<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
LAZARE KAPLAN INTERNATIONAL INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $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 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
[LOGO] LAZARE KAPLAN INTERNATIONAL INC.
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
WEDNESDAY, NOVEMBER 1, 1995
-------------------------
The Annual Meeting of Stockholders of Lazare Kaplan International Inc. will
be held on Wednesday, November 1, 1995 at 10:00 A.M. at The Cornell Club, 6 East
44th Street, 5th Floor, Room AB, 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 LLP, independent
certified public accountants, as auditors for the Company for the
fiscal year ending May 31, 1996; 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 11,
1995 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 22, 1995
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
---------------------------------
1995 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 10:00 a.m. on Wednesday, November 1, 1995 at The Cornell Club, 6 East
44th Street, 5th Floor, Room AB, 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, 1995 are first
being sent to stockholders of the Company on or about September 22, 1995.
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 11, 1995
(the 'Record Date'). On the Record Date, there were issued and outstanding
6,147,808 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 3,073,905 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 LLP 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).
1
<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 LLP as the Company's independent auditors for the current fiscal
year; as well as in the discretion of the proxies with respect to 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 the Company since April 1984;
General Partner of Leon Tempelsman & Son, an investment
limited partnership 1984 66
Leon Tempelsman................. Vice Chairman of the Board of the Company since April
1984; President of the Company since April 1986;
General Partner of Leon Tempelsman & Son 1984 39
George R. Kaplan................ Vice Chairman of the Board of the Company since April
1984 1972 77
Lucien Burstein................. Partner, Warshaw Burstein Cohen Schlesinger & Kuh, LLP,
Attorneys; Secretary of the Company since 1984 1984 73
Michael W. Butterwick........... Business Consultant 1982 68
Myer Feldman.................... Partner, Ginsburg, Feldman and Bress, Chartered Attorneys 1984 78
Robert Speisman................. Vice President -- Sales of the Company since April 1986 1989 42
Sheldon L. Ginsberg............. Vice President and Chief Financial Officer of the Company
since April 1991; Vice President -- Finance from
January 1986 through April 1991 1989 41
</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, Lucien Burstein and Myer
Feldman.
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 Board of Directors does not have a Nominating Committee or a
committee performing similar functions.
During the fiscal year ended May 31, 1995, there were three meetings of the
Board of Directors, one meeting of the Audit Committee, and one meeting of the
Compensation Committee. In addition, action was taken by unanimous written
consent of 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, LLP 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 of
shares of the Company's Common Stock as of September 11, 1995 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
3
<PAGE>
persons have indicated that they have the sole power to vote and to dispose of
their respective shares of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------------------------------------------------------------------ ---------- --------
<S> <C> <C>
Maurice Tempelsman(1) .............................................................. 3,913,430 63.7%
529 Fifth Avenue
New York, New York 10017
Leon Tempelsman(1)(2) .............................................................. 1,869,466 29.5
529 Fifth Avenue
New York, New York 10017
Quest Advisory Corp.(3) ............................................................ 366,600 6.0
1414 Avenue of the Americas
New York, New York 10019
Dimensional Fund Advisors, Inc.(4) ................................................. 344,000 5.6
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Myer Feldman ....................................................................... 334,954 5.5
1250 Connecticut Avenue, NW
Washington, D.C. 20036
</TABLE>
------------
(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, 200,051 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 managed by Quest Advisory Corp. and
Quest Management Company, registered investment advisors. Charles M. Royce
is a deemed controlling person of Quest Advisory Corp. and Quest Management
Company. Mr. Royce disclaims beneficial ownership of all of the foregoing
shares.
(4) 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 Company Act of 1940, or the DFA Group Trust
Company and DFA Participation 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 of such shares.
4
<PAGE>
The following table reflects as of September 11, 1995 the beneficial
ownership of shares of Common Stock of the Company by each of the directors,
nominees and executive officers and by all directors and officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME BENEFICIAL OWNERSHIP PERCENT OF CLASS
-------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
Maurice Tempelsman(1)(2)................................ 3,913,430 63.7%
Leon Tempelsman(1)(2)(3)................................ 1,869,466 29.5
Myer Feldman............................................ 334,954 5.5
Sheldon Ginsberg(4)..................................... 51,371 0.8
Robert Speisman(1)(5)................................... 43,801 0.7
George R. Kaplan(6)..................................... 23,965 0.4
Lucien Burstein......................................... 1,500 less than 0.1
Michael W. Butterwick................................... 0 0.0
All directors and officers as a group(1)-(6)............ 4,710,071 73.1%
</TABLE>
------------
(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, 200,051 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 include an aggregate of 51,300 shares which are the
subject of currently exercisable options granted to Sheldon L. Ginsberg
pursuant to the Plan and 71 shares owned by Mr. Ginsberg directly. Number
and percentage of shares does not include 300 shares owned by Mr. Ginsberg
as custodian for his son, as to which beneficial ownership is disclaimed by
Mr. Ginsberg.
(5) 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 and as custodian
(footnotes continued on next page)
5
<PAGE>
(footnotes continued from previous page)
for the children of Robert and Rena Speisman, as to all of which beneficial
ownership is disclaimed by Robert Speisman. Number and percentage include
43,801 shares which are the subject of currently exercisable options granted
to Robert Speisman pursuant to the Plan.
(6) 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.
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 includes three nonemployee directors and one employee
director, none of whom is 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.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
The following policies are used by the Compensation Committee to set a
general framework within which specific compensation decisions are made.
-- The Company's executive pay program is intended to attract and
retain top management talent and to motivate and reward
performance.
-- Incentive compensation varies with relative Company performance
and a given individual's contribution to that performance.
-- The 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 (subject to
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 Plan is administered by a Compensation Committee consisting of four
directors of the Company who are not eligible to participate in the 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.
COMPENSATION OF THE PRESIDENT
Mr. Leon Tempelsman's salary was not increased for fiscal 1995 from its
fiscal 1994 level of $50,000, thereby remaining through fiscal 1995 at the same
level since 1984. It has long been the opinion of the Compensation Committee
that Mr. Tempelsman's salary stands well below those of executives with similar
responsibilities in companies of similar size. Accordingly, in the past, Mr.
7
<PAGE>
Tempelsman has been granted a significant number of incentive stock options as
long-term incentive to encourage him to continue his efforts to increase
shareholder value and to make his total compensation package more competitive
and appropriate in relation to his contribution to the Company. However, due to
the significantly fewer number of options available under the Plan for grant
during fiscal 1995, in March 1995, as part of its overall grant of options to
certain key employees of the Company, the Compensation Committee granted Mr.
Tempelsman only 10,000 incentive stock options. In addition, the Compensation
Committee noted that it is likely that no additional incentive stock options
will be available for grant under the Plan. The Compensation Committee continues
to recognize 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 1993, FISCAL 1994 AND FISCAL 1995
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, 1993, May 31, 1994 and May 31, 1995.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------------------- AWARDS
OTHER ------------
NAME AND FISCAL ANNUAL OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (SHARES)
---------------------------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Leon Tempelsman .............................. 1995 $ 50,000 $ 0 $0 10,000
Vice Chairman of the Board 1994 50,000 0 0 38,500
and President 1993 50,000 0 0 150,550(2)
Sheldon L. Ginsberg .......................... 1995 170,000 30,000(1) 0 6,000
Vice President and 1994 157,000 17,000(1) 0 10,500
Chief Financial Officer 1993 148,000 16,000(1) 0 35,800(3)
</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.
(footnotes continued on next page)
8
<PAGE>
(footnotes continued from previous 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.
STOCK OPTIONS GRANTED IN FISCAL 1995
The following table sets forth information concerning individual grants of
stock options made during fiscal year ended May 31, 1995 to each executive
officer listed in the Summary Compensation Table. The Company did not grant any
stock appreciation rights during fiscal 1995.
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS IN FISCAL 1995 REALIZABLE VALUE
--------------------------------------------------------- AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS/ RATES OF STOCK
SECURITIES SARS 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............... 10,000 34.78% $9.35 3/7/00 $14,984 $43,393
Sheldon L. Ginsberg........... 6,000 20.87% $8.50 3/7/05 $32,074 $81,281
</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 at the 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 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.
(footnotes continued on next page)
9
<PAGE>
(footnotes continued from previous page)
(2) Based upon the per share market price on the date of grant, which was $8.50
on March 7, 1995, 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 1995
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, 1995. No options to purchase Common Stock were
exercised during fiscal 1995 by such individuals and no stock appreciation
rights were outstanding during fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT MAY 31, 1995 AT MAY 31, 1995
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Leon Tempelsman........................ 200,051 53,999 $ 260,414 $16,500
Sheldon L. Ginsberg.................... 51,300 18,000 91,900 7,500
</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.
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').
10
<PAGE>
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DATE COMPANY INDEX MARKET INDEX PEER INDEX
--------- ------------- ------------ ----------
<S> <C> <C> <C>
05/31/90 100.000 100.000 100.000
06/29/90 166.154 99.813 98.939
07/31/90 105.385 96.182 96.197
08/31/90 83.077 85.522 78.740
09/28/90 80.769 79.502 69.590
10/31/90 73.077 76.394 69.808
11/30/90 80.000 82.429 77.021
12/31/90 82.308 85.184 75.762
01/31/91 70.769 89.641 84.995
02/28/91 68.077 97.733 94.294
03/28/91 66.154 101.869 98.552
04/30/91 66.923 102.036 102.303
05/31/91 67.692 106.100 105.903
06/28/91 65.385 101.691 104.771
07/31/91 55.769 105.848 100.270
08/30/91 53.846 106.310 104.595
09/30/91 63.846 107.289 99.450
10/31/91 58.077 111.186 93.437
11/29/91 49.615 107.456 92.442
12/31/91 46.154 118.044 93.053
01/31/92 51.923 122.344 88.739
02/28/92 47.692 124.341 94.482
03/31/92 46.154 118.083 100.943
04/30/92 36.538 116.270 89.652
05/29/92 39.231 115.640 78.155
06/30/92 36.923 111.483 75.504
07/31/92 31.538 114.029 67.257
08/31/92 31.538 111.156 62.714
09/30/92 30.000 111.324 60.128
10/30/92 34.615 114.109 62.004
11/30/92 41.538 122.221 69.418
12/31/92 41.538 123.967 74.013
01/29/93 34.615 128.551 71.579
02/26/93 34.615 125.015 61.671
03/31/93 38.462 129.741 64.665
04/30/93 41.154 127.465 59.501
05/28/93 39.231 132.173 64.437
06/30/93 36.154 133.040 70.208
07/30/93 43.846 134.791 65.632
08/31/93 43.077 141.757 65.618
09/30/93 36.539 144.571 63.002
10/29/93 38.462 148.737 68.916
11/30/93 41.539 142.198 67.291
12/31/93 43.077 146.075 69.903
01/31/94 57.692 148.271 64.768
02/28/94 53.077 144.745 67.368
03/31/94 52.308 135.995 67.353
04/29/94 57.692 134.626 66.218
05/31/94 54.615 134.326 74.467
06/30/94 56.154 130.185 73.825
07/29/94 57.692 134.912 75.424
08/31/94 55.385 139.121 77.542
09/30/94 58.462 141.601 76.199
10/31/94 59.231 140.449 77.282
11/30/94 59.231 134.284 80.345
12/30/94 58.462 135.929 74.341
01/31/95 53.846 139.605 60.222
02/28/95 54.615 143.959 64.347
03/31/95 51.539 146.099 62.810
04/28/95 48.462 149.772 67.392
05/31/95 46.154 153.797 65.800
</TABLE>
<PAGE>
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 weighing 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.
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 $89,518
(excluding escalations).
11
<PAGE>
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 LLP,
independent certified public accountants, to be auditors for the Company and its
subsidiaries for the fiscal year ending May 31, 1996 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 LLP and the Company or any of its
subsidiaries other than the rendition of professional services. A representative
of Ernst & Young LLP is expected to be present at the annual meeting. The
representative will have an opportunity to make a statement and will be
available to respond to questions.
During fiscal 1994, the Board of Directors considered changing the
Company's independent certified public accountants and, effective September 16,
1994, Ernst & Young LLP was appointed in replacement of Deloitte & Touche LLP,
to serve as the Company's independent certified public accountants for the
Company's fiscal year ending May 31, 1995. In connection with the audits of the
two most recent fiscal years of the Company and all subsequent interim periods
preceding such replacement, there was no disagreement between the Company and
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Deloitte & Touche LLP,
would have caused them to make reference thereto in their report on the
financial statements for such period. The reports of Deloitte & Touche LLP for
such period did not contain an adverse opinion or disclaimer of opinion nor were
they qualified as to uncertainty, audit scope, or accounting principles. The
decision to replace Deloitte & Touche LLP with Ernst & Young LLP as the
Company's independent certified public accountants was unanimously approved by
the Audit Committee of the Board of Directors of the Company and ratified by the
stockholders of the Company at the 1994 Annual Meeting of Stockholders.
The Board of Directors recommends a vote FOR ratification of the
appointment of Ernst & Young LLP.
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
12
<PAGE>
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.
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 1996 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 1996 Annual Meeting of Stockholders must submit such proposals so that
they are received by the Company no later than May 27, 1996. 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 22, 1995
13
<PAGE>
[LOGO] LAZARE KAPLAN INTERNATIONAL INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
</TABLE>
--------------------------------------------------------------------------------
September 22, 1995
<PAGE>
APPENDIX I
PROXY CARD
LAZARE KAPLAN INTERNATIONAL INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 1, 1995
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
Know All Men By These Presents that the undersigned stockholder of Lazare
Kaplan International Inc. hereby constitutes and appoints Leon Tempelsman,
Lucien Burstein and Sheldon L. Ginsberg, and each and any of them, the
attorneys and proxies of the undersigned, with full power of substitution and
revocation, to vote for and in the name, place and stead of the undersigned, at
the Annual Meeting of Stockholders of said corporation, to be held on the 5th
Floor, Room AB, The Cornell Club, Six East 44th Street, New York, New York on
November 1, 1995 at 10:00 A.M. and at any adjournments thereof, the number of
votes the undersigned would be entitled to cast if present:
(CONTINUED, TO BE DATED AND SIGNED ON REVERSE)
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
This Proxy when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE BOARD'S NOMINEES FOR DIRECTORS, FOR PROPOSAL 2 AND IN THE
DISCRETION OF THE PROXIES ON ALL OTHER MATTERS.
<TABLE>
<S> <C> <C> <C>
FOR WITHHOLD (1) ELECTION OF DIRECTORS (2) Approval of Ernst & Young
all nominees AUTHORITY MAURICE TEMPELSMAN, LEON TEMPELSMAN, GEORGE R. KAPLAN, LLP as the independent
listed to the right to vote for all LUCIEN BURSTEIN, MYER FELDMAN, MICHAEL W. BUTTERWICK, public accountants for the
(except as market nominees listed SHELDON L. GINSBERG AND ROBERT SPEISMAN fiscal year ending May 31,
to the contrary) to the right (INSTRUCTION: To withhold authority to vote for any 1996
individual nominee strike a line through the nominee's
name in the list above) FOR AGAINST ABSTAIN
[x] [x] [x] [x] [x]
(3) In their discretion, upon such Any of such attorneys and proxies, or their substitutes at The foreging matter
other matters as may properly come said meeting, or any adjournment thereof, may exercise all has been proposed by
before the meeting. the proxies hereby given. Any Proxy heretofore given is the Company and is
hereby revoked. not conditioned on the
Receipt is acknowledged of the Notice of Annual Meeting of approval of any other
Stockholders, the Proxy Statement accompanying such Notice matter.
and the Annual Report to Stockholders for the fiscal year
ended May 31, 1995.
</TABLE>
<TABLE>
<S> <C>
IN WITNESS WHEREOF, the undersigned has signed this proxy
Dated 1995
(Stockholder(s) signature(s)
Signature(s) of stockholder(s) should correspond exactly with
the name(s) shown hereon. If shares are jointly held, both
holders should sign. Attorneys, executors, administrators,
trustees, guardians or others signing in a representative
capacity should give their full titles. Proxies executed in
the name of a corporation should be signed on behalf of the
corporation by its president or other authorized officer.
NOTE: This proxy, properly filled in, dated and signed,
should be returned promptly in the enclosed postpaid envelope
to Lazare Kaplan International Inc., c/o Mellon Transfer
Services, P.O. Box 812, New York, New York 10138- 0832
</TABLE>
'PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORDED YOUR VOTES'
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING
OF STOCKHOLDERS
LAZARE KAPLAN INTERNATIONAL INC.
WEDNESDAY, NOVEMBER 1, 1995
10:00 A.M.
THE CORNELL CLUB
SIX EAST 44TH STREET
FIFTH FLOOR, ROOM AB
NEW YORK, NY 10017
AGENDA:
ELECTION OF DIRECTORS
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
OTHER BUSINESS
