<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
TROPICAL SPORTSWEAR INT'L CORPORATION
- --------------------------------------------------------------------------------
(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)(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.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[TSI LOGO]
4902 W. WATERS AVENUE
TAMPA, FLORIDA 33634-1302
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 5, 1998
To the Shareholders of Tropical Sportswear Int'l Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Tropical Sportswear Int'l Corporation (the "Company") will
be held at the offices of the Company, 4902 W. Waters Avenue, Tampa, Florida, on
Thursday, February 5, 1998 at 10:00 a.m.
Eastern Standard Time for the following purposes:
1. To elect two directors to hold office until the 2001
Annual Meeting of Shareholders and until each of their respective
successors is duly elected and qualified; and
2. To transact any other business as may properly come
before the Annual Meeting.
Shareholders of record as of the close of business on December 26, 1997
will be entitled to vote at the Annual Meeting or any adjournment or
postponement thereof. Information relating to the matters to be considered and
voted on at the Annual Meeting is set forth in the proxy statement accompanying
this Notice.
By Order of the Board of Directors,
MICHAEL KAGAN
January 2, 1998 Secretary
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION
AT THE ANNUAL MEETING, PLEASE VOTE ON THE MATTERS TO BE CONSIDERED
AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY AND MAILING IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
[TSI LOGO]
4902 W. WATERS AVENUE
TAMPA, FLORIDA 33634-1302
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Tropical Sportswear Int'l
Corporation (the "Company") for the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Thursday, February 5, 1998 at 10:00 a.m. Eastern
Standard Time, or any adjournment thereof.
If the accompanying proxy form ("Proxy") is completed, signed and
returned, the shares represented thereby will be voted at the Annual Meeting.
The giving of the Proxy does not affect the right to vote in person should the
shareholder be able to attend the Annual Meeting. The shareholder may revoke the
Proxy at any time prior to the voting thereof.
The Company's Annual Report on Form 10-K for the fiscal year ended
September 27, 1997 ("Fiscal 1997"), together with this Proxy Statement and the
Proxy, are first being mailed on or about January 2, 1998 to shareholders
entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record as of the close of business on December 26, 1997
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At that date, there were 7,600,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), outstanding and entitled to vote. Each outstanding share
of Common Stock is entitled to one vote on all matters submitted to a vote of
shareholders.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspector of elections appointed for the Annual Meeting who
will also determine whether a quorum is present for the transaction of business.
The Company's Amended and Restated Bylaws provide that a quorum is present if
the holders of a majority of the issued and outstanding shares of Common Stock
entitled to vote at the meeting are present in person or represented by proxy.
Abstentions will be counted as shares that are present and entitled to vote for
purposes of determining whether a quorum is present. Shares held by nominees for
beneficial owners will also be counted for purposes of determining whether a
quorum is present if the nominee has the discretion to vote on at least one of
the matters presented, even though the nominee may not exercise discretionary
voting power with respect to other matters and even though voting instructions
have not been received from the beneficial owner (a "broker non-vote"). Neither
abstentions nor broker non-votes are counted in determining whether a proposal
has been approved.
1
<PAGE> 4
Under Florida law, if a quorum exists, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each proposal listed in the Notice
of Annual Meeting of Shareholders which are set forth more completely herein.
Returning your completed Proxy will not prevent you from voting in person at the
Annual Meeting should you be present and wish to do so.
Any shareholder giving a Proxy has the power to revoke it at any time
before it is exercised by: (i) filing with the Secretary of the Company written
notice thereof; (ii) submitting a duly executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment thereof and will not be used for any
other meeting. Proxies solicited hereby will be returned to the Board of
Directors and will be tabulated by the inspector of elections designated by the
Board of Directors who will not be employed by the Company or any of its
affiliates.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies also may be solicited by
personal interview or by telephone, in addition to the use of the mails, by
directors, officers and regular employees of the Company without additional
compensation therefor. The Company also has made arrangements with brokerage
firms, banks, nominees and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record to the beneficial owners of
such shares. The Company will reimburse such record holders for their reasonable
out-of-pocket expenses.
ITEM 1: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES FOR ELECTION
AS DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE NOMINEES. PROXIES IN
THE ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING, UNLESS AUTHORITY TO
DO SO IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED
BELOW.
The Company's Board of Directors is divided into three classes, with
each class serving three-year terms expiring at the third annual meeting of
shareholders after their elections. Two directors are to be elected at the
Annual Meeting to hold office for a term of three years expiring at the 2001
Annual Meeting of Shareholders, and until each of their respective successors
shall have been duly elected and qualified. In the event either of such nominees
is unable to serve, the person designated as proxy will cast votes for such
other person in their discretion as a substitute nominee. The Board of Directors
has no reason to believe that the nominees named below will be unavailable, or
if elected, will decline to serve.
2
<PAGE> 5
Pursuant to the Company's Amended and Restated Articles of
Incorporation (the "Articles"), Accel, S.A. de C.V. ("Accel") currently has the
right to nominate two persons to stand for election to the Company's
seven-member Board of Directors. In addition, separate family partnerships
controlled by William W. Compton, Chairman of the Board and Chief Executive
Officer of the Company, and Michael Kagan, Vice Chairman of the Board, Executive
Vice President, Chief Financial Officer, Treasurer and Secretary, respectively,
each currently has the right to nominate one person to stand for election to the
Company's seven-member Board of Directors. The nomination of Mr. Kagan for
election as a director was made by the Board of Directors of the Company,
although Mr. Kagan also constitutes the nominee of the family limited
partnership controlled by him pursuant to its rights under the Articles.
Moreover, pursuant to a shareholders' agreement among Accel and Messrs. Compton
and Kagan and their respective family limited partnerships, all shares of Common
Stock owned or controlled by such persons or entities will be voted in favor of
the election of Mr. Kagan as a director.
Certain information is given for the nominees for directors, as well as
for each director whose term of office will continue after the Annual Meeting.
NOMINEES FOR DIRECTORS - TERMS TO EXPIRE 2001
MICHAEL KAGAN
Mr. Kagan, age 58, has served as Vice Chairman of the Board, Executive Vice
President, Chief Financial Officer, Treasurer, Secretary and a Director of the
Company and its predecessors since November 1989. He has more than 30 years
experience in the apparel industry. Prior to joining the Company, Mr. Kagan
served as Senior Vice President of Finance for Munsingwear, Inc. and as
Executive Vice President and Chief Operating Officer of Flexnit Company, Inc., a
manufacturer of women's intimate apparel.
LEON H. REINHART
Mr. Reinhart, age 55, has served as a Director of the Company since August 1997.
Mr. Reinhart has been President, Chief Executive Officer and a director of First
National Bank based in San Diego, California since May 1996. Prior to such time,
he served as Chief Credit Officer and Deputy General Manager of Citibank Mexico
from 1988 through April 1996. Mr. Reinhart's experience includes more than
twenty years as a financial executive with Citibank, N.A. and its affiliates in
a variety of domestic and international positions.
DIRECTORS CONTINUING IN OFFICE - TERMS TO EXPIRE 1999
LESLIE J. GILLOCK
Ms. Gillock, age 41, has served as a Director of the Company since August 1997.
She has served in various capacities with Fruit of the Loom, Inc. since 1978,
including Vice President of Marketing since March 1995, Director of Marketing
from January 1993 through February 1995, and Marketing Manager for Intimate
Apparel from January 1989 through December 1992. She has over 19 years
experience in the apparel industry.
DONALD H. LIVINGSTONE
Mr. Livingstone, age 54, has served as a Director of the Company since August
1997. He has been a Teaching Professor at the Brigham Young University Marriott
School of Management and the Director of its Center for Entrepreneurship since
September 1994. From 1976 through March 1995, he was a partner with Arthur
Andersen LLP. He joined Arthur Andersen LLP in 1966.
3
<PAGE> 6
ELOY S. VALLINA-LAGUERA
Mr. Vallina-Laguera, age 59, has served as a Director of the Company and its
predecessors since November 1989. He has been Chairman of the Board of Accel,
S.A. de C.V. ("Accel") and its predecessor, Grupo Chihuahua, S.A. de C.V.
("Grupo Chihuahua"), since its inception in 1979. Accel is a publicly traded
Mexican holding company having subsidiaries engaged in warehousing, distribution
and manufacturing. Mr. Vallina-Laguera has been Chairman of the Board of Elamex,
S.A. de C.V. ("Elamex"), a manufacturing company controlled by Accel, since
1990. He is also Chairman of Kleentex Corp. Mr. Vallina-Laguera was Chairman of
Banco Commercial Mexicano, later Multibanco Comermex, one of Mexico's largest
commercial banks at that time, from 1971 until its expropriation in 1982.
DIRECTORS CONTINUING IN OFFICE - TERMS TO EXPIRE 2000
JESUS ALVAREZ-MORODO
Mr. Alvarez-Morodo, age 51, has served as a Director of the Company and its
predecessors since November 1989. He has been Vice Chairman of the Board of
Elamex since 1995 and a Director since 1990. He has been President and Chief
Executive Officer of Accel since 1992 and has held various positions with Accel
and its predecessor, Grupo Chihuahua, and its subsidiaries since 1982, including
Vice President from 1989 to 1992 and Director since 1997. Mr. Alvarez-Morodo was
a Director of El Paso State Bank from 1989 to 1992.
WILLIAM W. COMPTON
Mr. Compton, age 53, has served as Chairman of the Board, Chief Executive
Officer and a Director of the Company and its predecessors since November 1989.
He also served as President of the Company and its predecessors from November
1989 to November 1994. Mr. Compton has over 28 years of experience in the
apparel industry. Prior to joining the Company, he served as President and Chief
Operating Officer of Munsingwear, Inc., an apparel manufacturer and marketer,
President/Executive Vice President of Corporate Marketing for five apparel
divisions of McGregor/Faberge Corporation and President, U.S.A. and a director
of Farah Manufacturing Corporation, a men's apparel manufacturer. Mr. Compton
currently serves on the Board of Directors of the Brigham Young University
Marriott School of Management.
BOARD OF DIRECTORS
GENERAL
The Board of Directors held nine meetings during the fiscal year ended
September 27, 1997. The Board of Directors also took certain actions by
unanimous written consent in lieu of a meeting, as permitted by Florida law. All
of the current directors attended all meetings of the Board of Directors held
during the respective periods that they served in such capacity during the
fiscal year ended September 27, 1997.
4
<PAGE> 7
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no
compensation as such for service as members of either the Board of Directors or
committees thereof. Directors who are not executive officers of the Company
receive $1,000 per Board and/or committee meeting attended, plus reimbursement
of reasonable expenses. The outside directors are also eligible to receive
options to purchase Common Stock under the Company's Non-Employee Director Stock
Option Plan. See "Executive Compensation-Stock Option Plans."
COMMITTEES OF THE BOARD
The Board of Directors has established committees whose
responsibilities are summarized as follows. These committees were formed in
conjunction with the Company's initial public offering subsequent to the close
of the fiscal year ended September 27, 1997 and, therefore, had no meetings
during that year.
AUDIT COMMITTEE. The Audit Committee is comprised of Messrs. Alvarez-Morodo and
Livingstone and Ms. Gillock, and is responsible for reviewing the independence,
qualifications and activities of the Company's independent certified public
accountants and the Company's financial policies, control procedures and
accounting staff. The Audit Committee recommends to the Board the appointment of
the independent certified public accountants and reviews and approves the
Company's financial statements. The Audit Committee is also responsible for the
review of transactions between the Company and any Company officer, director or
entity in which a Company officer or director has a material interest.
COMPENSATION COMMITTEE. The Compensation Committee is comprised of Messrs.
Compton, Reinhart and Vallina-Laguera and Ms. Gillock, and is responsible for
establishing the compensation of the Company's directors, officers and other
managerial personnel, including salaries, bonuses, termination arrangements, and
other executive officer benefits.
STOCK OPTION COMMITTEE. The Stock Option Committee is comprised of Ms. Gillock
and Messrs. Reinhart and Vallina-Laguera. The Stock Option Committee is
responsible for the administration of both the Company's Employee Stock Option
Plan, including the recipients, amounts and terms of stock option grants
thereunder, and the Company's 1996 Stock Option Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors, certain officers and beneficial owners of
more than 10% of a class of securities registered under the Exchange Act to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "Commission"). The Company's Common
Stock was registered pursuant to Section 12 of the Exchange Act in late October
1997 in connection with the Company's initial public offering. Consequently, the
Company's directors, officers and beneficial owners of more than 10% of the
Common Stock were not subject to the reporting requirements under Section 16(a)
of the Exchange Act during the fiscal year ended September 27, 1997.
5
<PAGE> 8
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of the Record Date, with respect to: (i)
each of the Company's directors; (ii) each of the Company's executive officers
named in the Summary Compensation Table below; (iii) all directors and executive
officers of the Company as a group; and (iv) each person known by the Company to
own beneficially more than 5% of the Common Stock. Except as otherwise
indicated, each of the shareholders listed below has sole voting and investment
power over the shares beneficially owned.
<TABLE>
<CAPTION>
Beneficially Owned
-----------------------
Name Shares Percent
---- ---------- ---------
<S> <C> <C>
William W. Compton (1) 946,233 12.4%
Richard J. Domino (2) 4,767 *
Michael Kagan (3) 567,100 7.5
Jesus Alvarez-Morodo (4)(5) 1,600,450 21.1
Eloy S. Vallina-Laguera (4)(5) 1,600,450 21.1
Leslie J. Gillock (4) 200 *
Donald H. Livingstone (4) 1,000 *
Leon H. Reinhart (4) --- *
Accel, S.A. de C.V. (5) 1,600,450 21.1
All directors and officers as a group (8 persons) 3,119,750 41.0
</TABLE>
- ----------------------------
* Less than 1%.
(1) Includes 216,000 shares held by the Compton Family Limited Partnership.
Includes 7,833 shares of Common Stock issuable upon the exercise of
vested stock options. Does not include 120,067 shares of Common Stock
issuable upon the exercise of nonvested stock options. The business
address of Mr. Compton is 4902 W. Waters Avenue, Tampa, Florida 33634.
(2) Includes 2,667 shares of Common Stock issuable upon the exercise of
vested stock options. Does not include 40,633 shares of Common Stock
issuable upon the exercise of nonvested stock options. Includes 100
shares held as custodian for the benefit of his minor children.
(3) Includes 562,500 shares held by the Kagan Family Limited Partnership.
Includes 4,600 shares of Common Stock issuable upon the exercise of
vested stock options. Does not include 70,300 shares of Common Stock
issuable upon the exercise of nonvested stock options. The business
address of Mr. Kagan is 4902 W. Waters Avenue, Tampa, Florida 33634.
(4) Does not include 10,000 shares of Common Stock issuable upon the
exercise of nonvested stock options.
(5) Consists of shares held by Accel. Mr. Vallina-Laguera owns directly
130,862,957 shares, or 37.6%, of the outstanding common stock of Accel.
In addition, he controls companies that hold 46,414,851 shares, or
13.3%, of the outstanding common stock of Accel. Mr. Alvarez-Morodo is
the President and Chief Executive Officer of Accel. The business
address of Mr. Vallina-Laguera is Av. Zarco No. 2401., Col. Zarco,
Chihuahua, Chih., Mexico, and the business address of Mr.
Alvarez-Morodo and Accel is Virginia Fabregas No. 80, Col. San Rafael,
06470 Mexico, D.F.
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<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
paid to or earned by the Company's Chief Executive Officer and the Company's two
other most highly compensated executive officers who earned more than $100,000
for the fiscal years ended September 27, 1997 and September 28, 1996.
<TABLE>
<CAPTION>
FISCAL NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
William W. Compton 1997 $390,000 $429,000 23,500 $ 32,640 (1)(2)
Chairman of the Board and 1996 336,985 387,200 --
Chief Executive Officer 31,522 (1)(2)
Richard J. Domino 1997 225,000 225,000 8,000 --
President 1996 191,346 200,000 -- --
Michael Kagan 1997 215,000 172,000 13,800 $ 19,343 (2)(3)
Vice Chairman of the Board, 1996 192,000 153,600 --
Executive Vice President, 19,343 (2)(3)
Chief Financial Officer,
Treasurer and Secretary
</TABLE>
- --------------------
(1) Includes $25,000 in director's fees for each of fiscal 1997 and fiscal
1996 and $7,640 and $6,522 in grossed up premiums for term life
insurance for fiscal 1997 and fiscal 1996, respectively, for the
benefit of Mr. Compton and his family.
(2) Directors who are executive officers of the Company no longer receive
compensation as such for service as members of either the Board of
Directors or committees thereof.
(3) Includes $15,000 in director's fees for each of fiscal 1997 and fiscal
1996 and $4,343 in grossed up premiums for term life insurance for each
of fiscal 1997 and fiscal 1996, respectively, for the benefit of Mr.
Kagan and his family.
7
<PAGE> 10
OPTION GRANTS IN FISCAL 1997 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to grants of stock
options during the fiscal year ended September 27, 1997 to the executive
officers named in the Summary Compensation Table and the year-end value of
unexercised options held by such executive officers. No options were outstanding
prior to such fiscal year and no options were exercised during such fiscal year.
<TABLE>
<CAPTION>
Executive Officer
----------------------------------------------------------------
William W. Compton Richard J. Domino Michael Kagan
------------------ ----------------- -------------
<S> <C> <C> <C>
Individual Grants:
Options Granted (1) 23,500 8,000 13,800
% of Total Options Granted to
Employees in Fiscal 1997 39.2 13.3 23.0
Exercise Price Per Share $ 10.50 10.50 10.50
Expiration Date 12/18/06 12/18/06 12/18/06
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for Option Terms:
5% (2) $ 155,100 52,800 91,080
10% (2) $ 393,155 133,840 230,874
Unexercisable Options at Year End (3) 23,500 8,000 13,800
Value of Unexercisable In-The-Money
Options at Year End (3) (4) $ 35,250 12,000 20,700
</TABLE>
- --------------------
(1) Options granted under the Company's 1996 Stock Option Plan are exercisable
by the named executive officer to the extent of 33-1/3% of the shares
subject to such options each year beginning one year after the date of
grant subject to certain conditions.
(2) Assumes rates of Common Stock price appreciation that are prescribed by
the United States Securities and Exchange Commission.
(3) All options issued were unexercisable at Fiscal 1997 year-end.
(4) Represents the number of shares of Common Stock that may be acquired upon
the exercise of options, multiplied by the difference between (i) the
initial public offering price of the Common Stock on October 28, 1997
($12.00) and (ii) the exercise price per share.
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<PAGE> 11
EMPLOYMENT AGREEMENTS
Prior to its initial public offering, the Company had separate employment
agreements with each of Messrs. Compton, Kagan and Domino. Under these
agreements, Messrs. Compton, Kagan and Domino were entitled to annual base
salaries of $390,000, $215,000, and $225,000, respectively, in Fiscal 1997. In
addition, Mr. Compton and Mr. Kagan were entitled to receive annual bonuses
based on the Company's earnings before interest payments and income taxes.
The Company has entered into new employment agreements with each of Messrs.
Compton, Kagan and Domino, which became effective as of the completion of the
initial public offering in October 1997. The employment agreement with Mr.
Compton provides for an initial term of five years, with automatic renewals
beginning at the end of the third year such that there shall remain at all times
thereafter a rolling two-year term of employment. Notwithstanding the foregoing,
in the event the agreement has not otherwise been terminated, it will terminate
automatically at the end of the Company's fiscal year in which Mr. Compton
reaches age 65. The agreement provides for an annual base salary (currently
$448,500) subject to a minimum annual increase equal to the increase in the
Consumer Price Index for all Urban Consumers--All Items Index for Tampa, Florida
("CPI") for the immediately preceding twelve months. Mr. Compton is also
entitled to an annual performance bonus of up to 110% of his base salary based
on a comparison of the Company's average return on total capital employed over a
four-year period as compared to an average target return on total capital as
calculated for a select group of publicly traded apparel companies over the same
period. To the extent authorized by the Board, Mr. Compton also shall be
entitled to participate in such bonus programs and other benefit plans as are
generally made available to other executive officers of the Company.
The agreement may not be terminated by the Company prior to January 1, 1999
for any reason other than cause (as defined therein) or Mr. Compton's death or
disability. If the agreement is terminated by the Company on or after January 1,
1999, for any reason other than cause or Mr. Compton's death or disability, the
Company shall pay Mr. Compton a one-time, lump sum severance payment equal to
the product of (i) the greater of two and the number of years (rounded to the
nearest 1/12th of a year) remaining in the initial five-year term and (ii) the
sum of Mr. Compton's average annual base salary and average annual bonus for the
preceding three years. During the two-year period following termination of
employment other than as a result of disability, Mr. Compton shall not engage in
or have any impermissible financial interest in any business that is engaged in
the merchandising, manufacturing, distribution or marketing of men's casual
pants, shorts or jeans.
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<PAGE> 12
The agreement also provides for a one-time, lump sum severance payment, in
lieu of any other severance payment, if Mr. Compton elects to terminate his
employment with the Company either for "good reason" (as defined therein) or
upon a "change of control" of the Company. Upon termination for "good reason,"
the severance payment will equal the product of (i) the greater of two and the
number of years (rounded to the nearest 1/12th of a year) remaining in the
initial five-year term and (ii) the sum of Mr. Compton's average annual base
salary and average annual bonus for the preceding three years. Upon termination
upon a "change of control," the severance payment will equal, depending on the
extent of the change of control, either (a) two times Mr. Compton's average
annual base salary for the preceding three years or (b) two times the sum of Mr.
Compton's average annual base salary and average annual bonus for the preceding
three years. Under the agreement, a "change of control" shall be deemed to have
occurred if (i) any person (other than certain exempt persons, including Messrs.
Compton and Kagan, Accel, the Company and their respective affiliates and
associates) beneficially owns 25% or more of the outstanding shares of voting
capital stock or (ii) immediately following the sale or transfer of
substantially all of the Company's assets, or the merger or consolidation of the
Company with or into another person, any person (other than certain exempt
persons) shall beneficially own 25% or more of the surviving or acquiring
person.
The Company's employment agreement with Mr. Kagan is substantially the same
as Mr. Compton's except that Mr. Kagan's current annual base salary is $247,250
and his maximum annual performance bonus equals 80% of his base salary.
The Company's employment agreement with Mr. Domino provides for an initial
term of three years, with automatic renewals beginning at the end of the second
year such that there shall remain at all times thereunder a rolling one-year
term of employment. Notwithstanding the foregoing, in the event the agreement
has not been otherwise terminated, it will terminate automatically at the end of
the Company's fiscal year in which Mr. Domino reaches age 65. The agreement
provides for an annual base salary (currently $258,750) subject to a minimum
annual increase equal to the increase in the CPI for the immediately preceding
twelve months. Mr. Domino is also entitled to an annual performance bonus of up
to 100% of his base salary. To the extent authorized by the Board, Mr. Domino
shall be entitled to participate in such bonus programs and other benefit plans
as are generally made available to other executive officers of the Company.
The agreement provides that, if Mr. Domino's employment is terminated without
cause (as defined therein) by the Company, he shall be entitled to severance
payments, payable biweekly, at his annual base salary rate at the time of
termination until the earlier of (i) the date he obtains new employment and (ii)
the end of the remaining term under the employment agreement. In the event Mr.
Domino obtains new employment prior to the end of the remaining term under the
employment agreement, he shall be entitled to receive biweekly from the Company
the difference between his annual base salary rate at the time of termination
and his annual cash compensation rate from his new employment. The agreement
further provides that, if Mr. Domino resigns or is terminated for cause, he will
not, during the one-year immediately following such termination, engage in or
have any impermissible financial interest in any business that is engaged in the
merchandising, manufacturing, distribution or marketing of men's casual pants,
shorts or jeans.
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STOCK OPTION PLANS
The Company currently maintains two stock option plans to attract, motivate
and retain key employees and members of the Board of Directors who are not
employees of the Company.
EMPLOYEE STOCK OPTION PLAN. The Company's Employee Stock Option Plan (the
"Employee Plan") provides for the grant of incentive or nonqualified stock
options to purchase up to 500,000 shares of Common Stock. In October 1997, the
executive officers named in the Summary Compensation Table were granted options
to purchase a total of 200,800 shares of Common Stock at $12.00 per share as
follows: William W. Compton, 104,400 shares; Michael Kagan, 61,100 shares; and
Richard J. Domino, 35,300 shares. All employees of the Company as a group,
including these executive officers, have been granted options to purchase a
total of 300,000 shares of Common Stock at $12.00 per share. All of such options
expire on October 28, 2007, the tenth anniversary of the date of grant. Options
shall become exercisable over a period of three years in equal amounts.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. The Company's Non-Employee Director
Stock Option Plan (the "Non-Employee Plan") provides for the grant of
nonqualified stock options to purchase up to 200,000 shares of Common Stock to
members of the Board of Directors who are not employees of the Company. Each
non-employee director was granted options to purchase 10,000 shares of Common
Stock at $12.00 per share in conjunction with the October 1997 initial public
offering. Thereafter, on the date on which an outside director is initially
elected or appointed, he or she shall automatically be granted options to
purchase 10,000 shares of Common Stock. Each outside director also shall be
granted options to purchase 10,000 shares of Common Stock on the day following
each annual meeting of shareholders at which such outside director is
re-elected. All options granted will have an exercise price equal to the then
fair market value of the Common Stock and will expire on the tenth anniversary
of the date of grant. Options shall become exercisable over a period of three
years in equal amounts. The Non-Employee Plan is a formula plan and accordingly
is intended to be self-governing. To the extent that questions of interpretation
arise, they will be resolved by the Board of Directors.
1996 STOCK OPTION GRANTS. On December 18, 1996, the Company adopted the 1996
Stock Option Plan (the "1996 Plan"). Pursuant to the 1996 Plan, options to
purchase (after giving effect to the reorganization of the Company) 60,000
shares of Common Stock at a price per share of $10.50 were granted to employees
of the Company, including the executive officers named in the Summary
Compensation Table. The executive officers named in the Summary Compensation
Table received options to purchase a total of 45,300 shares of Common Stock as
follows: William W. Compton, 23,500 shares; Michael Kagan, 13,800 shares; and
Richard J. Domino, 8,000 shares. All of such options will expire on the tenth
anniversary of the date of grant. The options shall become exercisable over a
period of three years in equal amounts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was established in connection with the
Company's initial public offering in October 1997. The members of the
Compensation Committee are Messrs. Compton, Reinhart and Vallina-Laguera and Ms.
Gillock. Except for Messrs. Compton and Kagan, no officer or employee of the
Company participated in deliberations of the Board of Directors concerning
executive officer compensation during the fiscal years ended September 27, 1997
and September 28, 1996.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under the rules of the Commission, the Company is required to provide certain
information concerning compensation of the Company's chief executive officer and
its executive officers reported for the fiscal year ended September 27, 1997.
The disclosure requirements for the executive officers include the use of tables
and a report of the committee responsible for compensation decisions for the
named executive officers, explaining the rationale and considerations that led
to those compensation decisions. The Compensation Committee of the Board of
Directors was not formed until October 1997. Prior to such time, the Board was
responsible for these decisions.
COMPENSATION COMMITTEE ROLE
The Compensation Committee and the Stock Option Committee currently are
responsible for separate aspects of the Company's compensation program for its
executive officers, including the named executive officers. The Compensation
Committee is responsible for establishing the compensation of the Company's
directors, officers and other managerial personnel, including salaries, bonuses,
termination arrangements and other executive officer benefits. The Stock Option
Committee is responsible for the administration of both the Employee Plan,
including the recipients, amounts and terms of stock option grants thereunder,
and the 1996 Plan. Prior to the formation of the Compensation Committee and the
Stock Option Committee in connection with the Company's initial public offering
in October 1997, the entire Board of Directors performed these functions.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms generally to the
compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of performance-based and
discretionary cash bonuses and periodic grants of stock options are designed to
reward and provide incentives for individual contributions as well as overall
Company performance.
The Compensation Committee monitors the operation of the Company's executive
compensation policies. Key elements of the Company's compensation program
consists of base salary, annual cash bonuses and periodic grants of stock
options. The Company's policies with respect to these elements, including the
basis for the compensation awarded the Company's chief executive officer, are
discussed below. While the elements of compensation described below are
considered separately, the Board of Directors and Compensation Committee take
into account the full compensation package offered by the Company to the
individual, including healthcare and other insurance benefits.
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Base Salaries. The Company has established competitive annual base salaries
for all officers, including the named executive officers. Effective as of the
initial public offering, the Company entered into new employment agreements with
each of its executive officers. The employment agreement for each of Messrs.
Compton and Kagan provides for an initial term of five years, with automatic
renewals. The employment agreement for Mr. Domino provides for an initial term
of three years, with automatic renewals. See "Executive Compensation-Employment
Agreements." The annual base salaries for each of the Company's executive
officers, including the Company's chief executive officer, reflect the
subjective judgment of the Board of Directors based on the consideration of the
executive officer's position and tenure with the Company, the Company's needs,
and the executive officer's individual performance, achievements and
contributions to the growth of the Company. The minimum annual percentage
increase in base salary under each of the foregoing employment agreements is the
percentage increase in the CPI.
Mr. Compton's annual base salary as the Company's chief executive officer was
$390,000 for Fiscal 1997. The Board of Directors and Compensation Committee
believe that this annual base salary is consistent with the salary range
established for this position based on the factors noted above and Mr. Compton's
prior experience and managerial expertise, his knowledge of the Company's
operations and the industry in which it operates.
Annual Bonus. Pursuant to their respective employment agreements, each of the
Company's executive officers is eligible for an annual cash bonus. Mr. Compton
is entitled to an annual performance bonus of up to 110% of his base salary
based on a comparison of the Company's average return on total capital employed
over a four-year period as compared to an average target return on total capital
as calculated for a select group of publicly traded apparel companies over the
same period. Messrs. Kagan and Domino are entitled to similarly computed annual
performance bonuses, except that Mr. Kagan's maximum annual bonus equals 80% of
his base salary and Mr. Domino's maximum bonus equals 100% of his base salary.
Under their prior employment agreements, Messrs. Compton and Kagan were entitled
to receive annual cash bonuses based on the Company's earnings before interest
payments and income taxes.
The amount of the cash bonus paid to Mr. Compton as the Company's chief
executive officer was $429,000 for the fiscal year ended September 27, 1997, and
was determined in accordance with the provisions of his current employment
agreement.
Stock Options. Under the Company's Employee Plan, stock options may be
granted to key employees, including executive officers of the Company. The
Employee Plan is administered by the Stock Option Committee. The Stock Option
Committee also administers the 1996 Plan.
During the fiscal year ended September, 1997, options to purchase
(after giving effect to the reorganization of the Company) 23,500 shares of
Common Stock were granted to Mr. Compton under the Company's 1996 Plan. The
principal factors considered in determining the granting of stock options to
executive officers of the Company, including the Company's chief executive
officer, were the executive officer's tenure with the Company, his total cash
compensation for the prior year, the executive officer's acceptance of
additional responsibilities and his contributions toward the Company's
attainment of strategic goals.
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SECTION 162(M) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), a tax deduction by corporate taxpayers, such as the Company, is limited
with respect to the compensation of certain executive officers unless such
compensation is based upon performance objectives meeting certain regulatory
criteria or is otherwise excluded from the limitation. Based upon the Board of
Directors' and Compensation Committee's commitment to link compensation with
performance as described in this report, the Board of Directors and Compensation
Committee currently intend to qualify compensation paid to the Company's
executive officers for deductibility by the Company under Section 162(m) of the
Code.
COMPENSATION COMMITTEE:
William W. Compton
Eloy J. Vallina-Laguera
Leslie J. Gillock
Leon H. Reinhart
December 17, 1997
The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the Exchange
Act (together, the "Acts"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
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CERTAIN TRANSACTIONS
The Audit Committee of the Board of Directors is responsible for reviewing all
transactions between the Company and any officer or director of the Company or
any entity in which an officer of director has a material interest. Any such
transactions must be on terms no less favorable than those that could be
obtained on an arms-length basis from independent third parties.
Pursuant to the underwriting agreement by and among the Company, Accel and
Shakale Internacional, S.A., as Selling Shareholders, and the underwriters in
connection with the Company's initial public offering, the Company and the
Selling Shareholders jointly and severally agreed to indemnify the several
underwriters or to contribute to losses arising out of certain liabilities,
including liabilities under the Securities Act of 1933. The Company and the
Selling Shareholders entered into a separate agreement which allocates between
them certain liabilities which may arise under the underwriting agreement or
otherwise in connection with the initial public offering. Such liabilities have
been allocated to the Company, except to the extent that such liabilities arise
out of certain information supplied by the Selling Shareholders or their
affiliates in writing in connection with the initial public offering or out of
certain representations and warranties or covenants and agreements made by them
in the underwriting agreement.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP as the Company's
independent certified public accountants for fiscal 1998. A representative of
Ernst & Young LLP will be present at the Annual Meeting. Such representative
will be available to respond to appropriate questions and may make a statement
if he or she so desires.
SHAREHOLDER PROPOSALS
Proposals which shareholders intend to present at the 1999 Annual Meeting of
Shareholders must be received by the Company no later than September 4, 1998 to
be eligible for inclusion in the proxy material for that meeting.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which
is not referred to in the Notice of Annual Meeting. If any other matters
properly come before the Annual Meeting, it is intended that the shares
represented by Proxy will be voted with respect thereto in accordance with the
judgment of the persons voting them.
By Order of the Board of Directors,
MICHAEL KAGAN
Secretary
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APPENDIX
1998 ANNUAL MEETING OF SHAREHOLDERS OF
TROPICAL SPORTSWEAR INT'L CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints William W. Compton as proxy, with full
power of substitution, to represent and to vote all shares of voting common
stock of TROPICAL SPORTSWEAR INT'L CORPORATION, a Florida corporation (the
"Company"), at the Annual Meeting of Shareholders of the Company to be held on
Thursday, February 5, 1998 at 10:00 a.m., EST at any adjournment thereof,
hereby revoking any and all proxies heretofore given.
The proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR the Nominees.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
TROPICAL SPORTSWEAR INT'L CORPORATION 1998 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1. Michael Kagan 2. Leon H. Reinhart [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed to the left to vote for all
(except as specified nominees listed to
below). the left.
(Instructions: To withhold authority to vote for any indicated nominee, [ ]
write the number(s) of the nominee(s) in the box provided to the right.) ----------------------------------------------
Check appropriate box Date NO. OF SHARES
indicate changes below: -----------------------
Address Change? [ ] Name Change? [ ]
Signatures(s) in Box
Please sign exactly as your name appears hereon.
If shares owned by more than one person, all
owners should sign. Persons signing as executor,
administrator, trustee or in similar capacities
should be indicated. If a corporation, please
sign in full corporate name by the president or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
</TABLE>
