<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 'SS'240.14a-11(c) or 'SS'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] No fee required.
[ ] 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:
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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 0-11 (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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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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<PAGE>
[LOGO] LAZARE KAPLAN INTERNATIONAL INC.
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, NOVEMBER 2, 2000
------------------
The Annual Meeting of Stockholders of Lazare Kaplan International Inc. will
be held on Thursday, November 2, 2000 at 10:00 A.M. at The Cornell Club, 6 East
44th Street, 3rd Floor, 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 auditors,
as auditors for the Company for the fiscal year ending May 31, 2001;
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 6, 2000
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 18, 2000
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
--------------------------
2000 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 Thursday, November 2, 2000 at The Cornell Club, 6 East
44th Street, 3rd Floor, 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, 2000 are first
being sent to stockholders of the Company on or about September 20, 2000.
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 6, 2000
(the 'Record Date'). On the Record Date, there were issued and outstanding
7,818,443 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 3,909,222 shares of Common Stock will
constitute a quorum at the Annual Meeting. Assuming a quorum is present, (i) 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 (ii) 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 to
ratify 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 not 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
(ITEM 1 ON THE PROXY CARD)
Six 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 six 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 since January 1984 1984 71
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 since January 1984 1984 44
Lucien Burstein............. Partner, Warshaw Burstein Cohen Schlesinger &
Kuh, LLP, Attorneys; Secretary of the
Company since 1984 1984 78
Myer Feldman................ Attorney, self employed since December 1999;
Attorney, Partner, Ginsburg, Feldman and
Bress, Chartered Attorneys for more than
five years prior thereto; Director and
Chairman of the Board of Totalbank since
1986 1984 83
Robert Speisman............. Senior Vice President -- Sales of the Company
since January 1999; Vice President -- Sales
of the Company from January 1986 to January
1999 1989 47
Sheldon L. Ginsberg......... President and Chief Executive Officer of
Enjewel, LLC, an on-line retailer of branded
fine jewelry, since June 2000; Executive
Vice President of the Company from February
1996 to May 2000; Chief Financial Officer
of the Company from April 1991 to May 2000. 1989 46
</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, Compensation and Stock Option 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
Lucien Burstein and Myer Feldman. The Compensation Committee consists of Maurice
Tempelsman, Myer Feldman and Lucien Burstein. The Stock Option Committee
currently is comprised of all the members of the Board of Directors.
The Audit Committee confers with the independent auditors and financial
officers of the Company, oversees the Company's internal controls, audits,
financial reporting and compliance programs, recommends to the Board of
Directors the independent auditors to be selected to audit the Company's annual
financial statements and oversees the activities of the auditors, reviews
reports submitted by the auditors, establishes or reviews and monitors
compliance with codes of conduct of the Company, inquires about procedures for
compliance with laws and regulations relating to the management of the Company,
approves any special assignments given to the independent auditors and reports
and makes 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 and the Vice Chairman
of the Board and President of the Company and for fixing the compensation and
benefits of the other executive officers of the Company. The Stock Option
Committee is responsible for administering the Company's 1988 Stock Option
Incentive Plan (the '1988 Plan') and the 1997 Long Term Stock Incentive Plan
(the '1997 Plan' and with the 1988 Plan collectively, the 'Plans'), including
the designating of employees to be granted options, prescribing the terms and
conditions of options granted under the Plans, interpreting the Plans and making
all other determinations deemed necessary for the administration of the Plans.
The Board of Directors does not have a Nominating Committee or a committee
performing similar functions.
During the fiscal year ended May 31, 2000, there were three meetings of the
Board of Directors, one meeting of the Audit Committee and one meeting of the
Compensation Committee. 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.
SECURITY OWNERSHIP
The following table sets forth information regarding the ownership of shares
of the Common Stock as of September 6, 2000 by those persons known by the
Company to own beneficially more than 5% of the outstanding shares of the Common
Stock. All information in the table is based upon reports filed by such persons
with the Securities and Exchange Commission and upon responses to 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
3
<PAGE>
that they have the sole power to vote and to dispose of their respective shares
of the 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) ...................................... 3,452,158 44.1%
529 Fifth Avenue
New York, New York 10017
Leon Tempelsman(2) ......................................... 1,872,545 23.5%
529 Fifth Avenue
New York, New York 10017
Charles M. Royce(3) ........................................ 858,200 11.0%
Royce & Associates, Inc.
1414 Avenue of the Americas
New York, New York 10017
Dimension Fund Advisors Inc.(4) ............................ 608,100 7.8%
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
---------
(1) Consists of 1,910,409 shares owned directly by Maurice Tempelsman, 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, and 13,333 shares
which are the subject of currently exercisable options granted to Mr.
Tempelsman pursuant to the 1997 Plan.
(2) Consists of 77,000 shares owned directly by Leon Tempelsman, 2,240 shares
held by the spouse of Leon Tempelsman, 26,816 shares owned by his sister,
Rena Speisman, 32,025 shares owned by his sister, Marcy Meiller, 34,641
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 34,641 shares held by Leon Tempelsman as custodian for his
children, 135,166 which are the subject of currently exercisable options
granted to Mr. Tempelsman pursuant to the Plans and 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.
(3) Consists of 847,100 shares owned directly by Royce & Associates, Inc.
('Royce') and 11,100 shares owned directly by Royce Management Company
('RMC'). Mr. Charles Royce may be deemed to be a controlling person of Royce
and RMC, and as such may be deemed to beneficially own the shares owned by
Royce and RMC. Mr. Royce does not own any shares outside of Royce and RMC,
and disclaims beneficial ownership of the shares held by Royce and RMC. The
information contained herein is based solely on a Schedule 13G, dated
February 9, 2000, of Royce, RMC and Mr. Royce.
(4) Consists of shares as to which Dimensional Fund Advisors Inc., a registered
investment advisor ('DFA'), exercises sole voting and dispositive power in
its role as investment advisor or investment manager to certain registered
investment companies and other investment vehicles. The information
contained herein is based solely on a Schedule 13G, dated February 4, 2000,
of DFA.
4
<PAGE>
The following table reflects as of September 6, 2000 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
(seven persons).
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME BENEFICIAL OWNERSHIP PERCENT OF CLASS
---- -------------------- ----------------
<S> <C> <C>
Maurice Tempelsman(1)(2)..................... 3,452,158 44.1%
Leon Tempelsman(1)(3)........................ 1,872,545 23.5%
Myer Feldman................................. 303,259 3.9%
Sheldon L. Ginsberg(4)....................... 35,362 0.5%
Robert Speisman(1)(5)........................ 69,174 0.9%
Lucien Burstein.............................. 1,500 less than 0.1%
All directors and officers as a
group(1)-(5)............................... 4,272,250 52.7%
</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,
Senior 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) Consists of 1,910,409 shares owned directly by Maurice Tempelsman, 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, and 13,333 shares
which are the subject of currently exercisable options granted to Mr.
Tempelsman pursuant to the 1997 Plan.
(3) Consists of 77,000 shares owned directly by Leon Tempelsman, 2,240 shares
held by the spouse of Leon Tempelsman, 26,816 shares owned by his sister,
Rena Speisman, 32,025 shares owned by his sister, Marcy Meiller, 34,641
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. Also includes 34,641 shares held
by Leon Tempelsman as custodian for his children, 135,166 shares which are
the subject of currently exercisable options granted to Mr. Tempelsman
pursuant to the Plans and 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.
(4) Consists of shares owned by Mr. Ginsberg directly.
(5) Consists of 66,466 shares which are the subject of currently exercisable
options granted to Mr. Speisman pursuant to the Plans and 2,708 shares owned
by Mr. Speisman directly. Does not include 1,528,416 shares owned by LTS, of
which Rena Speisman, the wife of Robert Speisman, is a limited partner,
61,457 shares owned by Rena Speisman for herself and as custodian for the
children of Robert and Rena Speisman and 33,334 shares which are the subject
of currently exercisable options gifted to her by Maurice Tempelsman, as to
all of which beneficial ownership is disclaimed by Mr. Speisman.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 filed with the Securities and
Exchange Commission and the Company under the Exchange Act and a review of
written representations received by the Company, no person who at any time
during the fiscal year ended May 31, 2000
5
<PAGE>
was a director, executive officer or beneficial owner of more than 10% of the
outstanding shares of Common Stock failed to file, on a timely basis, reports
required by Section 16(a) of the Exchange Act., except that Myer Feldman, a
director of the Company, inadvertently filed late (a) an amended Form 4 for
September 1999 reporting one transaction involving the disposition of common
stock and (b) a Form 4 for October 1999 reporting one transaction involving the
disposition of common stock.
EXECUTIVE COMPENSATION
The Company's executive compensation program (other than as it relates to
stock options) is administered by the Compensation Committee of the Board of
Directors, and the Plans are administered by the Stock Option Committee of the
Board of Directors. The Compensation Committee includes two outside directors
and one employee director. The Stock Option Committee currently is comprised of
all members of the Board of Directors. The Compensation Committee annually
recommends the cash compensation and benefits for the Chairman and the Vice
Chairman and President and fixes the cash compensation and benefits for the
other executive officers of the Company. Following Compensation Committee review
and approval, all matters relating to compensation for the Chairman and the Vice
Chairman and President (other than as it relates to stock options) are submitted
to the full Board for approval. In its administration of the Plans, the Stock
Option Committee, in its sole discretion, determines option recipients and the
number of shares subject to each option.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES
During Fiscal 2000, the following policies were used by the Compensation
Committee to set a general framework within which specific compensation
decisions were 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 1997 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 determined base salary levels by evaluating
individual performance with specific input from the President (excluding input
for his own performance). Increases in base salary were 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 were recommended to the Board by the Compensation Committee
for employees it felt 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 calendar year to which they relate.
MATCHING 401(k) PLAN
The Company offers all full-time employees in the United States and Puerto
Rico 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 $10,500 (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 maximum of 6% of
the first $20,000 of the employee's compensation, 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. For the year ended December 31,
1999, the Company did not make a matching contribution.
STOCK OPTION GRANTS
The Company periodically grants stock options in order to provide certain of
its key employees with a long-term incentive award as part of a competitive
total compensation package, 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.
During Fiscal 2000, options were granted under the 1997 Plan. The Stock
Option 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 Stock Option Committee took 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 Stock Option Committee deemed relevant
in connection with accomplishing the purposes of the 1997 Plan.
Each option granted under the 1997 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 date of grant.
COMPENSATION OF THE PRESIDENT
In conjunction with an overall review of executive and employee
compensation, and in light of the overall contributions made by Leon Tempelsman
to the Company during the last fiscal year, effective in February 2000, Mr.
Tempelsman's salary was increased to $400,000. In addition, Mr. Tempelsman was
granted an aggregate of 40,000 options under the 1997 Plan. The Compensation
Committee maintains the belief that Mr. Tempelsman's salary still stands below
the
7
<PAGE>
salaries of executives with similar responsibilities in companies of similar
size. The Compensation Committee continues to recognize Mr. Tempelsman's
contribution to the overall management of the Company and the Company's
retention and expansion of its strategic and market positions in the world
diamond market.
Compensation Committee:
Maurice Tempelsman
Lucien Burstein
Myer Feldman
Stock Option Committee:
Maurice Tempelsman
Leon Tempelsman
Lucien Burstein
Myer Feldman
Sheldon Ginsberg
Robert Speisman
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION IN FISCAL 1998, FISCAL 1999 AND FISCAL 2000
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
year ended May 31, 2000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER
NAME AND FISCAL ANNUAL OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS(4) COMPENSATION (SHARES)(9)
------------------ ---- ------ -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Maurice Tempelsman ............... 2000 $210,000 $ -- $ -- 15,000
Chairman of the Board 1999 200,000 -- -- --
1998 133,336 100,000 -- 20,000
Leon Tempelsman .................. 2000 386,325(1) 3,190(5) -- 40,000
Vice Chairman of the Board and 1999 317,755(1) 3,036(5) -- --
President 1998 294,442(1) 52,918(5) -- 40,000
Sheldon L. Ginsberg .............. 2000 322,303(2) 192,436(6) -- --
Executive Vice President and 1999 287,189(2) 52,322(6) -- --
Chief Financial Officer 1998 252,595(2) 42,728(6) 600(8) 20,000
Robert Speisman .................. 2000 211,462(3) 42,922(7) -- 10,000
Senior Vice President-Sales 1999 176,384(3) 2,844(7) -- --
1998 162,935(3) 27,728(7) 600(8) 10,000
</TABLE>
---------
(1) Includes premiums paid by the Company on an individual life insurance policy
purchased by the Company on behalf of Mr. Tempelsman in the amount of
$11,325 in Fiscal 2000 and $7,755 in each of Fiscal 1999 and Fiscal 1998.
(2) Includes premiums paid by the Company on an individual life insurance policy
purchased by the Company on behalf of Mr. Ginsberg in the amount of $3,200
in each of Fiscal 2000, Fiscal
(footnotes continued on next page)
8
<PAGE>
(footnotes continued from previous page)
1999 and Fiscal 1998. Mr. Ginsberg resigned as an officer of the Company
effective as of May 31, 2000 but remains as a director.
(3) Includes premiums paid by the Company on an individual life insurance policy
purchased by the Company on behalf of Mr. Speisman in the amount of $3,540
in each of Fiscal 2000, Fiscal 1999 and Fiscal 1998.
(4) Bonuses are determined by the Compensation Committee based on the
executive's performance. See Compensation Committee Report beginning on
page 6.
(5) Includes a bonus in the amount of $3,190 in Fiscal 2000, $3,036 in Fiscal
1999 and $2,918 in Fiscal 1998 pursuant to the Retirement Benefit Plan. See
'Retirement Benefit Plan.'
(6) Includes a bonus in the amount of $2,436 in Fiscal 2000, $2,322 in Fiscal
1999 and $2,728 in Fiscal 1998 pursuant to the Retirement Benefit Plan. See
'Retirement Benefit Plan.'
(7) Includes a bonus in the amount of $2,922 in Fiscal 2000, $2,844 in Fiscal
1999 and $2,728 in Fiscal 1998 pursuant to the Retirement Benefit Plan. See
'Retirement Benefit Plan.'
(8) Represents a matching contribution made by the Company to the Company's
401(k) plan.
(9) Consists of shares granted under the 1997 Plan.
STOCK OPTIONS GRANTED IN FISCAL 2000
The following table sets forth information concerning individual grants of
stock options made during Fiscal 2000 to each executive officer listed in the
Summary Compensation Table. The Company did not grant any stock appreciation
rights during Fiscal 2000.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 2000 POTENTIAL
---------------------------------------------------------- REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OPTION TERM(5)
GRANTED EMPLOYEES OR BASE PRICE EXPIRATION -----------------------------
NAME (SHARES) IN FISCAL YEAR (PER SHARE) DATE 5% 10%
---- -------- -------------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Maurice Tempelsman... 15,000(1)(4) 11% $7.70 3/31/05 $18,510 $143,737
Leon Tempelsman...... 40,000(2)(4) 28% $7.70 3/31/05 $49,359 $142,943
Sheldon L. Ginsberg.. -- -- -- -- -- --
Robert Speisman...... 10,000(3)(4) 7% $7.00 3/31/10 $44,023 $111,562
</TABLE>
---------
(1) All of such options are intended to be incentive stock options and become
exercisable as to one-third (1/3) of the shares included in the grant on
December 15 of each of 2001, 2002 and 2003.
(2) All of such options are intended to be incentive stock options and become
exercisable as to one-third (1/3) of the shares included in the grant on
January 1 of each of 2002, 2003 and 2004.
(3) All of such options are intended to be incentive stock options and become
exercisable as to one-third (1/3) of the shares included in the grant on
December 15 of each of 2000, 2001 and 2002.
(4) 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
(footnotes continued on next page)
9
<PAGE>
(footnotes continued from previous page)
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 cutting and
polishing of diamonds, 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 Stock
Option 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,
unless the option agreement provides otherwise, the option may be exercised
or surrendered by the optionee or his or her legal representative within a
period 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 Stock Option Committee
may, in its absolute discretion, authorize the purchase of such additional
shares subject to options as are not then exercisable.
(5) Based upon the per share market price on the date of grant, which was $7.00
on March 31, 2000, and an annual cumulative appreciation at the rate stated
of such market price through the expiration date of such options. Gains, if
any, are dependent upon the actual performance of the Common Stock, as well
as the continued employment of the executive officers through the vesting
period. The potential realizable values indicated have not taken into
account amounts required to be paid as income tax under the Internal Revenue
Code of 1986, as amended, and any applicable state laws.
STOCK OPTIONS HELD AT END OF FISCAL 2000
The following table indicates the total number and the value of exercisable
and unexercisable stock options held as of May 31, 2000. by each executive
officer named in the Summary Compensation Table. None of these executive
officers exercised any options during Fiscal 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 2000
AND FISCAL 2000 YEAR-END OPTION VALUES
------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
MAY 31, 2000 (#) MAY 31, 2000 ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Maurice Tempelsman............................ 13,333 21,667 $ 0 $15,750
Leon Tempelsman............................... 135,166 66,667 $ 84,245 $42,000
Sheldon L. Ginsberg........................... 54,457 11,343 $ 64,763 $ 0
Robert Speisman............................... 66,466 13,334 $149,275 $17,500
</TABLE>
---------
(1) Based upon the per share closing price of $8.75 of the Common Stock on
May 31, 2000.
10
<PAGE>
RETIREMENT BENEFIT PLAN
Effective June 1, 1997, the Company adopted separate Retirement Benefit
Plans (each a 'Retirement Plan' and collectively, the 'Retirement Plans') for
the benefit of each of Leon Tempelsman, Sheldon L. Ginsberg and Robert Speisman
(each an 'Executive' and collectively, the 'Executives'). Pursuant to these
Retirement Plans, the Company will pay each Executive certain benefits upon his
termination of employment depending upon the reason for such termination (i.e.,
death, disability, retirement or termination with or without cause) and his age
at the time his employment terminates.
In this connection, the Company has purchased an individual whole life
insurance policy on the life of each Executive. Each Retirement Plan permits the
Company to borrow against the related life insurance policy to fund the
retirement benefits payable to the Executive, and the Company expects to effect
such borrowings. The amount an Executive will receive upon his death will be
determined by reference to the death benefit that would be payable under the
relevant life insurance policy if such policy had remained in full force and
effect and the Company had not borrowed against such policy beyond amounts
required to fund his retirement benefits. The retirement benefits to which an
Executive will be entitled under his Retirement Plan will be determined by
reference to the cash surrender value the relevant life insurance policy would
have at the time of his retirement if such policy had remained in full force and
effect and the Company had not borrowed against such policy. Each Retirement
Plan provides that if, at the time the Company becomes obligated to pay a
retirement benefit to an Executive, the insurer is unable, on account of
financial distress, to pay or lend the Company any amount with respect to the
relevant life insurance policy to which the Company may be entitled, the Company
nevertheless will be obligated to make such payment and subsequent payments to
the Executive determined by reference to the cash surrender value the relevant
life insurance policy would have had at the time such payment became due if such
policy had remained in full force and effect, the Company had not borrowed
against such policy, and the earnings rate on such policy had been the minimum
rate guaranteed by the insurer. The Company will pay each Executive an annual
bonus in an amount equal to the income tax payable by such Executive on the
value of the term insurance protection received by him in such calendar year.
During Fiscal 2000, the Company paid premiums of $43,030, $39,041 and $39,041 on
behalf of Messrs. Tempelsman, Ginsberg and Speisman, respectively, and
reimbursed such individuals in the amounts of $3,190, $2,436 and $2,922,
respectively, for the income tax costs of such Executives. See 'Transactions
with Management.'
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has no employment contract with any of its executive officers
named in the Summary Compensation Table. The incentive stock options granted by
the Company to its executive officers provide that if employment with the
Company is terminated for any reason other than 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
death or disability) unless otherwise extended by the Stock Option Committee.
Other than the Plans, 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.
Pursuant to the Retirement Plans, in the event an Executive retires or his
employment is terminated within the two-year period following a
change-in-control, the Executive
11
<PAGE>
will be entitled to receive either (a) a lump sum payment in an amount
determined by reference to the cash surrender value the relevant life insurance
policy would have at the time his employment terminates if the policy had
remained in full force and effect and the Company had not borrowed against the
policy beyond amounts required to fund the Executive's retirement benefits, or
(b) the same benefits to which he would have been entitled had he continued in
the employ of the Company and retired upon attaining age sixty-five.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Maurice
Tempelsman, Myer Feldman, and Lucien Burstein. Mr. Feldman is not an officer or
employee of the Company. Mr. Burstein is Secretary of the Company and a partner
in the law firm of Warshaw Burstein Cohen Schlesinger & Kuh, LLP, which firm
serves as counsel to the Company. Mr. Burstein does not receive any compensation
for serving as a Secretary of the Company and credits his directors' fee against
legal fees of his firm incurred by the Company for each period for which a
directors' fee is paid. During calender 1999, the Company paid his firm $729,715
in legal fees. Neither of Messrs. 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. See 'Transactions with Management.'
COMPARATIVE PERFORMANCE BY THE COMPANY
The following graph compares the market performance of the 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').
TOTAL RETURN CHART
[PERFORMANCE GRAPH]
Comparison of Five-Year Cumulative Total Returns
Performance Report for
LAZARE KAPLAN INTERNATIONAL INC.
DATE LAZARE AMEX INDUSTRY
---- ------ ---- --------
05/31/1995 100.000 100.000 100.000
06/30/1995 100.000 102.374 101.903
07/31/1995 92.917 107.724 111.999
08/31/1995 98.333 110.495 121.955
09/29/1995 95.000 112.700 122.355
10/31/1995 93.333 108.380 121.093
11/30/1995 88.333 111.577 139.858
12/29/1995 105.833 113.637 135.860
01/31/1996 103.333 113.726 146.311
02/29/1996 113.333 115.606 144.403
03/29/1996 107.500 116.625 151.158
04/30/1996 136.667 120.645 167.470
05/31/1996 193.333 124.650 193.044
06/28/1996 175.000 117.720 189.817
07/31/1996 170.000 108.539 165.233
08/30/1996 220.000 111.683 171.615
09/30/1996 230.000 114.760 192.336
10/31/1996 231.667 112.486 179.219
11/29/1996 258.333 117.177 178.130
12/31/1996 228.333 115.346 178.366
01/31/1997 236.667 118.108 182.521
02/28/1997 246.667 120.299 171.451
03/31/1997 203.333 114.445 181.997
04/30/1997 181.667 111.069 188.065
05/30/1997 216.667 122.231 219.069
06/30/1997 223.333 126.511 222.209
07/31/1997 230.000 131.897 210.023
08/29/1997 219.167 133.409 210.779
09/30/1997 205.000 144.151 200.713
10/31/1997 203.333 139.168 188.344
11/28/1997 190.833 139.069 183.507
12/31/1997 180.000 144.542 173.533
01/30/1998 145.000 142.020 187.089
02/27/1998 150.000 150.779 221.339
03/31/1998 145.833 159.709 230.326
04/30/1998 146.667 161.642 219.709
05/29/1998 155.000 154.731 226.916
06/30/1998 140.833 158.820 232.777
07/31/1998 146.667 156.555 204.765
08/31/1998 110.833 125.634 175.834
09/30/1998 103.333 135.070 149.635
10/30/1998 103.333 141.442 152.704
11/30/1998 103.333 146.540 202.815
12/31/1998 93.333 155.089 235.473
01/29/1999 101.667 161.928 262.103
02/26/1999 98.333 158.409 260.666
03/31/1999 91.667 158.782 337.972
04/30/1999 120.000 171.996 376.019
05/28/1999 126.667 174.017 371.214
06/30/1999 135.000 178.876 429.246
07/30/1999 128.333 175.883 445.894
08/31/1999 110.000 171.800 473.207
09/30/1999 107.500 174.287 527.098
10/29/1999 113.333 175.854 524.002
11/30/1999 103.333 188.223 680.671
12/31/1999 108.333 203.856 781.108
01/31/2000 117.500 197.704 650.062
02/29/2000 100.000 217.482 564.115
03/31/2000 93.333 225.102 735.350
04/28/2000 121.667 207.568 639.922
05/31/2000 116.667 204.023 539.648
DATA PERIOD: MAY 31, 1995 THROUGH MAY 31, 2000
12
<PAGE>
The Peer Group consists of the following companies: A.T. Cross Company,
Michael Anthony Jewelers, Inc., Tiffany & Co., and Town & Country Corporation
(until June 1998). 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 Common Stock does not assume the reinvestment of
dividends, since no dividends were declared on the 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
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).
On September 3, 1999, the Company made a non-interest bearing loan to
Sheldon Ginsberg in the amount of $150,300 to assist Mr. Ginsberg in meeting
certain financial obligations. The loan is due in full on June 1, 2002 and is
secured by a pledge of the shares of Common Stock held by Mr. Ginsberg. On
June 1, 2000, the Company made a further non-interest bearing loan to Mr.
Ginsberg in the amount of $43,872 to assist him in purchasing the life insurance
policy that the Company had purchased as part of his Retirement Plan. The loan
is due in two equal annual installments of $21,936 commencing on June 1, 2001.
In addition, Mr. Ginsberg owes the Company $56,000 which was advanced to him
during fiscal 2000.
See 'Compensation Committee Interlocks and Insider Participation' for
information with respect to transactions with Mr. Burstein's law firm.
2. RATIFICATION OF THE APPOINTMENT OF AUDITORS
(ITEM 2 ON THE PROXY CARD)
The Board of Directors has appointed the firm of Ernst & Young LLP,
independent auditors, to be auditors for the Company and its subsidiaries for
the fiscal year ending May 31, 2001 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
13
<PAGE>
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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS 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. However, the enclosed proxy gives discretionary
authority if any other matters are presented at the meeting or any adjournment
thereof and 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 2001 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 2000 Annual Meeting of Stockholders must submit such proposals so that
they are received by the Company no later than May 27, 2001. 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 18, 2000
14
<PAGE>
[LOGO] LAZARE KAPLAN INTERNATIONAL INC.
===============================================================================
YOUR VOTE IS IMPORTANT, WHETHER OR NOT YOU PLAN TO ATTEND NOTICE OF
THE MEETING, PLEASE DATE, MARK AND SIGN THE ENCLOSED PROXY ANNUAL MEETING
CARD AND RETURN IT IN THE ENVELOPE PROVIDED OF STOCKHOLDERS
AND
PROXY STATEMENT
--------------------------------------------------------------------------------
<PAGE>
Appendix 1
LAZARE KAPLAN INTERNATIONAL INC.
PROXY - ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 2, 2000
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned stockholder of Lazare Kaplan International Inc. hereby
constitutes and appoints Leon Tempelsman, Lucien Burstein and William H. Moryto,
and each of them, the attorneys and proxies of the undersigned, with full power
of substitution and revocation, to represent and to vote on behalf of the
undersigned all of the shares of the Company's Common Stock which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at the Cornell Club, Six East 44th Street, 3rd Floor, New York, New York on
November 2, 2000, at 10:00 a.m., and at any adjournments thereof, upon the
following proposals which are more fully described in the notice of, and proxy
statement for, the Annual Meeting.
NOTE: This proxy, properly filled in, dated and signed, should be returned
promptly in the enclosed postpaid envelope. To Lazare Kaplan International Inc.,
Midtown Station, P.O. Box 812, New York, New York 10138-0832
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 THE ELECTION OF DIRECTORS AND EACH OF THE ABOVE PROPOSALS AND IN THE
DISCRETION OF THE PROXIES ON ALL OTHER MATTERS.
<TABLE>
<S> <C> <C> <C>
(1) ELECTION OF DIRECTORS [ ] FOR [ ] WITHHOLD
Maurice Tempelsman, Leon Tempelsman, Lucien all nominees AUTHORITY
Burstein, Myer Feldman, Sheldon L. Ginsberg and listed to the left to vote for all
Robert Speisman (except as marked nominees listed
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY to the contrary) to the left
INDIVIDUAL NOMINEE, STRIKE A LINE WRITE THROUGH THAT NOMINEE'S
NAME IN THE SPACE PROVIDED ABOVE)
(2) Proposal to ratify the appointment of Ernst & Young LLP, as [ ] FOR [ ] AGAINST [ ] ABSTAIN
the Company's independent auditors for the fiscal year ending
May 31, 2001.
(3) In their discretion, upon such other matters as properly may
come before the Annual Meeting.
</TABLE>
(Continued and to be signed on reverse side.)
<PAGE>
Any of such attorneys and proxies, or their substitutes (or if only one, that
one) at said Annual Meeting, and any adjournments thereof, may exercise all of
the powers hereby given. Any proxy heretofore given is hereby revoked.
Receipt is acknowledged of the Notice of Annual Meeting of shareholders, the
Proxy Statement accompanying said Notice and the Annual Report to Stockholders
for the fiscal year ended May 31, 2000.
EACH OF THE FOREGOING MATTERS HAS BEEN PROPOSED BY THE COMPANY AND IS NOT
CONDITIONED ON THE APPROVAL OF ANY OTHER MATTER.
IN WITNESS WHEREOF, the undersigned has signed this proxy.
Dated: , 2000
-----------------------------
-------------------------------------
Stockholder(s) signature
-------------------------------------
Stockholder(s) signature
Signature(s) of stockholder should correspond
exactly with the name(s) shown hereon. If
shares are held jointly, 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.
<PAGE>
FOLD AND DETACH HERE
ANNUAL MEETING OF STOCKHOLDERS
LAZARE KAPLAN INTERNATIONAL INC.
THURSDAY, NOVEMBER 2, 2000
10:00 A.M.
THE CORNELL CLUB
SIX EAST 44TH STREET
THIRD FLOOR
NEW YORK, NY 10017
--------------------------------------------------------------------------------
AGENDA:
ELECTION OF DIRECTORS
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
OTHER BUSINESS
--------------------------------------------------------------------------------
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as....................................'SS'
