<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12
I.C. ISAACS & COMPANY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
EUGENE C. WIELEPSKI, CORPORATE SECRETARY
- --------------------------------------------------------------------------------
(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)(1)
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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<PAGE>
[ISAACS' LETTERHEAD]
May 11, 1998
To Our Stockholders:
On behalf of our Directors, I cordially invite you to attend the Annual
Meeting of Stockholders of I.C. Isaacs & Company, Inc. The Meeting will be held
at 11:00 a.m., local time, on Tuesday, June 16, 1998, at the Best Western and
Conference Center, 5625 O'Donnell Street, Baltimore, Maryland 21224. The formal
notice of the meeting is attached hereto.
The Proxy Statement describes matters that we expect will be acted upon at
the Annual Meeting. The stockholders who are present will have the opportunity
to ask questions.
We are gratified by our stockholders' interest in the Company and hope that
many of you vote your shares in person or by proxy. We urge you to return your
proxy card as soon as possible.
Cordially yours,
Robert J. Arnot
Chairman of the Board and Co-Chief
Executive
Officer
Gerald W. Lear
President and Co-Chief Executive
Officer
<PAGE>
I.C. ISAACS & COMPANY, INC.
3840 Bank Street
Baltimore, Maryland 21224-2522
(410) 342-8200
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of I.C. ISAACS & COMPANY, INC. (the "Company") will be held on
Tuesday, June 16, 1998, at the Best Western and Conference Center, 5625
O'Donnell Street, Baltimore, Maryland 21224, at 11:00 a.m., local time. The
Meeting will be held for the following purposes:
1. To elect three directors, each for a term of three years and/or until
their successors are elected and qualified;
2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent auditors for the current fiscal year; and
3. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed May l, 1998, as the record date for the
determination of the stockholders entitled to notice of, and to vote at, the
Meeting and any adjournments thereof. Only those stockholders of record of the
Company as of the close of business on that date will be entitled to vote at the
Meeting or any adjournments or postponements thereof.
By Order of the Board of Directors
Robert J. Arnot
Chairman of the Board and Co-Chief
Executive
Officer
Gerald W. Lear
President and Co-Chief Executive
Officer
Eugene C. Wielepski
Corporate Secretary
Baltimore, Maryland
May 11, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THIS MEETING. IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. IF YOU WILL BE UNABLE TO
BE PRESENT AT THE MEETING OR EVEN IF YOU ANTICIPATE THAT YOU WILL ATTEND, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE
WITHOUT DELAY. YOU WILL BE MOST WELCOME AT THE MEETING AND MAY THEN VOTE IN
PERSON IF YOU SO DESIRE, EVEN THOUGH YOU MAY HAVE EXECUTED AND RETURNED THE
PROXY. ANY STOCKHOLDER WHO EXECUTES SUCH A PROXY MAY REVOKE IT AT ANY TIME
BEFORE IT IS EXERCISED. YOUR PROMPT RETURN OF YOUR PROXY WILL HELP AVOID THE
COST OF FURTHER SOLICITATIONS.
<PAGE>
I.C. ISAACS & COMPANY, INC.
3840 Bank Street
Baltimore, Maryland 21224-2522
(410) 342-8200
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1998
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of I.C. Isaacs & Company, Inc. (the "Company"), of proxies to
be used at the Annual Meeting of Stockholders (the "Meeting") of the Company on
Tuesday, June 16, 1998, and any adjournments or postponements thereof. The
Meeting will be at the Best Western and Conference Center, 5625 O'Donnell
Street, Baltimore, Maryland 21224, at 11:00 a.m., local time. The Meeting will
be held for the following purposes:
1. To elect three directors, each for a term of three years and/or
until their successors are elected and qualified;
2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent auditors for the current fiscal year; and
3. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
This Proxy Statement, the accompanying Notice of Annual Meeting and Proxy
Card and the Company's 1997 Annual Report on Form 10-K containing the Company's
consolidated financial statements for the year ended December 31, 1997 are being
mailed to stockholders on or about May 11, 1998.
RECORD DATE AND PRINCIPAL STOCKHOLDERS
Stockholders of record at the close of business on May 1, 1998 (the "Record
Date") are entitled to notice of, and to vote at, the Meeting and any
adjournments or postponements thereof. On the Record Date, the Company had
outstanding entitled to vote 8,320,000 shares of common stock, par value $.001
per share (the "Common Stock"). For information regarding security ownership by
management and certain other holders of the Company's Common Stock, see
"Security Ownership of Certain Beneficial Owners and Management."
REVOCABILITY OF PROXIES
A proxy is enclosed for use at the Meeting. Each stockholder is urged to
complete and return the enclosed proxy immediately, even if attendance in person
at the Meeting is anticipated. The proxy may be revoked by the stockholder at
any time before it is voted by delivering to the Secretary of the Company a
notice of revocation or a duly executed proxy bearing a later date. Any proxy
may also be revoked by (i) the stockholder's attendance at the Meeting, (ii)
filing a written notice of revocation with the Secretary of the Meeting, and
(iii) voting in person. The presence of a stockholder at the Meeting will not
automatically revoke that stockholder's proxy. All notices of revocation should
be sent to the attention of the Company's Corporate Secretary, Eugene C.
Wielepski, I.C. Isaacs & Company, Inc., 3840 Bank Street, Baltimore, Maryland
21224-2522.
<PAGE>
VOTING AND SOLICITATION
Proxies properly executed and received in time to be duly presented at the
Meeting will be voted in accordance with the stockholder's directions. Properly
executed proxies not marked to indicate any desired vote will be voted FOR the
election of the nominees for directors named below and FOR the ratification of
BDO Seidman, LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998. If any other matters are properly brought before the
Meeting, the persons named in the accompanying proxies will vote the shares
represented by such proxies on such matters as instructed by the Board of
Directors of the Company, who have instructed the proxies to vote in accordance
with the proxies' own best judgment in the absence of express instruction from
the Board.
The expense of preparing, printing, and mailing this proxy statement and the
proxies will be borne by the Company. In addition to the use of the mail,
proxies may be solicited by directors and officers of the Company in person or
by telephone or telegram. The Company will also reimburse brokerage houses and
other custodians, nominees and fiduciaries for their expenses, in accordance
with Securities and Exchange Commission (the "SEC") regulations, in sending this
proxy statement and proxies to the beneficial owners of its Common Stock.
QUORUM, ABSTENTIONS AND BROKER NON-VOTES
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares of the Company's Common Stock is necessary to
constitute a quorum. Shares of Common Stock represented by a properly signed and
returned proxy will be counted as present at the Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining. Shares of Common Stock held by nominees that are voted on at
least one matter coming before the Meeting will also be counted as present for
purposes of determining a quorum, even if the beneficial owner's discretion has
been withheld (a "broker non-vote") for voting on some or all other matters.
Each share of Common Stock is entitled to one vote on all matters that may
properly come before the Meeting other than the election of directors. In the
election of directors, each share is entitled to cast one vote for each director
to be elected. Directors of the Company shall be elected by a plurality of votes
cast at the Meeting. The holders of Common Stock may not vote their shares
cumulatively for election of directors. For purposes of the election of
directors, abstentions and broker non-votes are not considered to be votes cast
and do not affect the plurality vote required for the election of directors. All
other matters to come before the Meeting require the approval of a majority of
the shares of Common Stock present, in person or by proxy, at the Meeting and
entitled to vote. Therefore, abstentions will have the same effect as votes
against the proposals on such matters. Broker non-votes, however, will be deemed
shares not present to vote on such matters, and therefore will not count as
votes for or against the proposals, and will not be included in calculating the
number of votes necessary for approval of such matters.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Board of Directors met on five occasions in 1997. Each
director of the Company who is also an employee of the Company attended 100% of
the aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees on which he served. Each
director of the Company who is not also an employee of the Company attended
fewer than 75% of such meetings. The Board of Directors has standing audit and
compensation committees as described below.
AUDIT COMMITTEE. The Audit Committee consists of Ronald S. Schmidt
(Chairman), Neal J. Fox and Anthony J. Marterie. The Audit Committee is
responsible for recommending to the Board of Directors the engagement of the
independent auditors of the Company and reviewing with the independent auditors
the scope and results of the audits, the internal accounting controls of the
Company, audit practices and the professional services furnished by the
independent auditors. The Audit Committee was formed in February, 1998 and
therefore did not meet during 1997.
2
<PAGE>
COMPENSATION COMMITTEE. The Compensation Committee consists of Ira J.
Hechler (Chairman), Jon Hechler and Ronald S. Schmidt. The Compensation
Committee reviews and determines the compensation of the Company's executive
officers and recommends the granting of awards to eligible employees pursuant to
the Company's 1997 Omnibus Stock Plan. See "Compensation Committee Report on
Executive Officer Compensation," below. The Compensation Committee was formed in
May 1997 and met one time during 1997.
DIRECTORS' COMPENSATION
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Directors who are not employees of the
Company receive an annual retainer fee of $10,000 for their services and
attendance fees of $750 per Board or committee meeting attended. All directors
are reimbursed for expenses incurred in connection with attendance at Board or
committee meetings. In addition, members of the Board of Directors are eligible
to participate in the Company's 1997 Omnibus Stock Plan. See "Executive
Compensation--1997 Omnibus Stock Plan."
PROPOSAL 1: ELECTION OF CLASS I DIRECTORS
The Amended and Restated Bylaws (the "Bylaws") of the Company provide that
the number of directors constituting the Board of Directors shall be as
determined from time to time by the Board. The Board has acted to fix the number
of directors at nine.
Pursuant to the terms of the Company's Amended and Restated Certificate of
Incorporation, the Board of Directors is divided into three classes, as nearly
equal in number as reasonably possible, with terms expiring at the Meeting
("Class I"), the 1999 Annual Meeting of Stockholders ("Class II") and at the
2000 Annual Meeting of Stockholders ("Class III"), respectively.
At the Meeting, three directors are to be elected as Class I directors, each
for a term of three years, or until their successors have been elected and
qualified. The Board of Directors has nominated for election as Class I
directors, Robert J. Arnot, Gerald W. Lear and Eugene C. Wielepski, each of whom
currently serves on the Board as Class I directors. The proxies solicited
hereby, unless directed to the contrary therein, will be voted FOR the nominees
for Class I directors. All of the nominees for Class I directors have consented
to being named in this Proxy Statement and to serve if elected. The Board has no
reason to believe that any nominee for election as a Class I director will not
be a candidate or will be unable to serve, but if either event occurs, it is
intended that the shares represented by proxies will be voted FOR such
substituted nominee or nominees as the Board, in its discretion, may designate.
The following sets forth certain biographical information, present
occupation and business experience for the past five years for each of the
nominees for election as Class I directors and for each of the Class II and
Class III incumbent directors.
CLASS I: NOMINEES WHOSE TERMS WILL EXPIRE IN 2001.
The Company has two Chief Executive Officers, Robert J. Arnot and Gerald W.
Lear. Messrs. Arnot and Lear share decision-making responsibility with respect
to the Company's business strategy, product pricing, budgeting, financial
management, institutional relationships, licensing decisions, European
operations and legal issues.
ROBERT J. ARNOT, age 49, has been a director of the Company since 1984, Vice
President of Planning and Corporate Development from 1989 to 1991, Chairman of
the Board of Directors since 1991 and Co-Chief Executive Officer since 1996. He
has been employed by the Company since 1989. In addition to sharing overall
decision-making responsibility as described above, Mr. Arnot has lead
responsibility for the following operating areas, which report directly to him
in New York: BOSS-Registered Trademark-, Beverly Hills Polo
Club-Registered Trademark- and Girbaud-Registered Trademark- design and
merchandising, Asian sourcing and manufacturing, BOSS-Registered Trademark-,
Beverly Hills Polo Club-Registered Trademark- and Girbaud-Registered Trademark-
sales management and advertising.
3
<PAGE>
GERALD W. LEAR, age 55, has been a director of the Company since 1980 and
President and Chief Executive Officer since 1987. He was Vice President from
1975 to 1984 and Executive Vice President from 1984 to 1986. He has been
employed by the Company since 1962. In addition to sharing overall decision-
making responsibility as described above, Mr. Lear has lead responsibility for
the following operating areas, which report directly to him in Baltimore: United
States and Mexican production of bottoms, United States tee shirt production,
I.C. Isaacs bottoms merchandising, bottoms design department, cost accounting,
shipping and warehousing and corporate administration (which includes management
information systems, credit, accounting, customer service and personnel).
EUGENE C. WIELEPSKI, age 51, has been a director, Vice President--Finance
and Chief Financial Officer of the Company since 1991. He has also held the
positions of Secretary and Treasurer since 1976. From 1976 to 1990 he was
Controller. He is a Certified Public Accountant and has been employed by the
Company since 1973.
CLASS II: INCUMBENTS WHOSE TERMS EXPIRE AT THE 1999 ANNUAL MEETING OF
STOCKHOLDERS.
IRA J. HECHLER, age 79, has been a director of the Company since 1984. He is
a private investor who is also a member of the Board of Directors of American
Banknote Corporation and Concord Camera Corporation. He is Vice Chairman of the
Board of Directors of A.R.T./New York and a member of the Board of Trustees and
Treasurer of the Nassau County Museum of Art. He is the father of Jon Hechler.
JON HECHLER, age 44, has been a director of the Company since 1984. He has
been employed by Ira J. Hechler and Associates, an investment company, since
1980. He also serves as President of T. Eliot, Inc., a manufacturer of bathroom
equipment. He is the son of Ira J. Hechler.
GARY B. BASHERS, age 50, has been a director and Chief Operating Officer of
the Company since 1988 and Vice President--Manufacturing since 1985. Prior to
that he held positions with the Company in quality control and manufacturing. He
has been employed by the Company since 1978. Prior to joining the Company, he
held various manufacturing management positions in the apparel industry since
1969.
CLASS III: INCUMBENTS WHOSE TERMS EXPIRE AT THE 2000 ANNUAL MEETING OF
STOCKHOLDERS.
RONALD S. SCHMIDT, age 54, has been a director of the Company since 1990. He
is President and Chief Executive Officer of I.B. Diffusion, a manufacturer of
ladies' apparel.
NEAL J. FOX, age 64, has been a director of the Company since February 1998.
Since 1989 he has served as the President and Chief Executive Officer of Sulka,
an international menswear retailer.
ANTHONY J. MARTERIE, age 59, has been a director of the Company since
February 1998. Since 1989 he has served as the President and Chief Executive
Officer of North Coast Industries, a producer and distributor of casual women's
sportswear under the Blast-Registered Trademark- brand which is not competitive
with the Company's brands.
PRINCIPAL EXECUTIVE OFFICERS OF THE COMPANY
WHO ARE NOT ALSO DIRECTORS
Executive officers of the Company are elected annually by the Board of
Directors. Set forth below is certain information regarding the positions and
business experience of the only executive officer of the Company who is not also
a director of the Company.
THOMAS P. ORMANDY, age 47, has been Vice President--Sales of the Company
since 1986. Previously, he was a salesman with Thompson and Company, an apparel
manufacturer, since 1975. He is responsible for the sales and marketing of the
BOSS-Registered Trademark- men's, boys' and juniors' lines as well as the
Beverly Hills Polo Club-Registered Trademark- men's line and the
Girbaud-Registered Trademark- men's and women's lines.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock, as of May 1, 1998, by (i)
each person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5.0% of the outstanding Common Stock, (ii) each of the
Company's directors, (iii) each of the Company's executive officers, and (iv)
all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------
NUMBER
NAME OF BENEFICIAL OWNERS OF SHARES PERCENT
- ------------------------------------------------------------------------ ---------- -----------
<S> <C> <C>
Robert J. Arnot (1)..................................................... 447,792 5.4%
Gary B. Brashers........................................................ 288,237 3.5
Neal J. Fox............................................................. 0 *
Ira J. Hechler (1)...................................................... 811,361 9.8
Jon Hechler............................................................. 365,791 4.4
Gerald W. Lear (1)...................................................... 447,792 5.4
Anthony J. Marterie..................................................... 0 *
Thomas P. Ormandy....................................................... 158,320 1.9
Ronald S. Schmidt....................................................... 0 *
The Robinson-Humphrey Company, LLC (2).................................. 625,900 7.5
Eugene C. Wielepski..................................................... 185,242 2.2
All directors and executive officers as a group
(11 persons).......................................................... 2,704,535 32.5%
</TABLE>
- ------------------------
* Less than one percent.
(1) The business address of such person is c/o I.C. Isaacs & Company, Inc., 3840
Bank Street, Baltimore, Maryland 21224-2522. Except as described below and
subject to the Restated Shareholders' Agreement and applicable community
property laws and similar laws, each person listed above has sole voting and
investment power with respect to such shares. See "Certain Relationships and
Related Transactions--Restated Shareholders' Agreement."
(2) This number of shares is based on a Schedule 13G filed jointly with the SEC
on February 13, 1998 by The Robinson-Humphrey Company, LLC ("R-H"), Smith
Barney Inc. ("SB"), Salomon Smith Barney Holdings Inc. ("SSB Holdings") and
Travelers Group Inc. ("TRV"). The business address of R-H is Atlanta
Financial Center, 3333 Peachtree Road, NE, Atlanta, Georgia 30326. The
business address of each of SB, SSB Holdings and TRV is 388 Greenwich
Street, New York, New York 10013. SSB Holdings and TRV disclaimed beneficial
ownership of such shares in the Schedule 13G.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation for the
past two years of each of the Company's five most highly compensated officers,
including the two Co-Chief Executive Officers (collectively, the "Named
Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (2)
---------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
- ---------------------------------------------------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
Robert J. Arnot (1)............................................................... 1997 $ 379,542 $ --
Chairman of the Board and 1996 275,676 50,000
Co-Chief Executive Officer
Gerald W. Lear (1)................................................................ 1997 386,918 --
President and 1996 300,220 50,000
Co-Chief Executive Officer
Gary B. Brashers (1).............................................................. 1997 235,328 --
Vice President--Manufacturing and 1996 200,220 25,000
Chief Operating Officer
Eugene C. Wielepski (1)........................................................... 1997 190,885 --
Vice President--Finance and 1996 160,220 20,000
Chief Financial Officer
Thomas P. Ormandy (1)............................................................. 1997 301,581 --
Vice President--Sales 1996 240,000 110,000
Marc Baff......................................................................... 1997 119,150 --
Vice President--Sales 1996 107,620 --
</TABLE>
- ------------------------
(1) In his capacity as a stockholder of the Company, this Named Executive
Officer (a) was reimbursed during 1996 and 1997 for payment of taxes on
income of the Company that was passed through to the stockholders and (b)
received, in connection with the Company's initial public offering in 1997,
a dividend distribution representing a portion of the earned but
undistributed S corporation earnings of the Company.
(2) Perquisites did not exceed the lesser of $50,000 or 10.0% of the total
salary and bonus in any year for any of the Named Executive Officers.
DEFINED BENEFIT PENSION PLAN
The Company maintains a defined benefit pension plan (the "Pension Plan")
for its employees. The normal retirement benefit, payable at age 65, is 20.0% of
base compensation up to $10,000 plus 39.5% of base compensation over $10,000,
prorated for service less than 30 years. A reduced benefit is also payable on
early retirement, after age 55 and after 15 years of service. The Pension Plan
also provides disability retirement and death benefits. The Company pays the
full cost of the benefits under the Pension Plan through its contributions to a
trust. The Company's cash contributions to the Pension Plan during the year
ended December 31, 1997 aggregated approximately $0.4 million.
The Pension Plan Table below provides the estimated annual benefits payable
under the Pension Plan upon retirement in specified compensation and years of
service classifications:
6
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$100,000..................................................... $ 13,838 $ 18,451 $ 23,063 $ 27,676 $ 27,676
125,000...................................................... 13,838 18,451 23,063 27,676 27,676
150,000...................................................... 13,838 18,451 23,063 27,676 27,676
175,000...................................................... 13,838 18,451 23,063 27,676 27,676
200,000...................................................... 13,838 18,451 23,063 27,676 27,676
225,000...................................................... 13,838 18,451 23,063 27,676 27,676
250,000...................................................... 13,838 18,451 23,063 27,676 27,676
300,000...................................................... 13,838 18,451 23,063 27,676 27,676
400,000...................................................... 13,838 18,451 23,063 27,676 27,676
450,000...................................................... 13,838 18,451 23,063 27,676 27,676
500,000...................................................... 13,838 18,451 23,063 27,676 27,676
</TABLE>
The compensation considered in determining benefits under the Pension Plan
(as provided in the column titled "Remuneration") is the annual average
compensation for the five consecutive calendar years producing the highest
average. The compensation considered is limited to $75,000. All amounts of
salary, bonus and other compensation as reported in the Summary Compensation
Table, up to $75,000, are included in compensation considered under the Pension
Plan. The amounts of benefit provided in the Pension Plan Table are the amounts
of benefit payable per year in equal monthly installments for the life
expectancy of the participants (i.e., straight life annuity amounts). The
Pension Plan is integrated with Social Security, and its benefit formula is as
follows: (i) 0.6667% of compensation, multiplied by years of service up to 30
years; plus (ii) 0.65% of compensation in excess of $10,000 multiplied by years
of service up to 30 years.
The estimated credited years of service for each of the Named Executive
Officers were as follows, estimated as of January 1, 1998:
<TABLE>
<CAPTION>
ESTIMATED CREDITED
NAME YEARS OF SERVICE
- --------------------------------------------------------------------------- -----------------------
<S> <C>
Robert J. Arnot............................................................ 6
Gerald W. Lear............................................................. 35
Gary B. Brashers........................................................... 19
Eugene C. Wielepski........................................................ 24
Thomas P. Ormandy.......................................................... 11
Marc Baff.................................................................. 20
</TABLE>
1997 OMNIBUS STOCK PLAN
On May 15, 1997, the Board of Directors of the Company and the Company's
stockholders adopted the 1997 Omnibus Stock Plan (the "Plan"). No awards were
granted under the Plan in 1997. The purpose of the Plan is to promote the
long-term growth and profitability of the Company by providing key people with
incentives to improve stockholder value and contribute to the growth and
financial success of the Company, and by enabling the Company to attract, retain
and reward the best-available persons for positions of substantial
responsibility. The maximum number of shares of Common Stock that may be issued
with respect to awards granted under the Plan is 500,000. The Plan is
administered by the Compensation Committee of the Board of Directors.
Participation in the Plan is open to all employees, officers, directors and
consultants of the Company or any of its affiliates, as may be selected by the
Compensation Committee from time to time. The Plan allows for stock options,
stock appreciation rights,
7
<PAGE>
stock awards, phantom stock awards and performance awards to be granted. The
Compensation Committee determines the prices, vesting schedules, expiration
dates and other material conditions upon which such awards may be exercised.
EMPLOYMENT AGREEMENTS
The Company has entered into individual employment agreements (the
"Executive Employment Agreements") with each of Messrs. Arnot, Lear, Brashers,
Wielepski and Ormandy (collectively, the "Executives"). The initial term of the
Executive Employment Agreements began on May 15, 1997 (the "Effective Date") and
will terminate on the third anniversary of the Effective Date in the case of
Messrs. Arnot and Lear and on the second anniversary of the Effective Date in
the case of Messrs. Brashers, Wielepski and Ormandy. The Executive Employment
Agreements will automatically extend after the initial term for successive
one-year terms, unless notice not to extend is given by either party at least 60
days prior to the end of the then current term. The Executive Employment
Agreements provide for an annual base salary of $400,000, $400,000, $240,000,
$200,000 and $300,000 plus up to 20.0% thereof as bonus, respectively, which may
be increased based on periodic reviews by the Compensation Committee. In
addition, the Executive Employment Agreements provide that the Executives are
entitled to participate in any bonus and stock option plans, programs,
arrangements and practices sponsored by the Company as may be established from
time to time by the Board of Directors of the Company for the benefit of such
executive employees, in accordance with the terms of such plans. Each Executive
is also entitled to certain fringe benefits, including Company-paid health and
life insurance. If any of the Executives is terminated without cause (as such
term is defined in the Executive Employment Agreements), then such Executive
will receive as severance his then current base salary for the remainder of his
term of employment. The Executive will also continue to participate in
Company-sponsored health, life insurance and other fringe benefit plans and
programs during the severance period. The Executive Employment Agreements also
include certain noncompetition, nonsolicitation and confidentiality provisions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
OBJECTIVES
The Company's compensation policies and procedures have historically been
aligned with the Company's entrepreneurial traditions. The Company seeks to
compensate its officers (including the Named Executive Officers) in a manner
which is:
(i) consistent with the Company's conservative traditions and cost
structure;
(ii) sufficient to attract and retain key executives critical to the success
of the Company;
(iii) reflective of current performance of both the individual officer and
the Company; and
(iv) remuneration of successful long-term strategic management and
enhancement of shareholder values.
COMPONENTS OF COMPENSATION
The Compensation Committee (the "Committee") approves the design of,
assesses the effectiveness of, and administers the executive compensation
programs of the Company in support of stockholder interests. The key elements of
the Company's executive compensation program are base salary, annual incentives
and long-term incentive compensation. These key elements are addressed
separately below. In determining each component of compensation, the Committee
considers all elements of an executive's total compensation package.
BASE SALARY
The Committee regularly reviews each executive's base salary. Base salaries
are not necessarily compared to other institutions, although market rates for
comparable executives with comparable responsibilities are considered in some
cases. Base salaries are adjusted by the Committee to recognize varying
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levels of responsibility, experience, breadth of knowledge, internal equity
issues, as well as external pay practices. Increases to base salaries are driven
primarily by individual performance. Individual performance is evaluated based
on sustained levels of individual contribution to the Company. The annual base
salaries of Messrs. Arnot and Lear, the Company's Co-Chief Executive Officers,
were increased to $400,000 pursuant to the terms of their Executive Employment
Agreements in consideration of their expanded responsibilities in connection
with the Company's initial public offering and in connection with entering into
the exclusive license agreement to manufacture and market men's sportswear under
the Girbaud-Registered Trademark- brand. The annual base salaries of the other
Named Executive Officers were increased based upon their individual performance
and contribution to the Company.
ANNUAL INCENTIVES
The annual incentive program promotes the Company's pay-for-performance
philosophy by providing the Co-Chief Executive Officers and other executive
officers with direct financial incentives in the form of annual cash bonuses to
achieve corporate and, in some cases, individual performance goals. Annual bonus
opportunities allow the Company to communicate specific goals that are of
primary importance during the coming year and motivate executives to achieve
these goals. The Company did not pay any bonuses to any of the Named Executive
Officers in 1997.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package which includes at-risk components of pay, long-term incentive
compensation comprises a significant portion of the value of an executive's
total compensation package. When awarding long-term grants, the Committee
considers an executive's level of responsibility, prior compensation experience,
historical award data, and individual performance criteria. Long-term incentives
are in the form of stock options awards under the Company's Plan.
Stock options are granted at an option price which is the fair market value
of the Common Stock on the date of grant. Accordingly, stock options have value
only if the stock price appreciates. This design focuses executives on the
creation of stockholder value over the long term. The size of stock option
grants is based on competitive practice, individual performance factors and
historical award data. No stock option grants were made to the Named Executive
Officers in 1997.
CONCLUSION
The Committee believes these executive compensation policies and programs
serve the interests of the Company and its stockholders effectively. The various
compensation vehicles offered are appropriately balanced to provide increased
motivation for executives to contribute to the Company's overall future success,
thereby enhancing the value of the Company for the stockholders' benefit.
We will continue to monitor the effectiveness of the Company's total
compensation program to meet the current and future needs of the Company.
Members of the Compensation Committee:
Ira J. Hechler (Chairman), Jon Hechler and Ronald S. Schmidt
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RESTATED SHAREHOLDERS' AGREEMENT
The Company's Shareholders' Agreement dated December 20, 1984, as amended,
was amended and restated (the "Restated Shareholders' Agreement"), effective as
of the time of consummation of the Company's initial public offering (the
"Offering"). No consideration was paid in connection with the execution of the
Restated Shareholders' Agreement. Pursuant to the Restated Shareholders'
Agreement, Messrs. Robert J. Arnot, Gerald W. Lear, Ira J. Hechler and Jon
Hechler are designated as principal shareholders (the "Principal Shareholders")
and the other stockholders of the Company immediately prior
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to consummation of the Offering are designated as non-principal shareholders
(the "Non-Principal Shareholders"). The Principal Shareholders and the
Non-Principal Shareholders have agreed to vote their shares of Common Stock, in
elections to fill Class I and Class II of the Board of Directors, to elect
nominees of the Principal Shareholders. The Restated Shareholders' Agreement
provides that each of the Principal Shareholders has granted to each of the
other Principal Shareholders and to the Company rights of first refusal (the
"Refusal Right") with respect to the sale of any shares of the Company's
outstanding Common Stock. The Restated Shareholders' Agreement provides that
each of the Non-Principal Shareholders holding, at the time of the contemplated
transfer, in excess of 0.5% of the outstanding Common Stock of the Company has
granted to (i) each of the Principal Shareholders, (ii) each of the
Non-Principal Shareholders and (iii) the Company, rights of first refusal with
respect to the sale of any shares of the Company's outstanding Common Stock. The
Restated Shareholders' Agreement also provides that in the event that any two of
(i) Robert J. Arnot, (ii) Gerald W. Lear and (iii) Ira J. Hechler and Jon
Hechler (a "Majority") agree to enter into a transaction with a third party for
the tender of shares (including, without limitation, in a change of control
transaction), the rights of first refusal set forth above shall not apply and
the Majority or the Company may require the other Principal Shareholders and
Non-Principal Shareholders to participate in such transaction on the same terms
and conditions applicable to the Majority. The Refusal Right terminates upon the
earlier of May 15, 2001 or upon the Principal Shareholders beneficially owning
20.0% or less of the shares of Common Stock outstanding. The remainder of the
Restated Shareholders' Agreement terminates upon the earlier of May 15, 2003 or
upon the Principal Shareholders beneficially owning 20.0% or less of the shares
of Common Stock outstanding.
ACQUISITION OF LIMITED PARTNERSHIP INTEREST
Prior to the closing date of the Offering, the Company's wholly-owned
subsidiary, Isaacs Design, Inc., acquired a 1.0% ownership interest in I.C.
Isaacs & Company L.P. (the "Partnership") from Ira J. Hechler, a director and
stockholder of the Company, in exchange for approximately $335,000 in cash,
which the Company believes represented terms no less favorable than as could
have been received from a disinterested third party. Prior to this acquisition,
the Company held a 99.0% ownership interest in the Partnership. As a result of
this acquisition, the Company has sole control of the Partnership.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS OF THE COMPANY
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the firm of BDO Seidman, LLP as independent auditors of the Company
for the current fiscal year. BDO Seidman, LLP has served as the Company's
independent auditors and have been the Company's auditors since 1985. Although
not legally required to do so, the Board is submitting the selection of BDO
Seidman, LLP for ratification by the Company's stockholders at the Meeting.
A representative of BDO Seidman, LLP will be present at the Meeting and will
have the opportunity to make a statement, if he desires to do so, and to respond
to appropriate questions from stockholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who beneficially own 10% or
more of the Company's Common Stock (the "Reporting Persons"), to file reports
regarding their Company Common Stock ownership and changes in ownership with the
SEC. Based solely on a review of the copies of such forms furnished to the
Company and written representations from certain of the Reporting Persons, the
Company believes that during 1997 and through the date hereof, the Reporting
Persons complied with all Section 16(a) reporting requirements applicable to
them except that the Form 3 initial statements of beneficial ownership of the
Reporting Persons were inadvertently late in the case of Messrs. Robert J.
Arnot, Gerald W. Lear, Eugene C. Wielepski, Ira J. Hechler, Jon Hechler, Gary B.
Brashers, Ronald S. Schmidt, Neal J. Fox, Anthony J. Marterie and Thomas P.
Ormandy.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company did not have a Compensation Committee until May 1997. Until that
time, each of Messrs. Arnot and Lear (each of whom served as an executive
officer of the Company during 1997) participated in deliberations concerning
executive compensation. The Executive Employment Agreements were approved by the
Company's current Compensation Committee. During 1997, Mr. Arnot served as a
member of the board of directors of I.B. Diffusion, a company for which Mr.
Schmidt, a member of the Company's Compensation Committee, serves as President
and Chief Executive Officer.
STOCKHOLDER PROPOSALS
In accordance with rules promulgated by the SEC, any stockholder who wishes
to submit a proposal for inclusion in the proxy materials to be distributed by
the Company in connection with the 1999 Annual Meeting of Stockholders must
submit the proposal to the Company by January 21, 1999.
In addition, in accordance with the Company's Bylaws, in order for a
stockholder proposal to be properly brought before the 1999 Annual Meeting of
Stockholders, a stockholder submitting a proposal must file a written notice
with the Corporate Secretary of the Company which conforms to the requirements
of the Company's Bylaws. If the Board or a designated committee or the officer
who will preside at the stockholders' meeting determines that the information
provided in such notice does not satisfy the informational requirements of the
Bylaws or is otherwise not in accordance with law, a stockholders will be
notified promptly of such deficiency and will be given an opportunity to cure
the deficiency within the time period prescribed in the Bylaws. Such notice of a
stockholder proposal must be delivered not less than 60 days nor more than 90
days prior to the date of the Annual Meeting of Stockholders to be held in 1999.
OTHER MATTERS
The Board of Directors of the Company does not know of any matters other
than those described in this Proxy Statement that will be presented for action
at the Meeting. If any other matters are properly brought before the Meeting,
the persons named in the accompanying proxies will vote the shares represented
by such proxies on such matters as instructed by the Board of Directors of the
Company, who have instructed the proxies to vote in accordance with the proxies'
own best judgment in the absence of express instruction from the Board.
By Order of the Board of Directors
Robert J. Arnot
Chairman of the Board and Co-Chief
Executive
Officer
Gerald W. Lear
President and Co-Chief Executive
Officer
Eugene C. Wielepski
Corporate Secretary
Baltimore, Maryland
May 11, 1998
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I.C. ISAACS & COMPANY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 16, 1998
The undersigned hereby constitutes and appoints Ira J. Hechler and Neal J.
Fox, as attorneys and proxies with full power of substitution, to attend and
vote all of the shares which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of I.C. Isaacs & Company, Inc. (the "Company") to be
held at the Best Western and Conference Center, 5625 O'Donnell Street,
Baltimore, Maryland 21224, at 11:00 a.m., local time, on Tuesday, June 16, 1998
and at any and all adjournments or postponements thereof, with the same force
and effect as if the undersigned were personally present and the undersigned
hereby instructs said attorneys and proxies to vote as follows with respect to
the matters described in the Proxy Statement:
1. To elect three Class I directors to the Company's Board of Directors
each for a term of three years or until their successors have been
elected and qualified. The following three persons have been nominated to
serve as Class I directors: Gerald W. Lear, Robert J. Arnot and Eugene C.
Wielepski.
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY to vote for all
nominees listed below
- --------------------------------------------------------------------------------
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ONE OR MORE INDIVIDUAL
NOMINEES, WRITE THE NAME OF EACH SUCH NOMINEE ON THE LINE PROVIDED ABOVE.)
2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent auditors for the current fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
(PLEASE SIGN ON REVERSE SIDE)
<PAGE>
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY,
WHICH RECOMMENDS A VOTE FOR THE DIRECTOR NOMINEES LISTED IN ITEM 1 AND FOR ITEM
2. AS TO ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING, SAID
PROXIES WILL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT.
THIS PROXY when properly executed will be voted in the manner directed
herein. If no direction is given, the proxy will be voted FOR the director
nominees listed in Item 1 and FOR Item 2.
/ / Please indicate by check mark if you plan to attend the Annual Meeting
of Stockholders.
Dated ______________________, 1998
__________________________________
(Signature)
__________________________________
(Signature)
NOTE: Please sign exactly as your name or names appear on this card. Joint
owners should each sign personally. When signing as attorney, executor,
administrator, personal representative, trustee or guardian, please give full
titles as such. (Please sign, date and return this proxy in the enclosed
envelope)
