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:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Lazare Kaplan International Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
Lazare Kaplan International Inc.
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
_____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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: ____________________________________________________________
___________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
[Logo]
LAZARE KAPLAN INTERNATIONAL INC.
529 Fifth Avenue
New York, New York 10017
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, November 3, 1994
------------------------
The Annual Meeting of Stockholders of Lazare Kaplan International Inc. will
be held on Thursday, November 3, 1994 at 11:00 A.M. at Chemical Banking Corp.,
270 Park Avenue, 3rd Floor, Auditorium, New York, New York 10017 for the
following purposes:
1. To elect directors for the ensuing year;
2. To ratify the appointment of Ernst & Young, independent certified
public accountants, as auditors for the Company for the fiscal year
ending May 31, 1995; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on September 12,
1994 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting and at any adjournments thereof.
By Order of the Board of Directors,
LEON TEMPELSMAN,
President
New York, New York
September 23, 1994
- - --------------------------------------------------------------------------------
IMPORTANT
Management invites you to attend the meeting in person, but
if you are unable to be present personally, please date,
sign and return the enclosed proxy as promptly as possible.
No postage is required if the proxy is returned in the
enclosed envelope and mailed in the United States.
- - --------------------------------------------------------------------------------
<PAGE>
LAZARE KAPLAN INTERNATIONAL INC.
529 Fifth Avenue
New York, New York 10017
--------------------------
PROXY STATEMENT
------------------------
1994 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to stockholders of Lazare Kaplan
International Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company (the "Board
of Directors") for use at the Annual Meeting of Stockholders of the Company to
be held at 11:00 a.m. on Thursday, November 3, 1994 at Chemical Banking Corp.,
270 Park Avenue, 3rd Floor, Auditorium, New York, New York, and any adjournment
or adjournments thereof (the "Annual Meeting"). This Proxy Statement, the
attached Notice of Annual Meeting, the accompanying form of proxy and the Annual
Report to Stockholders of the Company for the fiscal year ended May 31, 1994 are
first being sent to stockholders of the Company on or about September 23, 1994.
The record date for stockholders of the Company entitled to notice of, and
to vote at, the Annual Meeting is the close of business on September 12, 1994
(the "Record Date"). On the Record Date, there were issued and outstanding
6,131,606 shares of the Company's Common Stock, par value $1.00 per share (the
"Common Stock"). All of such shares are of one class, with equal voting rights,
and each holder thereof is entitled to one vote on all matters voted on at the
Annual Meeting for each share registered in such holder's name. Presence in
person or by proxy of holders of 3,065,804 shares of Common Stock will
constitute a quorum at the Annual Meeting. Assuming a quorum is present, the
affirmative vote by the holders of a plurality of the shares represented at the
Annual Meeting and entitled to vote will be required to act on the election of
directors, and the affirmative vote by the holders of a majority of the shares
represented at the Annual Meeting and entitled to vote will be required to act
on all other matters to come before the Annual Meeting, including the
ratification of the selection of Ernst & Young as independent auditors for the
current fiscal year. In accordance with applicable law, all stockholders of
record on the Record Date are entitled to receive notice of, and to vote at, the
Annual Meeting. If a stockholder, present in person or by proxy, abstains on any
matter, the stockholder's shares will not be voted on such matter. Thus, an
abstention from voting on a matter has the same legal effect as a vote "against"
the matter, even though a stockholder may interpret such action differently. A
proxy submitted by a stockholder may indicate that all or a portion of the
shares represented by such proxy are not being voted by such stockholder with
respect to a particular matter. This could occur, for example, when a broker is
not permitted to vote shares of Common Stock held in street name on certain
matters in the absence of instructions from the beneficial owner of the shares.
The shares subject to any such proxy which are not being voted with respect to a
particular matter (the "nonvoted shares") will be considered shares not present
and entitled to vote on such matter, although such shares may be considered
present and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum. (Shares voted to abstain as to a
particular matter will not be considered nonvoted shares).
<PAGE>
A proxy in the accompanying form, which is properly executed, duly returned
to the Company and not revoked will be voted in accordance with the instructions
contained thereon. If no specific instructions are indicated on the proxy, the
shares represented thereby will be voted FOR (i) the election of the persons
nominated herein as directors and (ii) the ratification of the selection of
Ernst & Young as the Company's independent auditors for the current fiscal year;
as well as FOR the transaction of such other business as properly may come
before the Annual Meeting.
Each proxy granted may be revoked by the person who granted it at any time
(i) by giving written notice to such effect to the Secretary of the Company,
(ii) by execution and delivery of a proxy bearing a later date, or (iii) by
attendance and voting in person at the Annual Meeting; except as to any matter
upon which, prior to such revocation, a vote shall have been cast at the Annual
Meeting pursuant to the authority conferred by such proxy. The mere presence at
the Annual Meeting of a person appointing a proxy does not revoke the
appointment.
1. ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting, to hold office
until the next annual meeting of stockholders and until their successors are
elected and have qualified. The eight nominees for directors consist of persons
currently serving as directors of the Company.
Set forth below are the names, principal occupations and certain other
information concerning the nominees.
<TABLE>
<CAPTION>
Positions and Offices With Director
Name Company or Principal Occupation Since Age
---- -------------------------------- ------- ---
<S> <C> <C> <C>
Maurice Tempelsman........... Chairman of the Board of 1984 65
the Company since April 1984;
General Partner of Leon
Tempelsman & Son, an investment
limited partnership
Leon Tempelsman.............. Vice Chairman of the Board of 1984 38
the Company since April 1984;
President of the Company since
April 1986; General Partner of
Leon Tempelsman & Son since
January 1984
George R. Kaplan............. Vice Chairman of the Board of 1972 76
the Company since April 1984
Lucien Burstein.............. Partner, Warshaw Burstein 1984 72
Cohen Schlesinger & Kuh, Attorneys;
Secretary of the Company since 1984
Michael W. Butterwick........ Business Consultant 1982 67
Myer Feldman................. Partner, Ginsburg, Feldman and 1984 77
Bress, Chartered Attorneys
Robert Speisman.............. Vice President -- Sales of the 1989 41
Company since April 1986
Sheldon L. Ginsberg.......... Vice President and Chief 1989 40
Financial Officer of the Company
since April 1991; Vice President --
Finance from January 1986 through
April 1991
</TABLE>
2
<PAGE>
Unless directed to the contrary, the persons named in the proxy will vote
the shares represented thereby FOR the election of the nominees listed above.
Management is informed that all of the nominees are willing to serve as
directors, but if any of them should decline or be unable to act as a director,
which is not anticipated, the persons named in the proxy will vote for the
election of such other person or persons as management may recommend.
The Company has standing Audit and Compensation Committees of the Board of
Directors. The current members of each committee hold office until the next
Annual Meeting of the Board of Directors and until their respective successors
have been elected and qualified. The Audit Committee consists of Michael W.
Butterwick, Lucien Burstein and Myer Feldman. The Compensation Committee
consists of Maurice Tempelsman, Michael W. Butterwick, Myer Feldman and Lucien
Burstein.
The Audit Committee is authorized to confer with the auditors and financial
officers of the Company, review reports submitted by the auditors, establish or
review, and monitor compliance with codes of conduct of the Company, inquire
about procedures for compliance with laws and regulations relating to the
management of the Company, and report and make recommendations to the Board of
Directors. The Compensation Committee is responsible for recommending to the
Board of Directors policies with respect to compensation and benefits of the
Chairman of the Board, Vice Chairmen of the Board and President of the Company,
for fixing the compensation and benefits of other officers and employees of the
Company and its subsidiaries whose compensation is $75,000 per year or more and
administering the Company's 1988 Stock Option Incentive Plan (the "Plan")
including the designating of employees to be granted options, prescribing the
terms and conditions of options granted under the Plan, interpreting the Plan
and making all other determinations deemed necessary for the administration of
the Plan. The Company formerly had a standing Stock Option Committee, which was
responsible for administering the Plan, but this committee was consolidated with
the Compensation Committee by the Board of Directors in the third quarter of the
fiscal year ended May 31, 1994. The Board of Directors does not have a
Nominating Committee or a committee performing similar functions.
During the fiscal year ended May 31, 1994, there were four meetings of the
Board of Directors, one meeting of the Audit Committee, and one meeting of the
newly consolidated Compensation Committee. In addition, action was taken by
unanimous written consent of the former Stock Option Committee and the Executive
Committee of the Board of Directors. Each incumbent director attended at least
75% of the total number of meetings of the Board and all of the committees
thereof on which he served during the fiscal year. All outside directors receive
a fee equal to $1,250 per quarter. Mr. Lucien Burstein, an outside director,
credits his fee against legal fees of Warshaw Burstein Cohen Schlesinger & Kuh
incurred by the Company for each period for which a directors' fee is paid.
Security Ownership
The following table sets forth information regarding the ownership shares
of the Company's Common Stock as of September 12, 1994 by those persons known by
the Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock. All information in the table is based upon reports filed
by such persons with the Securities and Exchange Commission and upon
questionnaires submitted by such persons to the Company in connection with the
preparation of this proxy statement. Except as noted in the footnotes, such
persons have indicated that they have the sole power to vote and to dispose of
their respective shares of the Company's Common Stock.
3
<PAGE>
- - -------------------------------------------------------------------------------
Name and Address Amount and Percent of
of Beneficial Owner Nature of Class
Beneficial
Ownership
- - -------------------------------------------------------------------------------
Maurice Tempelsman(1) 3,985,130 65.0%
529 Fifth Avenue
New York, New York 10017
- - -------------------------------------------------------------------------------
Leon Tempelsman(1)(2) 1,788,114 28.6%
529 Fifth Avenue
New York, New York 10017
- - -------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc.(3) 344,300 5.6%
Ocean Avenue
Suite 650
Santa Monica, CA 90401
- - -------------------------------------------------------------------------------
Adrienne Arsht(4) 334,954 5.5%
1250 Connecticut Avenue, NW
Washington, D. C. 20036
- - -------------------------------------------------------------------------------
(1) Number and percentage of shares include the 1,528,416 shares owned by Leon
Tempelsman & Son, a New York limited partnership ("LTS") of which each of
Maurice Tempelsman and Leon Tempelsman, as the sole general partners, has
sole power to vote and dispose.
(2) Number and percentage of shares include 2,240 shares held by the spouse of
Leon Tempelsman, 26,816 shares owned by his sister, Rena Speisman, 26,725
shares owned by his sister, Marcy Tempelsman, 28,401 shares owned by Rena
Speisman as custodian for her children, and 1,600 shares held by his
brother-in-law, Scott Meiller, as to all of which shares Leon Tempelsman
has been granted a proxy. Number and percentage of shares also include
28,401 shares held by Leon Tempelsman as custodian for his children,
118,699 shares which are the subject of currently exercisable options
granted to Mr. Tempelsman pursuant to the Company's 1988 Stock Option
Incentive Plan (the "Plan"), 1,528,416 shares owned by LTS, of which each
of Maurice and Leon Tempelsman, as the sole general partners, has sole
power to vote and dispose and 26,816 shares owned by Mr. Tempelsman
directly.
(3) Includes shares owned in portfolios of DFA Investment Dimensions Group Inc.
and the DFA Investment Trust Company, open-end investment companies
registered under the Investment Act of 1940, or the DFA Group Trust Company
and DFA Participating Group Trust, investment vehicles for qualified
employee benefit plans, as to all of which Dimensional Fund Advisors Inc.,
a registered investment advisor, serves as investment manager. Dimensional
Fund Advisors Inc. disclaims beneficial ownership of all such shares.
(4) Adrienne Arsht is the wife of Myer Feldman, a director of the Company.
4
<PAGE>
The following table reflects as of September 12, 1994 the beneficial
ownership of shares of Common Stock of the Company by each of the directors,
nominees, executive officers by all directors and officers as a group.
- - -------------------------------------------------------------------------------
Name Amount and Percent of Class
Nature of
Beneficial Ownership
- - -------------------------------------------------------------------------------
Maurice Tempelsman(1)(2) 3,985,130 65.0%
- - -------------------------------------------------------------------------------
Leon Tempelsman(1)(2)(3) 1,788,114 28.6%
- - -------------------------------------------------------------------------------
George R. Kaplan(4) 23,965 0.4%
- - -------------------------------------------------------------------------------
Lucien Burstein 1,500 less than 0.1%
- - -------------------------------------------------------------------------------
Michael W. Butterwick 0 0.0%
- - -------------------------------------------------------------------------------
Myer Feldman(5) 0 0.0%
- - -------------------------------------------------------------------------------
Robert Speisman(1)(6) 28,532 0.5%
- - -------------------------------------------------------------------------------
Sheldon L. Ginsberg(7) 32,037 0.5%
- - -------------------------------------------------------------------------------
All directors and officers as a
group (1)-(7) 4,330,862 68.6%
- - -------------------------------------------------------------------------------
(1) Maurice Tempelsman, the Chairman of the Board and a director of the
Company, is the father of Leon Tempelsman and the father-in-law of Robert
Speisman, Vice President -- Sales of the Company. Each of Maurice
Tempelsman, Leon Tempelsman and Robert Speisman disclaims beneficial
ownership of shares beneficially owned by the others.
(2) Number and percentage of shares include the 1,528,416 shares owned by Leon
Tempelsman & Son, a New York limited partnership ("LTS") of which each of
Maurice Tempelsman and Leon Tempelsman, as the sole general partners, has
sole power to vote and dispose.
(3) Number and percentage of shares include 2,240 shares held by the spouse of
Leon Tempelsman, 26,816 shares owned by his sister, Rena Speisman, 26,725
shares owned by his sister, Marcy Tempelsman, 28,401 shares owned by Rena
Speisman as custodian for her children, and 1,600 shares held by his
brother-in-law, Scott Meiller, as to all of which shares Leon Tempelsman
has been granted a proxy. Number and percentage of shares also include
28,401 shares held by Leon Tempelsman as custodian for his children,
118,699 shares which are the subject of currently exercisable options
granted to Mr. Tempelsman pursuant to the Plan, 1,528,416 shares owned by
LTS, of which each of Maurice and Leon Tempelsman, as the sole general
partners, has sole power to vote and dispose and 26,816 shares owned by Mr.
Tempelsman directly.
(4) Number and percentage of shares do not include 1,500 shares owned by the
spouse of George Kaplan, the beneficial ownership of which is disclaimed by
Mr. Kaplan.
(5) Number and percentage of shares do not include 334,954 shares owned by
Adrienne Arsht, the wife of Myer Feldman, the beneficial ownership of which
is disclaimed by Myer Feldman.
5
<PAGE>
(6) Number and percentage of shares do not include the 1,528,416 shares owned
by LTS, of which Rena Speisman, the wife of Robert Speisman, is a limited
partner. Number and percentage of shares also do not include 55,217 shares
owned by Rena Speisman for herself or as custodian for the children of
Robert and Rena Speisman, as to all of which beneficial ownership is
disclaimed by Robert Speisman. Number and percentage include 28,532 shares
which are the subject of currently exercisable options granted to Robert
Speisman pursuant to the Plan.
(7) Number and percentage include an aggregate of 30,866 shares which are the
subject of currently exercisable options granted to Sheldon L. Ginsberg
pursuant to the Plan and 1,171 shares owned by Mr. Ginsberg directly.
Board Compensation Committee Report on Executive Compensation
The Company's executive cash compensation program and the Plan are
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is comprised of four nonemployee directors, none of which
are eligible to participate in the Plan. The Compensation Committee annually
recommends the cash compensation and benefits for the Chairman, Vice Chairmen,
President and all employees of the Company earning more than $75,000. In its
administration of the Plan, the Compensation Committee, in its sole discretion,
determines option recipients and the number of shares subject to each option.
Following Compensation Committee review and approval, all matters relating to
executive compensation (other than the granting of stock options) are submitted
to the full Board for approval.
Compensation Policies
The following policies are used by the Compensation Committee to set a
general framework within which specific compensation decisions are made.
o The Company's executive pay program is intended to attract and retain
top management talent and to motivate and reward performance.
o Incentive compensation varies with relative Company performance and a
given individual's contribution to that performance.
o The Company's 1988 Stock Option Incentive Plan is designed to
reinforce and encourage achievement of the Company's short-term and
long-term financial and strategic goals by aligning the interests of
certain key Company employees and the Company's stockholders.
Components of Compensation
Base Salary
The Compensation Committee determines base salary levels by evaluating
individual performance with specific input from the President (excluding
input for his own performance). Increases in base salary are based upon
periodic evaluations of such factors as demonstrated leadership ability,
competitive trends within the industry, level of responsibility, and
overall perceived future contribution to the Company.
6
<PAGE>
Cash Bonus
Bonus payments are recommended to the Board by the Compensation Committee
for employees it feels have performed exceptionally during the past year.
This component of the compensation package is designed to reward past
performance and encourage similarly exceptional future performance. Bonuses
are paid after the end of the fiscal year to which they relate.
Matching 401(k) Plan
The Company offers all full-time employees the opportunity to participate
in a matching 401(k) plan. Employees may participate up to an annual
maximum which is the lesser of 20% of the employee's compensation or $9,240
(dependent upon adjustments by the U. S. Secretary of the Treasury). The
Company will match those contributions in an amount equal to $.50 for every
pre-tax dollar contributed by the employee up to a minimum of the first 6%
of the employee's compensation to a maximum of $20,000, provided the
Company's pre-tax earnings exceed $3.5 million for the fiscal year ending
within the calendar year to which the matching contribution relates.
Stock Option Grants
The Company periodically grants stock options in order to provide certain
of its key employees with a competitive total compensation package, a
long-term incentive award and to reward them for their contribution to the
ongoing process of achieving the Company's long-term goals. These grants
are also intended to align the interests of the Company's key employees
with those of the stockholders, thereby encouraging these employees to
increase stockholder value.
The Company's 1988 Stock Option Incentive Plan (the "Plan") is administered
by a Compensation Committee consisting of four directors of the Company who
are not eligible to participate in such plan. The Compensation Committee,
in its sole discretion, determines option recipients and the number of
shares subject to each option. In determining the number of shares to be
covered by each option, the Compensation Committee takes into account the
present and potential contributions of the respective participants to the
success of the Company, the anticipated number of years of effective
service remaining and such other factors as the Compensation Committee
deems relevant in connection with accomplishing the purposes of the Plan.
Each option granted under the Plan expires ten years after the date of
grant and is exercisable at the fair market value of the shares subject to
the option on the date of grant; except that incentive stock options
granted to any person who, at the time the option is granted, owns stock
possessing more than 10% of the combined voting power of all classes of the
stock of the Company, expire five years after the date of grant and are
exercisable at 110% of the fair market value of the shares subject to the
option on the day immediately preceding the day of grant.
7
<PAGE>
Compensation of the President
Mr. Leon Tempelsman's salary was not increased from its fiscal 1994 level
of $50,000 and has remained at the same level since 1984. Mr. Tempelsman's
salary clearly stands well below those of executives with similar
responsibilities in companies of similar market capitalization. During fiscal
1994, the Compensation Committee granted 38,500 incentive stock options to Mr.
Tempelsman as a long-term incentive to encourage him to continue his efforts to
increase shareholder value and to make his total compensation package more
competitive. The Compensation Committee recognizes Mr. Tempelsman's contribution
to the overall management of the Company and the Company's retention of its
strategic and market positions in the world diamond market.
Compensation Committee
Maurice Tempelsman
Lucien Burstein
Myer Feldman
Michael W. Butterwick
Executive Compensation
Summary of Compensation in fiscal 1992, fiscal 1993 and fiscal 1994
The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities awarded to, earned by or paid to the
Company's chief executive officer and the other most highly compensated
executive officers of the Company earning more than $100,000 during the fiscal
years ended May 31, 1992, May 31, 1993 and May 31, 1994.
<TABLE>
<CAPTION>
Annual Compensation Long-Term
--------------------------------------------------- Compensation
--------------
Awards
-------------
Other
Name and Fiscal Annual Options All other
Principal Position Year Salary Bonus Compensation (shares) Compensation(4)
- - ----------------- ------ ------ ----- ------------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Leon Tempelsman 1994 $ 50,000 0 0 38,500 0
Vice Chairman of the 1993 $ 50,000 0 0 150,550(2) 0
Board and President 1992 $ 50,000 0 0 55,000 $600
Sheldon L. Ginsberg 1994 $157,000 $17,000(1) 0 10,500 0
Vice President and 1993 $148,000 $16,000(1) 0 35,800(3) 0
Chief Financial Officer 1992 $142,000 $20,000(1) 0 15,000 $600
</TABLE>
- - ---------------------------------
(1) Bonuses are determined by the Compensation Committee based on the
executive's performance. Bonus amounts are paid after the end of the fiscal
year to which they relate. See Compensation Committee Report, page 6.
(2) Represents incentive stock options granted under the Plan (a) on August 14,
1992 in substitution for canceled options previously granted under the
Plan, which options are exercisable to purchase 95,550 shares of Common
Stock at an exercise price of $5.638 per share and (b) on April 13, 1993,
which options are exercisable to purchase 55,000 shares of Common Stock at
an exercise price of $6.60 per share.
8
<PAGE>
(3) Represents incentive stock options granted under the Plan (a) on August 14,
1992 in substitution for canceled options previously granted under the
Plan, which options are exercisable to purchase 20,800 shares of Common
Stock at an exercise price of $5.125 per share and (b) on April 13, 1993,
which options are exercisable to purchase 15,000 shares of Common Stock at
an exercise price of $6.00 per share.
(4) Represents a matching contribution made by the Company to the Company's
401(k) plan on behalf of Messrs. Tempelsman and Ginsberg.
Stock Options Granted in Fiscal 1994
The following table sets forth information concerning individual grants of
stock options made during fiscal year ended May 31, 1994 to each executive
officer listed in the Summary Compensation Table. The Company did not grant any
stock appreciation rights during fiscal 1994.
<TABLE>
<CAPTION>
Individual Grants in Fiscal 1994
-------------------------------------------------------
Potential
% of Total Realizable Value at
Number of Options/ Assumed Annual
Securities SARs Rates of Stock Price
Underlying Granted to Appreciation for
Options/SARs Employees Exercise Option Term(2)
Granted in Fiscal or Base Price Expiration -----------------------
Name (shares)(1) Year (per share) Date 5% 10%
- - ---- ------------ ---------- ------------- ---------- -- --
<S> <C> <C> <C> <C> <C> <C>
Leon Tempelsman 38,500 37.84% $8.387 1/14/99 $51,769 $149,886
Sheldon L. Ginsberg 10,500 10.32% $7.625 1/14/04 $50,351 $127,599
</TABLE>
- - --------------------
(1) All of such options become exercisable as to one-third (1/3) of the shares
included in the grant, commencing on December 15 in the year of the grant.
The right to purchase stock pursuant to all options outstanding is
cumulative, and the optionees may exercise the right to purchase stock at
any time and from time to time after the option has become exercisable and
prior to the expiration, termination or surrender of the option.
Each optionee who receives an option under the Plan agrees (a) to remain in
the employ of either of the Company or its subsidiaries for at least one
year from the date the option is granted but in no event later than the
optionee's 70th birthday and (b) to refrain from engaging in the diamond
business, directly or indirectly, for a period of two years after his or
her employment by the Company or a subsidiary terminates. If an optionee
fails to comply with either part of such an agreement, the Compensation
Committee, in its discretion, may require the optionee to resell to the
Company all shares purchased pursuant to the option exercise price and to
repay the Company any amounts paid to the optionee upon the surrender of
all or part of an option.
In the event of the termination of employment for any reason of an
optionee, the option may be exercised or surrendered by the optionee or his
or her legal representative within such period as may be provided in the
option instrument not to exceed the earlier of the balance of the option
term or three
9
<PAGE>
months from the date of termination (one year in the case of a disabled
employee or in the event of death); provided that the Compensation
Committee may, in its absolute discretion, authorize the purchase of such
additional shares subject to options as are not then exercisable.
(2) Based upon the per share market price on the date of grant, which was
$7.625 on January 14, 1994, and an annual appreciation at the rate stated
of such market price through the expiration date of such options. Gains, if
any, are dependent upon the actual performance of the Common Stock, as well
as the continued employment of the executive officers through the vesting
period. The potential realizable values indicated have not taken into
account amounts required to be paid as income tax under the Internal
Revenue Code of 1986, as amended, and any applicable state laws.
Stock Options Held at End of Fiscal 1994
The following table indicates the total number of exercisable and
unexercisable stock options held by each executive officer named in the Summary
Compensation Table as of May 31, 1994. No options to purchase Common Stock were
exercised during fiscal 1994 and no stock appreciation rights were outstanding
during fiscal 1994.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at May 31, 1994 at May 31, 1994
---------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Leon Tempelsman 118,699 125,351 $331,320 $247,014
Sheldon L. Ginsberg 30,866 32,434 $102,873 $ 82,253
</TABLE>
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
The Company has no employment contract with either Mr. Leon Tempelsman or
Mr. Ginsberg. Other than the Plan, the Company does not have any program
providing compensation to its executive officers which is intended to serve as
an incentive for performance to occur over a period longer than one fiscal year.
The incentive stock options granted to Messrs. Tempelsman and Ginsberg provide
that if their respective employments are terminated for any reason other than
death or retirement, the options must be exercised within the earlier of the
balance of the option period or three months from the date of termination (one
year in the case of termination as a result of disability).
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors consists of Maurice
Tempelsman, Myer Feldman, Michael W. Butterwick and Lucien Burstein. Messrs.
Feldman, Butterwick and Burstein are outside directors of the Company. Neither
Mr. Butterwick nor Mr. Feldman is an officer of the Company. Mr. Burstein is
Secretary of the Company. None of Messrs. Butterwick, Feldman or Burstein is
affiliated with any principal stockholder of the Company. Maurice Tempelsman is
the Chairman of the Board of the Company and the father of Leon Tempelsman, Vice
Chairman of the Board and President of the Company.
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Comparative Performance by the Company
The following graph compares the market performance of the Company's Common
Stock for the previous five fiscal years to the American Stock Exchange Market
Value Index (the "AMEX Index") and a peer group of companies in the fine jewelry
and accessories industry (the "Peer Group").
Lazare Amex Industry
Date Kaplan Composite Group
----------------------------------------------
5/31/89 100.000 100.000 100.000
6/30/89 91.139 99.859 96.843
7/31/89 215.190 104.682 110.775
8/31/89 169.620 106.400 125.215
9/29/89 156.962 107.627 115.749
10/31/89 151.899 102.519 109.633
11/30/89 164.557 103.761 112.705
12/29/89 162.025 105.054 108.537
1/31/90 189.873 96.699 93.856
2/28/90 288.608 97.931 89.179
3/30/90 298.734 100.233 102.047
4/30/90 336.709 96.518 95.473
5/31/90 329.114 103.361 102.296
6/29/90 546.835 103.170 101.210
7/31/90 346.835 99.540 98.405
8/31/90 273.418 88.784 80.548
9/28/90 265.823 82.643 71.188
10/31/90 237.975 79.299 71.410
11/30/90 260.520 85.415 78.789
12/31/90 268.035 88.284 77.501
1/31/91 230.460 92.755 86.947
2/28/91 221.692 101.048 96.459
3/28/91 215.430 105.327 100.815
4/30/91 217.935 105.431 104.652
5/31/91 220.440 109.538 108.334
6/28/91 212.925 105.002 107.177
7/31/91 181.612 109.225 102.572
8/30/91 175.350 109.798 106.996
9/30/91 207.915 110.760 101.733
10/31/91 189.127 114.877 95.582
11/29/91 161.572 111.106 94.565
12/31/91 150.300 121.778 95.190
1/31/92 151.421 126.169 90.777
2/28/92 136.840 128.004 96.651
3/31/92 134.615 121.419 103.261
4/30/92 106.570 119.355 91.711
5/29/92 114.423 118.765 79.949
6/30/92 107.692 114.536 77.237
7/31/92 91.987 117.096 68.801
8/31/92 91.987 114.189 64.154
9/30/92 87.500 114.401 61.509
10/30/92 100.961 117.103 63.427
11/30/92 121.153 125.174 71.012
12/31/92 121.153 126.787 75.713
1/29/93 100.961 131.275 73.223
2/26/93 100.961 127.848 63.087
3/31/93 112.179 132.630 66.149
4/30/93 120.032 130.526 60.867
5/28/93 114.423 135.372 65.916
6/30/93 105.448 136.238 71.820
7/30/93 127.884 138.053 67.139
8/31/93 125.640 145.084 67.125
9/30/93 106.570 147.729 64.448
10/29/93 112.179 151.954 70.498
11/30/93 121.153 145.113 68.836
12/31/93 125.640 148.927 71.508
1/31/94 168.268 151.210 66.255
2/28/94 154.807 147.566 68.915
3/31/94 152.563 138.829 68.900
4/29/94 168.268 137.440 67.269
5/31/94 159.294 137.144 75.494
The Peer Group consists of the following companies: A.T. Cross Company,
Michael Anthony Jewelers, Inc., Jewelmasters Inc., Tiffany & Co., and Town &
Country Corporation. The Company's management is of the opinion that despite the
existence of some similarities between the group of companies comprising its
peer group and the Company, the Company is unique because of the product it
produces, the markets in which its products are sold, and in its position as the
only publicly traded diamond cutting and polishing company in the United States.
Thus, comparisons made between the Company and the peer group are not
necessarily accurate or reliable and do not necessarily reflect the relative
performance data for the Company's primary competition.
(1) The cumulative total return for the securities comprising the Peer Group
and the AMEX Index assumes the reinvestment of dividends. The total return
for the Company's Common Stock does not assume the reinvestment of
dividends, since no dividends were declared on the Company's Common Stock
during the measurement period. The weighting of the securities comprising
each index, according to their market capitalization, has been calculated
at the end of each monthly period.
(2) The AMEX Index tracks the aggregate price performance of equity securities
of companies traded on the American Stock Exchange. The Company's Common
Stock is traded on the American Stock Exchange.
11
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Transactions With Management
The Company has entered into a sublease with Leon Tempelsman & Son, a New
York limited partnership of which Maurice Tempelsman and Leon Tempelsman are the
sole general partners ("LTS") under which approximately 30% of the 20th Floor at
529 Fifth Avenue, New York, New York is sublet to LTS. The sublease is prorated
to the same rental rate per square foot which the Company is paying to the
landlord under its lease for the 19th and 20th Floors at the same location.
Rental payments under the sublease amount to a base annual rent of $89,131
(excluding escalations).
The Company is a party to an agreement dated August 11, 1982, as amended on
April 8, 1983, with GIA Gem Trade Laboratory, Inc. ("GTL"), a wholly owned
subsidiary of Gemological Institute of America, Inc., pursuant to which the
Company has granted a license to GTL to use a laser micro-inscription system
developed by the Company in connection with GTL's business of grading diamonds
and identifying gem stones and issuing reports thereon. Such agreement, unless
earlier terminated in accordance with its terms, expires in the year 2000, when
the United States patent on the laser micro-inscription device expires. George
R. Kaplan, Vice Chairman of the Board of the Company, is a Board Member Emeritus
of the Board of Governors of the Gemological Institute of America. The agreement
requires GTL to pay to the Company royalties based on fees charged by GTL for
inscribing gem stones. The agreement with GTL was the result of arms-length
negotiations between the Company and GTL.
2. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young, independent
certified public accountants, to be auditors for the Company and its
subsidiaries for the fiscal year ending May 31, 1995 and recommends that the
stockholders ratify that appointment. If a majority of the shares are not voted
in favor of ratification, the Board will consider the appointment of other
auditors for the ensuing fiscal year. The Board is advised that there is and has
been, no relationship between Ernst & Young and the Company or any of its
subsidiaries other than the rendition of professional services.
The Board of Directors recommends a vote FOR ratification of the
appointment of Ernst & Young.
3. OTHER BUSINESS
As of the date hereof, the Board of Directors does not know of any matter
which will come before the meeting other than the business specified in the
foregoing notice of meeting. If any other matter is presented at the meeting or
any adjournment thereof, it is intended that the persons named in the proxy will
vote in accordance with their best judgment.
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Solicitation of Proxies
Solicitation of proxies is being made by the Board of Directors through the
mail, in person, and by telegraph and telephone. In addition, the Company will
request banks, brokers, and other custodians, nominees, and fiduciaries to
obtain voting instructions from the beneficial owners and will pay their
expenses for so doing. The cost of soliciting proxies will be borne by the
Company.
Stockholder Proposals for the 1995 Annual Meeting of Stockholders
Stockholders who wish to have proposals included in the proxy statement and
form of proxy to be furnished by the Board of Directors in connection with the
Company's 1995 Annual Meeting of Stockholders must submit such proposals so that
they are received by the Company no later than May 18, 1995. Please direct such
proposals to the attention of the Secretary of the Company.
By order of the Board of Directors,
LEON TEMPELSMAN,
President
New York, New York
September 23, 1994
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[LOGO] LAZARE KAPLAN INTERNATIONAL INC.
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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN NOTICE OF
TO ATTEND THE MEETING, PLEASE DATE, MARK AND SIGN ANNUAL MEETING
THE ENCLOSED PROXY CARD AND RETURN IT IN THE OF STOCKHOLDERS
ENVELOPE PROVIDED. AND
PROXY STATEMENT
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September 23, 1994
