<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
BIG DOG HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of secruties to which transaction applies:
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(3) Perunit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fe
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO of Big Dog Holdings, Inc.]
BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders which
will be held on Thursday, May 20, 1999 at 3:00 pm, local time, in Los Angeles,
California.
The following notice of meeting identifies each business item for your
action. These items are the election of two directors and the ratification of
Deloitte & Touche LLP as the Company's independent public accountants and
auditors for the 1999 fiscal year. The Board of Directors recommends that you
vote FOR each of these items. We have also included a proxy statement that
contains more information about these items and the meeting. Whether or not you
plan to attend in person, please complete, sign, date and return the enclosed
proxy card(s) promptly to ensure that your shares will be represented. If you do
attend the meeting and wish to vote your shares personally, you may revoke your
proxy.
Thank you for your continued interest in Big Dog Holdings, Inc.
Sincerely,
/s/ Andrew D. Feshbach
Andrew D. Feshbach
Chief Executive Officer and Director
[LOGO of Big Dog Holdings, Inc.]
BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
--------------
TO THE STOCKHOLDERS OF
BIG DOG HOLDINGS, INC.
The 1999 Annual Meeting of Stockholders of BIG DOG HOLDINGS, INC. (the
"Company") will be held at the Beverly Hilton Hotel, 9876 Wilshire Blvd, Beverly
Hills, CA 90210 on Thursday, May 20, 1999 at 3:00 pm, local time, for the
following purposes: 1. To elect two directors to serve until the Company's 2002
Annual Meeting; 2. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent public accountants and auditors for the 1999 fiscal year;
and 3. To transact such other business as may properly come before the meeting
or any adjournments thereof. Only stockholders of record at the close of
business on April 14, 1999 are entitled to notice of, and to vote at, the Annual
Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ Anthony J. Wall
Anthony J. Wall
Secretary
Santa Barbara, California
April 23, 1999
<PAGE>
BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
This Proxy Statement is furnished to stockholders by the Board of Directors
of Big Dog Holdings, Inc. (the "Company") in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of the Company to be held
at the Beverly Hilton Hotel, 9876 Wilshire Blvd, Beverly Hills, California,
90210 on Thursday, May 20, 1999 at 3:00 pm (local time), and at any adjournments
or postponements of the meeting. The Company's principal executive offices are
located at 121 Gray Avenue, Santa Barbara, California 9310 and its telephone
number is (805) 963-8727. This Proxy Statement, Notice of Annual Meeting and the
accompanying proxy card(s) are being first mailed to stockholders on or about
April 23, 1999.
General Information, Voting Rights and Voting Procedures
April 14, 1999 is the record date (the "Record Date") for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournments or postponements of the meeting. 12,100,350 shares of Common Stock
of the Company ("Common Stock") were outstanding on the Record Date, and are
entitled to vote at the meeting. The Common Stock is the only outstanding voting
stock of the Company, with each share entitled to one vote.
Each accompanying proxy card that is properly signed and returned to the
Company, and not revoked, will be voted in accordance with the instructions
contained therein. The proxy may be revoked at any time before it is exercised
by delivery to the Secretary of the Company, either in person or by mail, of a
written notice of revocation. Attendance at the Annual Meeting will not in
itself constitute revocation of the proxy.
Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying proxy card(s) (or their substitutes) will (i) vote
FOR the election of Robert H. Schnell and David Walsh to the Board of Directors
of the Company, (ii) vote FOR the approval of Deloitte & Touche LLP as the
Company's independent public accountants and auditors for the 1999 fiscal year
and (iii) will use their discretion with regard to other matters (of which the
Company is not now aware) that may be properly presented at the meeting or any
adjournments or postponements of the meeting and all matters incident to the
conduct of the meeting.
The presence at the meeting, in person or by proxy, of a majority of the
shares of Common Stock outstanding on the Record Date will constitute a quorum.
Assuming the presence of a quorum, the directors nominated will be re-elected by
a plurality of the votes cast by the stockholders entitled to vote at the
meeting, and the approval of the appointment of Deloitte & Touche LLP as the
Company's independent accountants and auditors will require a majority of the
votes cast by the stockholders represented and entitled to vote at the meeting.
Abstentions will be treated as shares that are present in determining those
entitled to vote on a matter and the presence of a quorum. If a broker or
nominee indicates on its proxy that it does not have discretionary authority to
vote on a particular matter as to certain share, those shares will be counted
for general quorum purposes, but will not be counted as represented at the
meeting in determining the number of shares necessary for approval of that
matter. Any unmarked proxies, including those submitted by brokers or nominees,
will be voted in favor of the nominees of the Board of Directors and appointment
of Deloitte & Touche LLP.
Security Ownership of Principal Shareholders and Management
The following table shows certain information, as of March 15, 1999, with
respect to the shares of the Company's Common Stock beneficially owned by (i)
persons or entities known by the Company to own 5% or more of the Company's
Common Stock, (ii) the Company's directors and Named Executive Officers (as
defined under "Executive Compensation") and (iii) all directors and Named
Executive Officers as a group.
<TABLE>
<CAPTION>
Number of Options and Percent of
NAME and ADDRESS Shares Owned(1) Warrants(2) Total Class(3)
- ------------------------------------------- -------------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Fred Kayne................................. 6,001,110(4) 0 6,001,110 49.6%
c/o Fortune Financial
1800 Avenue of the Stars, Suite 1112
Los Angeles, CA 90067
Andrew D. Feshbach......................... 1,195,400(5) 0 1,195,400 9.9%
c/o Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Fidelity Advisor Strategic Opportunities Fund
82 Devonshire Street 1,011,600(6) --- 1,011,600 8.4%
Boston, MA 02109
FMR Corp., Edward C. Johnson 3d and
Abigail P. Johnson
c/o FMR Corp.
82 Devonshire Street
Boston, MA 02109
Robert H. Schnell.......................... 317,220(7) 30,333 347,553 2.9%
Anthony J. Wall............................ 117,000 2,000 119,000 ---
Douglas N. Nilsen.......................... 100,000 4,000 104,000 ---
Roberta J. Morris.......................... 70,000 1,500 71,500 ---
Andrew W. Wadhams.......................... 50,000 4,000 54,000 ---
David J. Walsh............................. 20,000 15,000 35,000 ---
Steven C. Good............................. 5,000 3,000 8,000 ---
Kenneth A. Solomon......................... 0 3,000 3,000 ---
All directors and executive officers as a
group (10 persons)......................... 7,855,7307 62,833 7,938,563 65.6%
</TABLE>
(1) Unless otherwise indicated, each person has sole voting and dispositive
power with respect to the shares shown.
(2) Represents shares subject to options or warrants held by directors and
Named Executive Officers that are exercisable as of March 15, 1999 or
become exercisable within 60 days thereof.
(3) Based on 12,100,350 shares outstanding. Percentage information is omitted
for individuals who own less than one percent of the outstanding shares of
Common Stock and the shares deemed outstanding due to exercisable options.
(4) Includes 38,610 shares of Common Stock held in trusts (of which Mr. Kayne
is one of two co-trustees) for the benefit of certain relatives. Mr. Kayne
disclaims any pecuniary interest in the trust's shares.
(5) All such shares are owned by the Feshbach Trust, of which Mr. Feshbach and
his wife are co-trustees.
(6) Based on a Schedule 13G dated February 1, 1999 filed with the Securities
and Exchange Commission. According to such 13G, all of the shares shown are
owned by Fidelity Advisor Strategic Opportunities Fund (the
"Fund").Fidelity Management & Research Company ("Fidelity"), as advisor to
the Fund, and FMR Corp., Edward P. Johnson and Abigail Johnson, as a result
of their direct or indirect control of Fidelity, may also be deemed to be
beneficial owners of the shares.
(7) All such shares are owned by the Robert and Renee Schnell Living Trust, of
which Mr. Schnell and his wife are co-trustees.
PROPOSAL 1
ELECTION OF DIRECTORS
Board of Directors
The Board of Directors of the Company is comprised of six members divided
into three classes. Stockholders elect one-third of the members of the Board of
Directors each year, and the members of each class serve on the Board of
Directors for three years. The terms of Robert Schnell and David Walsh, the
Class II Directors, expire in 1999 and each has been nominated to stand for
re-election at the Annual Meeting to hold office until the Company's Annual
Meeting in 2002 or until his successor is duly elected and qualified. The terms
of other directors expire at the Annual Meeting in 2000 or 2001.
The Board of Directors recommends a vote "FOR" the election of each of the
nominees. Unless authority to do so is withheld, the persons named in the
enclosed proxy card(s) (or their substitutes) will vote the shares represented
thereby FOR the election of Robert H. Schnell and David J. Walsh. If either
nominee becomes unavailable or is unable to serve as a director, the persons
named as proxies (or their substitutes) will have full discretion and authority
to vote or refrain from voting for any other nominee.
The following table contains information regarding the nominees and the
other incumbent directors.
<TABLE>
Nominees For Election-Term Expiring 2002 (Class II)
<CAPTION>
Year First
Name Age Elected
---- --- ----------
<S> <C> <C>
Robert H. Schnell......................................... 59 1997
David J. Walsh............................................ 39 1997
</TABLE>
<TABLE>
Incumbent Directors-Term Expiring 2000 (Class III)
<CAPTION>
Year First
Name Age Elected
---- --- ----------
<S> <C> <C>
Fred Kayne................................................ 60 1992
Andrew D. Feshbach........................................ 38 1992
</TABLE>
<TABLE>
<CAPTION>
Incumbent Directors-Term Expiring 2001(Class I)
Year First
Name Age Elected
---- --- ----------
<S> <C> <C>
Steven C. Good............................................ 56 1997
Kenneth A. Solomon........................................ 36 1997
</TABLE>
Since September 1994 through the present, Mr. Schnell has been a private
investor. Mr. Schnell served as Chairman of the Board of Cosmar Corporation, a
designer and, through an affiliated company, a manufacturer of artificial nail
and nail care products, from October 1986 until its sale in August 1994.
Mr. Walsh has served as Senior Vice President-Strategic Planning of
Transaction Network Services, Inc., a provider of data communications services
for more than five years.
Mr. Kayne co-founded the Company in May 1992 and has served as its Chairman
since that time. Mr. Kayne co-founded Fortune Fashions, Inc., a custom
manufacturer of embellished apparel for the tourist industry, in 1991 and has
served as its Chairman and President since that time. Mr. Kayne also founded
Fortune Financial, a private merchant banking firm, in 1986 and has served as
its Chairman and President since that time. Mr. Kayne also serves as a director
of The Right Start, Inc., an infant products retailer and catalog company.
Mr. Feshbach co-founded the Company in May 1992 and has served as
President, Chief Executive Officer and as a director since that time. From June
1992 until May 1997, Mr. Feshbach also served as Chief Financial Officer of the
Company. Mr. Feshbach co-founded Fortune Fashions, Inc. in 1991 and he has
served as one of its directors since that time. Mr. Feshbach serves as a
director of The Right Start, Inc.
Mr. Good founded Good, Swartz & Berns, an accountancy corporation more than
five years ago and is the senior partner of that firm. Mr. Good also serves as a
director of Opto Sensors, Inc. and Arden Realty Company.
Mr. Solomon has served as President of Network Television for Studios USA
Television (formerly Universal Television) since July 1997. From August 1995 to
July 1997, Mr. Solomon served as co-head of television at DreamWorks SKG. From
June 1994 to August 1995, Mr. Solomon served as Executive Vice President of
Network Distribution at Fox Broadcasting. From 1992 to 1995, Mr. Solomon was
Executive Vice President and General Sales Manager at Fox's Twentieth Century
Television. Mr. Solomon currently serves as a director and Chair of the
Convention Committee for the National Association of Television Producing
Executives.
Board and Committee Meetings
During 1998, there were four meetings of the Board of Directors. The Board
maintains an Audit, Compensation, Employee Stock Option and Special Compensation
Committee, the responsibilities of which are summarized below. Each Board member
attended 75% or more of the meetings of the Board and the committees on which he
served that were held in 1998.
Audit Committee. Steven Good and David Walsh, neither of whom is an officer
or employee of the Company, are the current members of the Audit Committee. The
Audit Committee is responsible for monitoring and reviewing accounting methods
adopted by the Company, internal accounting procedures and controls and audit
plans. The Audit Committee recommends to the Board of Directors the engagement
of the Company's independent auditors and monitors the scope and results of the
Company's audits, the internal accounting controls of the Company, and the audit
practices and professional services furnished by the Company's independent
auditors. The Audit Committee held two meetings during 1998.
Compensation Committee. Fred Kayne, Robert Schnell and David Walsh, none of
whom is an officer or employee of the Company, are the current members of the
Compensation Committee. The Compensation Committee is responsible for reviewing
and approving all compensation arrangements for the officers of the Company and
has principal responsibility for administering the Amended and Restated 1997
Performance Award Plan (the "1997 Plan"). The Compensation Committee held three
meetings during 1998.
Employee Stock Option Committee. The Employee Stock Option Committee is
comprised of Fred Kayne and Andrew Feshbach and is responsible for authorizing
grants of stock options and other awards under the 1997 Plan to employees of the
Company who have positions below that of vice president, within guidelines
established by the Compensation Committee. The Employee Stock Option Committee
generally operates by unanimous written consent and held no meetings during
1998.
Special Compensation Committee. Robert Schnell and David Walsh are the
current members of the Special Compensation Committee, which has the
responsibility of evaluating, authorizing and administering stock option grants
and other awards under the 1997 Plan to directors and executive officers whose
compensation may be subject to Section 162(m) limits under the Internal Revenue
Code. The Special Compensation Committee held one meeting during 1998.
Compensation of Directors
Cash Compensation of Directors. Each non-employee director (excluding Mr.
Kayne) receives a fee of $10,000 per year for his services and is entitled to be
reimbursed for expenses incurred in connection with attendance at Board or
committee meetings. Mr. Kayne is paid a fee of $10,000 per month for acting as
Chairman. Directors who are employees of the Company are not paid any additional
compensation for their services as a director. No additional compensation was
paid to directors for participating in committees during 1998. However, for 1999
the Board has approved payment of an additional fee of $2,500 per year for each
director who is a member of the Compensation Committee (other than Mr. Kayne)
and $5,000 per year for each director who is a member of the Audit Committee.
Option Grants to Non-Employee Directors. On April 7, 1998, options to
acquire 10,000 shares at an exercise price of $14.00 per share that had been
granted to each non-employee director in the prior year under the 1997 Plan were
cancelled and options for the same number of shares were issued to the
non-employee directors with an exercise price of $6.50 per share (the fair
market value at the time of grant). See "Executive Compensation-Option Values"
below. On June 5, 1998 each non-employee director was granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $6.50 per share,
which was greater than the market price of the Common Stock at the close of
trading on the date of grant.
If a non-employee director's services are terminated for any reason other
than death, disability or retirement, any option held by the non-employee
director that is then exercisable will remain exercisable for six months after
the termination of service or until the expiration of the option term, whichever
occurs first. If the non-employee director dies, becomes disabled or retires,
his option will become fully exercisable and will remain exercisable for two
years or until the expiration of the option term, whichever occurs first. Upon a
change in control (as defined in the 1997 Plan), each option will become
immediately exercisable for all shares at the time subject to that option. Any
outstanding option that is not exercised prior to a reorganization in which the
Company as an entity does not survive as a public company, may terminate, unless
the option is assumed or replaced in the context of the reorganization.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid in the years indicated to the Company's Chief Executive
Officer and the Company's four other most highly compensated officers (the
"Named Executive Officers").
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------------------- ------------
Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus(1) Compensation(2) Options(3)
- ------------------------------------------ ---- -------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Andrew D. Feshbach........................ 1998 $269,269 $90,000 --- ---
President and Chief Executive Officer 1997 $233,000 $75,000 --- ---
1996 $200,000 --- $21,955 ---
Douglas N. Nilsen......................... 1998 $196,154 $25,000 --- 127,500
Executive Vice President 1997 $175,000 $20,000 --- ---
1996 $147,000 $10,000 --- ---
Anthony J. Wall........................... 1998 $164,385 $25,000 --- 77,500
Executive Vice President and General 1997 $126,000 $20,000 --- ---
Counsel 1996 $104,000 --- --- ---
Andrew W. Wadhams......................... 1998 $148,077 $25,000 --- 127,500
Executive Vice President-Retail 1997 $138,000 $30,000 --- ---
1996 $ 56,000(4) $ 5,000 --- ---
Roberta J. Morris......................... 1998 $115,481 $25,000 --- 62,500
Chief Financial Officer and Treasurer 1997 $ 99,000 $15,000 --- ---
1996 $ 92,900 $ 4,000 --- ---
</TABLE>
(1) Amounts shown represent the bonus earned by the Named Executive Officer
during the year indicated, whether or not paid in that year.
(2) Other 1996 annual compensation for Mr. Feshbach represents a car allowance.
(3) Does not include options for 300,000 shares granted to Mr. Feshbach that
were voluntarily surrendered by him for no consideration and canceled.
(4) Mr. Wadhams was hired by the Company on August 1, 1996; this amount
represents his salary from such date through December 31, 1996.
Option Grants
The following table sets forth certain information with respect to the
Options granted the Named Executive Officers during the Company's 1998 fiscal
year. No SARs were granted to the Named Executive Officers during fiscal 1998.
<TABLE>
Option Grants in the Last Fiscal Year
-------------------------------------
<CAPTION>
Percent of
Total
Options
Number of Granted to
Securities Employees Exercise or Grant Date
Underlying in Last Base Price Expiration Present
Name Options(1) Fiscal Year per Share Date Value(2)
- ------------------------ ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Andrew D. Feshbach --- n/a n/a n/a n/a
Douglas N. Nilsen 40,000 3.5% $ 6.50(3) 4/6/08 $222,275
30,000 2.6% 8.00(4) 4/6/08 163,350
30,000 2.6% 10.00(5) 4/6/08 159,452
27,500 2.4% 3.50(6) 12/7/08 81,444
Anthony J. Wall 20,000 1.8% $ 6.50(3) 4/6/08 $111,138
15,000 1.3% 8.00(4) 4/6/08 81,675
15,000 1.3% 10.00(5) 4/6/08 79,726
27,500 2.4% 3.50(6) 12/7/08 81,444
Andrew W. Wadhams 40,000 3.5% $ 6.50(3) 4/6/08 $222,275
30,000 2.6% 8.00(4) 4/6/08 163,350
30,000 2.6% 10.00(5) 4/6/08 159,452
27,500 2.4% 3.50(6) 12/7/08 81,444
Roberta J. Morris 15,000 1.3% $ 6.50(3) 4/6/08 $ 83,353
12,500 1.1% 8.00(4) 4/6/08 68,062
12,500 1.1% 10.00(5) 4/6/08 66,438
22,500 2.0% 3.50(6) 12/7/08 66,636
</TABLE>
(1) Does not include stock options granted in 1998 that were then canceled in
the same year, but does include options granted in the previous year that
were repriced in 1998. See "Option Values" and "Summary of Compensation
Table." Upon any termination of employment, options which have not yet
vested will terminate. Vested but unexercised options expire 12 months
after a termination of employment due to retirement, death or total
disability; immediately upon any termination of the officer's employment
"for cause"; and three months after termination of employment for any other
reason. The 1997 Plan grants the Compensation Committee discretion to
accelerate, extend or otherwise modify benefits payable under the
applicable awards in various circumstances, including a termination of
employment (other than "for cause") or change in control or to permit the
transfer of options to certain related persons or entities on a
case-by-case basis. Under the 1997 Plan, upon a change in control of the
Company, all options become immediately exercisable unless the applicable
Committee otherwise determines.
(2) The present value of the options as of their grant dates was calculated
using the Black-Scholes single option model. The assumptions used in the
model were: expected volatility of 259%, risk-free rate of return
(approximately equal to the U.S. Treasury Strip rate at the grant date) of
5.4%, dividend yield of 0% and time to exercise of ten years. No
discounting was done to account for non-transferability or vesting. The
actual value, if any, an executive may realize will depend on the excess of
the stock price over the exercise price on the date the option is
exercised.
(3) Options granted at $6.50 per share vest in the following annual
installments: 10% Year 1; 10% Year 2; 20% Year 3; 20% Year 4; 20% Year 5;
20% Year 6. The fair market value of the Company's stock at the time of the
grant was $6.50.
(4) Options granted at $8.00 per share vest in five equal annual installments
on the third through the seventh anniversary of the grant date. These
options were premium-priced options, with an exercise price that was 123%
of the fair market value of the underlying shares on the date of grant.
(5) Options granted at $10.00 vest in three equal annual installments on the
fifth through the seventh anniversary of the grant date. These options were
premium-priced options, with an exercise price that was 154% of the fair
market value of the underlying shares on the date of grant.
(6) Options granted at $3.50 per share vest in five equal annual installments
over five years. These options were premium-priced options, with an
exercise price that was 110% of the fair market value of the Company's
stock underlying shares on the date of grant.
Option Values
The following table sets forth certain information with respect to the
value of unexercised options held by Named Executive Officers at the end of
1998. "Value" is calculated as the difference between the fair market value and
the exercise price of in-the-money options at year end. None of the Named
Executive Officers exercised options during 1998.
<TABLE>
Year-End Option Values
----------------------
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1998 December 31, 1998
--------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew D. Feshbach.......................... 0 0 0 0
Douglas N. Nilsen........................... 0 127,500 0 $34,375
Andrew W. Wadhams........................... 0 127,500 0 $34,375
Anthony J. Wall............................. 0 77,500 0 $34,375
Roberta J. Morris........................... 0 62,500 0 $28,125
</TABLE>
The following table sets forth certain information as to the repricing of
options held by the Named Executive Officers.
<TABLE>
Option Repricings
-----------------
<CAPTION>
Length of
Securities Market Original
Underlying Price of Exercise Option Term
Number of Stock at Price at New Remaining at
Date of Options Time of Time of Exercise Date of
Name Repricing Repriced Repricing Repricing Price Repricing
- ------------------------ --------- ---------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Andrew D. Feshbach, n/a 0 n/a n/a n/a n/a
Chief Executive Officer
Douglas N. Nilsen, 4/7/98 30,000 $6.50 $12.00 $6.50 6 yrs, 3 mos.
Executive Vice President
Andrew W. Wadhams, 4/7/98 25,000 $6.50 $12.00 $6.50 6 yrs, 3 mos.
Executive Vice President
Anthony J. Wall, 4/7/98 10,000 $6.50 $12.00 $6.50 6 yrs, 3 mos.
Executive Vice President
Roberta J. Morris, n/a 0 n/a n/a n/a n/a
Chief Financial Officer
</TABLE>
Report of the Compensation Committee on Repricing of Options
On February 5, 1998, the Board authorized the Compensation Committee and
the Special Compensation Committee (for the executive officers) to reprice the
options previously granted to directors, officers and employees to current fair
market value. On April 7, 1998, such Committees repriced 408,750 outstanding
options. Chairman of the Board Fred Kayne and Board member and Chief Executive
Officer Andrew Feshbach held no options. As described above under "Options
Granted in the Last Fiscal Year," the repriced options granted to officers have
staggered exercise prices of $6.50 (the fair market value as of the repricing
date) to $10.00, and a term of 10 years. The officers' options, which previously
vested equally over five years commencing from their original date of grant, now
vest over seven years, with the majority of the options vesting in the later
years. The commencement of the vesting date for the officers was changed to
restart as of the April 7, 1998 repricing date. The repriced options held by
employees below the officer level and by non-employee directors have an exercise
price of $6.50 (the fair market value as of the repricing date) and a term of 10
years, with regular 5-year vesting from April 7, 1998.
The Board and the Committees approved the repricing based, in part, on
their belief that the fair market value of the Common Stock was so significantly
below the exercise prices of the outstanding options that that situation (1) was
having or could have an adverse impact on the morale of the Company's employees,
(2) had largely abrogated the incentives that the options were designed to
create, and (3) could impact the Company's competitive position with respect to
retention of valued employees. The Board and the Committees believe that the
repricing has helped and will continue to help the Company retain its officers
and key employees and provides an incentive to all employees to work toward
goals that will benefit all stockholders.nd key employees and provides an
incentive to all employees to work toward goals that will benefit all
stockholders.
The Compensation Committee
Fred Kayne
Robert Schnell
David Walsh
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Company currently does not have any employment contracts with its Chief
Executive Officer or any other Named Executive Officers. Unless the Compensation
Committee provides otherwise, upon a change in control (as defined in the 1997
Plan) each option and stock appreciation right issued under the 1997 Plan will
be come immediately exercisable, any restricted stock issued under the 1997 Plan
will immediately vest free of restrictions, and the number of shares, cash or
other property covered by any "performance share award" issued under the 1997
Plan will be issued to the grantee of such award. The Company has to date issued
only options under the 1997 Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report shall not be deemed to be incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates the report by reference
therein. The report shall not be deemed soliciting material or otherwise deemed
filed under either such Act.
The Compensation Committee consists of Messrs. Kayne, Schnell and Walsh,
who are non-employee directors of the Company. The responsibilities of the
Compensation Committee and the other committees to which the Board has delegated
certain compensation responsibilities are described above under "Board and
Committee Meetings."
Compensation Philosophy
The Company's executive compensation program consists of three main
components: (1) base salary, (2) potential for annual cash incentive
compensation (bonus) based on the Company's overall performance and the
employee's individual performance and (3) stock options to provide long-term
incentives for performance and to align the interests of executive officers and
stockholders. There is no fixed ratio of total compensation to be represented by
salary, incentive compensation or stock options.
Compensation of Named Executive Officers
With respect to the base salaries and annual bonuses for 1999 for the Named
Executive Officers, the Compensation Committee met with Mr. Feshbach to review
his recommendations. The decisions of the Compensation Committee were not based
on any set formula but focused on consideration of the performance of each
executive in his or her particular area of responsibility, the executive's
contribution to the Company's overall management team, an assessment of the
future contributions the executive may be expected to make to the Company, and
prevailing industry compensation levels.
With respect to options granted to Named Executive Officers in 1998, the
Special Compensation Committee met with Mr. Feshbach to review his
recommendations. The specific amounts granted were again not determined by a
formula, but were based on the individual's performance, his or her
responsibilities and his or her anticipated ability to contribute to the future
success of the Company.
Compensation of the Chief Executive Officer
In 1998, Mr. Feshbach's salary and bonus were determined by the
Compensation Committee based on the same factors applied to the other executive
officers. In addition, the determination of Mr. Feshbach's base salary and bonus
compensation also took into consideration the Company's achievement of sales and
profit goals and the implementation of growth plans, cost controls, and other
items affecting its business and stockholder value.
Section 162(m) Considerations
Section 162(m) of the Internal Revenue Code limits the tax deductibility to
the Company of compensation in excess of $1 million in any year for certain
executive officers, except for qualified "performance-based compensation" under
the Section 162(m) rules. No covered executive's compensation for these purposes
exceeded $1 million for 1998. The Compensation Committee considers the Section
162(m) rules as a factor with respect to compensation matters, but will not
necessarily limit compensation to amounts deductible under Section 162(m).
The Compensation Committee
Fred Kayne
Robert Schnell
David Walsh
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during the fiscal year, an
officer or employee of the Company or any of its subsidiaries, nor was any
member of the Compensation Committee formerly an officer of the Company or any
of its subsidiaries. No executive officer of the Company served (i) as a member
of the compensation committee (or board of directors serving the compensation
function) of another entity, one of whose executive officers served on the
Compensation Committee or (ii) as a member of the compensation committee of
another entity, one of whose executive officers served on the Company's Board.
Messrs. Kayne and Feshbach own approximately 60% and 10%, respectively, of
the outstanding stock of Fortune Fashions. Mr. Kayne is the Chairman and
President of Fortune Fashions and Mr. Feshbach is a director of Fortune
Fashions. Mr. Feshbach is not involved in the day-to-day operations or
management of Fortune Fashions. Fortune Fashions is a custom manufacturer of
embellished apparel for the tourist industry, and for a number of years has been
a supplier to the Company. Fortune Fashions sold approximately $2.2 million of
goods, primarily graphic t-shirts, to the Company during 1998. The Company
believes that the overall terms of the purchases from Fortune Fashions were
comparable to what could have been obtained from an unaffiliated third party. In
March 1998, the Company took in-house the management of the services provided by
Fortune Fashions, and the Company currently does not plan to do substantial
future business with Fortune Fashions. The Company's General Counsel, Anthony
Wall, is also General Counsel for Fortune Fashions.
Certain Relationships and Related Party Transactions
In connection with the purchase of Common Stock from the Company under the
Company's 1996 Stock Incentive Plan (the "1996 Plan"), as partial payment from
participants in the 1996 Plan, the Company accepted promissory notes with a
10-year term bearing interest at a rate of seven percent (7%) per annum,
compounded annually and not payable until maturity. The only promissory note
evidencing 1996 Plan participant indebtedness exceeding $60,000 was executed by
Mr. Wadhams. Mr. Wadhams executed a note on July 29, 1996 evidencing a loan in
the principal amount of $123,025 and secured by the pledge of 50,000 shares of
Common Stock. The amount of Mr. Wadhams' indebtedness, including accrued
interest, outstanding as of December 31, 1998, which was the maximum amount
outstanding from January 1, 1998 through March 1, 1999 was $146,686.
In connection with the purchase of a personal residence, on June 3, 1998,
the Company loaned $175,000 to Executive Vice President and General Counsel
Anthony Wall. The loan has a term of 5 years, bears interest at the rate of
8-1/2% per annum and is secured by a second lien on such residence.
During 1998, the Company used Harmatta Construction, a construction company
owned by Mr. Feshbach's brother-in-law, to provide store construction services
to the Company. The Company paid $871,000 to Harmatta Construction during 1998
in connection with such services. Harmatta Construction continues to provide
construction services to the Company in connection with the build-out of the
Company's new retail stores. The Company believes that the terms of its
relationship with Harmatta Construction are no less favorable to the Company
than it could have obtained with unrelated third parties.
See also "Compensation Committee Interlocks and Insider Participation."
COMPARISON OF CUMULATIVE TOTAL RETURN
The following is a comparison of the cumulative total stockholder return on
a $100 investment in the Common Stock of the Company, including the reinvestment
of dividends, with the cumulative total return of a $100 investment in the
Nasdaq National Stock Market Index and the CRSP Total Return Industry Index for
Retail Trade Stocks for the period from September 30, 1997 (the first quarter
ending after the Company's September 25, 1997 initial public offering) through
December 31, 1998. The two comparison indexes are intended to provide a relevant
comparison of total annual return in the time period (through December 31, 1998)
in which the Company's Common Stock has been publicly traded.
BIG DOG HOLDINGS, INC.
Comparison of Cumulative Total Return*
September 30, 1997 through December 31, 1998
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
NASDAQ NASDAQ
Measurement Period BIG DOG CRSP RETAIL MARKET
(Fiscal Year Covered) HOLDINGS, INC. TRADE STOCKS INDEX
- ----------------------- -------------- ------------ -------
<S> <C> <C> <C>
Measurement Pt- 9/26/97 $100.00 $100.00 $100.00
9/30/97 100.00 106.63 105.91
12/31/97 40.18 102.82 99.31
3/31/98 47.32 123.41 116.20
6/30/98 36.61 126.02 119.57
9/30/98 22.32 91.65 108.25
12/31/98 33.93 124.45 139.61
</TABLE>
The Comparison of Cumulative Total Return shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing of the Company pursuant to the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended
except to the extent the Company specifically incorporates the Comparison by
reference therein. The Comparison shall not be deemed soliciting material or
otherwise deemed filed under either such Act.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS AND AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has appointed Deloitte & Touche LLP as the Company's independent
public accountants and auditors for the fiscal year ending December 31, 1999,
subject to stockholder approval. Deloitte & Touche LLP has served as the
Company's independent public accountants and auditors since 1992.
Services which will be provided to the Company and its subsidiaries by
Deloitte & Touche LLP with respect to the 1999 fiscal year include the
examination of the Company's consolidated financial statements, reviews of
quarterly reports, services related to filings with the SEC and consultations on
various tax matters.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting to respond to appropriate questions, and to make such statements
as he or she may desire.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of Deloitte & Touche LLP as the Company independent public
accountants and auditors for the 1999 fiscal year.
MISCELLANEOUS
Other Matters
If any other matters properly come before the meeting, it is the intention
of the proxy holders to vote in their discretion on such matters pursuant to the
authority granted in the proxy and permitted under applicable law.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
executive officers, directors, and holders of more than 10% of a company's
registered class of securities file reports of their ownership of a company's
securities with the SEC. Based on a review of these reports, the Company
believes that its reporting persons complied with all applicable filing
requirements except for a failure to timely file a report on Form 5 relating to
a small acquisition of shares by Mr. Good. Mr. Good's Form 5 was filed after the
oversight was discovered.
Cost of Soliciting Proxies
The expenses of preparing and mailing the Notice of Annual Meeting, the
Proxy Statement and the proxy card(s) will be paid by the Company. In addition
to the solicitation of proxies by mail, proxies may be solicited by directors,
officers and employees of the Company (who will receive no additional
compensation) by personal interviews, telephone, telegraph and facsimile. The
Company has not retained, and does not intend to retain, any other entities to
assist in the solicitation of proxies. It is anticipated that banks, custodians,
nominees and fiduciaries will forward proxy soliciting material to beneficial
owners of the Company's Common Stock and that such persons will be reimbursed by
the Company for their expenses incurred in so doing.
Form 10-K and Annual Report to Stockholders
Enclosed with the Proxy Statement is the Annual Report of the Company for
1998. The Annual Report is enclosed for the convenience of stockholders only and
should not be viewed as part of the proxy solicitation material. If any person
who was a beneficial owner of Common Stock of the Company on the record date for
the 1999 Annual Meeting desires additional copies of the Company's Annual
Report, it will be furnished without charge upon receipt of a written request.
The request should identify the person making the request as a stockholder of
the Company and should be directed to:
Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Attn: Stockholder Relations
Telephone requests may be directed to Stockholder Relations at (805) 963-8727,
ext. 1700.
Proposals of Stockholders
The 2000 Annual Meeting of stockholders is presently expected to be held in
May 2000. To be considered for inclusion in the Company's Proxy Statement for
the 2000 Annual Meeting, proposals of stockholders intended to be presented at
the meeting must be received by the Corporate Secretary, Big Dog Holdings, Inc.,
121 Gray Avenue, Santa Barbara, California 93101, no later than December 28,
1999.
A stockholder may wish to have a proposal presented at the 2000 Annual
Meeting, but not to have it included in the Company's Proxy Statement for the
meeting. If notice of the proposal is not received by the Company at the above
address by March 9, 2000, then the proposal will be deemed untimely under Rule
14a-4(c) under the Securities and Exchange Act of 1934, and the Company will
have the right to exercise discretionary voting authority with respect to the
proposal.
Stockholders wishing to bring proposals before the 2000 Annual Meeting must
also comply with Section 1.9 of the Company's Bylaws, which requires certain
information to be provided in connection with the submission of stockholder
proposals and sets forth certain requirements in regard thereto.
Anthony J. Wall
Executive Vice President,
General Counsel and Secretary
<PAGE>
PROXY
BIG DOG HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
BALLOT
I hereby appoint Andrew D. Feshbach and Anthony J. Wall, and each of them
or either of them, with full power to act without the other and with full power
of substitution, my true and lawful attorneys and proxies, to vote all of the
shares of common stock of Big Dog Holdings, Inc. (the 'Company') which the
undersigned may be entitled to vote and to act for me in my name, place and
stead at the Annual Meeting of Stockholders of the Company to be held at Beverly
Hills, California, on Thursday, May 20, 1999 at 3:00 pm local time, and any
adjournments or postponements thereof, for the purpose of considering and voting
upon the following:
1. ELECTION OF DIRECTORS ROBERT H. SCHNELL AND DAVID J. WALSH
[_] FOR the nominees listed below [_] AUTHORITY WITHHELD
to vote for the nominees listed below
If you wish to withhold authority to vote for any individual nominee,
strike a line through the nominee's name below:
ROBERT H. SCHNELL DAVID J. WALSH
2. RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS AND AUDITORS FOR THE 1999 FISCAL YEAR
[_] FOR [_] AGAINST [_] ABSTAIN
3. OTHER BUSINESS: In their discretion, the proxies are authorized
to vote upon such other business as may properly come before
the meeting.
Please sign and date the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS MADE, FOR ITEMS 1, 2 AND 3, AND AS SAID PROXIES DEEM ADVISABLE ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Note: Please sign your name exactly as it appears on this proxy card. If
shares are held jointly, each holder should sign. Executors, administrators,
trustees, guardians, attorneys and agents should give their full titles. If the
stockholder is a corporation, sign in full corporate name by the authorized
officer.
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Signature
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Signature (if jointly held)
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Date
