<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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
ABERCROMBIE & FITCH CO.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(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:
<PAGE>
ABERCROMBIE & FITCH
FOUR LIMITED PARKWAY
REYNOLDSBURG, OHIO 43068
(614) 577-6500
May 29, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 10:00 a.m., Eastern Daylight Time, on July 16, 1998, at the offices of
Abercrombie & Fitch Co., Four Limited Parkway, Reynoldsburg, Ohio. This is the
first Annual Meeting of Stockholders since the completion of our separation
from The Limited, and I hope that you will all be able to attend and
participate in the meeting, at which time I will have the opportunity to
review the business and operations of Abercrombie & Fitch, including our new
status as an independent company.
The formal Notice of Annual Meeting of Stockholders and Proxy Statement are
attached, and the matters to be acted upon by our stockholders are set forth
in such Notice of Annual Meeting of Stockholders. Our Investor Relations
telephone number is (614) 577-6493 should you require assistance in finding
the location of the meeting.
It is important that your shares be represented and voted at the meeting.
Accordingly, after reading the attached Proxy Statement, would you kindly
sign, date and return the enclosed proxy card. Your vote is important
regardless of the number of shares you own.
Sincerely yours,
/s/ Michael S. Jeffries
Michael S. Jeffries
Chairman and Chief Executive Officer
<PAGE>
ABERCROMBIE & FITCH
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 16, 1998
May 29, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Abercrombie & Fitch Co., a Delaware corporation (the "Company"), will be held
at the offices of Abercrombie & Fitch Co., Four Limited Parkway, Reynoldsburg,
Ohio on July 16, 1998, at 10:00 a.m., Eastern Daylight Time, for the following
purposes:
1. To elect two directors to serve for terms of three years.
2. To consider and vote upon a proposal to approve the 1998 Restatement
of the Abercrombie & Fitch Co. 1996 Stock Option and Performance
Incentive Plan.
3. To consider and vote upon a proposal to approve the 1998 Restatement
of the Abercrombie & Fitch Co. 1996 Stock Plan for Non-Associate
Directors.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record, as shown by the transfer books of the Company,
at the close of business on May 27, 1998 are entitled to notice of and to vote
at the Annual Meeting.
By Order of the Board of Directors
/s/ Michael S. Jeffries
Michael S. Jeffries
Chairman and Chief Executive Officer
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR
ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY
STATEMENT.
<PAGE>
ABERCROMBIE & FITCH
FOUR LIMITED PARKWAY
REYNOLDSBURG, OHIO 43068
(614) 577-6500
PROXY STATEMENT
DATED MAY 29, 1998
ANNUAL MEETING OF STOCKHOLDERS
JULY 16, 1998
The accompanying proxy is solicited by the Board of Directors of Abercrombie
& Fitch Co. (the "Company") to be voted at the Annual Meeting of Stockholders
to be held July 16, 1998 (the "Annual Meeting"), and any adjournments thereof.
When such proxy is properly executed and returned, the shares it represents
will be voted at the meeting as directed. If no specification is indicated,
the shares will be voted in accordance with the recommendation of the
Company's Board of Directors with respect to each matter submitted to the
Company's stockholders for approval. Abstentions will not be voted, but will
be counted for determining the presence of a quorum. Broker non-votes will not
be counted for any purpose. Any stockholder giving a proxy has the power to
revoke it prior to its exercise by notice of revocation to the Company in
writing, by voting in person at the Annual Meeting or by execution of a
subsequent proxy; provided, however, that such action must be taken in
sufficient time to permit the necessary examination and tabulation of the
subsequent proxy or revocation before the vote is taken.
The shares entitled to vote at the meeting consist of shares of the Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, with
each share entitling the holder of record to one vote. At the close of
business on May 27, 1998, the record date for the Annual Meeting, there were
outstanding 51,630,077 shares of Common Stock (this amount includes the
3,115,455 shares of Common Stock owned by The Limited which will be
distributed to Limited stockholders in the Spin-Off). This Proxy Statement and
the accompanying form of proxy are first being sent to stockholders on or
about May 29, 1998.
The Company consummated an initial public offering of its Class A Common
Stock in September 1996 (the "Initial Public Offering"). Prior to that time,
the businesses comprising Abercrombie & Fitch were wholly owned by The
Limited. On May 19, 1998, The Limited, Inc., a Delaware corporation and the
former parent of the Company ("The Limited"), consummated its exchange offer
(the "Split-Off") whereby 40,484,545 shares of Common Stock (approximately 93%
of the Common Stock then owned by The Limited) were distributed to tendering
stockholders of The Limited in exchange for the common stock, par value $.50
per share ("Limited Common Stock"), of The Limited. The Limited will be
distributing its remaining shares of Common Stock (3,115,455 shares) to
Limited stockholders who were stockholders of record as of the close of
business on May 29, 1998 (the "Spin-Off"). Accordingly, The Limited will not
own any shares of Common Stock after such date.
<PAGE>
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS.
Two members of the Board of Directors of the Company will be elected at the
Annual Meeting. Directors elected at the Annual Meeting will hold office for a
three-year term expiring at the Annual Meeting of Stockholders in 2001 or
until their successors are elected and qualified. The nominees of the Board of
Directors for such positions are identified below. In the event any of such
nominees is unable or unwilling to serve as a director, it is intended that
the proxies will be voted for the election of such person nominated by the
Board of Directors in substitution. The Company has no reason to believe that
any nominee of the Board of Directors will be unable to serve as a director if
elected.
Stockholders wishing to nominate directors for election may do so by
delivering to the Secretary of the Company, no later than 14 days before the
Annual Meeting, a notice setting forth (a) the name, age, business address
and, if known, residence address of each nominee proposed in such notice, (b)
the principal occupation or employment of each such nominee and (c) the number
of shares of stock of the Company beneficially owned by each such nominee. No
person may be elected as a director unless he or she has been nominated by a
stockholder in the manner just described or by the Board of Directors. The two
nominees receiving the highest number of votes will be elected directors.
Proxies may not be voted for more than two nominees.
BUSINESS EXPERIENCE.
Nominees of the Board of Directors for Election at the 1998 Annual Meeting.
JOHN A. GOLDEN Mr. Golden has been a limited partner of Goldman Sachs
Group L.P. since 1994 and a general partner prior
thereto. Mr. Golden is also a member of the Board of
Trustees of Colgate University. Goldman, Sachs & Co., an
affiliate of Goldman Sachs Group L.P., has from time to
time provided investment banking services to the
Company, including acting as dealer manager in the
Split-Off and lead manager for the Initial Public
Offering, for which Goldman, Sachs & Co. received
customary compensation.
SETH R. JOHNSON Mr. Johnson has been Vice President and Chief Financial
Officer of the Company since 1992. Mr. Johnson was
Director of Financial Analysis of The Limited from 1989
until 1992 and was Director of Financial Reporting of
The Limited Stores, Inc., from 1986 until 1989.
Directors Whose Terms Continue until the 1999 Annual Meeting.
SAM N. SHAHID, JR. Mr. Shahid has been President and Creative Director of
Shahid & Company, Inc., an advertising and design
agency, since 1993. Prior thereto, he has served as Vice
President and Creative Director of Banana Republic
Advertising (an in-house agency for Banana Republic) and
Vice President and Creative Director of CRK Advertising
(an in-house agency for Calvin Klein). Shahid & Company,
Inc. has provided advertising and design services for
the Company since 1995. Fees paid to Shahid & Company,
Inc. for services provided during fiscal year 1997 were
approximately $850,000.
DOUGLAS L. WILLIAMS
Mr. Williams has been a partner in the Columbus office
of Vorys, Sater, Seymour and Pease LLP since 1993. Mr.
Williams is also a member of the Board of the United Way
and the Children's Defense Fund for the State of Ohio.
Prior to joining Vorys, Sater, Mr. Williams was a
partner at the firm of Schwartz, Kelm, Warren &
Rubenstein. Vorys, Sater has provided corporate legal
services for the Company since 1993.
2
<PAGE>
Directors Whose Terms Continue until the 2000 Annual Meeting.
GEORGE FOOS Mr. Foos has been a management consultant focusing on
retail chains and apparel manufacturers since 1989.
Prior thereto, he has served as Chairman of the Board of
Emporium Capwell Department Stores and President and
Chief Executive Officer of May Department Stores,
Southern California.
MICHAEL S. JEFFRIES Mr. Jeffries has been Chairman of the Company since the
consummation of the Split-Off and has been Chief
Executive Officer of the Company since February 1992.
Prior to the consummation of the Split-Off, Mr. Jeffries
held the title of President of the Company.
JOHN W. KESSLER Mr. Kessler has been the Chairman of New Albany Co.
since 1988, Chairman of Marsh & McLennan Real Estate
Advisors, Inc. (a real estate consulting firm) since
1980 and Chairman of the John W. Kessler Company (a real
estate development company) since 1975. Mr. Kessler has
also been a director of Banc One since 1995.
INFORMATION CONCERNING THE BOARD OF DIRECTORS.
The Company's Board of Directors held three meetings and took action in
writing without a meeting on two occasions in fiscal year 1997. During fiscal
year 1997, all of the directors attended 75% or more of the total number of
meetings of the Board and of Committees of the Board on which they served.
During fiscal year 1997 until the consummation of the Split-Off, the members
of the Company's Board of Directors were Messrs. Leslie H. Wexner, Kenneth B.
Gilman, Michael S. Jeffries, Roger D. Blackwell, E. Gordon Gee and Donald B.
Shackelford. Effective upon the consummation of the Split-Off, all such
members of the Board other than Mr. Jeffries resigned as directors and were
replaced by six new directors, Messrs. Foos, Golden, Johnson, Kessler, Shahid
and Williams.
The Compensation Committee of the Board is charged with reviewing executive
compensation and administering the Company's stock option and performance
incentive plans. During fiscal year 1997 until the consummation of the Split-
Off, its members were Messrs. Shackelford (Chair) and Gee. Currently, its
members are Messrs. Kessler (Chair) and Foos. Members of the Compensation
Committee held four meetings and took action in writing without a meeting on
twelve occasions in fiscal year 1997.
The Executive Committee of the Board may exercise, to the fullest extent
permitted by law, all of the powers and authority granted to the Board. The
Executive Committee may also declare dividends, authorize the issuance of
stock and authorize the seal of the Company to be affixed to papers that
require it. During fiscal year 1997 until the consummation of the Split-Off,
its members were Messrs. Jeffries (Chair), Gilman and Shackelford. Currently,
its members are Messrs. Jeffries (Chair), Golden and Williams.
The Audit Committee of the Board was formed on May 19, 1998. It will
recommend the firm to be employed as the Company's independent public
accountants and review the scope of the audit and audit fees. In addition, the
Audit Committee will consult with the independent auditors with regard to the
plan of audit, the resulting audit report and the accompanying management
letter, and confer with the independent auditors with regard to the adequacy
of internal accounting controls, as appropriate, out of the presence of
management. The members of the Audit Committee are Messrs. Golden (Chair) and
Williams.
EXECUTIVE OFFICERS.
In addition to Messrs. Johnson and Jeffries, Michele Donnan-Martin also
serves as an executive officer of the Company. Ms. Donnan-Martin, age 34, has
been Vice President--General Merchandising Manager-- Women's of the Company
since February 1996 and for three and one-half years prior thereto held the
position of Vice-President Women's Merchandising of the Company.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT.
Set forth below is certain information about the security ownership of all
directors of the Company, the executive officers of the Company named in the
Summary Compensation Table below and all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME, POSITION WITH THE DIRECTOR COMMON STOCK
COMPANY; AND/OR CONTINUOUSLY BENEFICIALLY OWNED PERCENT OF
PRINCIPAL OCCUPATION, AGE SINCE TERM EXPIRES (a)(b) CLASS
- ------------------------- ------------ ------------ ------------------- ----------
<S> <C> <C> <C> <C>
Michele S. Donnan-Martin. ** ** 45,736(c) *
Vice President--General
Merchandising Manager
Women's, 34
George Foos.............. 1998 2000 1,000 *
Director; Management
Consultant, 77
Kenneth B. Gilman........ ** ** 10,000 *
Vice Chairman and Chief
Administrative Officer
of The Limited, 51(d)
John A. Golden........... 1998 1998 10,000 *
Director; Limited
Partner of Goldman Sachs
Group L.P., 53
Michael S. Jeffries...... 1996 2000 250,271(c) *
Director; Chairman and
Chief Executive
Officer, 53
Seth R. Johnson.......... 1998 1998 23,459(c) *
Director; Vice
President--Chief
Financial Officer, 44
John W. Kessler.......... 1998 2000 -- *
Director; Chairman of
the Board of New Albany
Co., Chairman of the
Board of Marsh &
McLennan Real Estate
Advisors, Inc. and
Chairman of the Board of
John W. Kessler Company,
62
Sam N. Shahid, Jr........ 1998 1999 -- *
Director; President and
Creative Director of
Shahid & Company, Inc.,
57
Leslie H. Wexner......... ** ** 10,000 *
Chairman of the Board,
Chief Executive Officer
and President of The
Limited, 60(e)
Douglas L. Williams...... 1998 1999 -- *
Director; Partner of Law
Firm of Vorys, Sater,
Seymour and Pease, 44
All directors and
executive officers as a
group................... ** ** 350,466(f) *
</TABLE>
4
<PAGE>
- --------
* Less than 1%.
** Not applicable.
(a) Unless otherwise indicated, each named person has voting and investment
power over the listed shares and such voting and investment power is
exercised solely by the named person or shared with a spouse.
(b) Reflects ownership as of May 20, 1998.
(c) Includes the following number of shares issuable within 60 days upon the
exercise of outstanding stock options: Mr. Jeffries, 232,500; Ms. Donnan-
Martin, 41,750; Mr. Johnson, 13,250; and all directors and executive
officers as a group, 287,500.
(d) Mr. Gilman served as Vice Chairman of the Company from 1996 until the
consummation of the Split-Off. Effective upon the consummation of the
Split-Off, Mr. Gilman resigned from all offices with the Company and any
subsidiary of the Company.
(e) Mr. Wexner served as Chairman of the Company from 1996 until the
consummation of the Split-Off. Effective upon the consummation of the
Split-Off, Mr. Wexner resigned from all offices with the Company and any
subsidiary of the Company.
(f) Includes 287,500 shares issuable within 60 days upon the exercise of
outstanding stock options.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE.
The following table provides information concerning compensation paid by the
Company (except, as noted below, for Executive Officers Wexner and Gilman,
whose compensation was paid by The Limited in the years noted) to each of the
named executive officers of the Company for its last two fiscal years and by
The Limited for fiscal year 1995 and that portion of fiscal year 1996 prior to
the consummation of the Initial Public Offering.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
---------------------- -----------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND PRINCIPAL FISCAL STOCK OPTIONS ALL OTHER
POSITION(1) YEAR SALARY ($) BONUS(2)($) AWARDS(3)($) AWARDED (#) COMPENSATION(4)($)
------------------ ------ ---------- ----------- ------------ ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner......... 1997 $1,000,000 $1,861,560 -- 1,600,000(5) $135,296
Chairman of the Board 1996 1,011,538 915,000 -- 200,000(5) 151,629
100,000(6)
1995 1,150,000 768,315 -- 100,000(5) 148,436
Kenneth B. Gilman........ 1997 900,000 1,228,630 $6,220,313(5) 500,000(5) 195,094
Vice Chairman 1996 903,846 603,900 -- 50,000(5) 187,192
50,000(6)
1995 941,935 449,820 -- 25,000(5) 190,772
Michael S. Jeffries...... 1997 596,154 1,200,000 8,000,000(7) 1,000,000(7) 190,184
Chairman and Chief 1996 546,154 990,275 1,060,478(7) 130,000(7) 140,380
Executive Officer 93,366(5)
1995 491,700 426,300 159,393(5) 12,000(5) 104,772
Michele S. Donnan-Martin. 1997 320,000 390,000 311,250(7) 225,000(7) 66,453
Vice President--General 1996 256,923 234,065 203,203(7) 28,000(7) 46,657
Merchandising 15,561(5)
Manager--Women's 1995 217,510 107,184 26,566(5) 5,000(5) 36,051
Seth R. Johnson.......... 1997 261,923 265,000 186,750(7) 175,000(7) 55,010
Vice President--Chief 1996 223,077 202,556 43,203(7) 6,500(7) 45,873
Financial Officer 15,561(5)
1995 198,340 97,440 26,566(5) 5,000(5) 39,854
</TABLE>
- --------
(1) Effective upon the consummation of the Split-Off, Messrs. Wexner and
Gilman resigned from the Board of Directors of the Company and all offices
which they then held with the Company or with any subsidiary of the
Company. Messrs. Wexner and Gilman are currently and were during fiscal
years 1997, 1996 and 1995 employed by The Limited and received no direct
compensation from the Company. The annual base salary and annual bonus
opportunity for Messrs. Wexner and Gilman in respect of their service with
The Limited and its affiliates was determined by The Limited's
Compensation Committee and was paid by The Limited.
(2) Represents for each fiscal year, the aggregate of the performance-based
incentive compensation for the Spring and Fall selling seasons.
6
<PAGE>
(3) Represents for each executive officer, the restricted stock awards for the
specified fiscal year under the Company's 1996 Stock Option and
Performance Incentive Plan for awards of Common Stock and under The
Limited, Inc. 1993 Stock Option and Performance Incentive Plan for awards
of Limited Common Stock. Information set forth above is based on the
closing price of the stated common stock on the date on which the awards
were made.
On February 1, 1998, 10,000 and 6,000 restricted shares of Common Stock were
granted to Executive Officers Donnan-Martin and Johnson, respectively, based
on business performance for fiscal year 1997. The per share value of Common
Stock on the then most recent prior date on which there were sales (January
30, 1998) was $31.125. This award vests 10% on the grant date, and 20%, 30%
and 40% on the first through third anniversaries of the grant date, in each
case, subject to the holder's continued employment with the Company.
On May 20, 1997, 300,000 restricted shares of Limited Common Stock were
granted to Mr. Gilman. The per share value of Limited Common Stock on such
date was $19.50. This award is earned subject to established financial
performance measures and once earned, vests 10%, 10%, 10%, 15%, 20% and 35%
on the first through sixth anniversaries of the grant date, respectively,
subject to continued employment with The Limited.
On May 13, 1997, 500,000 restricted shares of Common Stock were granted to
Mr. Jeffries. The per share value of Common Stock on such date was $16.00.
This award is earned subject to established financial performance measures
and once earned, vests over six years, subject to continued employment with
the Company.
On March 25, 1997, 19,750 restricted shares of Limited Common Stock were
granted to Mr. Gilman. The per share value of Limited Common Stock on such
date was $18.75. This award vests 100% one year from the grant date, subject
to continued employment with The Limited.
On February 1, 1997, 24,762, 3,142 and 3,142 restricted stock performance
awards of Common Stock were granted to Executive Officers Jeffries, Donnan-
Martin and Johnson, respectively. The per share value of Common Stock on
Friday, January 31, 1997 was $13.75. On August 1, 1996, 4,788, 798 and 798
restricted stock performance awards of Limited Common Stock were granted to
Executive Officers Jeffries, Donnan-Martin and Johnson, respectively. The
per share value of Limited Common Stock on such date was $19.50. These
awards, which are in respect of 1996 performance, generally vest 10% on the
grant date and 20%, 30% and 40% on the first through third anniversaries of
the grant date, in each case, subject to the holder's continued employment
with the Company.
On September 25, 1996, 45,000 and 4,500 restricted shares of Common Stock
were awarded to Executive Officers Jeffries and Donnan-Martin, respectively,
in consideration of the cancellation of Mr. Jeffries' March 1, 1994 and Ms.
Donnan-Martin's February 2, 1996 grant of restricted shares of Limited
Common Stock. These awards to Mr. Jeffries and Ms. Donnan-Martin vest 100%
on March 1, 1999 and February 2, 2001, respectively, subject to continued
employment. Also, on September 25, 1996, 5,500 restricted shares of Common
Stock were awarded to Ms. Donnan-Martin. Such shares vest 100% five years
from the grant date, subject to continued employment with the Company. The
per share value of Common Stock on such date was the Initial Public Offering
price of $16.00 per share.
On February 1, 1996, 9,516, 1,586 and 1,586 restricted stock performance
awards of Limited Common Stock were granted to Executive Officers Jeffries,
Donnan-Martin and Johnson, respectively, in respect of 1995 performance. The
per share value of Limited Common Stock on such date was $16.75. These
awards
7
<PAGE>
generally vest 10% on the grant date and 20%, 30% and 40% on the first
through third anniversaries of the grant date, in each case subject to the
holder's continued employment with the Company.
As of January 31, 1998, the aggregate holdings of restricted shares of
Common Stock and the market value of such holdings for such named executive
officers were: Mr. Jeffries, 567,286 shares, $17,656,777; Ms. Donnan-
Martin, 22,828 shares, $710,522; and Mr. Johnson, 8,828 shares, $274,772
(based on the $31.125 fair market value of Common Stock as of Friday,
January 30, 1998). The holdings of Executive Officers Donnan-Martin and
Johnson include the 10,000 and 6,000 restricted shares, respectively, as
noted in the second paragraph of this footnote.
As of January 31, 1998, the aggregate holdings of restricted shares of
Limited Common Stock and the market value of such holdings for each of the
named executive officers were: Mr. Wexner, 13,000 shares, $344,500; Mr.
Gilman, 326,250 shares, $8,645,625; Mr. Jeffries, 14,814 shares, $392,571;
Ms. Donnan-Martin, 2,470 shares, $65,455; and Mr. Johnson, 2,470 shares
$65,455 (based on the $26.50 fair market value of a share of Limited Common
Stock as of Friday, January 30, 1998).
Dividends will not be paid or accrue with respect to shares of restricted
stock until such shares vest.
(4) Represents for each executive officer, the amount of employer matching and
supplemental contributions allocated to his or her account under certain
of The Limited's qualified and non-qualified defined contribution plans
during 1997.
(5) Denominated in shares of Limited Common Stock.
(6) Denominated in shares of the Class A Common Stock of Intimate Brands, Inc.
(7) Denominated in shares of Common Stock.
LONG-TERM INCENTIVE PLAN AWARDS.
No awards were granted in respect of the 1997 fiscal year to the named
executive officers other than the restricted stock performance awards as
disclosed in the Summary Compensation Table.
STOCK OPTIONS.
The following table sets forth certain information regarding stock options
granted to the executive officers named in the Summary Compensation Table
during the Company's 1997 fiscal year.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)($)
OPTIONS ASSOCIATES PRICE PER EXPIRATION -----------------------
NAME GRANTED (#)(1) IN FISCAL YEAR SHARE ($) DATE 5% 10%
- ------------------------- -------------- -------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner......... 1,600,000(2) 22.01%(2) $22.1375(5) 07/02/07 $22,275,448 $56,450,358
Kenneth B. Gilman........ 500,000(2) 6.88%(2) 19.5000 05/21/07 6,131,723 15,538,989
Michael S. Jeffries...... 1,000,000(3) 60.13%(3) 16.0000 05/14/07 10,062,314 25,499,879
Michele S. Donnan-Martin. 150,000(3) 9.02%(3) 16.0000 02/21/07 1,509,347 3,824,982
75,000(3) 4.51%(3) 30.6250 12/06/07 1,444,492 3,660,627
Seth R. Johnson.......... 100,000(3) 6.01%(3) 16.0000 02/21/07 1,006,231 2,549,988
75,000(3) 4.51%(3) 30.6250 12/06/07 1,444,492 3,660,627
</TABLE>
8
<PAGE>
- --------
(1) On July 1, 1997, options were granted to Mr. Wexner and on May 20, 1997,
options were granted to Mr. Gilman pursuant to The Limited's 1993 Stock
Option and Performance Incentive Plan (1997 Restatement).
On February 20, 1997 and December 5, 1997, options were granted to Executive
Officers Donnan-Martin and Johnson pursuant to the Company's 1996 Stock
Option and Performance Incentive Plan (1997 Restatement). Such options vest
10%, 10%, 10%, 15%, 20% and 35% on the first through sixth anniversaries of
the grant date, respectively, in each case, subject to the holder's
continued employment with the executive's employer.
On May 13, 1997, options were granted to Mr. Jeffries pursuant to the
Company's 1996 Stock Option and Performance Incentive Plan (1997
Restatement). Such options vest over nine years, subject to earnings per
share performance targets and continued employment with the Company.
(2) Denominated in shares of Limited Common Stock.
(3) Denominated in shares of Common Stock.
(4) The assumed rates of growth were selected by the Securities and Exchange
Commission ("SEC") for illustrative purposes only and are not intended to
predict or forecast future stock prices.
(5) The per share exercise price of all such options to Mr. Wexner is set at
110% of the fair market value of the stock on the date of grant.
The following table sets forth certain information relating to stock options
exercised and the number and value of shares of Limited Common Stock and
Common Stock subject to the stock options held by the executive officers named
in the Summary Compensation Table during the Company's 1997 fiscal year and
the year-end value of unexercised options held by such executive officers.
AGGREGATED OPTION EXERCISES IN 1997 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED FISCAL YEAR END (#) FISCAL YEAR-END ($)
ON VALUE ------------------------- ----------------------------
NAME EXERCISE (#)(1) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- --------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner........ -- -- 137,500(3) 1,812,500(3) $1,113,750(3) $ 8,471,250(3)
25,000(4) 75,000(4) 93,125(4) 279,375(4)
Kenneth B. Gilman....... 31,250 $384,766 222,917(3) 564,583(3) 1,629,430(3) 4,124,476(3)
4,167(4) 45,833(4) 46,618(4) 512,757(4)
Michael S. Jeffries..... -- -- 52,000(3) 9,000(3) 302,625(3) 82,500(3)
10,833(5) 1,119,167(5) 163,849(5) 16,927,401(5)
Michele S.
Donnan-Martin.......... 19,500 72,125 -- 3,500(3) -- 32,000(3)
7,000(5) 246,000(5) 105,875(5) 2,623,875(5)
Seth R. Johnson......... -- -- 31,250(3) 3,750(3) 233,250(3) 34,375(3)
1,625(5) 179,875(5) 24,578(5) 1,623,734(5)
</TABLE>
- --------
(1) All such shares acquired on exercise represent shares of Limited Common
Stock.
(2) Calculated on the basis of the number of shares exercised, multiplied by
the excess of the fair market value of a share of Limited Common Stock on
the date of exercise over the exercise price of such option.
(3) Denominated in shares of Limited Common Stock. Value is calculated on the
basis of the number of shares subject to each such option, multiplied by
the excess of the fair market value of a share of Limited Common Stock on
the last trading day prior to fiscal year-end ($26.50) over the exercise
price of such option.
9
<PAGE>
(4) Denominated in shares of the Class A Common Stock of Intimate Brands, Inc.
Value is calculated on the basis of the number of shares subject to such
option, multiplied by the excess of the fair market value of a share of
the Class A Common Stock of Intimate Brands, Inc. on the last trading day
prior to fiscal year-end ($25.3125) over the exercise price of such
option.
(5) Denominated in shares of Common Stock. Value is calculated on the basis of
the number of shares subject to such option, multiplied by the excess of
the fair market value of a share of Common Stock on the last trading day
prior to fiscal year-end ($31.125) over the exercise price of such option.
COMPENSATION OF DIRECTORS.
Directors who are not associates of the Company receive an annual retainer
of $10,000 per year (increased by $1,500 for each committee chair held), plus
a fee of $1,000 for each Board meeting attended ($400 for a telephonic
meeting) and, as committee members, receive $600 per committee meeting
attended ($200 for a telephonic meeting). Each action in writing taken by the
Board or any committee entitles each such director to be paid $200. Associates
and officers who are directors receive no additional compensation for services
rendered as directors. Under the Company's 1996 Stock Plan for Non-Associate
Directors, each director who is not an associate of the Company receives (i) a
grant of options to acquire 2,000 shares of Common Stock at a price equal to
the fair market value of such shares at the effective date of the Initial
Public Offering, (ii) annual grants of options to purchase 2,000 shares of
Common Stock at a price equal to the fair market value of such shares at the
date of grant and (iii) 50% of the annual retainer in shares of Common Stock.
See "Proposal to Approve Adoption of the 1998 Restatement of the 1996 Stock
Plan for Non-Associate Directors" below for a summary of the plan as it is
proposed to be amended.
EMPLOYMENT AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS.
In 1997, the Company entered into individual employment agreements with
Executive Officers Jeffries, Donnan-Martin and Johnson. Pursuant to these
agreements, Mr. Jeffries serves as the Company's Chairman and Chief Executive
Officer, Ms. Donnan-Martin serves as the Company's Vice President-General
Merchandising Manager, Women's, and Mr. Johnson serves as the Company's Vice
President and Chief Financial Officer. The initial term of each agreement is
six years, with automatic one-year extensions thereafter unless either party
gives written notice to the contrary. Mr. Jeffries' agreement provides for an
initial base salary of $600,000, Ms. Donnan-Martin's agreement provides for an
initial base salary of $325,000 and Mr. Johnson's agreement provides for an
initial base salary of $265,000. Option grants and the value of performance-
based stock awards made in 1997 pursuant to the agreements are included in the
Summary Compensation Table. Mr. Jeffries' agreement also provides for life
insurance coverage of $10 million. Each agreement also provides for incentive
plan participation as determined by the Board. Under each agreement, upon the
failure of the Company to extend the agreement or the termination of the
executive's employment either by the Company other than for cause or by the
executive for good reason, the executive will continue to receive the
executive's base salary for one year after the termination date. Under the
agreements, each executive agrees not to compete with the Company or solicit
its employees or customers during the employment term and for one year
thereafter. Each executive's agreement provides for disability benefits in
addition to the benefits available under the Company's disability plans. In
the event any "parachute" excise tax is imposed on any of Executive Officers
Jeffries, Donnan-Martin or Johnson, the executive will be entitled to tax
reimbursement payments.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
The Company's executive officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, are
required to file reports of ownership and changes in ownership of the
Company's equity securities with the SEC and the New York Stock Exchange.
Copies of those reports must also be furnished to the Company.
10
<PAGE>
Based solely on a review of the copies of reports furnished to the Company
and written representations that no other reports were required, the Company
believes that during fiscal year 1997 its executive officers, directors, and
greater than ten-percent beneficial owners complied with such filing
requirements other than Ms. Donnan-Martin who inadvertently filed two reports
after the due date therefor relating to two transactions in Common Stock.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") reviews and approves the
Company's executive compensation philosophy and policies and the application
of such policies to the compensation of executive officers. Messrs. Wexner and
Gilman were compensated by The Limited and did not participate in the
Company's compensation programs. The Company and the Committee have also
retained independent compensation consultants to assist in developing, and
periodically assessing the reasonableness of, the Company's executive officer
compensation program.
COMPENSATION PHILOSOPHY.
The Company seeks to apply a consistent philosophy to compensation for all
leadership associates, including senior executives. The primary goal of the
compensation program is to link total executive compensation to performance
that enhances stockholder value. Accordingly, total compensation for
leadership individuals is structured to provide a lower proportion as fixed
compensation and a much higher variable proportion keyed to business and stock
performance.
Our philosophy is built on the following basic principles:
To Pay for Outstanding Performance.
The Company believes in paying for results. Individuals in leadership roles
are compensated based on a combination of total company, and individual
performance factors. Total company performance is evaluated primarily based on
the degree by which financial targets are met. Individual performance is
evaluated based on several factors, including continuing to build the A&F
brand, attainment of specific merchandise and financial objectives, building
and developing a strong leadership team, developing an infrastructure to
support future business growth, and controlling expenses. In addition, a
significant portion of total compensation is in the form of equity-based award
opportunities to directly tie any increased compensation to increased
stockholder value.
To Pay Competitively.
The Company is committed to providing a total compensation program designed
to attract the best senior leaders to the business and that retains the best,
consistently highest performers. To achieve this goal, the Company annually
compares its pay practices and overall pay levels with other leading retail
and where appropriate, non-retail companies, and sets pay guidelines based on
this review.
To Pay Equitably.
The Company believes that it is important to apply generally consistent
guidelines for all leadership compensation programs across business units,
considering the size, complexity, stage of development and performance of the
business, along with the performance of the individual executive.
11
<PAGE>
PRINCIPAL COMPENSATION ELEMENTS.
The principal elements of executive compensation at the Company are base
salary, short-term performance-based cash incentive compensation and equity-
based incentive programs. In determining guidelines for each compensation
element, the Company participates in compensation surveys which include
approximately 75 national and regional specialty and department store retail
businesses, chosen because of their general similarity to the Company in
business and merchandise focus. In addition, the Company participates in
special surveys focusing on special segments of the business, such as
merchandise design. The Company, along with its compensation consultants,
analyzes executive compensation levels and practices relative to the
performance of these competitor companies, and from this information, develops
pay guidelines that generally target, and place the Company in, the 75th to
90th percentile of pay for those with exceptional performance. The competitor
group that is surveyed is subject to periodic review and is modified from time
to time to reflect new businesses, mergers, acquisitions and changes in
business focus. The competitor group contains approximately 50% of the
companies in the S&P Retail Stores Composite Index represented in the
Stockholder Return Graph below. Subject to the needs of the Company, its
policy is to attempt to design all incentive and equity-based compensation
programs to meet the requirements for deductibility under the Internal Revenue
Code of 1986, as amended (the "Code").
Base Salary.
The Committee annually reviews and approves the base salary of each
executive officer and the Chief Executive Officer. In determining salary
adjustments, the Committee considers the size and responsibility of the
individual's position, the Company's overall performance, the individual's
overall performance and future potential, and the base salaries paid by
competitors to employees in comparable positions. Individual performance is
measured against the following factors: seasonal and annual business goals,
brand growth strategy and execution, business growth and brand execution
goals, and the recruitment and development of future leadership talent. These
factors are considered subjectively in the aggregate, and none of these
factors is accorded a formula weight.
Performance-Based Cash Incentive Compensation.
The Company has employed a short-term performance-based cash incentive
compensation program for specified key leadership positions that provides for
incentive payments for each six-month operating season, based on the extent to
which preestablished objective goals are attained.
The goals under this plan were based on operating income. However, goals
also may be based on other objectives and/or criteria, depending on the
Company's business strategy. These goals are set at the beginning of each six
month season, and are based on an analysis of historical performance and
growth expectations for the Company, financial results of other comparable
businesses both inside and outside the Company and progress toward achieving
the Company's strategic plan.
Target cash incentive compensation opportunities are established annually
for eligible executives stated as a specific percent of base salary. The
amount of performance-based incentive compensation earned by participating
executives can range from zero to double their incentive target, based upon
the extent to which preestablished financial goals are achieved.
12
<PAGE>
Equity-Based Incentive Programs.
The Committee believes that continued emphasis on equity-based compensation
opportunities encourages performance that enhances stockholder value, thereby
further linking leadership and shareholder objectives. In 1997, the Committee
awarded equity-based incentive compensation under two programs: a stock option
program and a restricted stock program under which shares of restricted stock
are granted and earned based on seasonal and annual financial performance. The
Committee also believes that restricted stock awards, which are earned based
on financial performance and the ultimate vesting of which is subject to
continued employment, assist the Company in retaining key high performing
executives.
Award opportunities for each eligible participant are based on guidelines
which include size of the executive's business unit, the individual's
responsibility level within that business, competitive practice and the market
price of the Company's Common Stock. In determining the award for an executive
officer, the Committee evaluated competitive practice and the executive
officer's performance and criticality to the business.
Stock Options. In 1997, stock options were awarded to executives in the
amounts set forth in the Option Grants in Fiscal Year 1997 Table above. The
option program utilizes vesting periods to encourage retention of key
executives. The options granted in 1997 to Messrs. Wexner and Gilman cover
shares of The Limited. All other 1997 option grants cover the Company's Common
Stock. The options granted to Mr. Jeffries are earned subject to performance,
and vest on a graduated basis over nine years. The options granted to Messrs.
Wexner, Gilman, and Johnson and Ms. Donnan-Martin vest on a graduated basis
over six years. The exercise price for each option granted, with the exception
of certain options granted to Mr. Wexner (who was granted certain above-market
value options), is equal to the fair market value of the underlying common
stock on the date of grant.
Performance-Based Restricted Stock. In 1997, with the exception of Messrs.
Wexner, Gilman and Jeffries, the Committee continued a program commenced in
1995 under which executives, including the named executive officers, are
eligible to receive restricted stock based on the achievement of
preestablished financial goals. Executives can earn from zero to double their
targeted number of restricted shares based upon the extent to which financial
goals are achieved. In 1997, special restricted stock grants, as outlined in
the Summary Compensation Table, were made to Messrs. Gilman (in shares of The
Limited) and Jeffries (in Company Common Stock), and are earned based on
attainment of specified financial goals. If earned, these shares vest over six
years, subject to continued employment.
CEO COMPENSATION.
Mr. Jeffries has been President and Chief Executive Officer of the Company
since February 1992. The Company conducts the same type of competitive review
and analysis to determine base salary and incentive guidelines for Mr.
Jeffries' position as it does for the other executive positions.
In 1997, as in prior years, in establishing Mr. Jeffries' compensation
package the Committee considered competitive practices, the extent to which
the Company achieved operating income and sales growth objectives, continued
brand growth strategy and execution, and the actions involved in establishing
the Company as a fully independent public company. These factors are
considered subjectively in the aggregate and none of these factors is accorded
specific weight.
Because of the full public independence of the Company, the Committee
believes that Mr. Jeffries' total compensation package should have even
greater emphasis on performance-based equity compensation.
13
<PAGE>
Mr. Jeffries' base salary was increased by 9%, from $550,000 to $600,000,
while his performance-based cash incentive target remained at 100%. In 1997,
the Company entered into an employment agreement with Mr. Jeffries with an
initial term of six years. Pursuant to the Agreement, Mr. Jeffries received a
stock option grant of 1,000,000 options that are earned based on specific
performance criteria, and once earned, vest over a period of nine years,
subject to his continued employment with the Company. Mr. Jeffries was also
granted 500,000 shares of restricted stock that are earned based on attainment
of specific financial performance, and once earned vest over six years,
subject to his continued employment with the Company.
The Committee believes that under Mr. Jeffries' leadership, the Company's
performance over the past five years has been exceptional. Specifically, in
1997, the Company posted a net sales increase of 56%, an operating income
increase of 83%, and an earnings per share increase of 96% over the prior
year's adjusted earnings per share. As a result of that performance, Mr.
Jeffries earned significantly above targeted levels under the performance-
based cash incentive program, and the performance-based restricted stock
program.
Prepared by the 1997 Compensation
Committee
Ratified by the Current Compensation
Committee/1/
John W. Kessler (Chair)
George Foos
- --------
(1) The members of the Compensation Committee in office during fiscal year
1997 resigned as members of the Company's Board of Directors effective
upon the consummation of the Split-Off. The current members of the
Compensation Committee are Messrs. Kessler (Chair) and Foos.
14
<PAGE>
STOCKHOLDER RETURN GRAPH
The following graph shows the changes, over fiscal year 1997 and the three-
month period in fiscal year 1996 commencing after the Initial Public Offering,
in the value of $100 invested in the Common Stock of the Company, the Standard
& Poor's 500 Composite Stock Price Index and the Standard & Poor's Retail
Stores Composite Index. The plotted points represent the closing price on the
last day of the fiscal year indicated.
COMPARISON OF 16 MONTH CUMULATIVE TOTAL RETURN*
AMONG ABERCROMBIE & FITCH CO., THE S & P 500 INDEX
AND THE S & P RETAIL COMPOSITE INDEX
LINE GRAPH
ABERCROMBIE & FITCH CO. S & P 500 INDEX S & P RETAIL COMPOSITE INDEX
----------------------- --------------- ----------------------------
9/26/96 $100 $100 $100
1/31/97 86 115 94
1/31/98 195 143 141
* $100 INVESTED IN STOCK OR IN INDEX ON 9/26/96 - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JANUARY 31.
15
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth the names of all persons who, on May 20,
1998, were known by the Company to be the beneficial owners (as defined in the
rules of the SEC) of more than 5% of the shares of Common Stock of the
Company:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS
------------------- ------------------- ----------
<S> <C> <C>
The Limited, Inc. ......................... 3,115,455(1) 6.0%(1)
Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43216
</TABLE>
- --------
(1) The Limited owned 3,115,455 shares of Common Stock as of May 20, 1998,
which shares it expects to distribute to Limited stockholders pursuant to
the Spin-Off. The Spin-Off will be made to Limited stockholders who are
holders of record as of the close of business on May 29, 1998, i.e. the
date of this Proxy Statement. Accordingly, after such date, The Limited
will not own any shares of Common Stock.
RELATIONSHIP AND TRANSACTIONS WITH THE LIMITED
SERVICES AGREEMENT.
On September 27, 1996, the Company and The Limited entered into an
intercompany services and operating agreement (the "Old Services Agreement")
with respect to services to be provided by The Limited to the Company.
Pursuant to the Old Services Agreement, The Limited provided services in
exchange for fees which (based on current costs for such services) management
believes did not exceed fees that would be paid if such services were provided
by an independent third party and which were consistent in all material
respects with the allocation of the costs of such services set forth in the
historical consolidated financial statements of the Company. The services
provided to the Company by The Limited pursuant to the Old Services Agreement
included, among other things, certain accounting, associate benefit plan
administration, audit, cash management, corporate development, corporate
secretary, governmental affairs, human resources and compensation, investor
and public relations, legal, risk management, transportation, tax and
treasury, store design/planning, real estate and import and shipping services.
The net charge for services that were paid by the Company in 1997 was
approximately $8.3 million.
The Old Services Agreement was amended upon the consummation of the Split-
Off (as amended, the "New Services Agreement"). The services to be provided by
The Limited to the Company under the New Services Agreement include, among
other things, certain associate benefit plan administration, information
technology services, human resources and compensation, tax, store
design/planning, transportation, real estate and import and shipping services.
The cost of such services to be charged to the Company generally will equal
The Limited's costs in providing the relevant services plus 5% of such costs.
The aggregate amounts to be charged to the Company under the New Services
Agreement are not expected to be materially different than the amounts charged
to the Company under the Old Services Agreement. In addition to the foregoing,
the New Services Agreement includes provisions binding on both The Limited and
the Company imposing confidentiality obligations with respect to confidential
information of the other and prohibiting the hiring of certain of the other's
employees.
16
<PAGE>
Pursuant to the New Services Agreement, each party indemnifies the other,
except in certain limited circumstances, against liabilities that the other
may incur that are caused by or arise in connection with such party's failure
to fulfill its material obligations under the New Services Agreement. The New
Services Agreement also provides that (i) the Company will reimburse The
Limited for any amounts paid by The Limited under guarantees or arrangements
supporting the Company's obligations and (ii) the Company will not take
certain actions that could materially and adversely affect the Company's
ability to pay any obligations guaranteed or supported by The Limited unless
appropriate provision is made such that, in the reasonable judgment of The
Limited, The Limited's exposure under any such guarantee or support
arrangement is not materially increased.
The New Services Agreement has a three-year term, although The Limited will
cease to provide a substantial majority of the services thereunder upon the
first anniversary of the consummation of the Split-Off. Human resources and
benefits services will terminate three months after the Split-Off is complete.
The New Services Agreement also provides for early termination of the
agreement and of individual services by the Company.
SUBLEASE AGREEMENT.
On June 11, 1995, the Company entered into a sublease agreement with an
affiliate of The Limited (the "Sublease Agreement") pursuant to which such
affiliate subleases to the Company the distribution center and headquarters
office space currently used by the Company. The Sublease Agreement provides
that the lessee will lease space at an average annual rental rate equal to
$11.00 per square foot in the case of office space and $2.85 per square foot
in the case of the distribution center. The Sublease Agreement was amended
upon the consummation of the Split-Off to provide for a total term of six
years (expiring June 11, 2001), so that the Company may continue to occupy
such space for approximately three years after the consummation of the Split-
Off, instead of the original fifteen year term.
SHARED FACILITIES AGREEMENTS.
On September 27, 1996, the Company and the relevant businesses operated by
The Limited entered into shared facilities agreements (collectively, the
"Shared Facilities Agreements") pursuant to which the Company subleases such
facilities from the relevant subsidiary of The Limited. Under the Shared
Facilities Agreements, the Company is responsible for its pro rata share
(based on square feet occupied) of all costs and expenses (principally fixed
rent) under the relevant lease plus the portion of any performance based rent
attributable to the Company. This method of allocating such costs and expenses
is consistent in all material respects with the allocation of such costs and
expenses set forth in the historical consolidated financial statements of the
Company. The store lease and other occupancy costs charge paid by the Company
in 1997 is approximately $1.3 million. At February 10, 1998, two of the
Company's stores were located in space leased by other businesses controlled
by The Limited.
TAX-SEPARATION AGREEMENT.
Prior to the Split-Off, the Company was a member of The Limited's federal
consolidated income tax group. Accordingly, the Company's income will be
included in the consolidated federal income tax return of The Limited for 1997
and part of 1998. Certain of the Company's subsidiaries also may be included
with certain subsidiaries of The Limited in combined, consolidated or unitary
income tax groups for state and local tax purposes for 1997 and part of 1998.
Effective as of the first day after the Split-Off, the Company will no longer
be a member of The Limited's consolidated group for federal income tax
purposes, and no Company subsidiaries
17
<PAGE>
will be included with subsidiaries of The Limited in combined, consolidated or
unitary tax groups for state and local tax purposes. Accordingly, The Limited
and the Company have amended their tax-sharing agreement (as amended, the "Tax
Disaffiliation Agreement") to reflect the separation of the Company from The
Limited with respect to tax matters. The Tax Disaffiliation Agreement reflects
each party's rights and obligations with respect to payments and refunds of
taxes that are attributable to periods ending on or before the date of the
Split-Off and taxes resulting from transactions effected in connection with
the Split-Off. The Tax Disaffiliation Agreement also expresses each party's
intention with respect to certain tax attributes of the Company after the
Split-Off and provides for payments between the two companies for certain tax
adjustments made after the Split-Off that cover pre-Split-Off tax liabilities.
Other provisions cover the handling of audits, settlements, elections,
accounting methods and return filing in cases where both companies have an
interest in the results of these activities.
If pursuant to a plan in existence at the time of the Split-Off, one or more
persons were to acquire a 50 percent or greater interest in either The Limited
or the Company, The Limited would recognize a gain on the Company Common Stock
it distributed in the Split-Off. To minimize this risk, the Company has agreed
in the Tax Disaffiliation Agreement to refrain from engaging in certain
transactions for two years following the date of the Split-Off without first
(i) obtaining a ruling from the IRS to the effect that such actions will not
result in the Split-Off being taxable to The Limited or its stockholders, or
(ii) obtaining an opinion of counsel recognized as an expert in federal income
tax matters and acceptable to the other party to the same effect as in (i).
Transactions that may be subject to this restriction include, among other
things, liquidation, merger or consolidation with, or acquisition by, another
company, certain issuances and redemptions of the Company Common Stock, the
granting of stock options, the sale, distribution or other disposition of
assets in a manner that would adversely affect the tax consequences of the
Split-Off or any transactions effected in connection with the Split-Off and
the discontinuation of certain businesses.
18
<PAGE>
PROPOSAL TO APPROVE ADOPTION OF THE 1998 RESTATEMENT
OF THE 1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
Subject to stockholder approval, the Company's Board of Directors has
adopted the 1996 Stock Option and Performance Incentive Plan (1998
Restatement) (the "Stock Plan"). The only changes made to the Stock Plan are
to increase by 2,000,000 the maximum number of shares of Common Stock that may
be subject to awards granted under the Stock Plan, provide the Plan Committee
(as defined below) with greater discretion in establishing vesting and
forfeiture provisions for awards under the Stock Plan, require stockholder
approval only for amendments materially increasing the aggregate number of
shares of Common Stock issuable under the Stock Plan other than pursuant to
the Stock Plan's anti-dilution provisions and provide that it will expire on
July 15, 2008. The following summary of the material terms of the Stock Plan,
a copy of which is attached hereto as Exhibit A, does not purport to be
complete and is qualified in its entirety by the terms of the Stock Plan.
PURPOSE OF PLAN.
The purpose of the Stock Plan is to attract and retain the best available
executive and key management associates for the Company and its subsidiaries
and to encourage the highest level of performance by such associates, thereby
enhancing the value of the Company for the benefit of its stockholders. The
Stock Plan is also intended to motivate executive and key management
associates to contribute to the Company's future growth and profitability and
to reward their performance in a manner that provides them with a means to
increase their holdings of Common Stock and align their interests with the
interests of the Company's stockholders.
ADMINISTRATION OF THE STOCK PLAN.
The Stock Plan is administered by a committee of two or more members of the
Company's Board of Directors (the "Plan Committee"). The Plan Committee will
be composed of directors who qualify as "non-employee directors" within the
meaning of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and as "outside directors" within the meaning of Section 162(m) of the
Code. The Plan Committee has the power in its discretion to grant awards under
the Stock Plan, to determine the terms thereof, to interpret the provisions of
the Stock Plan and to take action as it deems necessary or advisable for the
administration of the Stock Plan.
NUMBER OF AUTHORIZED SHARES.
The Stock Plan provides for awards with respect to a maximum of 2,852,324
shares of Common Stock to associates of the Company and its subsidiaries
during the term of the Stock Plan. Corresponding Tax Offset Payments (as
hereinafter defined) also may be awarded at the discretion of the Plan
Committee. The number and class of shares available under the Stock Plan
and/or subject to outstanding awards may be adjusted by the Plan Committee to
prevent dilution or enlargement of rights in the event of various changes in
the capitalization of the Company. Shares of Common Stock attributable to: (i)
unexercised Options (as hereinafter defined) which expire or are terminated,
surrendered or canceled (other than in connection with the exercise of stock
appreciation rights ("SARs"); (ii) shares of Common Stock subject to certain
restrictions ("Restricted Shares") which are forfeited to the Company; (iii)
units representing shares of Common Stock ("Performance Shares") and units
which do not represent shares of Common Stock but which may be paid in shares
of Common Stock ("Performance Units") which are not earned and paid and (iv)
awards settled in cash in lieu of shares of Common Stock, may be available for
subsequent award under the Stock Plan at the Plan Committee's discretion, to
the extent permissible under Rule 16b-3 of the Exchange Act.
19
<PAGE>
ELIGIBILITY AND PARTICIPATION.
Eligibility to participate in the Stock Plan is limited to the named
executive officers and full-time executive and key management associates of
the Company and its subsidiaries who are selected by the Plan Committee.
Currently, approximately 400 associates of the Company and its subsidiaries
are within the classes eligible to participate in the Stock Plan. The Company
anticipates that approximately 30% of those eligible will participate in the
Stock Plan. Participation in the Stock Plan is subject to the discretion of
the Plan Committee and will be based upon the associate's present and
potential contributions to the success of the Company and its subsidiaries and
such other factors as the Plan Committee deems relevant. No associate may be
granted in any calendar year awards covering more than 1,500,000 shares of the
Company's Common Stock.
TYPE OF AWARDS UNDER THE STOCK PLAN.
The Stock Plan provides that the Plan Committee may grant awards to eligible
associates in any of the following forms, subject to such terms, conditions
and provisions as the Plan Committee may determine to be necessary or
desirable: (i) incentive stock options ("ISOs"); (ii) nonstatutory stock
options ("NSOs"); (iii) SARs; (iv) Restricted Shares; (v) Performance Shares;
(vi) Performance Units; (vii) shares of unrestricted Common Stock of the
Company ("Unrestricted Shares") and (viii) tax offset payments ("Tax Offset
Payments").
GRANT OF OPTIONS AND SARS.
The Plan Committee may award ISOs and/or NSOs (collectively, "Options") to
eligible associates. SARs may be awarded either in tandem with Options
("Tandem SARs") or on a stand-alone basis ("Nontandem SARs"). Tandem SARs may
be awarded by the Plan Committee either at the time the related Option is
granted or thereafter at any time prior to the exercise, termination or
expiration of the related Option.
EXERCISE PRICE.
The exercise price with respect to an Option is determined by the Plan
Committee at the time of grant. The exercise price determined with respect to
an Option shall also be applicable in connection with the exercise of any
Tandem SAR granted with respect to such Option. At the time of grant of a
Nontandem SAR, the Plan Committee will specify the base price of the shares of
the Company's Common Stock to be issued for determining the amount of cash or
number of shares of the Company's Common Stock to be distributed upon the
exercise of such Nontandem SAR. Neither the exercise price per share of the
Company's Common Stock nor the base price of Nontandem SARs will be less than
100% of the fair market value per share of the Company's Common Stock
underlying the award on the date of grant. Information as to awards under the
Stock Plan to named executive officers and other participants is set forth in
the table below.
VESTING.
The Plan Committee may determine at the time of grant and any time
thereafter the terms under which Options and SARs shall vest and become
exercisable.
SPECIAL LIMITATIONS ON ISOS.
No ISO may be granted to an associate who owns, at the time of the grant,
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or its subsidiaries (a "10% Shareholder")
unless the exercise price per share of the Company's Common Stock subject to
such ISO is at
20
<PAGE>
least 110% of the fair market value per share of the Company's Common Stock on
the date of grant and such ISO award is not exercisable more than five years
after its date of grant. In addition, the total fair market value of shares of
the Company's Common Stock subject to ISOs which are exercisable for the first
time by an eligible associate in a given calendar year shall not exceed
$100,000, valued as of the date of the ISOs' grant. ISOs may not be granted
more than ten years after the date of adoption of the Stock Plan by the
Company's Board of Directors.
EXERCISE OF OPTIONS AND SARS.
An Option may be exercised by written notice to the Plan Committee stating
the number of shares of the Company's Common Stock with respect to which the
Option is being exercised, and tendering payment therefor. The Plan Committee
may, at its discretion, accept shares of the Company's Common Stock as payment
(valued at their fair market value on the date of exercise).
Tandem SARs are exercisable only to the extent that the related Option is
exercisable and only for the period determined by the Plan Committee (which
period may expire prior to the expiration date of the related Option). Upon
the exercise of all or a portion of Tandem SARs, the related Option shall be
canceled with respect to an equal number of shares of the Company's Common
Stock. Similarly, upon exercise of all or a portion of an Option, the related
Tandem SARs shall be canceled with respect to an equal number of shares of the
Company's Common Stock. Nontandem SARs shall be exercisable for the period
determined by the Plan Committee.
SURRENDER OR EXCHANGE OF SARS.
Upon the surrender of a Tandem SAR and cancellation of the related
unexercised Option, the associate will be entitled to receive shares of the
Company's Common Stock having an aggregate fair market value equal to (A) the
excess of (i) the fair market value of one share of the Company's Common Stock
as of the date the Tandem SAR is exercised over (ii) the exercise price per
share specified in such Option, multiplied by (B) the number of shares of the
Company's Common Stock subject to the Option, or portion thereof, which is
surrendered. Upon surrender of a Nontandem SAR, the associate will be entitled
to receive shares of the Company's Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one share
of the Company's Common Stock as of the date on which the Nontandem SAR is
exercised over (ii) the base price of the shares covered by the Nontandem SAR
multiplied by (B) the number of shares of the Company's Common Stock covered
by the Nontandem SAR, or the portion thereof being exercised. The Plan
Committee, in its discretion, may cause all or any portion of the Company's
obligation to an associate in respect of the exercise of an SAR to be
satisfied in cash in lieu of shares of the Company's Common Stock. Any
fractional shares resulting from the exercise of an SAR will be paid in cash.
NONTRANSFERABILITY OF OPTIONS AND SARS.
Options and SARs are not transferable except by will or applicable laws of
descent and distribution.
EXPIRATION OF OPTIONS.
Options will expire at such time as the Plan Committee determines; provided,
however, that no Option may be exercised more than ten years from the date of
grant, unless an ISO is held by a 10% Shareholder, in which case such ISO may
not be exercised more than five years from the date of grant.
21
<PAGE>
TERMINATION OF OPTIONS AND SARS.
Except as the Plan Committee may at any time provide, Options and SARs may
be exercised within three months after the termination of an associate's
employment (other than by death or total disability), to the extent then
exercisable, but in no case later than the term specified in the grant. Except
as the Plan Committee may at any time provide, upon the death or total
disability of an associate while employed by the Company or its subsidiaries
(or upon the death of an associate within three months after termination of
employment), Options and SARs, to the extent then exercisable, shall remain
exercisable for (i) one year following such associate's death or (ii) during
the first nine months that the associate receives benefits under the Company's
Long-Term Disability Plan.
RESTRICTED SHARES.
Restricted Shares granted to associates under the Stock Plan may not be
sold, transferred, pledged or otherwise encumbered or disposed of during the
restricted period established by the Plan Committee. The Plan Committee may
also impose additional restrictions on the associate's right to dispose of or
to encumber Restricted Shares, which may include satisfaction of performance
objectives. Performance objectives under the Stock Plan will be determined by
the Plan Committee and will be based on operating income and/or gross margin
objectives for each relevant division. These objectives will be based on any
one or more of the following: price of the Common Stock or the stock of any
affiliate, shareholder return, return on equity, return on investment, return
on capital, sales productivity, comparable store sales growth, economic
profit, economic value added, net income, operating income, gross margin,
sales, free cash flow, earnings per share, operating company contribution or
market share. These factors shall have a minimum performance standard below
which, and a maximum performance standard above which, no payments will be
made. These performance goals may be based on an analysis of historical
performance and growth expectations for the business, financial results of
other comparable businesses, and progress towards achieving the long-range
strategic plan for the business. These performance goals and determination of
results shall be based entirely on financial measures. The Plan Committee may
not use any discretion to modify award results except as permitted under
Section 162(m) of the Code.
Except as the Plan Committee may at any time provide, holders of Restricted
Shares may not exercise the rights of a shareholder, such as the right to vote
the shares or receive dividends and other distributions.
Except as the Plan Committee may at any time provide, upon termination of
the associate's employment with the Company, Restricted Shares granted to such
associate shall be forfeited.
PERFORMANCE SHARES AND PERFORMANCE UNITS.
The Plan Committee may award to associates Performance Shares, each
equivalent to one share of the Company's Common Stock and Performance Units
which will have a specified value or formula-based value at the end of a
performance period. Performance Shares and Performance Units so awarded will
be credited to an account established and maintained for the associate. The
Plan Committee shall determine performance periods and performance objectives
in connection with each grant of Performance Shares or Performance Units.
Vesting of awards of Performance Shares and Performance Units will occur
upon achievement of the applicable objectives within the applicable
performance period. The Plan Committee may, at its discretion, permit vesting
in the event performance objectives are partially met, or grant additional
vested Performance Shares or Performance Units in the event performance
objectives are surpassed. Payment of vested Performance Shares and Performance
Units may be made in cash, Common Stock of the Company or any combination
thereof, as determined by the Plan Committee.
22
<PAGE>
No voting or dividend rights attach to the Performance Shares; however, the
Plan Committee may credit an associate's Performance Share account with
additional Performance Shares equivalent to the fair market value of any
dividends on an equivalent number of shares of Common Stock.
UNRESTRICTED SHARES.
Unrestricted Shares may also be granted at the discretion of the Plan
Committee. Except as required by applicable law, no payment will be required
for Unrestricted Shares.
TAX WITHHOLDING AND TAX OFFSET PAYMENTS.
The Plan Committee may require payment, or withhold payments made by the
Stock Plan, in order to satisfy applicable withholding tax requirements. The
Plan Committee may make Tax Offset Payments to assist associates in paying
income taxes incurred as a result of their participation in the Stock Plan.
The amount of the Tax Offset Payments shall be determined by multiplying a
percentage (established by the Plan Committee) by all or a portion of the
taxable income recognized by an associate upon: (i) the exercise of an NSO or
an SAR; (ii) the disposition of shares received upon exercise of an ISO; (iii)
the lapse of restrictions on Restricted Shares; (iv) the award of Unrestricted
Shares or (v) payments for Performance Shares or Performance Units.
TERM OF STOCK PLAN.
Unless earlier terminated by the Company's Board of Directors, the Stock
Plan will terminate on July 15, 2008.
AMENDMENT AND TERMINATION.
The Company's Board of Directors may suspend, amend, modify or terminate the
Stock Plan; provided, however, that the Company's stockholders shall be
required to approve any amendment that would materially increase the aggregate
number of shares issuable under the Stock Plan except for antidilution
adjustments permitted by the Stock Plan.
Awards granted prior to a termination of the Stock Plan shall continue in
accordance with their terms following such termination. No amendment,
suspension or termination of the Stock Plan shall adversely affect the rights
of an associate in awards previously granted without such associate's consent.
23
<PAGE>
Set forth below is a summary of the awards that were made in fiscal year
1997 pursuant to the prior Stock Plan.
1997 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN (1998 RESTATEMENT) TABLE
<TABLE>
<CAPTION>
NUMBER
NAME AND POSITION OF UNITS
----------------- ---------
<S> <C>
Leslie H. Wexner, Chairman of the Board........................ -- (1)
Kenneth B. Gilman, Vice Chairman............................... -- (1)
Michael S. Jeffries, President and Chief Executive Officer..... 1,000,000(2)
500,000(3)
Michele S. Donnan-Martin, Vice President--General Merchandising
Manager--Women's.............................................. 225,000(2)
10,000(3)
Seth R. Johnson, Vice President--Chief Financial Officer....... 175,000(2)
6,000(3)
All Executive Officers as a Group.............................. 1,400,000(2)
516,000(3)
All Current Directors Who are Not Executive Officers as a
Group......................................................... --
--
All Associates other than Executive Officers a Group........... 263,000(2)
14,000(3)
</TABLE>
- --------
(1) Messrs. Wexner and Gilman did not participate in the prior Stock Plan in
the last fiscal year.
(2) Consists of options to purchase shares of Common Stock. As of the close of
trading on May 22, 1998, the market value of a share of Common Stock was
$41.625.
(3) Consists of restricted shares of Common Stock, which will generally vest
as set forth in footnote 3 to the Summary Compensation Table, in each case
subject to the holder's continued employment with the Company.
FEDERAL INCOME TAX CONSEQUENCES.
Stock Options.
There will be no federal income tax consequences to the associate or the
Company upon the grant of either an ISO or an NSO under the Stock Plan. Upon
exercise of an NSO, an associate generally will recognize ordinary income in
an amount equal to (i) the fair market value, on the date of exercise, of the
acquired shares of Common Stock; less (ii) the exercise price of the NSO.
Subject to Section 162(m) of the Code and the associate including such
compensation in income or the Company satisfying applicable reporting
requirements, the Company will be entitled to a tax deduction in the same
amount.
Upon the exercise of an ISO, an associate recognizes no immediate taxable
income. Income recognition is deferred until the associate sells the shares of
Common Stock. If the ISO is exercised no later than three months after the
termination of the associate's employment, and the associate does not dispose
of the shares acquired pursuant to the exercise of the ISO within two years
from the date the ISO was granted and within one year after the exercise of
the ISO, the gain on the sale will be treated as long-term capital gain.
Certain of these holding periods and employment requirements are liberalized
in the event of an associate's death or disability while employed by the
Company. The Company is not entitled to any tax deduction with respect to the
grant or
24
<PAGE>
exercise of ISOs, except that if the shares of Common Stock are not held for
the full term of the holding period outlined above, the gain on the sale of
such Common Stock, being the lesser of: (i) the fair market value of the
shares of Common Stock on the date of exercise minus the option price or (ii)
the amount realized on disposition minus the exercise price, will be taxed to
the associate as ordinary income and, subject to Section 162(m) of the Code
and the associate including such compensation in income or the Company
satisfying applicable reporting requirements, the Company will be entitled to
a deduction in the same amount. The excess of the fair market value of the
shares of Common Stock acquired upon exercise of an ISO over the exercise
price therefor constitutes a tax preference item for purposes of computing the
"alternative minimum tax" under the Code.
Special rules, summarized below, may apply to associates who are subject to
Section 16 of the Exchange Act.
Stock Appreciation Rights.
There will be no federal income tax consequences to either the associate or
the Company upon the grant of an SAR. However, the associate generally will
recognize ordinary income upon the exercise of an SAR in an amount equal to
the aggregate amount of cash and the fair market value of the shares of Common
Stock received upon exercise. Subject to Section 162(m) of the Code and the
associate including such compensation in income or the Company satisfying
applicable reporting requirements, the Company will be entitled to a deduction
equal to the amount includable in the associate's income.
Special rules, summarized below, may apply to associates who are subject to
Section 16 of the Exchange Act.
Restricted Shares.
There will be no federal income tax consequences to either the associate or
the Company upon the grant of Restricted Shares until expiration of the
restricted period and the satisfaction of any other conditions applicable to
the Restricted Shares. At that time, the associate generally will recognize
taxable income equal to the then fair market value for the shares of Common
Stock and, subject to Section 162(m) of the Code and the associate including
such compensation in income or the Company satisfying applicable reporting
requirements, the Company will be entitled to a corresponding deduction.
However, the associate may elect, within thirty days after the date of the
grant, to recognize ordinary income as of the date of grant and the Company
will be entitled to a corresponding deduction at that time.
Special rules, summarized below, may apply to associates who are subject to
Section 16 of the Exchange Act.
Performance Shares and Units.
There will be no federal income tax consequences to the associate or the
Company upon the grant of Performance Shares or Performance Units. Associates
generally will recognize taxable income at the time when payment for the
Performance Shares or Performance Units is received in an amount equal to the
aggregate amount of cash and the fair market value of shares of Common Stock
acquired. Subject to Section 162(m) of the Code, and the associate including
such compensation in income or the Company satisfying applicable reporting
requirements, the Company will be entitled to a deduction equal to the amount
includable in the associate's income.
Special rules, summarized below, may apply to associates who are subject to
Section 16 of the Exchange Act.
25
<PAGE>
Unrestricted Shares.
Associates generally will recognize taxable income at the time Unrestricted
Shares are received. Subject to Section 162(m) of the Code and the associate
including such compensation in income or the Company satisfying applicable
reporting requirements, the Company will be entitled to a deduction equal to
the amount includable in the associate's income.
Special rules, summarized below, may apply to associates who are subject to
Section 16 of the Exchange Act.
Section 16 of the Exchange Act.
Associates who are subject to Section 16 of the Exchange Act and receive
shares of Common Stock under the Stock Plan will not recognize ordinary income
at that time unless (i) an election is made by such associate under Section
83(b) of the Code or (ii) the sale of such shares by such associate at a
profit is no longer subject to Section 16(b) of the Exchange Act (generally
(1) in the case of options, six months following the date of grant of the
option to which the shares relate and (2) otherwise, six months after the
receipt of shares). Such associate will instead recognize ordinary income
equal to the fair market value of such shares received (less the price paid
for the shares, if any) on the first day that such a sale is no longer subject
to Section 16(b) of the Exchange Act and, subject to Section 162(m) of the
Code, the Company or an affiliate generally will be entitled to a deduction of
an equal amount for federal income tax purposes at that time provided that
applicable reporting requirements are satisfied. An associate subject to
Section 16 of the Exchange Act may elect under Section 83(b) of the Code,
within 30 days of the transfer of such shares, to recognize income at the time
of transfer equal to the difference between the price paid for such shares, if
any, and the fair market value of such shares. Such amount will be taxed as
ordinary income to the associate and, subject to Section 162(m) of the Code
and satisfaction of applicable reporting requirements, generally will be
allowed as a deduction for federal income tax purposes to the Company.
REQUIRED VOTE.
Approval of the Stock Plan requires the affirmative vote of a majority of
the total voting power represented by the outstanding shares of Common Stock
present or represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK PLAN AS
DESCRIBED HEREIN.
26
<PAGE>
PROPOSAL TO APPROVE ADOPTION OF THE 1998 RESTATEMENT OF THE
1996 STOCK PLAN FOR NON-ASSOCIATE DIRECTORS
Subject to stockholder approval, the Company's Board of Directors has
adopted the Abercrombie & Fitch Co. 1996 Non-Associate Director Stock Plan
(1998 Restatement) (the "Director Stock Plan"). The only changes made to the
Director Stock Plan are to provide for grant of an option to acquire 10,000
shares of Common Stock to an Eligible Director (as defined below) upon the
initial election of such Eligible Director to the Board of Directors, to
increase by 100,000 the maximum number of shares of Common Stock that may be
subject to awards granted under the Director Stock Plan and to provide that it
will expire on July 15, 2008. The following summary of the material terms of
the Director Stock Plan, a copy of which is attached hereto as Exhibit B, does
not purport to be complete and is qualified in its entirety by the terms of
the Director Stock Plan.
PURPOSE OF PLAN.
The purpose of the Director Stock Plan is to promote the interests of the
Company and its shareholders by increasing the proprietary interest of non-
associate directors in the growth and performance of the Company.
ELIGIBILITY.
Directors of the Company who are not associates of the Company or its
affiliates ("Eligible Directors") are eligible to participate in the Director
Stock Plan.
TYPES OF AWARDS UNDER THE DIRECTOR STOCK PLAN.
Pursuant to the Director Stock Plan, upon their initial election to the
Board of Directors (or in the case of Eligible Directors first elected to the
Board of Directors prior to approval of the Director Stock Plan by the
Company's stockholders, upon the date of such approval), each new Eligible
Director is granted options to acquire 10,000 shares of Common Stock at a
price equal to the then fair market value of such shares. On the first
business day of each fiscal year of the Company commencing thereafter, each
Eligible Director will be granted an option to purchase 2,000 shares of Common
Stock as of such first business day of such fiscal year at a per share
exercise price equal to the fair market value of a share of Common Stock on
such date. Each option will: (i) vest in annual 25% increments commencing on
the first anniversary of the grant date; and (ii) expire on the earlier of the
tenth anniversary of the date of grant and one year from the date on which an
optionee ceases to be an Eligible Director. The exercise price per share of
Common Stock shall be 100% of the fair market value per share on the date the
option is granted. The exercise price of options must be paid in cash.
In addition, the Director Stock Plan provides that each Eligible Director
will receive 50% of such Eligible Director's annual retainer in unrestricted
shares of Common Stock.
NUMBER OF AUTHORIZED SHARES.
The maximum number of shares of Common Stock in respect of which options may
be granted and shares awarded in lieu of 50% of the annual retainer under the
Director Stock Plan is 182,000. Shares of Common Stock subject to options that
are forfeited, terminated or canceled will again be available for awards. The
shares of Common Stock to be delivered under the Director Stock Plan will be
made available from the authorized but unissued shares of Common Stock or from
treasury shares. The number and class of shares available under the Director
Stock Plan and/or subject to outstanding options may be adjusted by the Board
of Directors to prevent dilution or enlargement or rights in the event of
various changes in the capitalization of the Company.
27
<PAGE>
ADMINISTRATION OF THE DIRECTOR STOCK PLAN.
The Director Stock Plan will be administered by the Board of Directors.
Subject to the provisions of the Director Stock Plan, the Board shall be
authorized to interpret the Director Stock Plan, to establish, amend, and
rescind any rules and regulations relating to it and to make all other
determinations necessary or advisable for its administration; provided,
however, that the Board shall have no discretion with respect to the selection
of directors to receive options, the number of shares of Common Stock subject
to any such options, the purchase price thereunder or the timing or term of
grants of options. The determinations of the Board in the administration of
the Director Stock Plan, as described herein, shall be final and conclusive.
The Secretary of the Company shall be authorized to implement the Director
Stock Plan in accordance with its terms and to take such actions of a
ministerial nature as shall be necessary to effectuate the intent and purposes
thereof. The validity, construction and effect of the Director Stock Plan and
any rules and regulations relating to it shall be determined in accordance
with the laws of the State of Delaware.
TRANSFERABILITY.
The options granted under the Director Stock Plan may not be assigned or
transferred, except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order.
Shares issued under the Director Stock Plan in respect of 50% of the annual
retainer may be assigned or transferred.
TERM OF PLAN.
No option may be granted under the Director Stock Plan after the tenth
annual meeting of the Company's shareholders following its approval by the
Company's stockholders.
AMENDMENTS.
The Director Stock Plan may be amended by the Company's Board of Directors,
as it shall deem advisable or to conform to any change in any law or
regulation applicable thereto; provided, that the Company's Board of Directors
may not, except in certain limited circumstances, without the authorization
and approval of stockholders: (i) increase the number of shares of Common
Stock which may be purchased pursuant to options, either individually or in
the aggregate; (ii) change the requirement that option grants be priced at
fair market value; (iii) modify in any respect the class of individuals who
constitute Eligible Directors or (iv) materially increase benefits thereunder.
The provisions governing eligibility, the grant, terms and conditions of the
options and the award of shares of Common Stock in respect of the annual
retainer and, for purposes of the Director Stock Plan, the amount of the
annual retainer, may not be amended more often than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules under either such statute.
28
<PAGE>
AWARDS UNDER THE PLAN.
The following table sets forth amounts that would have been paid to the
current Non-Associate Director group under the Director Stock Plan had it been
in effect, and assuming the members of such group being first elected to the
Company's Board of Directors, in fiscal 1997.
1996 NON-ASSOCIATE DIRECTOR STOCK PLAN (1998 RESTATEMENT) BENEFITS TABLE
<TABLE>
<CAPTION>
NUMBER
OF
NAME AND POSITION UNITS
----------------- ------
<S> <C>
Non-Associate Director Group (Based on 5 Eligible Directors) 1,205(1)
50,000(2)
</TABLE>
- --------
(1) Consists of shares of Common Stock awarded in respect of 50% of each such
director's annual retainer, valued as of the date such retainer is paid.
(2) Consists of options to purchase shares of Common Stock. Each such option
will vest in 25% increments commencing on the first anniversary of the
date of grant. As of the close of trading on May 22, 1998, the market
value of a share of Common Stock was $41.625.
FEDERAL INCOME TAX CONSEQUENCES.
Options. There are no federal income consequences to an Eligible Director or
to the Company upon the grant of an option under the Director Stock Plan.
Eligible Directors, all of whom are subject to Section 16 of the Exchange
Act, who receive shares of Common Stock by reason of the exercise of an option
under the Director Stock Plan, will not recognize ordinary income at that time
unless (i) an election is made by such optionee under Section 83(b) of the
Code or (ii) the sale of such shares by such optionee at a profit is no longer
subject to Section 16(b) of the Exchange Act. Such optionee will instead
recognize ordinary income equal to the fair market value of such shares
received (less the exercise price paid for the shares, if any) on the first
day that such a sale is no longer subject to Section 16(b) of the Exchange
Act, and the Company or an affiliate will be entitled to a deduction of an
equal amount for federal income tax purposes at that time, provided that,
applicable reporting requirements are satisfied. In the alternative, such
optionee may elect under Section 83(b) of the Code, within 30 days of the
transfer of such shares to the optionee, to recognize income at the time of
exercise equal to the difference between the option price and any higher fair
market of the shares of Common Stock, generally on the date of exercise, will
be taxed as ordinary income to the optionee and generally will be allowed as a
deduction for federal income tax purposes to the Company.
Any gain or loss realized by an optionee on disposition of the Common Stock
acquired upon exercise of any option generally will be taxed as capital gain
or loss to such optionee, long-term or short-term depending on the holding
period, and will not result in any additional tax consequences to the Company.
The optionee's basis in the shares for determining gain or loss on the
disposition will generally be the fair market value of such shares determined
under either of the procedures set forth above.
REQUIRED VOTE.
Approval of the Director Stock Plan requires the affirmative vote of a
majority of the total voting power represented by the outstanding shares of
Common Stock present or represented at the Annual Meeting and entitled to
vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR STOCK
PLAN.
29
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
During the Company's 1997 fiscal year, Coopers & Lybrand L.L.P. served as
the Company's independent public accountants and in that capacity rendered an
opinion on the Company's consolidated financial statements as of and for the
fiscal year ended January 31, 1998. The Company annually reviews the selection
of its independent public accountants; no selection has yet been made for the
current fiscal year.
Representatives of Coopers & Lybrand are expected to be present at the
Annual Meeting. They will be available to respond to appropriate questions and
may make a statement if they so desire.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the meeting, it
is the intention of each of the persons named in the proxy to vote in
accordance with his judgment on such matters.
STOCKHOLDER PROPOSALS
Any proposals of stockholders which are intended to be presented at the next
Annual Meeting of Stockholders, but which are not received by the Secretary of
the Company at the principal executive offices of the Company on or before
January 29, 1999, may be omitted by the Company from the Proxy Statement and
form of proxy relating to that meeting.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing the proxy form
and the form of material used in solicitation of proxies will be paid by the
Company. In addition to the use of the mails, solicitation may be made by
employees of the Company by telephone, mailgram, facsimile, telegraph, cable
and personal interview. The Company has retained Shareholder Communications
Corporation, New York, New York, to aid in the solicitation of proxies with
respect to shares held by brokerage houses, custodians, fiduciaries and other
nominees for a fee of approximately $5,000, plus expenses. The Company does
not expect to pay any other compensation for the solicitation of proxies.
By Order of the Board of Directors
/s/ Michael S. Jeffries
Michael S. Jeffries
Chairman and Chief Executive Officer
30
<PAGE>
EXHIBIT A
ABERCROMBIE & FITCH CO.
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(1998 RESTATEMENT)
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Abercrombie & Fitch Co., a Delaware
corporation (the "Company"), hereby establishes a stock incentive plan to be
known as the Abercrombie & Fitch Co. 1996 Stock Option and Performance
Incentive Plan (1998 Restatement) (the "Plan"). The Plan shall become
effective on July 16, 1998, subject to the approval of the Company's
stockholders at the 1998 Annual Meeting. Upon approval of the Plan by the
Board of Directors of the Company (the "Board"), awards may be made as
provided herein, subject to stockholder approval.
1.2 Purpose. The Company desires to attract and retain the best available
executive and key management associates for itself and its subsidiaries and to
encourage the highest level of performance by such associates in order to
serve the best interests of the Company and its stockholders. The Plan is
expected to contribute to the attainment of these objectives by offering
eligible associates the opportunity to acquire stock ownership interests in
the Company, and other rights with respect to stock of the Company, and to
thereby provide them with incentives to put forth maximum efforts for the
success of the Company and its subsidiaries.
ARTICLE 2
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any one or all
of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) nonstatutory stock options
("Nonstatutory Stock Options") (unless otherwise indicated, references in the
Plan to "Options" shall include both Incentive Stock Options and Nonstatutory
Stock Options); (iii) stock appreciation rights ("Stock Appreciation Rights"),
as described in Article 7, which may be awarded either in tandem with Options
("Tandem Stock Appreciation Rights") or on a stand-alone basis ("Nontandem
Stock Appreciation Rights"); (iv) shares of Common Stock (as defined below)
which are restricted as provided in Article 11 ("Restricted Shares"); (v)
units representing shares of Common Stock, as described in Article 12
("Performance Shares"); (vi) units which do not represent shares of Common
Stock but which may be paid in the form of Common Stock, as described in
Article 13 ("Performance Units"); (vii) shares of unrestricted Common Stock
("Unrestricted Shares") and (viii) tax offset payments ("Tax Offset
Payments"), as described in Article 15.
2.2 Maximum Shares Available. The maximum aggregate number of shares of the
Company's Class A Common Stock, par value $.01 per share (the "Common Stock")
available for award under the Plan, including shares of Common Stock awarded
as Tax Offset Payments, is 2,852,324 subject to adjustment pursuant to
Article 16. Shares of Common Stock issued pursuant to the Plan may be either
authorized but unissued shares or
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issued shares reacquired by the Company. In the event that prior to the end of
the period during which Options may be granted under the Plan, any Option or
any Nontandem Stock Appreciation Right under the Plan expires unexercised or
is terminated, surrendered or canceled (other than in connection with the
exercise of a Stock Appreciation Right) without being exercised in whole or in
part for any reason, or any Restricted Shares, Performance Shares or
Performance Units are forfeited, or if such awards are settled in cash in lieu
of shares of Common Stock, then such shares or units may, at the discretion of
the Committee to the extent permissible under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Act"), be made available for subsequent awards
under the Plan, upon such terms as the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent award, the
Committee shall have the right, at its discretion, to require associates to
return to the Company awards previously granted under this Plan. Subject to
the provisions of this Plan, such new award shall be upon such terms and
conditions as are specified by the Committee at the time the new award is
granted to the extent permitted by Rule 16b-3 under the Act.
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by a Committee (the
"Committee") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-
employee director" (within the meaning of Rule 16b-3(b)(3)(i) under the Act).
3.2 Powers of Committee. Subject to the express provisions of the Plan, the
Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by
each Option and any performance objectives or vesting standards applicable to
each Option, (ii) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options and to determine which Options, if any, shall be
accompanied by Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock
Appreciation Rights and Nontandem Stock Appreciation Rights and to determine
the terms and conditions of such rights; (iv) to grant Restricted Shares and
to determine the term of the restricted period and other conditions and
restrictions applicable to such shares; (v) to grant Performance Shares and
Performance Units and to determine the performance objectives, performance
periods and other conditions applicable to such shares or units; (vi) to grant
Unrestricted Shares; (vii) to determine the amount of, and to make, Tax Offset
Payments; and (viii) to determine the associates to whom, and the time or
times at which, Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units and Unrestricted Shares shall be
granted.
3.3 Delegation. The Committee may delegate to one or more of its members or
to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions
under the Plan to fail to comply with Section 16 of the Act or (ii) the
Committee to fail to qualify as "outside directors" under Section 162(m) of
the Code. The Committee may also employ attorneys, consultants, accountants or
other professional advisors and shall be entitled to rely upon the advice,
opinions or valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary authority
to interpret the terms of the Plan, to adopt and revise rules, regulations and
policies to administer the Plan and to make any other factual
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determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all associates who have received awards under the Plan and
all other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor any
associate to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to
the Plan or awards made thereunder, and each member of the Committee shall be
fully indemnified and protected by the Company with respect to any liability
he or she may incur with respect to any such action, interpretation or
determination, to the extent permitted by applicable law and to the extent
provided in the Company's Certificate of Incorporation and Bylaws, as amended
from time to time.
ARTICLE 4
ELIGIBILITY
Awards shall be limited to executive and key management associates who are
regular, full-time associates of the Company, its present and future
subsidiaries. In determining the associates to whom awards shall be granted
and the number of shares to be covered by each award, the Committee shall take
into account the nature of the services rendered by such associates, their
present and potential contributions to the success of the Company and its
subsidiaries and such other factors as the Committee in its sole discretion
shall deem relevant. As used in this Plan, the term "subsidiary" shall mean
any corporation which at the time qualifies as a subsidiary of the Company
under the definition of "subsidiary corporation" set forth in Section 424(f)
of the Code, or any successor provision hereafter enacted. No associate may be
granted in any calendar year awards covering more than 1,500,000 shares of
Common Stock.
ARTICLE 5
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under this Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the
Committee shall from time to time determine.
5.2 Option Price. The option price of each Option to purchase Common Stock
shall be determined by the Committee at the time of grant, but shall not be
less than 100 percent of the fair market value of the Common Stock subject to
such Option on the date of grant. The option price so determined shall also be
applicable in connection with the exercise of any Tandem Stock Appreciation
Right granted with respect to such Option.
5.3 Term of Options. The term of each Option granted under the Plan shall
not exceed ten (10) years from the date of grant, subject to earlier
termination as provided in Articles 9 and 10, except as otherwise provided in
Section 6.1 with respect to ten (10) percent stockholders of the Company.
5.4 Exercise of Options. An Option may be exercised, in whole or in part, at
such time or times as the Committee shall determine. The Committee may, in its
discretion, accelerate the exercisability of any Option at any time. Options
may be exercised by an associate by giving written notice to the Committee
stating the number
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of shares of Common Stock with respect to which the Option is being exercised
and tendering payment therefor. Payment for the Common Stock issuable upon
exercise of the Option shall be made in full in cash, or by certified check
or, if the Committee, in its sole discretion, permits, in shares of Common
Stock (valued at fair market value on the date of exercise). As soon as
reasonably practicable following such exercise, a certificate representing the
shares of Common Stock purchased, registered in the name of the associate,
shall be delivered to the associate.
5.5 Cancellation of Stock Appreciation Rights. Upon exercise of all or a
portion of an Option, the related Tandem Stock Appreciation Rights shall be
canceled with respect to an equal number of shares of Common Stock.
ARTICLE 6
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
6.1 Ten Percent Stockholder. Notwithstanding any other provision of this
Plan to the contrary, no associate may receive an Incentive Stock Option under
the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of
all classes of stock of the Company or its subsidiaries, unless (i) the option
price for such Incentive Stock Option is at least 110 percent of the fair
market value of the Common Stock subject to such Incentive Stock Option on the
date of grant and (ii) such Option is not exercisable after the date five (5)
years from the date such Incentive Stock Option is granted.
6.2 Limitation on Grants. The aggregate fair market value (determined with
respect to each Incentive Stock Option at the time such Incentive Stock Option
is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an associate during any
calendar year (under this Plan or any other plan of the Company or a
subsidiary) shall not exceed $100,000.
6.3 Limitations on Time of Grants. No grant of an Incentive Stock Option
shall be made under this Plan after the termination date set forth in Section
19.10 hereof.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation Rights
may be awarded by the Committee in connection with any Option granted under
the Plan, either at the time the Option is granted or thereafter at any time
prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the
base price of shares of Common Stock to be used in connection with the
calculation described in Section 7.4 below. The base price of a Nontandem
Stock Appreciation Right shall be not less than 100 percent of the fair market
value of a share of Common Stock on the date of grant. Stock Appreciation
Rights shall be subject to such terms and conditions not inconsistent with the
other provisions of this Plan as the Committee shall determine.
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7.2 Limitations on Exercise. A Tandem Stock Appreciation Right shall be
exercisable only to the extent that the related Option is exercisable and
shall be exercisable only for such period as the Committee may determine
(which period may expire prior to the expiration date of the related Option).
Upon the exercise of all or a portion of Tandem Stock Appreciation Rights, the
related Option shall be canceled with respect to an equal number of shares of
Common Stock. Shares of Common Stock subject to Options or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall
determine.
7.3 Surrender or Exchange of Tandem Stock Appreciation Rights. A Tandem
Stock Appreciation Right shall entitle the associate to surrender to the
Company unexercised the related Option, or any portion thereof, and to receive
from the Company in exchange therefor that number of shares of Common Stock
having an aggregate fair market value equal to (A) the excess of (i) the fair
market value of one (1) share of Common Stock as of the date the Tandem Stock
Appreciation Right is exercised over (ii) the option price per share specified
in such Option, multiplied by (B) the number of shares of Common Stock subject
to the Option, or portion thereof, which is surrendered. Cash shall be
delivered in lieu of any fractional shares.
7.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of a
Nontandem Stock Appreciation Right shall entitle the associate to receive from
the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised over (ii) the base price of the shares covered by the
Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of
Common Stock covered by the Nontandem Stock Appreciation Right, or the portion
thereof being exercised. Cash shall be delivered in lieu of any fractional
shares.
7.5 Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company
shall (i) issue, in the name of the associate, stock certificates representing
the total number of full shares of Common Stock to which the associate is
entitled pursuant to Section 7.3 or 7.4 hereof and cash in an amount equal to
the fair market value, as of the date of exercise, of any resulting fractional
shares, and (ii) if the Committee causes the Company to elect to settle all or
part of its obligations arising out of the exercise of the Stock Appreciation
Right in cash pursuant to Section 7.6, deliver to the associate an amount in
cash equal to the fair market value, as of the date of exercise, of the shares
of Common Stock it would otherwise be obligated to deliver.
7.6 Cash Settlement. The Committee, in its discretion, may cause the Company
to settle all or any part of its obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash in lieu of all or part of the
shares of Common Stock it would otherwise be obligated to deliver in an amount
equal to the fair market value of such shares on the date of exercise.
ARTICLE 8
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Right may be transferred, assigned, pledged
or hypothecated (whether by operation of law or otherwise), except as provided
by will or the applicable laws of descent and distribution, and no Option or
Stock Appreciation Right shall be subject to execution, attachment or similar
process. Any
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attempted assignment, transfer, pledge, hypothecation or other disposition of
an Option or a Stock Appreciation Right not specifically permitted herein
shall be null and void and without effect. An Option or Stock Appreciation
Right may be exercised by an associate only during his or her lifetime, or
following his or her death pursuant to Article 10.
ARTICLE 9
TERMINATION OF EMPLOYMENT
9.1 Exercise after Termination of Employment. Except as the Committee may at
any time provide, in the event that the employment of an associate to whom an
Option or Stock Appreciation Right has been granted under the Plan shall be
terminated (for reasons other than death or total disability), such Option or
Stock Appreciation Right may be exercised (to the extent that the associate
was entitled to do so on the date of the termination of his employment) at any
time within three (3) months after such termination of employment.
9.2 Total Disability. In the event that an associate to whom an Option or
Stock Appreciation Right has been granted under the Plan shall become totally
disabled, except as the Committee may at any time provide, such Option or
Stock Appreciation Right may be exercised at any time during the first nine
(9) months that the associate receives benefits under the VABCO Long-Term
Disability Plan (the "Disability Plan") to the extent otherwise exercisable
during such nine-month period. For purposes hereof, "total disability" shall
have the definition set forth in the Disability Plan, which definition is
hereby incorporated by reference.
ARTICLE 10
DEATH OF ASSOCIATE
If an associate to whom an Option or Stock Appreciation Right has been
granted under the Plan shall die while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such
employment, except as the Committee may at any time provide, such Option or
Stock Appreciation Right may be exercised to the extent that the associate was
entitled to do so at the time of his or her death, by the associate's estate
or by the person who acquires the right to exercise such Option or Stock
Appreciation Right upon his or her death by bequest or inheritance. Such
exercise may occur at any time within one (1) year after the date of the
associate's death or such other period as the Committee may at any time
provide, but in no case later than the date on which the Option or Stock
Appreciation Right would otherwise terminate.
ARTICLE 11
RESTRICTED SHARES
11.1 Grant of Restricted Shares. The Committee may from time to time cause
the Company to grant Restricted Shares under the Plan to associates, subject
to such restrictions, conditions and other terms as the Committee may
determine.
11.2 Restrictions. At the time a grant of Restricted Shares is made, the
Committee shall establish a period of time (the "Restricted Period")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is
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made, prescribe restrictions in addition to or other than the expiration of
the Restricted Period, including the satisfaction of corporate or individual
performance objectives which may be applicable to all or any portion of the
Restricted Shares. Except with respect to grants of Restricted Shares intended
to qualify as performance-based compensation for purposes of Section 162(m) of
the Code, the Committee may also, in its sole discretion, shorten or terminate
the Restricted Period or waive any other restrictions applicable to all or a
portion of such Restricted Shares. None of the Restricted Shares may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during
the Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Committee with respect to such Restricted Shares.
11.3 Restricted Stock Certificates. If the Committee deems it necessary or
appropriate, the Company may issue, in the name of each associate to whom
Restricted Shares have been granted, stock certificates representing the total
number of Restricted Shares granted to the associate, provided that such
certificates bear an appropriate legend or other restriction on transfer. The
Secretary of the Company shall hold such certificates, properly endorsed for
transfer, for the associate's benefit until such time as the Restricted Shares
are forfeited to the Company, or the restrictions lapse.
11.4 Rights of Holders of Restricted Shares. Except as determined by the
Committee either at the time Restricted Shares are awarded or at any time
thereafter prior to the lapse of the restrictions, holders of Restricted
Shares shall not have the right to vote such shares or the right to receive
any dividends with respect to such shares. All distributions, if any, received
by an associate with respect to Restricted Shares as a result of any stock
split-up, stock distribution, a combination of shares, or other similar
transaction shall be subject to the restrictions of this Article 11.
11.5 Forfeiture. Except as the Committee may at any time provide, any
Restricted Shares granted to an associate pursuant to the Plan shall be
forfeited if the associate terminates employment with the Company or its
subsidiaries prior to the expiration or termination of the Restricted Period
and the satisfaction of any other conditions applicable to such Restricted
Shares. Upon such forfeiture, the Secretary of the Company shall either cancel
or retain in its treasury the Restricted Shares that are forfeited to the
Company.
11.6 Delivery of Restricted Shares. Upon the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the Restricted Shares shall
lapse and a stock certificate for the number of Restricted Shares with respect
to which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the associate or the associate's beneficiary or estate, as
the case may be.
11.7 Performance-Based Objectives. At the time of the grant of Restricted
Shares to an associate, and prior to the beginning of the performance period
to which performance objectives relate, the Committee may establish
performance objectives based on any one or more of the following: price of
Company Common Stock or the stock of any affiliate, shareholder return, return
on equity, return on investment, return on capital, sales productivity,
comparable store sales growth, economic profit, economic value added, net
income, operating income, gross margin, sales, free cash flow, earnings per
share, operating company contribution or market share. These factors shall
have a minimum performance standard below which, and a maximum performance
standard above which, no payments will be made. These performance goals may be
based on an analysis of historical performance and growth expectations for the
business, financial results of other comparable businesses, and progress
towards achieving the long-range strategic plan for the business. These
performance goals and determination of results shall be based entirely on
financial measures. The Committee may not use any discretion to modify award
results except as permitted under Section 162(m) of the Code.
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ARTICLE 12
PERFORMANCE SHARES
12.1 Award of Performance Shares. For each Performance Period (as defined in
Section 12.2), Performance Shares may be granted under the Plan to such
associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "Performance Share Account") established and
maintained for such associate.
12.2 Performance Period. "Performance Period" shall mean such period of time
as shall be determined by the Committee in its sole discretion. Different
Performance Periods may be established for different associates receiving
Performance Shares. Performance Periods may run consecutively or concurrently.
12.3 Right to Payment of Performance Shares. With respect to each award of
Performance Shares under this Plan, the Committee shall specify performance
objectives (the "Performance Objectives") which must be satisfied in order for
the associate to vest in the Performance Shares which have been awarded to him
or her for the Performance Period. If the Performance Objectives established
for an associate for the Performance Period are partially but not fully met,
the Committee may, nonetheless, in its sole discretion, determine that all or
a portion of the Performance Shares have vested. If the Performance Objectives
for a Performance Period are exceeded, the Committee may, in its sole
discretion, grant additional, fully vested Performance Shares to the
associate. The Committee may also determine, in its sole discretion, that
Performance Shares awarded to an associate shall become partially or fully
vested upon the associate's death, total disability (as defined in Article 9)
or retirement, or upon the termination of the associate's employment prior to
the end of the Performance Period.
12.4 Payment for Performance Shares. As soon as practicable following the
end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 12.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the
associate pursuant to Section 12.3. As soon as reasonably practicable after
such determinations, or at such later date as the Committee shall determine at
the time of grant, the Company shall pay to the associate an amount with
respect to each vested Performance Share equal to the fair market value of a
share of Common Stock on such payment date or, if the Committee shall so
specify at the time of grant, an amount equal to (i) the fair market value of
a share of Common Stock on the payment date less (ii) the fair market value of
a share of Common Stock on the date of grant of the Performance Share. Payment
shall be made entirely in cash, entirely in Common Stock (including Restricted
Shares) or in such combination of cash and Common Stock as the Committee shall
determine.
12.5 Voting and Dividend Rights. No associate shall be entitled to any
voting rights, to receive any dividends, or to have his or her Performance
Share Account credited or increased as a result of any dividends or other
distribution with respect to Common Stock. Notwithstanding the foregoing,
within sixty (60) days from the date of payment of a dividend by the Company
on its shares of Common Stock, the Committee, in its discretion, may credit an
associate's Performance Share Account with additional Performance Shares
having an aggregate fair market value equal to the dividend per share paid on
the Common Stock multiplied by the number of Performance Shares credited to
his or her account at the time the dividend was declared.
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ARTICLE 13
PERFORMANCE UNITS
13.1 Award of Performance Units. For each Performance Period (as defined in
Section 12.2), Performance Units may be granted under the Plan to such
associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining
the value of each Performance Unit at the time of payment (the "Ending
Value"). If necessary to make the calculation of the amount to be paid to the
associate pursuant to Section 13.3, the Committee shall also state in the
award agreement the initial value of each Performance Unit (the "Initial
Value"). Performance Units granted to an associate shall be credited to an
account (a "Performance Unit Account") established and maintained for such
associate.
13.2 Right to Payment of Performance Units. With respect to each award of
Performance Units under this Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the associate to vest in the
Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an associate for the
Performance Period are partially but not fully met, the Committee may,
nonetheless, in its sole discretion, determine that all or a portion of the
Performance Units have vested. If the Performance Objectives for a Performance
Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Units to the associate. The Committee may
also determine, in its sole discretion, that Performance Units awarded to an
associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of employment of the associate by the Company.
13.3 Payment for Performance Units. As soon as practicable following the end
of a Performance Period, the Committee shall determine whether the Performance
Objectives for the Performance Period have been achieved (or partially
achieved to the extent necessary to permit partial vesting at the discretion
of the Committee pursuant to Section 13.2). If the Performance Objectives for
the Performance Period have been exceeded, the Committee shall determine
whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine, the
Company shall pay to the associate an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.
ARTICLE 14
UNRESTRICTED SHARES
14.1 Award of Unrestricted Shares. The Committee may cause the Company to
grant Unrestricted Shares to associates at such time or times, in such amounts
and for such reasons as the Committee, in its sole discretion, shall
determine. Except as required by applicable law, no payment shall be required
for Unrestricted Shares.
14.2 Delivery of Unrestricted Shares. The Company shall issue, in the name
of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to
the associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
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ARTICLE 15
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under this
Plan or anytime thereafter to make Tax Offset Payments to assist associates in
paying income taxes incurred as a result of their participation in this Plan.
The Tax Offset Payments, which, if awarded, may be in cash or shares of Common
Stock, shall be determined by multiplying a percentage established by the
Committee by all or a portion (as the Committee shall determine) of the
taxable income recognized by an associate upon (i) the exercise of a
Nonstatutory Stock Option or a Stock Appreciation Right, (ii) the disposition
of shares received upon exercise of an Incentive Stock Option, (iii) the lapse
of restrictions on Restricted Shares, (iv) the award of Unrestricted Shares or
(v) payments for Performance Shares or Performance Units. The percentage shall
be established, from time to time, by the Committee at that rate which the
Committee, in its sole discretion, determines to be appropriate and in the
best interests of the Company to assist associates in paying income taxes
incurred as a result of the events described in the preceding sentence. Tax
Offset Payments shall be subject to the restrictions on transferability
applicable to Options and Stock Appreciation Rights under Article 8.
ARTICLE 16
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may at any
time make or provide for such adjustments to the Plan, to the number and class
of shares available thereunder or to any outstanding Options, Stock
Appreciation Rights, Restricted Shares or Performance Shares as it shall deem
appropriate to prevent dilution or enlargement of rights, including
adjustments in the event of changes in the number of shares of outstanding
Common Stock by reason of stock dividends, extraordinary cash dividends,
split-ups, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, liquidations and the like.
ARTICLE 17
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would materially increase the aggregate number of shares
which may be issued under the Plan shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Article 16 does not require such
approval. If the Plan is terminated, the terms of the Plan shall,
notwithstanding such termination, continue to apply to awards granted prior to
such termination. No suspension, termination, modification or amendment of the
Plan may, without the consent of the associate to whom an award shall
theretofore have been granted, adversely affect the rights of such associate
under such award.
ARTICLE 18
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement, executed by the associate
and the Company, and containing such restrictions, terms and conditions, if
any, as the Committee may require. In the event of any conflict between a
written agreement and the Plan, the terms of the Plan shall govern.
A-10
<PAGE>
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Fair Market Value. "Fair market value" for purposes of this Plan,
shall be the closing price of the Common Stock as reported on the principal
exchange on which the shares are listed for the date on which the grant,
exercise or other transaction occurs, or if there were no sales on such date,
the most recent prior date on which there were sales.
19.2 Tax Withholding. The Company shall have the right to require associates
or their beneficiaries or legal representatives to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax
requirements. Whenever payments under the Plan are to be made to an associate
in cash, such payments shall be net of any amounts sufficient to satisfy all
federal, state and local withholding tax requirements. The Committee may, in
its discretion, permit an associate to satisfy his or her tax withholding
obligation either by (i) surrendering shares owned by the associate or (ii)
having the Company withhold from shares otherwise deliverable to the
associate. Shares surrendered or withheld shall be valued at their fair market
value as of the date on which income is required to be recognized for income
tax purposes. In the case of an award of Incentive Stock Options, the
foregoing right shall be deemed to be provided to the associate at the time of
such award.
19.3 Compliance With Section 16(b) and Section 162(m). In the case of
associates who are or may be subject to Section 16 of the Act, it is the
intent of the Company that any award granted hereunder satisfy and be
interpreted in a manner that satisfies the applicable requirements of Rule
16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Act and will not be subjected to
liability thereunder. If any provision of the Plan or any award would
otherwise conflict with the intent expressed herein, that provision, to the
extent possible, shall be interpreted and deemed amended so as to avoid such
conflict. To the extent of any remaining irreconcilable conflict with such
intent, such provision shall be deemed void as applicable to associates who
are or may be subject to Section 16 of the Act. If any award hereunder is
intended to qualify as performance-based for purposes of Section 162(m) of the
Code, the Committee shall not exercise any discretion to increase the payment
under such award except to the extent permitted by Section 162(m) and the
regulations thereunder.
19.4 Successors. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses of the Company. In the event of any of the foregoing,
the Committee may, at its discretion prior to the consummation of the
transaction, cancel, offer to purchase, exchange, adjust or modify any
outstanding awards, at such time and in such manner as the Committee deems
appropriate and in accordance with applicable law.
19.5 General Creditor Status. Associates shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind, or a fiduciary relationship between the Company
and any associate or beneficiary or legal representative of such associate. To
the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company. All payments to be made hereunder
shall be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan.
A-11
<PAGE>
19.6 No Right to Employment. Nothing in the Plan or in any written agreement
entered into pursuant to Article 18, nor the grant of any award, shall confer
upon any associate any right to continue in the employ of the Company or a
subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.
19.7 Notices. Notices required or permitted to be made under the Plan shall
be sufficiently made if sent by registered or certified mail addressed (a) to
the associate at the associate's address as set forth in the books and records
of the Company or its subsidiaries, or (b) to the Company or the Committee at
the principal office of the Company.
19.8 Severability. In the event that any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
19.9 Governing Law. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
19.10 Term of Plan. Unless earlier terminated pursuant to Article 17 hereof,
the Plan shall terminate on the earlier of the tenth (10th) anniversary of the
date of adoption of the Plan by the Board or July 15, 2008.
A-12
<PAGE>
EXHIBIT B
ABERCROMBIE & FITCH CO.
1996 STOCK PLAN FOR NON-ASSOCIATE DIRECTORS
(1998 RESTATEMENT)
1. PURPOSE
The purpose of the Abercrombie & Fitch Co. 1996 Stock Plan for Non-Associate
Directors (1998 Restatement) (the "Plan") is to promote the interests of
Abercrombie & Fitch Co. (the "Company") and its stockholders by increasing the
proprietary interest of non-associate directors in the growth and performance
of the Company by granting such directors options to purchase shares of Class
A Common Stock, par value $.01 per share (the "Shares") of the Company and by
awarding Shares to such directors in respect of a portion of the Retainer (as
defined in Section 6(b)) payable to such directors.
2. ADMINISTRATION
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that the Board shall have no discretion with respect to the selection of
directors to receive options, the number of Shares subject to any such
options, the purchase price thereunder or the timing of grants of options
under the Plan. The determinations of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Secretary of the
Company shall be authorized to implement the Plan in accordance with its terms
and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware.
3. ELIGIBILITY
The class of individuals eligible to receive grants of options and awards of
Shares in respect of the Retainer under the Plan shall be directors of the
Company who are not associates of the Company or its affiliates ("Eligible
Directors"). Any holder of an option or Shares granted hereunder shall
hereinafter be referred to as a "Participant".
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, an aggregate of 182,000
Shares shall be available for issuance under the Plan. The Shares deliverable
upon the exercise of options or in respect of the Retainer may be made
available from authorized but unissued Shares or treasury Shares. If any
option granted under the Plan shall terminate for any reason without having
been exercised, the Shares subject to, but not delivered under, such option
shall be available for issuance under the Plan.
B-1
<PAGE>
5. GRANT, TERMS AND CONDITIONS OF OPTIONS
(a) On the date an Eligible Director is first elected to the Board such
Eligible Director shall be granted an option to purchase 10,000 Shares,
provided, however, in respect of the first election to the Board of Eligible
Directors prior to the Effective Date, such option shall be granted on the
Effective Date.
(b) Each Eligible Director on the first business day of a fiscal year of the
Company beginning after the Effective Date (as defined in Section 11), will be
granted on such a day an option to purchase 2,000 Shares.
(c) The options granted will be nonstatutory stock options not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and shall have the following terms and conditions:
(i) Price. The purchase price per Share deliverable upon the exercise of
each option shall be 100% of the Fair Market Value per Share on the date
the option is granted. For purposes of the Plan, Fair Market Value shall be
the closing price of the Shares as reported on the principal exchange on
which the shares are listed for the date in question, or if there were no
sales on such date, the most recent prior date on which there were sales.
(ii) Payment. Options may be exercised only upon payment of the purchase
price thereof in full. Such payment shall be made in cash.
(iii) Exercisability and Term of Options. Options shall become exercisable
in four equal annual installments commencing on the first anniversary of
the date of grant, provided the holder of such Option is an Eligible
Director on such anniversary, and shall be exercisable until the earlier of
ten years from the date of grant and the expiration of the one year period
provided in paragraph (iv) below.
(iv) Termination of Service as Eligible Director. Upon termination of a
Participant's service as a director of the Company for any reason, all
outstanding options held by such Eligible Director, to the extent then
exercisable, shall be exercisable in whole or in part for a period of one
year from the date upon which the Participant ceases to be a Director,
provided that in no event shall the options be exercisable beyond the
period provided for in paragraph (iii) above.
(v) Nontransferability of Options. No option may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or the laws of descent and distribution,
and during the lifetime of the Participant to whom an option is granted it
may be exercised only by the Participant or by the Participant's guardian
or legal representative. Notwithstanding the foregoing, options may be
transferred pursuant to a qualified domestic relations order.
(vi) Option Agreement. Each option granted hereunder shall be evidenced by
an agreement with the Company which shall contain the terms and provisions
set forth herein and shall otherwise be consistent with the provisions of
the Plan.
6. GRANT OF SHARES
(a) From and after the Effective Date, 50% of the Retainer of each Eligible
Director shall be paid in a number of Shares equal to the quotient of (i) 50%
of the Retainer divided by (ii) the Fair Market Value on the Retainer Payment
Date. Cash shall be paid to an Eligible Director in lieu of a fractional
Share.
B-2
<PAGE>
(b) For purposes of this Plan "Retainer" shall mean the annual retainer
payable to an Eligible Director (as defined in Section 3) for any fiscal
quarter of the Company, the amount of which Retainer may not be changed for
purposes of this Plan more often than once every six months and
"Retainer Payment Date" shall mean the first business day of the Company's
calendar quarter.
7. ADJUSTMENT OF AND CHANGES IN SHARES
In the event of a stock split, stock dividend, extraordinary cash dividend,
subdivision or combination of the Shares or other change in corporate
structure affecting the Shares, the number of Shares authorized by the Plan
shall be increased or decreased proportionately, as the case may be, and the
number of Shares subject to any outstanding option shall be increased or
decreased proportionately, as the case may be, with appropriate corresponding
adjustment in the purchase price per Share thereunder.
8. NO RIGHTS OF SHAREHOLDERS
Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company in
respect of any Shares purchasable upon the exercise of any option, in whole or
in part, unless and until certificates for such Shares shall have been issued.
9. PLAN AMENDMENTS
The Plan may be amended by the Board as it shall deem advisable or to
conform to any change in any law or regulation applicable thereto; provided,
that the Board may not, without the authorization and approval of shareholders
of the Company: (i) increase the number of Shares which may be purchased
pursuant to options hereunder, either individually or in the aggregate, except
as permitted by Section 7, (ii) change the requirement of Section 5(b) that
option grants be priced at Fair Market Value, except as permitted by Section 7
or (iii) modify in any respect the class of individuals who constitute
Eligible Directors. The provisions of Sections 3, 5 and/or 6 may not be
amended more often than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, or
the rules under either such statute.
10. LISTING AND REGISTRATION
Each Share shall be subject to the requirement that if at any time the Board
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the
granting of such Shares, no such Share may be disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.
11. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective on the date of the approval of the Plan by
the Company's stockholders ("Effective Date"). The Plan shall terminate the
day following the tenth Annual Shareholders Meeting at which Directors are
elected succeeding the Effective Date unless the Plan is extended or
terminated at an earlier date by Shareholders or is terminated by exhaustion
of the Shares available for issuance hereunder.
B-3
<PAGE>
PROXY
ABERCROMBIE & FITCH CO.
This Proxy is Solicited by the Board of Directors
Annual Meeting of Stockholders
July 16, 1998
The Board of Directors recommends a vote "FOR" each of the named nominees
and "FOR" approval of the Plans referred to below. If no specification is
indicated, the shares represented by this proxy will be voted as recommended by
the Board.
Election of Directors, Nominees:
John A. Golden, Seth R. Johnson
1. Election of Directors
FOR WITHHELD
[ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Approval of the 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Option and Performance Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued and to be signed on the reverse side)
<PAGE>
3. Approval of the 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Plan for Non-Associate Directors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned hereby appoints Michael S. Jeffries and Seth R. Johnson,
and each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Common Stock of Abercrombie & Fitch Co. which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on July 16, 1998 at 10:00 a.m., Eastern
Daylight Time, and at any adjournment thereof, upon the matters described in the
accompanying Proxy Statement and upon any other business that may properly come
before the meeting or any adjournments thereof.
The undersigned acknowledges receipt with this Proxy of a copy of the
Notice of Annual Meeting of Stockholders and Proxy Statement dated May 29, 1998.
SIGNATURE(S) DATE
---------------------------------- --------
IMPORTANT: Please date this Proxy and sign exactly as your name or names appear
hereon. If stock is held jointly, signature should include both names.
Executors, Administrators, Trustees, Guardians and others signing in a
representative capacity should indicate full titles.
<PAGE>
P R O X Y
ABERCROMBIE & FITCH CO.
This Proxy is Solicited by the Board of Directors
Annual Meeting of Stockholders
July 16, 1998
The undersigned hereby appoints Michael S. Jeffries and Seth R. Johnson, and
each of them, proxies, with full power of substitution, to vote for the
undersigned all shares of Common Stock of Abercrombie & Fitch Co. which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on July 16, 1998 at 10:00 a.m., Eastern
Daylight Time, and at any adjournments thereof, upon the matters described in
the accompanying Proxy Statement and upon any other business that may properly
come before the meeting or any adjournments thereof.
Election of Directors, Nominees:
John A. Golden, Seth R. Johnson
SAID PROXIES ARE DIRECTED TO VOTE AS MARKED ON THE REVERSE SIDE AND IN THEIR
DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
3249
[X] Please mark your votes as in this example.
The Board of Directors recommends a vote "FOR" each of the named nominees
and "FOR" approval of the Plans referred to below. If no specification is
indicated, the shares represented by this proxy will be voted as recommended by
the board.
1. Election of Directors FOR WITHHELD
(see reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- ----------------------------
2. Approval of the 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Option and Performance Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Plan for Non-Associate Directors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Annual Meeting of Stockholders and Proxy Statement dated May 29, 1998.
IMPORTANT: Please date this Proxy and sign exactly as your name appears hereon.
If stock is held jointly, signature should include both names. Executors,
Administrators, Trustees, Guardians and others signing in a representative
capacity should indicate full titles.
SIGNATURE(S) DATE:
---------------------------------- --------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
