<PAGE> 1
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:
X Preliminary Proxy Statement
- -----
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
- -----
Definitive Proxy Statement
- -----
Definitive Additional Materials
- -----
Soliciting Material Pursuant to ? 240.14a-11(c) or ? 240.14a-12
- -----
Weyco Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Weyco Group, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
- -----
1) Title of each class of securities to which transactions applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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Check box if any part of the fee is offset provided by Exchange Act
- ----- Rule O-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:
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4) Date Filed:
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<PAGE> 2
[WEYCOGROUP, INC. LOGO]
Milwaukee, Wisconsin
Notice of
ANNUAL MEETING OF SHAREHOLDERS
To be Held April 28, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of WEYCO GROUP,
INC., a Wisconsin corporation (hereinafter called the "Company"), will be held
at the general offices of the Company, 234 East Reservoir Avenue, Milwaukee,
Wisconsin 53212, on Tuesday, April 28, 1998 at 10:00 A. M. (Central Daylight
Time), for the following purposes:
1. To elect two members to the Board of Directors;
2. To act on a proposal to approve the Weyco Group, Inc. 1997 Stock Option
Plan;
3. To act on a proposal to amend the Company's Restated Articles of
Incorporation to increase the number of authorized shares of Common Stock
of the Company, $1.00 par value, from 4,000,000 to 10,000,000 shares; and
4. To consider and transact any other business that properly may come before
the meeting or any adjournment thereof.
The Board of Directors has fixed March 3, 1998 as the record date for the
determination of the common shareholders entitled to notice of and to vote at
this annual meeting or any adjournment thereof.
The Board of Directors requests that you indicate your voting directions, sign
and promptly mail the enclosed proxy(ies) for the meeting. Any proxy may be
revoked at any time prior to its exercise.
By order of the Board of Directors,
JOHN F. WITTKOWSKE
Secretary
March 30, 1998
<PAGE> 3
PROXY STATEMENT
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors of Weyco Group, Inc.
for exercise at the annual meeting of shareholders to be held at the offices of
the Company, 234 East Reservoir Avenue, Milwaukee, Wisconsin 53212, at 10:00
A.M. (Central Daylight Time) on Tuesday, April 28, 1998 or any adjournment
thereof.
Any shareholder delivering the form of proxy has the power to revoke it at any
time prior to the time of the annual meeting by filing with the Secretary of the
Company an instrument of revocation or a duly executed proxy bearing a later
date or by attendance at the meeting and electing to vote in person by giving
notice of such election to the Secretary of the Company. Proxies properly signed
and returned will be voted as specified thereon. The proxy statements and the
proxies are being mailed to shareholders on approximately March 30, 1998.
The Company has two classes of common stock entitled to vote at the
meeting -- Common Stock, $1.00 par value, with one vote per share and Class B
Common Stock, $1.00 par value, with ten votes per share. As of March 3, 1998,
the record date for determination of the common shareholders entitled to notice
of and to vote at the meeting or any adjournment thereof, there were outstanding
3,833,931 shares of Common Stock and 965,494 shares of Class B Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth information, as of March 3, 1998, with respect to
the beneficial ownership of the Company's common stock by each director and
nominee for director, for each of the named executive officers identified for
"Management Compensation" herein and by all directors and executive officers as
a group.
<TABLE>
<CAPTION>
COMMON STOCK CLASS B COMMON STOCK
------------------------ ------------------------
NO. OF SHARES NO. OF SHARES
AND NATURE OF AND NATURE OF
BENEFICIAL PERCENT BENEFICIAL
OWNERSHIP OF CLASS OWNERSHIP PERCENT
(1)(2) (3) (2) OF CLASS
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Thomas W. Florsheim................................ 485,987 12.50 606,420 62.81
234 E. Reservoir Ave., Milwaukee, WI 53212
John W. Florsheim.................................. 106,381 2.74 10,266 1.06
234 E. Reservoir Ave., Milwaukee, WI 53212
Thomas W. Florsheim, Jr. .......................... 148,731 3.83 10,542 1.09
234 E. Reservoir Ave., Milwaukee, WI 53212
James F. Gorman.................................... 35,000 .91 3,000 .31
Peter S. Grossman.................................. 34,175 .89 11,100 1.15
Robert Feitler..................................... 45,606 1.19 66,606 6.90
Leonard J. Goldstein............................... 3,000 .08 -- --
Frank W. Norris.................................... 6,822 .18 822 .09
Frederick P. Stratton, Jr. ........................ 27,000 .70 18,000 1.86
All Directors and Executive Officers as a Group
(11 persons including the above-named)........... 964,402 23.62 726,756 75.27
</TABLE>
NOTES:
(1) Includes the following unissued shares deemed to be "beneficially owned"
under Rule 13d-3 which may be acquired upon the exercise of outstanding
stock options: Mr. Thomas W. Florsheim -- 55,000; Mr. John W. Florsheim --
44,500; Mr. Thomas W. Florsheim, Jr. -- 46,000; James F. Gorman -- 23,000;
Peter S. Grossman -- 23,000; All Directors and Executive Officers as a
Group -- 248,500.
1
<PAGE> 4
(2) The specified persons have sole voting power and sole dispositive power as
to all shares indicated above, except for the following shares as to which
voting and dispositive power are shared:
<TABLE>
<CAPTION>
COMMON CLASS B COMMON
------ --------------
<S> <C> <C>
Thomas W. Florsheim 12,948 12,948
John W. Florsheim 5,533 --
Thomas W. Florsheim, Jr. 5,533 --
Peter S. Grossman 5,400 11,100
All Directors and Executive
Officers as a Group 29,414 24,048
</TABLE>
(3) Calculated on the basis of outstanding shares plus shares which can be
acquired upon exercise of outstanding stock options, by the person or group
involved.
The following table sets forth information, as of December 31, 1997, with
respect to the beneficial ownership of the Company's Common Stock by those
persons, other than those reflected in the above table, believed by the Company
to own beneficially more than five percent (5%) of the Common Stock outstanding.
The Company believes there are no other persons who own beneficially more than
five percent (5%) of the Class B Common Stock outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Royce & Associates, Inc., and Royce Management
Company
1414 Avenue of the Americas
New York, New York 10019 452,414 11.80%
</TABLE>
NOTE:
According to the Schedule 13G statement filed as a group by Royce &
Associates, Inc. and Royce Management Company in February 1998 (formerly
Quest Advisory Corp. and Quest Management Company, respectively), Royce &
Associates, Inc. has sole voting and dispositive power with respect to
401,150 shares of Common Stock of the Company and Royce Management Company
has sole voting and dispositive power with respect to 51,264 shares of
Common Stock of the Company.
ELECTION OF DIRECTORS
A majority of the votes entitled to be cast by outstanding shares of Common
Stock and Class B Common Stock (considered together as a single voting group),
represented in person or by proxy, will constitute a quorum at the annual
meeting.
Directors are elected by a plurality of the votes cast by the holders of the
Company's Common Stock and Class B Common Stock (voting together as a single
voting group) at a meeting at which a quorum is present. "Plurality" means that
the individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting.
Consequently, any shares not voted (whether by abstention, broker nonvote or
otherwise) have no impact in the election of directors except to the extent the
failure to vote for an individual results in another individual receiving a
larger number of votes. Votes "against" a candidate are not given legal effect
and are not counted as votes cast in an election of directors. Votes will be
tabulated by an inspector at the meeting.
The persons who are nominated as directors and for whom the proxies will be
voted and all continuing Directors are listed below. If any of the nominees
should decline or be unable to act as a Director, which eventuality is not
foreseen, the proxies will be voted with discretionary authority for a
substitute nominee designated by the Board of Directors.
2
<PAGE> 5
There are no family relationships between any of the Company's directors and
executive officers, except that Thomas W. Florsheim is the father of Thomas W.
Florsheim, Jr. and John W. Florsheim.
<TABLE>
<CAPTION>
SERVED AS
NOMINEES DIRECTOR PRINCIPAL OCCUPATION AND
FOR TERM EXPIRING 2001 AGE SINCE BUSINESS EXPERIENCE
- ---------------------------- --- --------- -------------------------------------------------------
<S> <C> <C> <C>
Thomas W. Florsheim 67 1964 Chairman of the Board and Chief Executive Officer of
(1) the Company 1968 to present
Frank W. Norris 77 1981 Director of Associated Bank Milwaukee; President of
(1)(2)(3)(4) Associated Bank Milwaukee, 1994; Vice Chairman of the
Board of Associated Bank Milwaukee, 1991 to 1994;
Chairman of the Board of Associated Bank Milwaukee,
1985 to 1991
CONTINUING DIRECTORS
TERM EXPIRES 2000
- ----------------------------
John W. Florsheim 34 1996 Executive Vice President of the Company, 1996 to pre-
sent; Vice President of the Company, 1994 to 1996;
Brand Manager, M & M/Mars, Inc., 1990 to 1994
Frederick P. Stratton, Jr. 58 1976 Chairman of the Board and Chief Executive Officer of
(1)(2)(3)(4) Briggs & Stratton Corporation (Manufacturer of Gasoline
Engines) 1986 to present; also a Director of Banc One
Corporation and Wisconsin Energy Corporation
CONTINUING DIRECTORS
TERM EXPIRES 1999
- ----------------------------
Thomas W. Florsheim, Jr. 40 1996 President and Chief Operating Officer of the Company,
1996 to present; Vice President of the Company, 1988 to
1996
Robert Feitler 67 1964 Chairman, Executive Committee of the Company, 1996 to
(1) present; President and Chief Operating Officer of the
the Company, 1996 to present; President and Chief
Operating Officer of the Company 1968 to 1996; also a
Director of Strattec Security Corp. and Trustee of
Rembrandt Funds
Leonard J. Goldstein 71 1992 Retired; Chairman of the Board of Miller Brewing Com-
(1)(2)(3)(4) pany 1991 to 1993; President and Chief Executive
Officer of Miller Brewing Company 1988 to 1991
</TABLE>
NOTES:
(1) Member of Executive Committee, of which Mr. Feitler is Chairman. No meetings
were held in 1997. The Executive Committee is empowered to exercise the
authority of the Board of Directors in the management of the business and
affairs of the Company between meetings of the Board, except for declaring
dividends, filling vacancies in the Board of Directors or committees
thereof, amending the Articles of Incorporation, adopting, amending or
repealing Bylaws and certain other matters.
(2) Member of Audit Committee, of which Mr. Stratton is Chairman. One meeting
was held in 1997. The Audit Committee reviews accounting policies and
practices of the Company, including the adequacy of the system of internal
accounting controls. It also recommends to the Board a firm of independent
public accountants to make an audit of the annual financial statements of
the Company and reviews with the independent public accountants the plan and
result of their audit of these financial statements.
(3) Member of Compensation and Fringe Benefit Committee, of which Mr. Norris is
Chairman. Two meetings were held in 1997. The Compensation and Fringe
Benefit Committee establishes compensation arrangements for senior
management.
(4) Member of Stock Option Committee, of which Mr. Norris is Chairman. One
meeting was held in 1997. The Stock Option Committee administers the
granting of stock options to officers and other key employees of the Company
and its subsidiaries.
The Board of Directors held eight meetings in 1997. All Directors attended at
least 75% of the meetings during 1997. The Company has no nominating or similar
committee of the Board of Directors.
3
<PAGE> 6
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth total compensation of the Chief Executive Officer
and the four other most highly compensated executive officers of the Company as
of December 31, 1997, for the year 1997, as well as for the two previous years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ ----------------------- -------
OTHER ANNUAL RESTRICTED OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION STOCK SARS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($) (#) (2)(3) ($) ($)(1)
- -------------------------- ---- --------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas W. Florsheim 1997 400,000 -- -- -- 10,000 -- --
Chairman and Chief 1996 400,000 -- -- -- 5,000 -- --
Executive Officer 1995 400,000 -- -- -- 5,000 -- --
Thomas W. Florsheim, Jr. 1997 280,000 -- -- -- 10,000 -- --
President and Chief 1996 202,100 -- -- -- 5,000 -- --
Operating Officer 1995 152,000 -- -- -- 5,000 -- --
John W. Florsheim 1997 200,000 -- -- -- 10,000 -- --
Executive Vice President 1996 147,600 -- -- -- 5,000 -- --
1995 106,000 -- -- -- 5,000 --
James F. Gorman 1997 216,025 2,500 -- -- 5,000 -- --
Vice President 1996 212,700 5,000 -- -- 2,000 -- --
1995 199,500 -- -- -- 2,000 -- --
Peter S. Grossman 1997 224,140 2,500 -- -- 5,000 -- --
Vice President 1996 222,400 5,000 -- -- 2,000 -- --
1995 207,500 -- -- -- 2,000 -- --
</TABLE>
NOTES:
(1) Other compensation to the named individuals did not exceed the lesser of
$50,000 or 10% of salary.
(2) Options to acquire shares of Common Stock.
(3) The Company has granted no stock appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------ POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/ ANNUAL RATES OF
UNDERLYING SARS STOCK PRICE
OPTIONS/ GRANTED TO APPRECIATION FOR
SARS EMPLOYEES EXERCISE OR OPTION TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------- ---------- ---------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Florsheim 5,868 9 22.00 11/18/07 81,200 205,700
4,132 6 24.20 11/18/02 16,000 46,400
Thomas W. Florsheim, Jr. 5,868 9 22.00 11/18/07 81,200 205,700
4,132 6 24.20 11/18/02 16,000 46,400
John W. Florsheim 5,868 9 22.00 11/18/07 81,200 205,700
4,132 6 24.20 11/18/02 16,000 46,400
James F. Gorman 5,000 7 22.00 11/18/07 69,200 175,300
Peter S. Grossman 5,000 7 22.00 11/18/07 69,200 175,300
</TABLE>
4
<PAGE> 7
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table provides information related to options exercised by the
named executive officers during 1997 and the number and value of options held at
December 31, 1997. The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
VALUE AT FY-END(#) (2) AT FY-END($) (2)(3)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE(#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Florsheim 15,000 192,500 45,000 10,000 506,876 11,736
Thomas W. Florsheim,
Jr. 3,000 38,500 39,000 10,000 437,750 11,736
John W. Florsheim -- -- 34,500 10,000 376,063 11,736
James F. Gorman 6,000 80,000 18,000 5,000 202,750 10,000
Peter S. Grossman 6,000 87,500 18,000 5,000 202,750 10,000
</TABLE>
NOTES:
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise multiplied by the number of shares to which the exercise relates.
(2) All options held by the named individuals at December 31, 1997 were
in-the-money, with the exception of certain options granted during 1997.
(3) The fair market value of the Company's Common Stock at December 31, 1997 was
$24.00 (average of bid -- $22.00 and asked -- $26.00). Value was calculated
on the basis of the difference between the option exercise price and $24.00
multiplied by the number of shares of Common Stock underlying the option.
PENSION PLANS
The Company maintains a defined benefit pension plan for various employees of
the Company, including salaried employees. The Company also maintains an
unfunded excess benefits plan so that participants in the defined benefit
pension plan may receive pension benefits which they would otherwise be
prevented from receiving as a result of certain limitations of the Internal
Revenue Code.
The following table shows estimated annual benefits payable at normal retirement
under the general plan formula to persons whose normal retirement age is 65 in
specified earnings and years-of-service classifications. Amounts in excess of
$118,800 or based on income in excess of $160,000 are payable pursuant to the
excess benefits plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
HIGHEST FIVE YEAR ----------------------------------------
AVERAGE EARNINGS 10 15 20 25
- ----------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000 $14,000 $ 22,000 $ 29,000 $ 36,000
150,000 22,000 34,000 45,000 56,000
200,000 30,000 46,000 61,000 76,000
250,000 38,000 58,000 77,000 96,000
300,000 46,000 70,000 93,000 116,000
350,000 54,000 82,000 109,000 136,000
400,000 62,000 94,000 125,000 156,000
450,000 70,000 100,000 141,000 176,000
500,000 78,000 118,000 157,000 196,000
</TABLE>
The plans provide for normal retirement at age 65 and provide for reduced
benefits for early retirement beginning at age 55. Pension benefits are payable
as a straight life annuity and are calculated under a formula which is
integrated with Social Security, although the amounts determined under the
formula are not reduced by Social Security benefits or other offsets. The normal
retirement benefit is based on (i) the highest average earnings for any 5
consecutive years during the 10 calendar years ending with the year of
retirement, (ii) length
5
<PAGE> 8
of service up to 25 years and (iii) the highest average covered compensation for
Social Security purposes. Earnings covered by the plan are generally defined as
wages for purposes of federal income tax withholding and therefore may include
minor items in addition to those included in the above Summary Compensation
Table as "Salary". Years of credited service under the plans for the individuals
described in the above Summary Compensation Table are as follows: Mr.
Florsheim -- 25; Mr. Gorman -- 25; Mr. Grossman -- 25; Mr. Florsheim, Jr. -- 16;
John W. Florsheim -- 4.
The foregoing describes the general formula under the defined benefit plan and
related excess benefits plan as revised in 1991. Those salaried employees who
were covered in the plans on January 1, 1989 are provided with the higher of the
benefits described above or a minimum benefit based on a prior formula through
the defined benefit plan, the unfunded excess benefits plan described above and
an unfunded deferred compensation plan. The normal retirement benefit under the
prior formula is based on the highest average earnings for any 5 consecutive
years during the 10 calendar years preceding retirement and length of service up
to 25 years. Minimum benefit amounts are not subject to any deduction for Social
security benefits. Earnings covered by this formula are the same as those shown
in the above Summary Compensation Table as "Salary".
The following table shows estimated annual benefits payable under the prior
formula upon normal retirement to persons in specified earnings and
years-of-service classifications. Amounts in excess of $118,800 or based on
income in excess of $160,000 are payable pursuant to the excess benefits plan
and the deferred compensation plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE
HIGHEST FIVE YEAR ----------------------------------------
AVERAGE EARNINGS 10 15 20 25
- ----------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000 $16,000 $ 23,000 $ 31,000 $ 39,000
150,000 24,000 35,000 47,000 59,000
200,000 32,000 48,000 63,000 79,000
250,000 40,000 59,000 79,000 99,000
300,000 48,000 71,000 95,000 119,000
350,000 56,000 84,000 111,000 139,000
400,000 64,000 95,000 127,000 159,000
450,000 72,000 107,000 143,000 179,000
500,000 80,000 120,000 159,000 199,000
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company who are not also employees of the Company or
subsidiaries receive a quarterly retainer of $1,250. In addition, they receive
$1,000 for each Board or Committee meeting attended, except that for each
additional meeting attended on the same day the compensation is $500. These
Directors may defer payment of all or part of their fees under the Deferred
Compensation Plan for Directors until they cease to be Directors.
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
The Company has entered into employment contracts with Thomas W. Florsheim,
Thomas W. Florsheim, Jr. and John W. Florsheim whereby, for services to be
rendered, their employment will be continued until December 31, 2001, at salary
levels to be determined and reviewed periodically. These contracts provide,
among other things, that a lump sum amount equal to slightly less than three
times his base amount compensation (as defined in Section 280G of the Internal
Revenue Code) will be paid to Mr. Thomas W. Florsheim, Mr. Thomas W. Florsheim,
Jr. or Mr. John W. Florsheim, respectively, as severance pay, in the event the
Company terminates his employment without cause or he terminates his employment
following a change in control of more than 15% of the shares of the Company, the
replacement of two or more directors by persons not nominated by the Board of
Directors, any enlargement of the size of the Board of Directors if the change
was not supported by the existing Board of Directors, a merger, consolidation or
transfer of assets of the Company, or a substantial change in his
responsibilities. In the event Mr. Thomas W. Florsheim, Mr. Thomas W. Florsheim,
Jr. or Mr. John W. Florsheim is prevented from performing his duties by reason
of permanent disability, his normal salary will be discontinued and a disability
salary of $300,000 per annum for Mr. Thomas W. Florsheim, $225,000 per annum for
Thomas W. Florsheim, Jr. and $161,250 per annum for Mr. John Florsheim will be
paid until December 31, 2003. Also, in the event Mr. Thomas W. Florsheim, Mr.
Thomas W. Florsheim, Jr. or Mr. John W. Florsheim dies prior to the termination
of his employment under the contract, a death benefit equal to his salary at the
annual rate being paid to him at the date of death will be paid to a designated
beneficiary for a three-year period. As of January 1, 1998, Mr. Thomas W.
Florsheim's annual salary is $400,000, Mr. Thomas W. Florsheim's, Jr. annual
salary is $300,000 and Mr. John W. Florsheim's annual salary is $215,000.
6
<PAGE> 9
The Company entered into deferred compensation agreements with both Mr. Thomas
W. Florsheim and Mr. Robert Feitler under which each of them, or their
designated beneficiaries in the event of their death, would be entitled to a
deferred compensation benefit of $180,000 per year for twenty years upon
reaching age 65 while employed by the Company, payable commencing upon
retirement from employment by the Company or at death.
On December 1, 1995, the Board of Directors, with Mr. Florsheim and Mr. Feitler
abstaining, approved the amendment of the deferred compensation agreements
between the Company and Mr. Florsheim and Mr. Feitler. The amended agreements
accelerate the payments which would have been made under the previous
agreements. The amended agreements call for payments which have the same present
value at a 7% discount rate as of the employee's 65th birthday as the
compensation under the previous agreements.
The Company has entered into a death benefit plan agreement with Thomas W.
Florsheim under which his designated beneficiary(ies) would receive a lump sum
payment of $444,727 in the event of Mr. Florsheim's death while he is employed
by the Company. Because of this agreement, Mr. Florsheim is not a participant in
the Company's group term life insurance program.
The Company has entered into change of control agreements with four executives,
John Wittkowske, Peter Grossman, James Gorman, and David Couper. These contracts
provide that a lump sum equal to slightly less than three times his base amount
of compensation, (as defined in Section 280G of the Internal Revenue Code)
calculated with respect to the 3 taxable year period ending before the date the
change of control occurs, will be paid as severance pay in the event of a change
of control. The change of control agreements define a change of control as an
event in which:
(1) more than 25% of the voting power of the outstanding stock of the Company is
directly or indirectly controlled by a person or group of persons other than
the members of the family of Thomas W. Florsheim and their descendents or
trusts;
(2) the Company consolidates or merges with another corporation or entity which
is not a wholly owned subsidiary of the Company unless such consolidation or
merger is approved by the Board of Directors when the majority of the
Directors are persons who have been nominated by the Board of Directors or
the Florsheims;
(3) all or substantially all of the operating assets of the Company have been
sold;
(4) the majority of the existing members of the Board of Directors have been
replaced by persons not nominated by the Board or Directors or the
Florsheims, or
(5) Section 2 of Article III of the Company's Bylaws is amended to enlarge the
number of directors of the Company if the change was not supported by the
existing Board of Directors or the Florsheims.
As of January 1, 1998, Mr. Wittkowske's annual salary is $155,000, Mr.
Grossman's annual salary is $230,500, Mr. Gorman's annual salary is $222,500,
and Mr. Couper's annual salary is $101,000.
REPORT OF THE COMPENSATION AND FRINGE BENEFIT COMMITTEE AND
STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation and Fringe Benefit Committee and the Stock Option Committee are
composed of three non-employee directors who are responsible for establishing
the total compensation of the CEO and other executive officers of the Company.
The Company historically has not utilized a bonus or other similar incentive pay
scheme except for the granting of stock options, which are incentives for
increasing the Company's long-term growth and profitability.
Salaries of the CEO and other executive officers are reviewed annually and
adjusted according to individual performance and ability to fulfill the
position's assigned duties and responsibilities, its accountability and its
impact on the operations and profitability of the Company.
The salary of the CEO was established by the Compensation and Fringe Benefit
Committee ("the Committee") at $400,000 as of January 1, 1997, which represented
no increase from 1996. It was also acknowledged that since the CEO is a
principal shareholder of the Company, his stock ownership provides performance
incentives that encourage long-term growth in value for public shareholders. A
stock option was granted at market value to the CEO in 1997 to reinforce these
performance incentives.
Stock options have also been granted to other executive officers of the Company
to link total executive compensation to stock price performance. Options were
granted in 1997 to other executive officers.
This report is submitted by the members of the Compensation and Fringe Benefit
Committee and the Stock Option Committee.
Leonard J. Goldstein
Frank W. Norris
Frederick P. Stratton, Jr.
7
<PAGE> 10
STOCK PERFORMANCE
The following line graph compares the cumulative total shareholder return on the
Company's common stock during the five years ended December 31, 1997 with the
cumulative return on the Nasdaq Non-Financial Stock Index and the Russell
3000-Shoes Index. The comparison assumes $100 was invested on December 31, 1992
in the Company's common stock and in each of the foregoing indices and assumes
reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NASDAQ
WEYCO NON- RUSSELL
MEASUREMENT PERIOD GROUP, FINANCIAL 3000 -
(FISCAL YEAR COVERED) INC. INDEX SHOES
<S> <C> <C> <C>
1992 100 100 100
1993 117 115 79
1994 128 111 82
1995 139 155 93
1996 142 188 144
1997 240 221 119
</TABLE>
8
<PAGE> 11
PROPOSAL TO APPROVE THE WEYCO GROUP, INC.
1997 STOCK OPTION PLAN
The Board of Directors of the Company believes its compensation structure should
provide incentive for management to increase shareholder value. Accordingly, the
Company utilizes stock options as a component of the total compensation package
for officers and other key employees of the Company and its subsidiaries. In
order to encourage those officers and employees to increase their equity stake
in the Company, the Board of Directors has adopted the Weyco Group, Inc. 1997
Stock Option Plan (the "1997 Plan"). The 1997 Plan is intended to replace the
Weyco Group, Inc. 1996 Nonqualified Stock Option Plan (the "1996 Plan"). The
1996 Plan is being replaced in order to provide incentive, as well as
nonqualified stock options under the Plan.
All key salaried employees, including officers of the Company and its
subsidiaries are eligible to participate in the 1997 Plan.
The 1997 Plan will be administered by the Stock Option Committee of the Board of
Directors of the Company, initially Frederick P. Stratton, Jr., Frank W. Norris,
and Leonard Goldstein, none of whom participate in any Company plans. The
committee has been constituted in this way partly to permit the 1997 Plan to
comply with the Rule 16b-3 under the Securities Exchange Act of 1934.
Under the 1997 Plan, 600,000 shares of the Company's Common Stock are available
for issuance upon the exercise of options granted pursuant to the Plan. No
eligible employee shall be granted an option or options in any calendar year
covering more than 45,000 shares. No options may be granted under the plan after
November 18, 2007.
Options are granted by the committee, which determines the number of shares
subject to such options, the exercise date(s) and the expiration date(s). The
exercise price shall be 100 percent of the fair market value of the shares on
the date on which the options are granted (or 110 percent for optionees who
directly or indirectly own shares representing more than 10 percent of the
voting power of Company stock), and may be paid in cash, through surrender of
shares of Company Common Stock owned by the optionee ("delivered stock"), or a
combination of both within 10 years (or 5 years for optionees directly or
indirectly owning shares representing more than 10 percent of the voting power
of the Company's stock). As of March 3, 1998, the market value of the Company's
Common Stock was $22.38 per share (based on the average of the high and low
trades for the day on the NASDAQ National Market).
Options were granted to 24 employees under the 1997 Plan in November 1997,
subject to shareholder approval of the Plan. All stock option grants in 1997
were made under the 1997 Plan. See the table entitled "Option/SAR Grants in Last
Fiscal Year." Options will be exercisable no sooner than 6 months and no later
than 10 years after the date of the grant (or no sooner than 6 months and no
later than 5 years after the date of grant for optionees owning more than 10
percent of the voting power of outstanding Company stock).
Options will expire upon the optionee's termination of employment for cause, one
year following termination of employment due to death or 90 days following other
termination of employment.
Options are not transferable except by will or the laws of descent or
distribution.
In the event of a stock split, stock dividend, combination or exchange of shares
or similar change affecting the common stock, the committee, subject to approval
of the Company's Board of Directors, shall make substitutions or adjustments in
the aggregate number of shares reserved for issuance and in the number and
option price of shares subject to outstanding options as appropriate and
equitable to prevent any diminution or enlargement of the rights of participants
in the 1997 Plan.
Upon the dissolution or liquidation of the Company or upon any merger in which
the Company is not the surviving corporation and which is approved by the
Company's non-insider shareholders, the Company shall settle all outstanding
options exercisable by their terms for cash. The amount of cash to be paid for
any such option shall be equal to the difference between the option exercise
price and the fair market value of the Company's stock on the effective date of
such dissolution, liquidation or merger.
For nonqualified stock options, the federal tax consequences to optionees and
the Company are as follows. An optionee will not realize taxable income at the
time an option is granted, but taxable income will be realized, and the Company
will be entitled to a deduction (provided, under current IRS regulations, that
it satisfies certain withholding requirements), at the time of exercise. The
amount of income (and the Company's deduction) will be equal to the difference
between the option exercise price and the fair market value of the shares on the
date of exercise. The income realized will be taxed at ordinary income tax rates
for federal income tax purposes. On a subsequent disposition of the shares
acquired upon exercise, capital gain or loss as determined under the normal
asset holding period rules will be realized in the amount of the difference
between the proceeds of the sale and the fair market value of the shares on the
date of exercise.
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<PAGE> 12
For incentive stock options, the federal tax consequences to optionees and the
Company are as follows. An optionee will not realize taxable income at the time
an option is granted. When the option is exercised, the optionee may retain a
tax basis equal to the exercise price and regard any gain or loss on the shares
as capital gain or loss, provided that the individual does not dispose of the
shares before the later of two years after the grant date of the option or one
year after the exercise date of the option. There is no deduction for the
Company if an incentive stock option is held for the proper period as noted
above. If an incentive option is not held for the proper period noted above, the
tax treatment is the same as a nonqualified stock option, as described above.
The affirmative vote of the holders of a majority of the votes represented by
the shares of Common Stock and Class B Common Stock present, in person or by
proxy, and entitled to vote on the 1997 Plan at the annual meeting of
shareholders, voting together as a single class, is necessary for the 1997 Plan
to qualify for reduced reporting and short-swing profit liability treatment
under Securities and Exchange Commission rules and to prevent the income
realized upon exercise of an option from being subject to the deductible
compensation limit imposed under Internal Revenue Code Section 162(m).
Abstentions will count as shares present and entitled to vote but broker
nonvotes will be counted as shares present but not entitled to vote for this
purpose.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ADOPTION OF THIS
PROPOSAL.
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Company's Restated Articles of Incorporation to increase the
number of authorized shares of Common Stock of the Company, $1.00 par value per
share, from 4,000,000 to 10,000,000 (the "Amendment").
The additional Common Stock to be authorized by the adoption of the Amendment
would have rights identical to the currently outstanding Common Stock of the
Company. Adoption of the proposed amendment and issuance of Common Stock would
not affect the rights of the holders of currently outstanding Common Stock,
except for the effects incidental to increasing the number of shares of the
Company's Common Stock outstanding to the extent additional shares are actually
used. If the amendment is adopted, it will become effective upon the filing of
an Amendment to the Restated Articles of Incorporation with the Department of
Financial Institution of the State of Wisconsin.
Prior to the effectiveness of the Amendment, the Company has 4,000,000 shares of
authorized Common Stock and 2,000,000 shares of authorized Class B Common Stock,
with 3,833,931 and 965,454 shares, respectively, outstanding as of the most
recent record date, March 3, 1998.
The principal purpose of the proposal is to provide the Company with the
flexibility to issue additional Common Stock for proper corporate purposes which
may be identified in the future, such as to raise equity capital, to declare
stock dividends, to adopt additional equity incentive plans or reserve
additional shares for issuance under such plans, or to make acquisitions through
the use of stock. The availability of additional shares of Common Stock is
particularly important in the event that the Board of Directors needs to
undertake any of the foregoing actions on an expedited basis and thus, to avoid
the time (and expense) of seeking stockholder approval in connection with the
contemplated action.
The Board of Directors has no present agreement, arrangement, or intention to
issue any of the additional shares for which the shareholder approval is sought,
with the exception of the intention to reserve 600,000 shares of Common Stock
for granting stock options under the Weyco Group, Inc. 1997 Stock Option Plan,
which is also being considered for approval at this Shareholder Meeting. If the
amendment is approved by the shareholders, the Board of Directors does not
intend to solicit further shareholder approval prior to the issuance of any
additional shares of Common Stock, except as may be required by applicable law.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action from the
shareholders. Shares of authorized and unissued common stock could (within the
limits imposed by applicable law) be issued in one or more transactions which
would make a change in control of the Company more difficult, and therefore,
less likely. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding common
stock or the stock ownership and voting rights of a person seeking to obtain
control of the Company.
The Company is not presently aware of any pending or proposed transaction
involving a change of control of the Company. While authorization of additional
shares may be deemed to have potential anti-takeover effects, this proposal is
not prompted by any specific effort or perceived threat of takeover.
10
<PAGE> 13
The proposal requires the affirmative vote of two-thirds (66 2/3%) of the
Company's outstanding common stock which consists of Common Stock with one (1)
vote per share and Class B Common Stock with ten (10) votes per share
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ADOPTION OF THIS
PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that Arthur Andersen LLP, the Company's independent public
accountants for 1997, will be selected for 1998 by the Board of Directors
immediately following the annual meeting of shareholders. A representative of
Arthur Andersen LLP is expected to be present at the annual meeting of
shareholders with the opportunity to make a statement if so desired and such
representative is expected to be available to respond to appropriate questions.
METHOD OF PROXY SOLICITATION
The entire cost of solicitation of proxies will be borne by the Company. The
officers of the Company may solicit proxies from some of the larger
shareholders, which solicitation may be made by mail, telephone, or personal
interviews; these officers will not receive additional compensation for
soliciting such proxies. Request will also be made of brokerage houses and other
custodians, nominees and fiduciaries to forward, at the expense of the Company,
soliciting material to the beneficial owners of shares held of record by such
persons.
OTHER MATTERS
The Company has not been informed and is not aware that any other matters will
be brought before the meeting. However, proxies will be voted with discretionary
authority with respect to any other matters that properly may be presented to
the meeting.
INCORPORATION BY REFERENCE
The Company's financial statements and the related management's discussion and
analysis of the financial condition and results of operations are incorporated
by reference from the Company's Annual Report.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than November 30,
1998, in order to be considered for inclusion in next year's annual meeting
proxy statement.
WEYCOGroup, Inc. logo
March 30, 1998 JOHN F. WITTKOWSKE
Milwaukee, Wisconsin Secretary
11
<PAGE> 14
EXHIBIT A
WEYCO GROUP, INC.
1997 STOCK OPTION PLAN
1. INTRODUCTION.
(a) Purposes. The purpose of the 1997 Weyco Group, Inc. Stock Option Plan (the
"1997 Plan" or "Plan") is to promote the growth and development of Weyco Group,
Inc. and to increase shareholder value by providing incentives for salaried
employees of Weyco Group, Inc. and of any present or future Subsidiary and by
facilitating the efforts of Weyco Group, Inc. and its Subsidiaries to obtain and
retain employees of outstanding ability.
(b) Effect on Prior Plan. No further grants will be made under the Weyco Group,
Inc. 1996 Nonqualified Stock Option Plan (the "1996 Plan"). Options granted
previously under the 1996 Plan will remain in effect until they have been
exercised or have expired. The options shall be administered in accordance with
their terms and in accordance with the 1996 Plan.
2. DEFINITIONS.
(a) "1934 Act" means the Securities Exchange Act of 1934, as it may be amended
from time to time.
(b) "Board" means the Board of Directors of Weyco Group, Inc.
(c) "Code" means the Internal Revenue Code of 1986, as it may be amended from
time to time.
(d) "Committee" means the Stock Option Committee of the Board, or any other
committee the Board may subsequently appoint to administer the Plan, as herein
described.
(e) "Common Stock" or "Stock" means the common stock of the Corporation having a
par value of $1.00 per share.
(f) "Corporation" means Weyco Group, Inc.
(g) "Fair Market Value" means for purposes of the Plan on any date the average
of the highest and lowest sale prices of the stock on such date as reported by
NASDAQ (the National Association of Securities Dealers, Inc. Automatic Quotation
System) or, in the absence of reported sales on NASDAQ on said date, the average
of the closing bid and asked prices for the stock on NASDAQ on said date.
However, if at any time the Common Stock is listed on any exchange, the "Fair
Market Value" shall be the average of the reported highest and lowest prices at
which shares are sold on such exchange on the date the option is granted or, in
the absence of reported sales on the exchange on the date the option is granted,
the "Fair Market Value" shall be the average of the closing bid and asked prices
for the shares on such exchange on the date the option is granted.
(h) "Grant Date" means the date on which any Option shall be duly granted by the
Committee.
(i) "Grantee" means an individual who has been granted an option.
(j) "Incentive Stock Option" means an option that is intended to meet the
requirements of Section 422 of the Code and regulations thereunder.
(k) "Non-Qualified Stock Option" means an option other than an Incentive Stock
Option.
(l) "Option" means an Incentive Stock Option or a Non-Qualified Stock Option, as
appropriate.
(m) "Option Agreement" means the agreement between the Corporation and the
Grantee specifying the terms and conditions as described thereunder.
(n) "Plan" means the Weyco Group, Inc. 1997 Stock Option Plan as set forth
herein, as it may be amended from time to time.
(o) "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, and any future
regulation amending or superseding such regulation.
(p) "Subsidiary" means any corporation more than 50 percent of whose total
combined voting stock of all classes is held by the Corporation or by another
corporation qualifying as a Subsidiary within this definition.
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3. SHARES SUBJECT TO OPTION.
The number of shares of Common Stock of the Corporation which may be sold upon
the exercise of Options granted under the Plan, and accordingly the number of
shares for which Options may be granted, shall not exceed 600,000 shares. Such
number of authorized but unissued shares shall be reserved for this purpose. The
aggregate number of shares of Common Stock available under the Plan shall be
subject to adjustment as set forth in Article 15 hereunder. Shares sold upon the
exercise of Options granted under the Plan may come from authorized but unissued
shares, from treasury shares held by the Corporation, from shares purchased by
the Corporation on an open market for such purpose, or from any combination of
the foregoing. If treasury shares or shares purchased on the open market are
sold upon the exercise of any Option, the number of authorized but unissued
shares reserved for the Plan shall be reduced correspondingly. If any
unexercised Option for any reason is cancelled, terminates or expires in whole
or in part prior to the termination of the Plan, the unpurchased shares subject
thereto shall become available for the granting of other Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee at all times
shall be constituted to permit the Plan to comply with the provisions of Rule
16b-3 and IRS Regulation Section 1.162-27(e)(3) (or its successor). The
Committee shall have full and final authority, in its discretion, but subject to
the express provisions of the Plan to:
(a) grant Options and to determine the purchase price of the stock
covered by each Option, the individuals to whom, the number of shares
subject to, and the time or times at which, Options shall be granted,
and the time or times at and the manner in which Options can be
exercised;
(b) interpret the Plan;
(c) prescribe, amend and rescind rules and regulations relating to the
Plan;
(d) determine the terms and provisions of the respective agreements
(which need not be identical) by which Options shall be evidenced;
(e) cancel with the consent of the holder outstanding Options and to
grant new Options, as appropriate, in substitution therefore;
(f) make all other determinations deemed necessary or advisable for the
administration of the Plan;
(g) require withholding from or payment by a Grantee of any federal,
state or local taxes; and
(h) impose, on any Grantee, such additional conditions, restrictions and
limitations upon exercise and retention of Options as the Committee
shall deem appropriate.
(i) modify, extend or renew any Option previously granted.
Any action of the Committee with respect to the administration of the Plan shall
be taken pursuant to a majority vote or by the unanimous written consent of its
members. The Committee's determinations and interpretations shall be final and
conclusive.
5. PARTICIPATION.
Options may be granted to salaried employees of the Corporation and any of its
Subsidiaries; provided, however that no employee can be granted an Option or
Options covering, in the aggregate, more than 45,000 shares of Stock in any
calendar year. If an Option is cancelled, such cancelled Option shall continue
to be counted against the maximum number of shares for which Options may be
granted to the employee. In selecting the individuals to whom Options shall be
granted, as well as in determining the number of Options granted, the Committee
shall take into consideration such factors as it deems relevant to accomplishing
the purposes of the Plan.
6. GRANTING OF OPTIONS.
For purposes of the Plan, an Option shall be considered as having been granted
on the date on which the Committee authorized the grant of the Option, except
where the Committee has designated a later date, in which event the later date
shall constitute the date of grant of the option; provided, however, that in
either case notice of the grant of the option shall be given to the employee
within a reasonable time. The officers of the Corporation are authorized and
directed, upon receipt of notice from the Committee of the granting of an
Option, to sign and deliver on behalf of the Corporation, by mail or otherwise,
to the Grantee an Option upon the terms and conditions specified under the Plan
and in the form of the Option Agreement. The Option Agreement shall be dated and
signed by an officer of the Corporation as of the Grant Date. If the Grantee
fails
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<PAGE> 16
to sign and return the Option Agreement, by delivery or by mailing, within 30
days after the date of its delivery or mailing to him, the Option grant shall be
deemed withdrawn.
7. OPTION PRICE.
The purchase price of the Common Stock covered by each Option shall be not less
than the Fair Market Value of such Stock on the Grant Date. Such price shall be
subject to adjustment as provided in Article 15 hereof.
8. OPTION DESIGNATION.
At the time of the grant of each Option, the Committee shall designate the
Option as (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option, as
described in Sections (a) and (b) below, respectively.
(a) Incentive Stock Options: Any Option designated as an Incentive Stock
Option shall comply with the requirements of Section 422 of the
Code. If an Option is so designated, the Fair Market Value
(determined as of the Grant Date) of the shares of Stock with
respect to which that and any other Incentive Stock Option first
becomes exercisable during any calendar year under this Plan or any
other stock option plan of the Corporation or its affiliates shall
not exceed $100,000; provided, however, that the time or times of
exercise of an Incentive Stock Option may be accelerated pursuant to
Article 11, 14 or 15 hereof, and, in the event of such acceleration,
such Incentive Stock Option shall be treated as a Non-Qualified
Option to the extent that the aggregate Fair Market Value
(determined as of the Grant Date) of the shares of stock with
respect to which such Option first becomes exercisable in the
calendar year (including Options under this Plan and any other Plan
of the Corporation or its affiliates) exceeds $100,000, the extent
of such excess to be determined by the Committee taking into account
the order in which the Options were granted, or such other factors
as may be consistent with the requirements of Section 422 of the
Code and rules promulgated thereunder. Furthermore, no Incentive
Stock Option shall be granted to any individual who, immediately
before the Option is granted, directly or indirectly owns (within
the meaning of Section 424(d) of the Code, as amended) shares
representing more than 10% of the total combined voting power of all
classes of stock of the Corporation or its subsidiaries, unless, at
the time the option is granted, and in accordance with the
provisions of Section 422, the option exercise price is 110% of the
Fair Market Value of shares of Stock subject to the Option and the
Option must be exercised within 5 years of the Grant Date.
(b) Non-Qualified Stock Options: All Options not subject to or in
conformance with the additional restrictions required to satisfy
Section 422 shall be designated Non-Qualified Stock Options.
9. NON-TRANSFERABILITY OF OPTIONS.
An Option granted under the Plan may be exercised during the lifetime of an
employee (to the extent exercisable) only by him and may not be transferred
except by will or the laws of descent and distribution. Subject to the above,
the Option and any rights and privileges pertaining thereto shall not be
transferred, assigned, pledged or hypothecated by him in any way whether by
operation of law or otherwise and shall not be subject to execution, attachment
or similar process.
10. SUBSTITUTED OPTIONS.
In the event the Committee cancels any Option granted under this Plan, and a new
Option is substituted therefor, the Grant Date of the cancelled Option (except
to the extent inconsistent with the restrictions described in Article 8(a), if
applicable) shall be the date used to determine the earliest date for exercising
the new substituted Option under Article 11 hereunder so that the Grantee may
exercise the substituted Option at the same time as if the Grantee had held the
substituted Option since the Grant Date of the cancelled Option.
11. EXERCISE AND TERM OF OPTION.
The Committee shall have the power to set the time or times within which each
Option shall be exercisable, and to accelerate the time or times of exercise,
provided that no Option granted under this Plan may be exercised until at least
six months have elapsed from the Grant Date or prior to shareholder approval of
the Plan. No Option may be exercised if in the opinion of counsel for the
Corporation the issuance or sale of Stock pursuant to such exercise shall be
unlawful for any reason, nor after the expiration of 10 years from the Grant
Date. In no event shall the Corporation be required to issue fractional shares
upon the exercise of an Option. Although the Corporation intends to exert its
best efforts so that the Stock purchasable upon the exercise of an Option, when
it first comes exercisable, will be registered under, or exempt from the
registration requirements of, the federal Securities Act of 1933 (the "Act") and
any applicable state securities laws, if the exercise of an Option would
otherwise result in the violation by the Company of any provision of the Act or
of any state securities law,
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<PAGE> 17
the Company may require that such exercise be deferred until the Company has
taken appropriate action to avoid any such violation.
12. WITHHOLDING.
Shares of Stock shall not be issued upon the exercise of any Option under the
Plan unless and until withholding tax, if any, or other withholding obligation,
if any, imposed by any governmental entity has, in the opinion of the Committee,
been satisfied or provision for satisfaction of such tax has been made. A
Grantee shall satisfy such withholding obligation by depositing with the
Corporation cash (or, at the request of Grantee but in the discretion of the
Committee and subject to such rules and regulations as the Committee may adopt
from time to time, in shares of Delivered Stock, as defined in Article 13) in
the amount thereof at the time of any exercise of the Option. The Committee may
provide that, if and to the extent withholding of any federal, state or local
tax is required in connection with the exercise of an Option, the Grantee may
elect, at such time and in such manner as the Committee may prescribe, to have
the Corporation hold back from the shares to be issued, the number of shares of
Common Stock calculated to have a Fair Market Value equal to such withholding
obligation. Notwithstanding the foregoing, in the case of a Grantee subject to
the reporting requirements of Section 16(a) of the 1934 Act, no such election
shall be effective unless made in compliance with any applicable requirements of
Rule 16b-3.
13. METHOD OF EXERCISE.
To the extent that the right to purchase shares pursuant to an Option has
occurred hereunder and if the Grantee has been continuously employed by the
Corporation or a Subsidiary since the Grant Date, such Option may be exercised
from time to time by written notice to the Corporation stating the number of
shares of Stock being purchased and accompanied by the payment in full of the
Option price for such shares. Such payment shall be made in cash or, with the
approval of the Committee, by delivering shares of the Common Stock which have
been beneficially owned by the Grantee, the Grantee?s spouse, or both of them
for a period of at least six months prior to the time of exercise ("Delivered
Stock") or in combinations thereof. If shares of Common Stock are used in part
or full payment for the shares to be acquired upon exercise of the Option, such
shares shall be valued for the purpose of such exchange as of the date of
exercise of the Option at the Fair Market Value of the shares.
14. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY OR DEATH.
Unless otherwise provided herein or in a specific Option Agreement which may
provide longer or shorter periods of exercisability, no Option shall be
exercisable after the expiration of the earliest of:
(i) in the case of an Incentive Stock Option:
(1) 10 years from the date the option is granted, or five years from
the date the option is granted to an individual owning (after the
application of the family and other attribution rules of Section
424(d) of the Code) at the time such option was granted more than
10% of the total combined voting power of all classes of stock of
the Corporation.
(2) three months after the date the Grantee ceases to perform
services for the Corporation or its Subsidiaries, if such
cessation is for any reason other than death, disability (within
the meaning of Code Section 22(e)(3)), or cause,
(3) one year after the date the Grantee ceases to perform services
for the Corporation or its Subsidiaries, if such cessation is by
reason of death or disability (within the meaning of Code Section
22(e)(3)), or
(4) the date the Grantee ceases to perform services for the
Corporation or its Subsidiaries, if such cessation is for cause,
as determined by the Board or the Committee in its sole
discretion;
(ii) in the case of a Nonqualified Stock Option:
(1) 10 years from the date of grant,
(2) ninety days after the date the Grantee ceases to perform services
for the Corporation or its Subsidiaries, if such cessation is for
any reason other than death, permanent disability or cause,
(3) one year after the date the Grantee ceases to perform services
for the Corporation or its Subsidiaries, if such cessation is by
reason of death, permanent disability, or
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<PAGE> 18
(4) the date the Grantee ceases to perform services for the
Corporation or its Subsidiaries, if such cessation is for cause,
as determined by the Board or the Committee in its sole
discretion;
provided, that, unless otherwise provided in a specific grant agreement, an
Option shall only be exercisable for the periods above following the date a
Grantee ceases to perform services to the extent the Option was exercisable on
the date of such cessation. For purposes of this Section, termination shall be
deemed to have been for cause if such termination shall have been for misconduct
or negligence by Grantee in the performance of his duties. Notwithstanding the
foregoing, no Option shall be exercisable after the date of expiration of its
term. In the event of Grantee's death, the person or persons to whom the option
is transferred by will or the laws of descent and distribution shall be the
person or persons who may exercise the option to the extent the Grantee was
entitled to do so.
15. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN.
In the event of a reorganization, recapitalization, stock split, stock dividend,
merger, consolidation, rights offering or like transaction, the Committee shall
make or provide for such adjustment in the exercise price of any Option or in
the number or kinds of stock covered by Options or reserved for issuance under
the Plan as it may, in its discretion, deem to be equitable to prevent any
diminution or enlargement of the right of Grantees; provided, however, upon the
dissolution or liquidation of the Corporation or upon any merger in which the
Corporation is not the surviving corporation and which is approved by the
Corporation's non-insider shareholders (a "triggering event"), the Corporation
shall settle all outstanding Options exercisable by their terms for cash. The
amount of cash to be paid to the employee for any such Option shall be equal to
the difference between the Option exercise price and the Fair Market Value of
the Corporation's Common Stock on the effective date of the triggering event.
16. EMPLOYMENT RIGHTS.
Neither the establishment of nor the awarding of Options under this Plan shall
be construed to create a contract of employment between any Grantee and the
Corporation or its Subsidiaries; nor does it give any Grantee the right to
continue in the employment of the Corporation or its Subsidiaries or limit in
any way the right of the Corporation or its Subsidiaries to discharge any
Grantee at any time and without notice, with or without cause, or to any
benefits not specifically provided by this Plan, or in any manner modify the
Corporation's right to establish, modify, amend or terminate any profit sharing
or retirement plans. Transfer of an employee from the Corporation to a
Subsidiary or from a Subsidiary to the Corporation or another Subsidiary shall
not be a termination of employment or an interruption of continuous employment
for the purposes of the Plan.
17. SHAREHOLDER RIGHTS.
Grantee shall not, by reason of any Options granted hereunder, have any right of
a shareholder of the Corporation with respect to the shares covered by his
Options until shares of Stock have been issued to him.
18. CONTROLLING LAW.
The law of the State of Wisconsin, except its law with respect to choice of law,
shall be controlling in all matters relating to the Plan.
19. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have as members
of the Committee or as directors generally, the members of the Committee
administering the Plan and other members of the Board shall be indemnified by
the Corporation against the reasonable expenses, including attorneys' fees
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such member acted in bad faith in the performance of his duties;
provided that within 20 days after institution of any such action, suit or
proceeding, the member shall in writing offer the Corporation the opportunity,
at its own expense, to handle and defend the same.
A-5
<PAGE> 19
20. USE OF PROCEEDS.
The proceeds from the sale of shares of Common Stock pursuant to Options granted
under the Plan shall constitute general funds of the Corporation.
21. AMENDMENT OF THE PLAN.
The Board may from time to time amend, modify, suspend or terminate the Plan;
provided, however, that no such action shall be made without shareholder
approval where such change would be required in order to comply with Rule 16b-3
or the Code.
22. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date of the resolutions of the Board of
Directors of the Corporation adopting the Plan, subject to approval by the
shareholders of the Corporation within 12 months thereof. Options may be granted
under the Plan on or after the effective date but shall in no circumstances be
exercisable prior to such shareholder approval. If such shareholder approval is
not obtained within 12 months, the grant of such Options and this Plan shall be
of no force and effect, but the 1996 Plan would then continue in effect in
accordance with its terms.
23. TERMINATION OF THE PLAN.
The Plan shall terminate after the expiration of ten years from its effective
date and no grants shall be made after such date under the Plan; provided,
however, that the Plan shall terminate at such earlier time as the Board may
determine. Any such termination, either partially or wholly, shall not affect
any Options then outstanding under the Plan.
A-6
<PAGE> 20
COMMON STOCK
PROXY WEYCO GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas W. Florsheim and Thomas W. Flosheim,
Jr. or either of them, proxies with full power of substitution, to vote at the
Annual Meeting of Shareholders of Weyco Group, Inc. (the "Company") to be held
on April 28, 1998 at 10:00 A. M., local time and at any adjournment thereof,
hereby revoking any proxies heretofore given, to vote all shares of Common Stock
of the Company held or owned by the undersigned as directed on the reverse, and
in their discretion upon such other matters as may come before the meeting.
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHELD
[ ] [ ] FOR AGAINST ABSTAIN
1. Election of NOMINEES: 2. Proposal to approve
Directors Thomas W. Florsheim The Weyco Group, Inc. [ ] [ ] [ ]
for their Frank W. Norris 1997 Stock Option Plan
respective terms
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual 3. Proposal to amend the
Nominee, print that nominee's name on the line provided below. Company's Restated
Articles of Incorporation
_______________________________________________________________
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR PROPOSAL 1, PROPOSAL 2 AND PROPOSAL 3 IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO
DIRECTION IS GIVEN.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
SIGNATURE(S)________________________________________________________ DATE___________________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
trustee or guardian please give full title as such.
</TABLE>
<PAGE> 21
CLASS B COMMON STOCK
PROXY WEYCO GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas W. Florsheim and Thomas W. Flosheim,
Jr. or either of them, proxies with full power of substitution, to vote at the
Annual Meeting of Shareholders of Weyco Group, Inc. (the "Company") to be held
on April 28, 1998 at 10:00 A. M., local time and at any adjournment thereof,
hereby revoking any proxies heretofore given, to vote all shares of Class B
Common Stock of the Company held or owned by the undersigned as directed on the
reverse, and in their discretion upon such other matters as may come before the
meeting.
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHELD
[ ] [ ] FOR AGAINST ABSTAIN
1. Election of NOMINEES: 2. Proposal to approve
Directors Thomas W. Florsheim The Weyco Group, Inc. [ ] [ ] [ ]
for their Frank W. Norris 1997 Stock Option Plan
respective terms
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual 3. Proposal to amend the
Nominee, print that nominee's name on the line provided below. Company's Restated
Articles of Incorporation
_______________________________________________________________
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR PROPOSAL 1, PROPOSAL 2 AND PROPOSAL 3 IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO
DIRECTION IS GIVEN.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
SIGNATURE(S)________________________________________________________ DATE___________________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
trustee or guardian please give full title as such.
</TABLE>
