share, vested
upon consummation of the Company's initial public offering in January 1996. As
of March 30, 1998, 254,373 of these options to purchase shares remained
outstanding and were unexercised.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own beneficially more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership of
such stock with the SEC and the National Association of Securities Dealers, Inc.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all such forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the company and written representations from such persons
that no other
11
<PAGE>
reports were required, its directors, executive officers and greater then 10%
shareholders complied during fiscal 1997 with all applicable Section 16(a)
filing requirements.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information concerning (i) those persons
known by the Company to own beneficially more then 5% of the Company's
outstanding Common Stock, (ii) the directors and executive officers of the
Company and (iii) the directors and executive officers of the Company as a
group. Except as otherwise indicated in the footnotes below, such information
is provided as of March 30, 1998. According to rules adopted by the SEC, a
person is the "beneficial owner" of securities if he or she has or shares the
power to vote them or to direct their investment or has the right to acquire
beneficial ownership of such securities within 60 days through the exercise of
an option, warrant or right, the conversion of a security or otherwise. Except
as otherwise noted, the indicated owners have sole voting and investment power
with respect to shares beneficially owned. An asterisk in the percent of class
column indicates beneficial ownership of less than 1% of the outstanding Common
Stock.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Beneficial
Class Name of Beneficial Owner Ownership Percent of Class
-------- ------------------------ -------------------- ----------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS
Common Stock Stephen H. Greenspan(1)........................ 1,682,362 16.6%
Common Stock W. Paul Ruben(2)............................... 897,005 8.8%
Common Stock John C. Dancu(3)............................... 277,893 2.7%
Common Stock Martin Schwartz................................ 349,311 3.4%
Common Stock R. Scott Saban................................. 899 *
Common Stock James W. Inglis................................ 11,400 *
Common Stock Campbell B. Lanier, III(4)..................... 98,655 *
Common Stock Donald W. Burton(5)............................ 997,362 9.8%
Common Stock All executive officers and directors as a
group (8 persons)............................ 4,060,514 40.0%
OTHER SHAREHOLDERS
Common Stock Northwestern Mutual Life Insurance Company..... 851,100 8.4%
</TABLE>
- ------------
(1) Include 984,375 shares owned of record by a partnership established for Mr.
Greenspan's family and 24,000 shares held in a foundation. Mr. Greenspan's
business address is that of the Company.
(2) Includes 763,590 shares owned of record by a partnership established for Mr.
Ruben's family. Mr. Ruben's business address is that of the Company.
(3) Includes 23,520 shares owned directly by Mr. Dancu and 254,373 shares
subject to options held by him to purchase outstanding shares of Common
Stock. Mr. Dancu's options were granted to him prior to the Company's
initial public offering by the Company's shareholders at that time.
Accordingly, Mr. Dancu's share holdings relate to shares held by various
shareholders, including certain of the shareholders identified herein.
(4) All of the indicated shares are owned of record by ITC Holding Company, with
which Mr. Lanier is affiliated. The business address of ITC Holding Company
("ITC") is 1239 OG Skinner Drive, P.O. Box 510, West Point, Georgia 31833.
(5) Includes 949,737 shares owned of Record by South Atlantic Venture Fund III,
Limited Partnership of which Mr. Burton is the Managing General Partner, and
47,625 owned of record by The Burton Partnership, Limited Partnership, of
which Mr. Burton is the General Partner.
12
<PAGE>
EXECUTIVE COMPENSATION
Pursuant to SEC rules for Proxy Statement disclosure of executive
compensation, the Compensation Committee of the Board of Directors of the
Company has prepared the following Report on Executive Compensation. The
Committee intends that his report clearly describe the current executive
compensation program of the Company, including the underlying philosophy of the
program and the specific performance criteria on which executive compensation is
based. This report also discusses in detail the compensation paid to the
Company's Chief Executive Officer, Mr. Stephen H. Greenspan, during fiscal 1997.
REPORT ON EXECUTIVE COMPENSATION
Until the establishment of the Compensation Committee in November 1995, the
Board of Directors made decisions involving executive compensation based
primarily upon the recommendations of the Chairman of the Board, President and
Chief Executive Officer, Mr. Stephen H. Greenspan. Although management
continues to make initial recommendations concerning adjustments to executive
compensation, upon the establishment of the Compensation Committee, that
Committee became primarily responsible for establishing salaries, bonuses and
other compensation for the Company's executive officers for fiscal 1995 and
thereafter, as well as administering the 1995 Stock Option Plan for Employees
(the "Plan"). Each member of the Compensation Committee is a non-employee
director.
Compensation Policy. The Company's executive compensation policy is
designed to provide levels of compensation that integrate compensation with the
Company's annual and long-term performance goals and reward above-average
corporate performance, thereby allowing the Company to attract and retain
qualified executives. Specifically, the Company's executive compensation policy
is intended to:
. Provide compensation levels that are consistent with the Company's
business plan, financial objectives and operating performance;
. Reward performance that facilitates the achievement of the Company's
business plan goals;
. Motivate executive to achieve strategic operating objectives; and
. Align the interest of executives with those of shareholders and the
long-term interests of the Company by providing long-term incentive
compensation in the form of stock options.
In light of the Company's compensation policy, the components of its
executive compensation program for fiscal 1997 were base salaries, cash bonuses
and stock options.
Base Salary. Each executive officer's base salary (including the Chief
Executive Officer's base salary) is based upon a number of factors, including
the responsibilities borne by the executive officer and his or her length of
service to the Company. Each executive officer's base salary is reviewed
annually and occasionally adjusted to account for the Company's financial
13
<PAGE>
performance, any change in the executive officer's responsibilities and the
executive officer's overall performance. Factors considered in evaluating
performance include financial results such as increases in sales, net income
before taxes and earnings per share, as well as non-financial measures such as
improvements in service and relationships with suppliers and employees, and
leadership and management development. These non-financial measures are subject
in nature. No particular weight is given by the Compensation Committee to any
particular factor.
Cash Bonuses. Each executive officer, including the Chief Executive
Officer, is eligible to receive a discretionary annual cash bonus. In
determining the discretionary bonus payable to any particular executive officer,
the executive officer's performance during the preceding fiscal year and the
aggregate cash compensation (salary plus bonus) to be received by such officer
if the Company achieves its projected financial performance is evaluated, as
well as such other factors as are deemed relevant in calculating the officer's
bonus. Such other factors generally include the officer's level of
responsibility and length of service to the Company. No weight is given by the
Compensation Committee to any particular factor.
Stock Options. In November 1995, the Company adopted the Plan under which
executive officers, including the Chief Executive Officer, are eligible to
receive stock options. In general, stock option awards are granted as warranted
by the Company's growth and profitability.
Under the Plan, all stock options granted to date have been granted at
exercise prices no less than the fair market value of the Company's Common Stock
on the date of grant, although that is not a requirement of the Plan. All
options granted to date to employees become exercisable in varying increments
over a four-year period. The Compensation Committee believes that these
features serve to align the interests of the executives with those of
shareholders and the long-term interests of the Company.
In March 1997, each of the named executive officers of the Company received
a grant of options to purchase 37,500 shares of Common Stock. These options
become exercisable in increments over a four-year period. In the future, the
amount of each executive officer's grant of stock options will be based upon an
evaluation of such executive officer's responsibilities and performance, the
desirability of long-term service from the particular executive officer, the
aggregate amount of stock or stock options previously held by such executive
officer and the Company's overall financial performance. While the Compensation
Committee has not established a target level of stock ownership by the Company's
executive officers, it does encourage such ownership and intends to gradually
increase the ownership of the Company's Common Stock by executive officers and
other key employees through grants of options to purchase such stock.
Compensation of Chief Executive Officer. As stated above, until the
establishment of the Compensation Committee in November 1995, the Board of
Directors made decisions involving executive compensation based primarily upon
the recommendations of the Chairman of the Board, President and Chief Executive
Officer, Mr. Stephen H. Greenspan.
14
<PAGE>
Mr. Greenspan's compensation for fiscal 1997 consisted of cash compensation
in the form of his salary and a grant of stock options to purchase 37,500 shares
of the Company's Common Stock. These options become exercisable in increments
over a four-year period.
Limitations on Deductibility of Compensation. Under the 1993 Omnibus
Budget Reconciliation Act, a portion of annual compensation payable after 1993
to any of the Company's five highest paid executive officers would not be
deductible by the Company for federal income tax purposes to the extent such
officer's overall compensation exceeds $1,000,000. Qualifying performance-based
incentive compensation, however, would be both deductible and excluded for
purposes of calculating the $1,000,000 base. Although the Compensation
Committee does not presently intend to award compensation in excess of the
$1,000,000 cap, it will address this issue when formulating compensation
arrangements for the Company's executive officers and will seek, where possible,
to maintain the deductibility of any such payments.
CAMPBELL B. LANIER, III
JAMES W. INGLIS
The Report on Executive Compensation of the Compensation Committee of the
Board of Directors shall not be deemed to be incorporated by reference as a
result of any general incorporation by reference of this Proxy Statement or any
part hereof in the Company's Annual Report to Shareholders or its Report on
Form 10-K.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Lanier and Burton. During fiscal 1997, the Compensation Committee did not
include any member of the Board of Directors who at that time served as an
officer or employee of the Company, nor did any executive officer of the Company
serve as a member of the Board of Directors of any entity that had executive
officers who served on the Company's Board of Directors during that year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the Company's initial public offering in January 1996, the Company
was operated as a privately-held business and as such entered into various
transactions in the ordinary course of business with certain entities affiliated
with Messrs. Greenspan, Ruben and Richard M. Vehon, Sr. Mr. Greenspan is the
Chairman of the Board, President and Chief Executive Officer of the Company, and
also its principal shareholder. Mr. Ruben is a director and Mr. Vehon was
formerly a director of the Company, and both of Messrs. Ruben and Vehon owned
greater than 10% of the outstanding Common Stock of the Company prior to its
initial public offering. Mr. Vehon is now decreased. Management has sought to
reduce the number and dollar volume of related party transactions involving the
Company. The Audit Committee of the Board of Directors is responsible for
evaluating the appropriateness of any future related party transactions.
15
<PAGE>
The Company leases its Irving, Texas store from Messrs. Greenspan and Ruben
and the Estate of Mr. Vehon. Pursuant to this arrangement, the Company made
lease payments of $66,000 in fiscal 1997. The lease for this store currently
provides that the Company pay rent of $5,500 per month.
Historically, the Company purchased a portion of its inventory from, and
sold inventory to, a company called K&G Associates, 50% of which is owned by
each of Messrs. Greenspan and Ruben. Pursuant to this arrangement, the Company
purchased inventory in the amount of approximately $114,000 in fiscal 1997.
In fiscal 1995, Ellsworth Realty, L.L.C. ("Ellsworth Realty"), a limited
liability company whose shareholders are Messrs. Greenspan, Ruben and Dancu,
acquired a building located across the street from the Company's original store
in Atlanta. In February 1996, the Company relocated its original Atlanta store
in this building. The lease for the building provides for the Company to pay
Ellsworth Realty a specified amount for the warehouse and office space and a
specified amount for the retail space plus 1% of the net sales of the store in
excess of a certain threshold amount. Pursuant to this arrangement, the Company
paid or accrued to Ellsworth Realty approximately $257,800 in fiscal 1997.
Management believes that the principal terms of all of the transactions
described above were no less favorable to the Company as could have been
obtained from unaffiliated third parties.
16
<PAGE>
EXECUTIVE OFFICER COMPENSATION
TABLE I - SUMMARY COMPENSATION TABLE
The following table presents certain information required by the SEC
relating to various forms of compensation award to, earned by or paid to the
Company's Chief Executive Officer and the most highly compensated officers other
than the Chief Executive Officer who earned more than $100,000 during fiscal
1997 and were serving in such capacities at the end of fiscal 1997. Such
executive officers are hereinafter referred to as the Company's "Named Executive
Officers."
<TABLE>
<CAPTION>
Long-Term
Compensation
-------------------
Securities
Underlying
Annual Compensation Options
-----------------------------
Named and Principal Position Fiscal Year Salary Bonus (# of Shares) Compensation/1/
- ---------------------------- --------------- --------------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Stephen H. Greenspan, 1997 $120,000 $ 0 37,500 $3,882
Chairman, President and Chief 1996 $120,000 $ 0 0 $4,792
Executive Officer................. 1995 $ 92,308 $ 0 0 $2,865
John C. Dancu, Chief Operating 1997 $150,000 $25,000 37,500 $5,491
Officer and Chief Financial 1996 $120,000 $ 0 0 $6,587
Officer........................... 1995 $ 96,923 $ 0 354,373 $3,280
Martin Schwartz, Senior Vice 1997 $114,000 $ 0 37,500 $3,882
President and General 1996 $114,000 $ 0 0 $4,736
Merchandising Manager............. 1995 $112,862 $22,539 20,250 $4,904
R. Scott Saban, Vice President 1997 $ 88,462 $12,000 37,500 $5,431
of Management Information 1996 $ 78,154 $ 8,000 0 $6,527
Systems and Store Construction.... 1995 $ 50,539 $ 5,000 20,250 $3,220
</TABLE>
- ------------
/1/ These figures represent premiums for the Company's medical and dental
coverage paid by the Company on behalf of the Named Executive Officers.
17
<PAGE>
TABLE II - OPTION GRANTS IN FISCAL 1997
This table represents information regarding options to purchase shares of
the Company's Common stock granted to named Executive Officers in Fiscal 1997.
<TABLE>
<CAPTION>
Number of Percent of Potential Realizable
Securities Total Options Value at Assumed Annual
Underlying Granted to Rates of Stock Appreciation
Options Employees Exercise Price Expiration for the Option Term (2)
Name Granted(1) in Fiscal 1997 ($/sh) Date 5% 10%
- ---------------- ---------------- ----------------- ----------------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mr. Greenspan 37,500 13.2% $19.42 3/11/07 $455,244 $1,156,266
Mr. Schwartz 37,500 13.2% $19.42 3/11/07 $455,244 $1,156,266
Mr. Dancu 37,500 13.2% $19.42 3/11/07 $455,244 $1,156,266
Mr. Saban 37,500 13.2% $19.42 3/11/07 $455,244 $1,156,266
</TABLE>
____________
(1) Options vest 50% on the second anniversary date of the grant, and an
additional 25% on each subsequent anniversary so that they are fully vested
on the fourth anniversary of the date of the grant.
(2) Amounts represents hypothetical gains that could be achieved for the
respective options at the end of the option term. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded annually
from the option grant date to their expiration date based upon a closing
price of $19.375 per share, the closing price of Common Stock as of January
30, 1998. These assumptions are not intended to forecast or represent
future prices of the Company's common stock. The potential realizable value
calculation does not take into account federal or state income tax
consequences.
TABLE III - OPTION EXERCISES IN FISCAL 1997 AND
FISCAL 1997 YEAR-END OPTION VALUES
None of the Company's Named Executive Officers exercised any stock options
during fiscal 1997. The following table shows the number of shares of Common
Stock subject to exercisable and unexercisable stock options held by each of the
Named Executive Officers as of February 1, 1998. The table also reflects the
value of such options based on the positive spread between the exercisable price
of such options and $19.375, which was the closing sale price of a share of
Common Stock reported in the Nasdaq National Market on January 30, 1998 (the
last trading day prior to the end of the Company's fiscal year).
<TABLE>
<CAPTION>
Value of Unexercised
In-the-Money Options
Shares Number of Unexercised at Year-End(1)
Acquired Options at Year-End (#) ($)
on Exercise Value Realized -------------------------------- ---------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ---------------- ---------------- -------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Greenspan 0 0 0 37,500 0 0
Mr. Schwartz 0 0 10,125 47,625 128,638 128,638
Mr. Dancu 0 0 354,373 72,500 5,965,869 0
Mr. Saban 0 0 10,125 47,625 128,638 128,638
</TABLE>
____________
(1) The value of unexercised in-the-money options at January 30, 1998 is
calculated as follows: [(Per Share Closing Sale Price on January 30, 1998)
- (Per Share Exercise Price)] x Number of Shares Subject to Unexercised
Options. The closing sale price reported by the Nasdaq National Market for
the Company's Common Stock on January 30, 1998 was $19.375 per share.
18
<PAGE>
PERFORMANCE GRAPH
The following indexed line graph indicates the Company's total return to
shareholders from January 24, 1996, the first day the Company's Common Stock
traded on the Nasdaq National Market, to January 30, 1998, the last trading day
prior to the end of fiscal 1997, as compared to the total return for the Nasdaq
Composite Index and an index comprised of the Nasdaq Retail Trade Stock for the
same period. The calculations in the graph assume that $100 was invested on
January 24, 1996 in each of the Company's Common Stock and each index and also
assumes dividend reinvestment.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1/24/96 1/26/96 1/31/97 1/30/98
<S> <C> <C> <C> <C>
Nasdaq Comp. $ 100.00 $ 99.75 $ 132.45 $ 157.38
Nasdaq Retail $ 100.00 $ 101.23 $ 126.73 $ 148.22
K&G $ 100.00 $ 104.95 $ 279.91 $ 290.61
</TABLE>
PROPOSAL IV - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Arthur
Andersen LLP to serve as independent public accountants of the Company for the
fiscal year ending January 31,
19
<PAGE>
1999, and has directed that such appointment be submitted to shareholders of the
Company for ratification at the Annual Meeting. Arthur Andersen LLP has served
as independent public accountants of the Company since 1994 and is considered by
management of the Company to be well qualified to serve in this capacity. If
the shareholders do not ratify the appointment of Arthur Andersen LLP, the Board
of Directors will reconsider the appointment.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. They also will be available to respond to appropriate questions from
shareholder.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, the persons appointed in the accompanying proxy intend to vote
the Shares represented thereby in accordance with their best judgment.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies on behalf of the Company will be
borne by the Company. In addition, directors, officers and other employees of
the Company may, without additional compensation except reimbursement for actual
expenses, solicit proxies by mail, in person or by telecommunication. The
Company will reimburse brokers, fiduciaries, custodians and other nominees for
out-of-pocket expenses incurred in sending the Company's proxy materials to, and
obtaining instructions relating to such materials from, beneficial owners.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposal that a shareholder may desire to have included in the
Company's proxy material for presentation at the 1998 Annual Meeting must be
received by the Company at its executive offices at 1225 Chattahoochee Avenue,
NW, Atlanta, Georgia 30318, Attention: Mr. John C. Dancu, on or prior to
January 4, 1999.
ANNUAL REPORT
The Company's Annual Report to Shareholders for fiscal 1997 (which is not
part of the Company's proxy soliciting material) is being mailed to the
Company's shareholders with this Proxy Statement.
May 5, 1998
Atlanta, Georgia
20
<PAGE>
APPENDIX A
----------
At the Annual Meeting, the Shareholders will be asked to consider the
following resolution, the purpose of which will be to increase the number of
shares of Common Stock from twenty million (20,000,000) to forty million
(40,000,000);
RESOLVED, that the first sentence of ARTICLE IV of the Amended and Restated
Articles of Incorporation of K&G Men's Center, Inc. shall be amended to increase
the total number of shares of all classes of stock which the Company has
authority to issue from twenty-two million (22,000,000) to forty-two million
(42,000,000), and to increase the number of authorized shares of "Common Stock"
from twenty million (20,000,000) to forty million (40,000,000) so that, as
amended, the first sentence of ARTICLE IV shall read in its entirety as follows:
ARTICLE
The total number of shares of all classes of stock which the
Corporation has authority to issue shall be forty-two million (42,000,000)
shares, of which forty million (40,000,000) shares, having a par value of
One Cent ($.01) per share, shall be designated as "Common Stock," and two
million (2,000,000) shares, having a par value of One Cent ($.01) per
share, shall be designated as "Preferred Stock."
In all other respects, the Amended and Restated Articles of Incorporation shall
remain unchanged.
APPENDIX B
----------
At the Annual Meeting, the Shareholders will be asked to consider the
following resolution, the purpose of which will be to amend the Company's 1995
Stock Option Plan for Employees to increase the number of shares of Common Stock
reserved for grant under the plan form 843,750 to 1,100,000:
RESOLVED, that the first sentence of Section 4 of the K&G Men's Center,
Inc. 1995 Stock Option Plan for Employees, shall be amended to increase the
total number of shares of stock reserved for issuance under the plan from
843,750 to 1,100,000 so that as amended the first sentence of Section 4 shall
read as follows:
4. Stock Subject to Plan
---------------------
The Company has authorized and reserved for issuance upon the exercise
of Options pursuant to the Plan an aggregate of 1,100,000 shares of the
$.01 par value, voting common stock of the Company (collectively, the
"Shares").
In all other respects, the K&G Men's Center, Inc. 1995 Stock Option Plan for
Employees shall remain unchanged.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF K&G MEN'S CENTER, INC.
The undersigned shareholder(s) of K&G Men's Center, Inc. a Georgia
corporation (the "Company"), hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement, each dated May 5, 1998, and
hereby appoints Stephen H. Greenspan and John C. Dancu, or either of them,
proxies and attorneys-in-fact, with full power of substitution, on behalf and
in the name of the undersigned, to represent the undersigned at the 1998 Annual
Meeting of Shareholders of the Company to be held at 11:00 a.m. local time on
Friday, June 5, 1998 at the Company's headquarters located at 1225
Chattahoochee Avenue, NW, Atlanta, Georgia 30318, and at any adjournment(s)
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters set forth
below:
(1) To approve an amendment to the Company's Articles of Incorporation to
increase from 20,000,000 to 40,000,000 the number of shares of Common Stock
the Company is authorized to issue.
[_]ABSTAIN
[_FOR]the approval [_]WITHHOLD authority to vote for approval
(2) To approve an amendment to the Company's 1995 Stock Option Plan for
Employees to increase the number of shares of the Company's Common Stock
reserved for grant under the plan from 843,750 to 1,100,000.
[_]ABSTAIN
[_FOR]the approval [_]WITHHOLD authority to vote for approval
(3) To elect Stephen H. Greenspan and W. Paul Ruben to serve as the Company's
two (2) Class III directors to each serve three-year terms expiring in 2001.
[_FOR]the nominees listed above
[_]WITHHOLD authority to vote for nominees
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, MARK "FOR"
ABOVE, AND WRITE THE NAME OF THE NOMINEE AS TO WHOM YOU WISH TO WITHHOLD
AUTHORITY IN THE SPACE BELOW:
------------------------------------------------------------------------------
(4) To ratify the appointment of Arthur Andersen LLP as the independent public
accountants of the Company.
[_]ABSTAIN
[_FOR]the ratification [_]WITHHOLD authority to vote for ratification
(5) In their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournments(s) thereof.
<PAGE>
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. This Proxy, when
properly executed, will be voted in accordance with the directions given by the
undersigned shareholder(s). IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE FROM 20,000,000 TO 40,000,000 THE NUMBER OF SHARES OF COMMON STOCK THE
COMPANY IS AUTHORIZED TO ISSUE AS SET FORTH IN (1) ABOVE, FOR THE APPROVAL OF
THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN FOR EMPLOYEES TO INCREASE
THE NUMBER OF SHARES RESERVED FOR GRANT FROM 843,750 TO 1,100,000 AS SET FORTH
IN (2) ABOVE, FOR THE DIRECTOR NOMINEES NAMED IN ITEM (3) ABOVE AND FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS AS SET FORTH IN ITEM (4) ABOVE, AND AS THE PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: _________________ 1998
_____________________________
Signature
-----------------------------
Signature (if held jointly)
Title or authority (if ap-
plicable)
NOTE: PLEASE SIGN EXACTLY AS
NAME APPEARS HEREON. IF
SHARES ARE REGISTERED IN
MORE THAN ONE NAME, THE SIG-
NATURE OF ALL SUCH PERSONS
ARE REQUIRED. A CORPORATION
SHOULD SIGN IN ITS FULL COR-
PORATE NAME BY A DULY AUTHO-
RIZED OFFICER, STATING HIS
OR HER TITLE. TRUSTEES,
GUARDIANS, EXECUTORS AND AD-
MINISTRATORS SHOULD SIGN IN
THEIR OFFICIAL CAPACITY,
GIVING THEIR FULL TITLE AS
SUCH. IF A PARTNERSHIP,
PLEASE SIGN IN THE PARTNER-
SHIP NAME BY AN AUTHORIZED
PERSON.
