<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
LIZ CLAIBORNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
LIZ CLAIBORNE, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
LIZ CLAIBORNE, INC.
The annual meeting of stockholders of Liz Claiborne, Inc., a Delaware
corporation (the "Company"), will be held at the offices of The Chase Manhattan
Bank, N.A., at 1211 Avenue of the Americas, 36th Floor, New York, New York, on
Thursday, May 12, 1994 at 3:30 P.M., prevailing local time, for the following
purposes:
1. To elect three directors to serve until the 1997 annual meeting of
stockholders and one director to serve until the 1996 annual meeting of
stockholders, in each case until their respective successors are duly
elected and qualified;
2. To approve the Company's sec.162(m) Cash Bonus Plan;
3. To ratify the appointment of Arthur Andersen & Co. as independent
public accountants of the Company for the 1994 fiscal year ; and
4. To transact such other business as may be properly brought before
the meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 15, 1994 are
entitled to notice of and to vote at the annual meeting and any adjournments
thereof.
Your attention is called to the Proxy Statement on the following pages. We
hope that you will attend the meeting in person. Your Board of Directors and
management look forward to greeting those stockholders able to attend. WHETHER
OR NOT YOU PLAN TO ATTEND, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
[SIGNATURE]
KENNETH P. KOPELMAN,
Secretary
New York, New York
March 25, 1994
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR
PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 3
[LOGO]
LIZ CLAIBORNE, INC.
1441 BROADWAY
NEW YORK, NEW YORK 10018
------------------------
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about March 25, 1994 in connection with the solicitation by the
Board of Directors of Liz Claiborne, Inc. (the "Company") of proxies in the
enclosed form for use at the annual meeting of stockholders to be held on May
12, 1994, and any adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Any proxy given pursuant
to such solicitation and received in time for the meeting will be voted as
specified in such proxy. If no instructions are given, proxies will be voted FOR
the election of the nominees named below under the caption "Election of
Directors--Nominees for Election", FOR the approval of the Company's sec.162(m)
Cash Bonus Plan, FOR the ratification of the appointment of Arthur Andersen &
Co. as independent public accountants of the Company for the 1994 fiscal year,
and in the discretion of the proxies named on the proxy card with respect to any
other matters properly brought before the meeting and any adjournments thereof.
Any proxy may be revoked by written notice received by the Secretary of the
Company at any time prior to the voting thereof.
Only stockholders of record at the close of business on March 15, 1994 are
entitled to notice of and to vote at the annual meeting and any adjournments
thereof. As of the close of business on March 15, 1994, there were 78,850,894
shares of the Company's Common Stock, par value $1.00 per share (the "Common
Stock"), outstanding. Each share of Common Stock entitles the record holder
thereof to one vote on all matters properly brought before the meeting and any
adjournments thereof. Directors are elected by a plurality of the eligible votes
present in person or by proxy at the annual meeting. The vote of the holders of
a majority of the issued and outstanding shares of Common Stock present in
person or by proxy and voting thereon is necessary to approve the sec.162(m)
Cash Bonus Plan.
If a stockholder participates in the Company's Dividend Reinvestment Plan,
the proxy to vote shares represents the number of shares held in custody for the
stockholder pursuant to the Plan as well as shares registered in the
stockholder's own name. Accordingly, First Chicago Trust Company of New York, as
Agent for the Dividend Reinvestment Plan, will cause shares held for the account
of stockholders participating in the Plan to be voted in the same way as the
stockholder votes shares registered in his or her own name. If the stockholder
does not give a proxy, such shares will not be voted. The Company will mail a
proxy and this Proxy Statement to all persons who, according to the records of
the Company's Transfer Agent, hold shares of Common Stock beneficially in the
Plan but do not own any other shares of Common Stock.
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The members of the Company's Board of Directors are divided into three
classes with the term of office of one class expiring each year. In order to
keep the classes as equal in number as possible in accordance with the Company's
Certificate of Incorporation, at the upcoming annual meeting, three Directors
will be elected to serve a three-year term (until the third succeeding annual
meeting, in 1997) and one Director will be elected to serve a two-year term
(until the second succeeding annual meeting, in 1996), in each case until their
respective successors are duly elected and qualified. Unless authority to vote
for the election of Directors is withheld, the enclosed proxy will be voted FOR
the election of the nominees named below. While management has no reason to
believe that the nominees will not be available as candidates, should such a
situation arise, proxies may be voted for the election of such other persons as
the holders of the proxies may, in their discretion, determine.
<PAGE> 4
Harvey L. Falk, Ann M. Fudge, J. James Gordon and Louis Lowenstein, each of
whom is presently a Director of the Company, have been nominated by the Board of
Directors for re-election to the Board, to serve in the case of Mr. Falk, Ms.
Fudge and Mr. Gordon, until the third succeeding annual meeting, in 1997, and in
the case of Mr. Lowenstein, until the second succeeding annual meeting, in 1996,
in each case until their respective successors are duly elected and qualified.
INFORMATION CONCERNING THE DIRECTORS
Background information with respect to the nominees for election and the
five Directors whose terms of office will continue after the upcoming annual
meeting appears below. See "Security Ownership of Management" for information
regarding such persons' holdings of Common Stock.
NOMINEES TO SERVE UNTIL 1997:
HARVEY L. FALK--Mr. Falk, 59, a certified public accountant, joined the
Company in 1982 as Senior Vice President--Finance (Chief Financial and
Accounting Officer), and has served as a Director of the Company since 1983. Mr.
Falk was elected Executive Vice President--Finance in 1985 and became Executive
Vice President--Operations and Corporate Planning in 1987. In 1989, Mr. Falk
became Vice Chairman of the Board and President.
ANN M. FUDGE--Ms. Fudge, 42, became a Director of the Company in March
1993. Since 1991, Ms. Fudge has served as Executive Vice President of General
Foods USA, and in January 1994, she became President of Maxwell House Coffee
Company. From 1986 to 1993, Ms. Fudge held a variety of executive positions at
General Foods USA, including General Manager of the Dinners and Enhancers
Division, and Vice President, Marketing. Ms. Fudge also serves on the board of
directors of AlliedSignal, Inc.
J. JAMES GORDON--Mr. Gordon, 63, has served as a Director of the Company
since 1977. Since 1984, Mr. Gordon has been President of Gordon Textiles
International, Ltd., a consultant and distributor/importer of apparel fabrics.
NOMINEE TO SERVE UNTIL 1996:
LOUIS LOWENSTEIN--Mr. Lowenstein, 68, was elected a Director of the Company
in 1989. For more than ten years, he has been a professor of finance and law at
Columbia University, where he is the Simon H. Rifkind Professor of Finance and
Law and the Director of the Columbia Institutional Investor Project.
DIRECTORS WHOSE TERMS EXPIRE IN 1996:
JEROME A. CHAZEN--Mr. Chazen, 67, has served in various senior executive
positions and as a Director of the Company since 1977. In 1985, he was elected
Co-Chairman of the Board of the Company, and became Vice Chairman of the Board
in 1987. In 1989, Mr. Chazen became Chairman of the Board. Mr. Chazen also
serves on the board of directors of Taubman Centers, Inc., an owner and operator
of regional shopping centers.
KAY KOPLOVITZ--Ms. Koplovitz, 48, was elected a Director of the Company in
July 1992. Since 1980, Ms. Koplovitz has served as Founder, President and Chief
Executive Officer of USA Networks, a cable television network. Ms. Koplovitz
also serves on the board of directors of General Re Corporation, a diversified
reinsurance company.
DIRECTORS WHOSE TERMS EXPIRE IN 1995:
LEE ABRAHAM--Mr. Abraham, 66, was elected a Director of the Company in
January 1993. Mr. Abraham served as Chairman and Chief Executive Officer of
Associated Merchandising Corporation, a retail merchandising and sourcing
organization, from 1977 until his retirement in January 1993. Mr. Abraham also
serves on the board of directors of Galey & Lord, Inc., a manufacturer of woven
fabrics, R. G. Barry Corp., a manufacturer of slippers, Smith Barney Shearson
Income Funds, and Smith Barney Shearson Equity Funds.
2
<PAGE> 5
LEONARD BOXER--Mr. Boxer, 72, who served in various senior executive
positions and as a Director of the Company since its incorporation in 1976,
retired from his position as Executive Vice President-- Production of the
Company in 1985. He presently is a consultant in the apparel industry.
SHERWIN KAMIN--Mr. Kamin, 67, has served as a Director of the Company since
1983. He is currently of counsel to the New York City law firm of Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, corporate counsel to the Company, where he
served as a partner for more than 25 years.
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD
The Board of Directors of the Company met nine times during the 1993 fiscal
year. During such year, each Director attended more than 75% of meetings held by
the Board of Directors and the committees on which he or she served. The
Company's Board of Directors also acts from time to time by unanimous written
consent in lieu of meetings.
The Board of Directors has three standing committees, all of which are
composed solely of non-management Directors of the Company: the Audit Committee,
the Compensation Committee and the Nominating Committee.
Audit Committee. This Committee recommends to the Board the independent
public accountants to be engaged, reviews the audit plan and results of the
auditing engagement with such accountants, reviews the independence and fees of,
and approves non-audit services provided by, such accountants, and reviews with
the accountants the overall internal accounting controls and other matters; it
also meets with representatives of the Company's internal audit staff. The
Committee, whose present members are Lee Abraham, Leonard Boxer, Ann M. Fudge,
J. James Gordon, Sherwin Kamin and Kay Koplovitz, held two meetings during the
1993 fiscal year.
Compensation Committee. This Committee determines the compensation of the
Company's management Directors, approves the compensation policies and
parameters applicable to the other executive officers and reviews and acts on
salary increases and bonuses for these officers, and makes all award decisions
regarding equity-based compensation to executive officers. The Committee, whose
present members are J. James Gordon, Kay Koplovitz and Louis Lowenstein, held
two meetings during the 1993 fiscal year.
Nominating Committee. This Committee makes recommendations with respect to
the nomination by the Board of qualified candidates to serve as Directors of the
Company. Any shareholder wishing to recommend a candidate for the Committee's
consideration should communicate in writing with the Company's Secretary, 1441
Broadway, New York, New York 10018. The Company's Certificate of Incorporation
contains timing and other requirements relating to stockholder nominations. The
Committee, whose present members are Lee Abraham, Ann M. Fudge, J. James Gordon
and Sherwin Kamin, did not hold any meetings during the 1993 fiscal year.
The Company currently pays its non-management Directors an annual fee of
$25,000, $10,000 of which is paid in shares of Common Stock as described below,
plus $750 for each Board meeting and committee meeting attended (except as
provided below). Directors are reimbursed for out-of-pocket travel expenses
incurred in connection with attendance at Board and committee meetings.
Directors who are employees of the Company receive no fees or compensation for
their services as Directors. Under the Outside Directors' 1991 Stock Ownership
Plan (the "1991 Plan"), each non-management Director receives an annual award of
shares of Common Stock having a value of $10,000. Pursuant to the 1991 Plan,
awards of 441 shares were made to each of Lee Abraham, Leonard Boxer, Ann M.
Fudge, J. James Gordon, Sherwin Kamin, Kay Koplovitz and Louis Lowenstein on
January 1, 1994. All shares awarded under the 1991 Plan are nontransferable for
a period of three years following the applicable award date, subject to
exceptions in the case of death or retirement from the Board. In July 1993, the
Board of Directors established an ad hoc committee, consisting of Lee Abraham,
Ann M. Fudge and J. James Gordon, to assist in addressing certain strategic
issues for the Company, including long-term planning, and management structure
and development. In 1993, each ad hoc committee member received $30,000, or
$15,000 per quarter, in connection with their ad hoc committee work. In February
1994, the Company engaged Mr. Abraham to serve as a consultant to the Company
with respect to a variety of special projects. This arrangement currently calls
for the payment of $45,000 for 15 days of consulting services.
3
<PAGE> 6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services in all capacities for the fiscal years ended December 25, 1993,
December 26, 1992 and December 28, 1991 of those persons who were, at December
25, 1993, the chief executive officer and the other four most highly compensated
executive officers of the Company (the "Five Named Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS
--------------------------
SECURITIES PAYOUTS
ANNUAL COMPENSATION(1) RESTRICTED UNDERLYING -------
NAME AND PRINCIPAL --------------------------- STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(2) AWARDS SARS(#) PAYOUTS COMPENSATION(3)
- -------------------------- ---- --------- --------- ------------ ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen.......... 1993 $574,100 $ -0- -- -- -- $629,961(4)
Chairman of the Board 1992 $549,300 $550,000 -- -- -- $ 49,526
1991 $523,000 $662,000 -- -- -- $ 42,463
- -------------------------------------------------------------------------------------------------------------
Harvey L. Falk............ 1993 $574,100 $275,000 -- 25,000(6) -- $197,379(5)
Vice Chairman of the Board 1992 $549,300 $550,000 -- 525,000 -- $ 35,256
and President 1991 $523,000 $662,000 -- 7,225 -- $ 32,576
- -------------------------------------------------------------------------------------------------------------
Jack Listanowsky.......... 1993 $347,200 $155,000 -- 25,000(6) -- $ 71,260(5)
Executive Vice President-- 1992 $330,600 $165,700 -- 54,475 -- $ 22,472
Manufacturing and 1991 $309,000 $188,000 -- 4,475 -- $ 18,727
Operations
- -------------------------------------------------------------------------------------------------------------
Hank Sinkel............... 1993 $360,200 $ 90,000 -- 15,000(6) -- $ 75,111(5)
Senior Vice President -- 1992 $338,000 $220,900 -- 59,600 -- $ 20,283
President, Corporate 1991 $306,000 $216,000 -- 4,300 -- $ 19,514
Sales Group-U.S.
- -------------------------------------------------------------------------------------------------------------
Samuel M. Miller.......... 1993 $295,000 $120,000 -- 10,000(6) -- $ 46,851(5)
Senior Vice President-- 1992 $283,000 $101,400 -- 53,800 -- $ 21,261
Finance and Chief 1991 $264,000 $125,000 -- 3,800 -- $ 20,331
Financial Officer
</TABLE>
- ---------------
(1) The Company has concluded that the aggregate amount of perquisites and other
personal benefits paid to each of the Five Named Officers for the 1993
fiscal year did not exceed the lesser of 10% of such officer's total annual
salary and bonus for 1993 or $50,000; such amounts are not included in the
table.
(2) A description of the Company's bonus arrangements is contained under the
caption "Board Compensation Committee Report on Executive Compensation"
below ("Compensation Committee Report").
(3) For fiscal 1993 includes for each of the Five Named Officers (a) $14,150
contributed under the Company's Profit-Sharing Retirement Plan, except that
in the case of Mr. Sinkel, the amount of the contribution was $10,882; (b)
$4,497 contributed as matching contributions under the Company's Savings
Plan; (c) the full amount of all premiums paid by the Company for universal
life insurance coverage under the Company's supplemental life insurance plan
under which each participant owns any cash surrender value under the policy,
providing coverage equal to two times annual base salary, as follows: Mr.
Chazen $20,878; Mr. Falk $11,506; Mr. Listanowsky $2,559; Mr. Sinkel $2,625;
and Mr. Miller $6,040; and (d) amounts accrued under an unfunded
Supplemental Executive Retirement Plan ("SERP") with respect to services
rendered for the 1993 fiscal year, as follows: Mr. Chazen $30,154; Mr. Falk
$30,154; Mr. Listanowsky $10,861; Mr. Sinkel $15,240; and Mr. Miller $6,430.
A description of the SERP is contained in the Compensation Committee Report.
(4) Includes (a) an accrual of $375,000 under an unfunded deferred compensation
arrangement ("UDCA") established in October 1992; (b) an accrual of $172,782
as a one-time "catch-up" benefit credited to Mr. Chazen's SERP account; and
(c) $12,500 of premiums paid by the Company under a supplemental $1,000,000
term life insurance policy owned by Mr. Chazen. Amounts accrued under the
UDCA and the SERP are payable only after retirement; the UDCA accrual bears
interest at a market rate, and the SERP "catch-up" accrual is deemed
invested in "phantom" shares of Common Stock. The UDCA calls for up to three
additional accruals of $375,000 per annum, based on continued service. See
the Compensation Committee Report.
(5) Includes a one-time "catch-up" benefit accrued under the SERP, as follows:
Mr. Falk $130,372; Mr. Listanowsky $39,193; Mr. Sinkel $41,867; and Mr.
Miller $15,734. See the Compensation Committee Report. For Mr. Falk,
includes $6,700 of premiums paid by the Company under a supplemental
$1,000,000 term life insurance policy owned by Mr. Falk.
4
<PAGE> 7
(6) Includes premium-priced options (issued at an exercise price of $58.50,
which was equal to 150% of the market price on the date of grant) which
become exercisable on October 21, 1998.
OPTION GRANTS TABLE FOR FISCAL 1993
The following table sets forth additional information concerning stock
option grants made during fiscal 1993 to the Five Named Officers. These grants
are also reflected in the Summary Compensation Table. In addition, in accordance
with the SEC disclosure rules, the hypothetical gains or "option spreads" for
each option grant are shown based on compound annual rates of stock price
appreciation of 5% and 10% from the grant date to the expiration date. The
assumed rates of growth are prescribed by the SEC and are for illustration
purposes only; they are not intended to predict future stock prices, which will
depend upon market conditions and the Company's future performance and
prospects. The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
----------------------------------------------------------- ----------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL 1993 (1) ($/SHARE) DATE 5%($) 10%($)
- ---------------------------------- --------------------- ------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen........ -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Harvey L. Falk.......... 25,000(2) 2.22% $ 21.25 12/13/00 $216,250(3) $504,000(4)
- --------------------------------------------------------------------------------------------------------------
Jack Listanowsky........ 25,000(2) 2.22% $ 21.25 12/13/00 $216,250(3) $504,000(4)
- --------------------------------------------------------------------------------------------------------------
Hank Sinkel............. 15,000(2) 1.33% $ 21.25 12/13/00 $129,750(3) $302,400(4)
- --------------------------------------------------------------------------------------------------------------
Samuel M. Miller........ 10,000(2) 0.89% $ 21.25 12/13/00 $ 86,500(3) $201,600(4)
</TABLE>
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(1) During fiscal 1993, options to purchase an aggregate of 1,125,575 shares
were granted to 751 employees at exercise prices equal to the market price
on the respective grant dates.
(2) These options, issued pursuant to the stockholder-approved 1992 Stock
Incentive Plan, become exercisable in six annual installments commencing on
the first anniversary of the grant and expire on the seventh anniversary,
subject to earlier vesting upon a "change of control". A change of control
occurs if any person acquires 20% or more of the outstanding shares of
Common Stock, the stockholders approve a merger, consolidation, liquidation
or sale of all or substantially all of the assets of the Company, a cash
offer for 50% or more of the outstanding shares of the Common Stock is
commenced, or two or more directors are elected to the Board of Directors
without approval of incumbent Board members.
(3) Assumes that the stock price on the grant date ($21.25) has grown at 5% per
annum for seven years, to $29.90. Based on such stock price assumption, the
aggregate gain to the holders of the options listed in the table above would
approximate $648,000, while the aggregate gain in total stockholder value
(assuming the number of shares outstanding on March 1, 1994 remains constant
at 78,850,487) would exceed $682,000,000; in such case, the gain to the
named optionees would represent less than 0.1% of the aggregate gain to all
stockholders.
(4) Assumes that the stock price on the grant date ($21.25) has grown at 10% per
annum for seven years, to $41.41. Based on such stock price assumption, the
aggregate gain to the holders of the options listed in the table above would
approximate $1,500,000, while the aggregate gain in total stockholder value
(assuming the number of shares outstanding on March 1, 1994 remains constant
at 78,850,487) would exceed $1,589,000,000; in such case, the gain to the
named optionees would represent less than 0.1% of the aggregate gain to all
stockholders.
5
<PAGE> 8
AGGREGATED OPTION EXERCISES IN FISCAL 1993 AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table provides information concerning all exercises of stock
options during fiscal 1993 by the Five Named Officers and the fiscal year-end
value of unexercised options on an aggregated basis. The Company has not granted
any stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/25/93 AT 12/25/93(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- -------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen...... -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Harvey L. Falk........ -- -- 21,452 551,574 $ -0- $ -0-
- ------------------------------------------------------------------------------------------------------------------
Jack Listanowsky...... -- -- 8,158 82,387 -0- -0-
- ------------------------------------------------------------------------------------------------------------------
Hank Sinkel........... -- -- 9,141 76,034 -0- -0-
- ------------------------------------------------------------------------------------------------------------------
Samuel M. Miller...... 4,963 $ 108,522 4,745 66,255 -0- -0-
</TABLE>
- ---------------
(1) Calculated by determining the difference between the market value of the
shares of Common Stock covered by the options on the date of exercise and
the exercise price of such options.
(2) Options would be "in-the-money" if on December 23, 1993 the market price of
the Common Stock ($21.00) exceeded the exercise price of such options.
CERTAIN EMPLOYMENT ARRANGEMENTS
The Company does not have any employment contracts with any of its
executive officers.
The Company has undertaken to make a payment to each executive officer
holding a premium-priced stock option in the event that such executive officer
dies or becomes disabled prior to October 21, 1998, in an amount calculated to
compensate the executive against the loss of potential opportunity for gain upon
future exercise of such option; provided, that such payment shall be made only
if the Company's stock price has increased at a compound rate of at least 7% per
year (on a cumulative basis) from the grant date to the date of death or
disability.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For over 15 years, the Company and a number of its contractors have done
business with AGH Trimsource ("AGH"), a supplier of trim and related products.
Linda Larsen German, who became an executive officer of the Company in December
1993, married David German, an owner of AGH, in 1992. During fiscal 1993, the
Company paid AGH a total of $1,682,015 for trim products. The Company believes
that all its transactions with AGH have been consummated on as favorable a basis
as those obtained in other arm's-length, competitive, at-market transactions.
The Company is likely to continue to engage in similar transactions with AGH.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee is composed of three independent,
disinterested Directors. The Committee (i) determines the salaries and bonuses
for the Chairman and Vice Chairman, (ii) approves the policies and parameters
applicable to salaries and bonuses for the other executive officers and reviews
and acts on salary increases and bonuses for those officers, and (iii) makes all
award decisions regarding equity-based compensation to executive officers. In
connection with its work in respect of fiscal 1993, the Committee again retained
its own independent executive compensation consulting firm.
6
<PAGE> 9
Overall Objectives and Approach. In making its determinations, the
Committee evaluates, on both an absolute and relative basis, the Company's
financial results (based on sales, operating and net earnings, the quality of
those earnings as measured by free cash flows, return on equity and on capital,
and balance sheet strength), market share and competitive position, the
potential for future growth, and the individual and group performance of
executive officers. In addition, the Committee reviews compensation data for a
group of publicly-traded companies within the apparel and retail industries
believed by it and its compensation consultant to fairly represent the industry
group within which the Company competes for experienced executive talent. In
1993, the Committee reviewed data on more than 25 such companies, including the
other companies within the S&P Textiles Index (which is used in the performance
graph following this report). In making its determinations, the Committee seeks
to recognize and reward achievements on an annual basis while emphasizing the
value and importance of sustained long-term performance.
Cash Compensation. The Committee does not target aggregate cash
compensation levels, or any component thereof, to any specific compensation
range of any particular comparator group. In general, base salaries have
historically been set conservatively, in light of the Company's sustained growth
and profitability. Over the past few years, the Committee has not sought to
adjust base salary levels on the basis of external comparisons, and has instead
generally determined to grant annual salary increases to the executive officer
group using the same increase guideline that has been applied to all salaried
employees. For 1992 and 1993, the Company-wide guideline was 5%; effective 1994,
the Company-wide guideline is 4%.
Under the incentive bonus plan for 1993, most salaried employees, including
all executive officers, were eligible to receive a bonus based upon base salary
and (i) growth in corporate operating income over specified levels and the
achievement of a targeted rate of return measured by the Company's operating
profits as a percentage of stockholder equity; (ii) the achievement of targeted
levels of divisional operating income (where applicable); and (iii) a
combination of other corporate, divisional (where applicable) and individual
performance considerations. The corporate performance goals set for 1993 were
not met, and as a result, no bonus awards were earned under the corporate
component of the bonus program. The divisional performance goals set for the
three divisions in which executive officers had divisional responsibilities for
1993 likewise were not met, and as a result, no bonus awards were earned by them
under the divisional component of the bonus program. Accordingly, the 1993 bonus
awards were based upon the Committee's assessment of the level and quality of
individual business initiatives and achievements (taking into account, with
regard to the other executive officers, the evaluations of the Chairman and the
Vice Chairman). In making its 1993 bonus determinations, the Committee was fully
cognizant of the Company's performance in 1993 as compared with 1992 and 1991,
and as against 1993 budgeted targets, as well as the impact such performance had
on the Company's stock price. At the same time, the Committee took into account
(i) the continued profitability and financial strength of the Company in a very
difficult competitive environment; (ii) the substantial efforts of the executive
officer group to continue to pursue new opportunities as they arose and to
continue to press forward with a variety of ongoing initiatives, especially in
newer businesses; and (iii) the need to continue to pay competitive aggregate
cash compensation in order to retain and fairly reward such executives,
particularly within the context of the current highly competitive market for
experienced senior executive talent in the apparel and retail industries. The
weighting given to these factors in the 1993 review varied from executive to
executive based, among other things, on the experience and caliber of the
executive, and the nature of his or her actual contributions during the year. In
determining the 1993 bonus for Mr. Falk, the Committee also considered the
Company's performance over a span of years, taking into account cumulative
long-term performance as well as progress with respect to certain longer-term
strategic goals. Mr. Falk's bonus for 1993 was 50% less than his 1992 bonus, and
nearly 60% lower than his 1991 bonus. With respect to the other three named
officers other than the Chairman, total bonus payments declined by 25% from
1992, notwithstanding an increased bonus to one officer.
Stock Options. The Company has a longstanding policy of granting stock
options to a substantial number of employees as a way of establishing a
longer-term pay component that emphasizes the importance of increasing
shareholder value. In December 1993, concurrent with the annual grant to
employees, the Committee granted options to all executive officers other than
the Company's Chairman, at an exercise price equal to the market price on the
grant date. See "Option Grants Table for Fiscal 1993." In light of the fact
7
<PAGE> 10
that most prior option grants still outstanding had become significantly "out of
the money", and had little, if any, current retentive or incentive value as of
late 1993, the 1993 grant levels of at-market options for executive officers
were higher than in past years. As was the case with the 1992 at-market grants,
all 1993 options become exercisable in six annual installments commencing on the
first anniversary of the grant, and expire on the seventh anniversary. The
Committee believes that this approach is conservative as compared with the
general market practice of providing for a ten-year term with a faster vesting
schedule, as well as when compared with the Company's pre-1992 practice of 25%
annual vesting.
Supplemental Executive Retirement Plan ("SERP"). Last year's Committee
Report stated that the Committee was then considering the adoption of a program
to supplement tax-qualified retirement plan benefits for key employees. In light
of the need to continue to offer competitive benefits, the Committee
recommended, and the Board adopted, the SERP in 1993. The SERP participants are
key employees whose benefits under the Company's tax-qualified profit sharing
and 401(k) plans are constrained by the operation of certain Internal Revenue
Code limitations. The SERP provides a benefit based on the contribution that
would have been credited to the participant's account under the two
tax-qualified plans absent such limitations. The SERP is not funded and benefits
are payable only after termination of employment. The "All Other Compensation"
column of the Summary Compensation Table reflects both a 1993 cash benefit
accrual as well as a one-time "catch-up" benefit credited under the SERP to
provide participants with a retroactive benefit for the prior years in which the
legal limitations had affected their tax-qualified plan allocations; this
"catch-up" benefit was credited to each participant's SERP account in the form
of hypothetical ("phantom") shares of the Company's Common Stock. In future
years, the benefits credited to SERP participants will reflect only the current
annual accrual.
CEO Compensation. Mr. Chazen's salary was increased at the beginning of
1993 in accordance with the same 5% Company-wide guideline that applied to all
other salaried employees. His salary level for 1994 has likewise been raised in
accordance with the applicable 4% Company-wide guideline. With respect to the
cash bonus program, Mr. Chazen requested, in light of the Company's performance
during fiscal 1993, that the Committee not consider him for any bonus in respect
of the 1993 year; the Committee respected his request. Mr. Chazen's "All Other
Compensation" for 1993, which aggregates approximately $630,000, primarily
reflects, in addition to benefits paid or accrued to all executive officers on
an equivalent basis, (i) the one-time "catch-up" benefit under the SERP, of
approximately $173,000 (all of which was credited to his SERP account in
"phantom" shares of Company stock); and (ii) the accrual of $375,000 under his
unfunded deferred compensation arrangement, which was adopted in October 1992
primarily to take into account the fact that, in view of his significant holding
of Company stock, Mr. Chazen does not participate in the Company's option
program.
Compliance with New Limitations on the Deductibility of Executive
Compensation. As set forth in more detail under the heading "Proposal
2 -- Approval of sec.162(m) Cash Bonus Plan", the Committee intends to structure
the compensation arrangements for executive officers in a manner that will
generally avoid the deduction limitations imposed by Section 162(m) of the
Internal Revenue Code. At the same time, the Committee and the Board strongly
believe that it is important and necessary that the Committee retain the right,
in the exercise of its business judgment, to provide compensation arrangements
from time to time that may not qualify under Section 162(m) if such arrangements
are, in the Committee's view, in the best interests of the Company and its
stockholders, and the Committee has expressly retained that right under the
proposal. The Committee believes that, under the transition rule in the proposed
Section 162(m) regulations, the Company will continue to be entitled to a
deduction (at least until 1996) upon the exercise of options outstanding under
the Company's stock option plans, including any awards to be made under its 1992
Stock Incentive Plan.
J. JAMES GORDON
KAY KOPLOVITZ
LOUIS LOWENSTEIN
8
<PAGE> 11
PERFORMANCE GRAPH
The line graph below compares the cumulative total shareholder return on
the Company's Common Stock over a 5-year period with the return on the Standard
& Poor's 500 Stock Index ("S & P 500") and the Standard & Poor's Textiles Index
("S & P Textiles"). In accordance with the SEC disclosure rules, the
measurements are indexed to a value of $100 at December 30, 1988 (the last
trading day before the beginning of the Company's 1989 fiscal year) and assume
that all dividends were reinvested.
<TABLE>
<CAPTION>
Measurement Period Liz Clai- S&P 500 In-
(Fiscal Year Covered) borne, Inc. dex S&P Textiles
<S> <C> <C> <C>
1988 100 100 100
1989 140.33 131.59 130.44
1990 174.04 126.91 116.54
1991 248.86 161.93 174.23
1992 252.13 180.47 196.30
1993 128.06 197.14 142.28
</TABLE>
The line graph below compares the cumulative total shareholder return on
the Company's Common Stock over a 10-year period with the return on the S & P
500 and the S & P Textiles. In this graph, the measurements are indexed to a
value of $100 at December 30, 1983 and assume that all dividends were
reinvested.
<TABLE>
<CAPTION>
Measurement Period Liz Clai- S&P 500 In-
(Fiscal Year Covered) borne, Inc. dex S&P Textiles
<S> <C> <C> <C>
1983 100 100 100
1984 151.34 106.22 88.28
1985 290.09 139.83 172.13
1986 514.24 165.86 246.80
1987 405.63 177.94 197.69
1988 422.55 203.24 224.39
1989 592.92 267.45 292.72
1990 735.40 257.93 261.52
1991 1051.55 329.12 390.97
1992 1065.32 366.80 440.50
1993 541.08 400.68 319.28
</TABLE>
9
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning any person
who, to the knowledge of the Company, beneficially owns more than 5% of the
outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE
OF
AMOUNT AND NATURE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
- ----------------------------------------------------------- -------------------- ------------
<S> <C> <C>
Invesco PLC................................................ 5,215,000(1) 6.6%
11 Devonshire Square
London EC2M 4YR
England
Sanford C. Bernstein & Co., Inc. .......................... 5,215,805(2) 6.6%
767 Fifth Avenue
New York, NY 10153
</TABLE>
- ---------------
(1) The number of shares reported is based upon information contained in a
Schedule 13G report dated February 10, 1994 filed with the Securities and
Exchange Commission by Invesco PLC, a parent holding company under Rule
13d-1(b)(ii)(G) ("Invesco"). Pursuant to such Schedule 13G, Invesco, a
company organized under the laws of England, has shared voting and
dispositive power with respect to the shares which are held on behalf of
persons (none of whom holds in excess of 5% of the Company's Common Stock)
who have the right to receive dividends from, or the proceeds from the sale
of, such securities.
(2) The number of shares reported is as of February 28, 1994 based upon
information furnished to the Company by Sanford C. Bernstein & Co., Inc.
("Bernstein"). Bernstein, a New York corporation, is a registered investment
adviser that holds the shares in managed accounts for its clients. According
to Bernstein, no one account holds in excess of 5% of the Company's Common
Stock, and Bernstein has shared dispositive power with respect to all of the
shares and shared voting power with respect to some of the shares.
10
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 1, 1994, the number of shares
of Common Stock (the Company's only voting security) beneficially owned by each
Director, each of the Five Named Officers listed on the Summary Compensation
Table, and by all executive officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
- ------------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Jerome A. Chazen(3).......................................... 2,347,556 2.98%
Harvey L. Falk(4)............................................ 61,452 *
Lee Abraham.................................................. 1,441 *
Leonard Boxer(5)............................................. 530,863 *
Ann M. Fudge................................................. 642 *
J. James Gordon.............................................. 1,951 *
Sherwin Kamin................................................ 3,351 *
Kay Koplovitz................................................ 681 *
Louis Lowenstein............................................. 3,451 *
Jack Listanowsky(6).......................................... 8,558 *
Samuel M. Miller(7).......................................... 6,245 *
Hank Sinkel(8)............................................... 11,113 *
All executive officers and Directors as a group, including
those named above (14 persons)(9).......................... 2,986,821 3.79%
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise indicated below, the persons listed have advised the
Company that they have sole voting power and sole investment power with
respect to the securities indicated as owned by them.
(2) Based on 78,850,487 shares outstanding, except as otherwise indicated.
(3) Includes 185,968 shares as to which Mr. Chazen, as trustee, has shared
voting and investment power, and includes 40,000 shares owned by Mr.
Chazen's wife, as to which shares he disclaims beneficial ownership and as
to which he does not have voting or investment power.
(4) Includes 21,452 shares issuable upon the exercise of stock options under the
Company's stock option plans which are currently exercisable.
(5) Includes 1,852 shares as to which Mr. Boxer, as trustee, has shared voting
and investment power.
(6) Includes 400 shares owned by Mr. Listanowsky's son, as to which shares he
disclaims beneficial ownership and as to which he does not have voting or
investment power, and 8,158 shares issuable upon the exercise of stock
options under the Company's stock option plans which are currently
exercisable. Does not include 2,635 shares of Common Stock held under the
Company's Savings Plan as of December 31, 1993.
(7) Includes 4,745 shares issuable upon the exercise of stock options under the
Company's stock option plans which are currently exercisable.
(8) Includes 9,141 shares issuable upon the exercise of stock options held by
Mr. Sinkel under the Company's stock option plans which are currently
exercisable, and 1,972 shares issuable upon the exercise of stock options
held by Mr. Sinkel's wife under the Company's stock option plans which are
currently exercisable. Mr. Sinkel's wife is a Director of Merchandising at
the Company's Liz & Co. division. Does not include 183 shares of Common
Stock held by Mr. Sinkel's wife under the Company's Savings Plan as of
December 31, 1993. Mr. Sinkel disclaims beneficial ownership of his wife's
options and shares.
(9) Includes (i) 54,010 shares issuable upon the exercise of stock options under
the Company's stock option plans which are currently exercisable (the
percentage is calculated based on the number of shares which would be
outstanding following the exercise of such options), and (ii) an aggregate
of 40,400 shares held directly by members of the immediate families of two
executive officers, as to which shares each executive officer disclaims
beneficial ownership. Does not include 4,862 shares of Common Stock held
under the Company's Savings Plan as of December 31, 1993 by Mr. Sinkel's
wife and by three executive officers.
11
<PAGE> 14
PROPOSAL 2--APPROVAL OF SEC.162(M) CASH BONUS PLAN
BACKGROUND
As a result of the enactment in 1993 of sec.162(m) of the Internal Revenue
Code, compensation paid to a publicly-traded company's chief executive officer
and any of the next four highest paid executive officers in excess of $1 million
(per executive) will generally be non-deductible, subject to certain exceptions,
including an exception for stockholder-approved "performance-based" compensation
programs.
The legislation will first affect the Company with respect to compensation
payable to these five executives for the fiscal year beginning January 1, 1995,
and thus will cover any bonuses that may be paid early in 1996 relating to the
1995 fiscal year. Stockholder approval is not required and not being sought for
the Board-approved bonus plan already in place (the "Annual Bonus Plan"), under
which bonuses may be paid for the current fiscal year (which began on December
26, 1993 and will end on December 31, 1994).
Consistent with competitive pay practices in the apparel and retail
sectors, the Company has in recent years (excluding 1993) paid aggregate cash
compensation in excess of $1 million to a limited number of its senior
executives when deemed warranted by the Board or its designated committee after
an evaluation of annual and longer-term financial and other performance goals.
The Board adopted, on March 9, 1994, subject to stockholder approval, the
sec.162(m) Cash Bonus Plan as described herein, which is a separate annual bonus
plan for certain senior executive officers (the "sec.162(m) Plan"), so as to
qualify bonuses paid under that Plan for the 1995 fiscal year and later years as
"performance-based".
In order for bonuses to be so qualified, the proposed tax regulations
issued in December 1993 (which have not yet been finalized and are subject to
change) require that the material terms of the sec.162(m) Plan be approved by
stockholders, and that the Compensation Committee of the Board (the "Committee")
establish the actual performance-based goals to be applied under the sec.162(m)
Plan for the 1995 and later fiscal years prior to the start of each such year.
As a result, the Board and the Committee believe it appropriate to seek
stockholder approval of the material sec.162(m) Plan terms at this time.
Accordingly, there will be presented at the annual meeting a proposal to
approve the Company's sec.162(m) Plan, under which the Committee will annually
set the performance goals applicable to sec.162(m) Plan participants.
MATERIAL PLAN TERMS
Eligible Executives. For each fiscal year commencing on or after January
1, 1995, the sec.162(m) Plan will cover all employees (i) having a base salary
in excess of $500,000, or whose compensation may reasonably be expected to
exceed the $1 million threshold as determined by the Committee prior to the
start of such year, and (ii) who are executive officers at the start of such
year or are hired or promoted into that status during such year. Participants in
the sec.162(m) Plan will not participate in the Annual Bonus Plan. The Committee
reserves the right to establish alternative incentive compensation arrangements
for otherwise eligible executives if it determines, in its discretion, that it
would be in the best interests of the Company and its stockholders to do so,
even if the result is a loss of deductibility for certain compensation payments.
Currently only two of the Company's executive officers would be eligible to
participate in the sec.162(m) Plan.
Business Criteria Upon Which Performance Goals will be Based. Specific
performance goals for participating executives will be selected from among the
business criteria described below. These goals will be established for each
participant by the Committee prior to the start of each fiscal year unless
applicable regulations permit a later date.
The Compensation Committee believes that it has been and continues to be in
the best interests of the Company and its stockholders to have a bonus program
that focuses both on (i) corporate and divisional performance compared with
stated objective financial goals, and (ii) an assessment of each participant's
individual leadership and achievements relative to short-term and longer-term
strategic goals and initiatives as well as business opportunities and challenges
that arise during the year.
12
<PAGE> 15
Background: Performance Criteria Under the Annual Bonus Plan for 1994. The
1994 performance goals for executive officers under the Annual Bonus Plan
continue to reflect the dual focus on objective financial goals and on each
executive's individual performance and achievements. Corporate performance will
be measured by growth in the Company's operating income above a specified
threshold level, and improvements in the Company's return on capital above a
specified threshold. Executives who are primarily responsible for a given
division will have a designated portion of their bonus opportunity tied to the
operating earnings of such division as against specified targets.
Business Criteria Under the sec.162(m) Plan for 1995 and Later Fiscal
Years. Under the sec.162(m) Plan, for which stockholder approval is being
sought, the Compensation Committee will set one or more objective performance
goals for each participant each year using one or more earnings-based measures
(which may be based on net income, operating income, cash flows, or any
combination thereof), and, if the Committee so determines, one or more
sales-based measures. The goals set by the Committee may be expressed on an
absolute and/or relative basis, and may include comparisons with the current or
past performance of the Company (including one or more of its divisions), and/or
other companies. In addition, earnings-based goals may also be expressed as
comparisons to capital, stockholders' equity and/or shares outstanding (e.g.,
return on capital, return on equity or earnings per share). While the degree of
achievement of the objective goals will determine the maximum bonus potentially
payable to each participant pursuant to the goal formula(s) (subject to the
maximum level per participant described below), the Committee will have absolute
discretion to reduce the actual payment below that level to the extent that it
considers appropriate. The Committee will not have discretion to increase bonus
amounts over the level determined by application of the performance goal
formula(s) and will be required to certify that the performance goals underlying
the bonus payments have been satisfied.
For these purposes, operating income, net income, cash flows, net sales,
capital, stockholders' equity, and shares outstanding shall be determined in a
manner consistent with generally accepted accounting principles ("GAAP") and in
a manner consistent with the methods of reporting used in the Company's Form
10-K and 10-Q reports, without regard to changes in accounting methods or
extraordinary items as determined by the Company's independent public
accountants in accordance with GAAP.
Maximum Bonus Opportunity. The bonus opportunity for each participant
under the sec.162(m) Plan each year will be related by a specific formula to his
or her base salary at the start of such year, provided, that the maximum bonus
paid under the Plan to any individual in respect of any fiscal year shall not
exceed $1.5 million. As a point of reference, the highest bonus that the Company
has ever paid to an individual executive in any year was $776,000, in 1990. The
amounts that would have been received by sec.162(m) Plan participants for the
1993 fiscal year had such Plan then been in effect are not determinable.
RECOMMENDED VOTE
The Board of Directors recommends a vote FOR the sec.162(m) Plan. The
affirmative vote of the holders of a majority of the issued and outstanding
shares of Common Stock present in person or by proxy and voting thereon is
necessary to approve the Plan. Under the proposed regulations, if the Plan is
approved, it may remain in effect without further stockholder approval until the
annual meeting of stockholders in 1999, unless materially amended prior to such
meeting.
PROPOSAL 3--APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has retained Arthur Andersen & Co., the Company's
independent public accountants for the fiscal year ended December 25, 1993, as
the Company's independent public accountants for the fiscal year ending December
31, 1994.
The stockholders will be asked to ratify the appointment of Arthur Andersen
& Co. as independent public accountants of the Company for the fiscal year
ending December 31, 1994. The Board of Directors recommends that the
stockholders vote FOR the ratification of such appointment.
It is expected that representatives of Arthur Andersen & Co. will be
present at the annual meeting, with the opportunity to make a statement if they
desire to do so, and they will be available to respond to appropriate questions.
13
<PAGE> 16
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual meeting
of stockholders must be received by the Company, addressed to the attention of
the Company's Secretary at its offices at 1441 Broadway, New York, New York
10018, no later than November 25, 1994 in order to be included in the Company's
proxy statement relating to that meeting.
OTHER INFORMATION
The Board of Directors is aware of no other matters that are to be
presented to stockholders for formal action at the meeting. If, however, any
other matters properly come before the meeting and any adjournments thereof, it
is the intention of the persons named in the enclosed form of proxy to vote such
proxies in accordance with their judgment on such matters.
MANNER AND EXPENSES OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
solicitations by mail, Company officers, directors and other employees may,
without additional compensation, personally solicit proxies by telephone,
telegraph or similar means. The Company has engaged MacKenzie Partners, Inc., a
proxy solicitation firm, to assist in soliciting proxies for a fee not to exceed
$7,500 plus reimbursement of reasonable out-of-pocket expenses. The Company
will, if requested, reimburse banks, brokers and other custodians, nominees and
certain fiduciaries for their reasonable expenses incurred in forwarding proxy
material to their principals. Inspectors of election will be appointed to
tabulate the number of shares of Common Stock represented at the meeting in
person or by proxy, to determine whether or not a quorum is present and to count
all votes cast at the meeting. Brokers holding shares for beneficial owners must
vote those shares according to the specific instructions they receive from the
owners. If instructions are not received, brokers may vote the shares in their
discretion, depending upon the type of proposals involved. "Broker non-votes"
result when brokers are precluded by the New York Stock Exchange from exercising
their discretion on certain types of proposals. Brokers have discretionary
authority to vote on the three proposals being submitted to the stockholders:
the election of directors, the approval of the Company's sec.162(m) Cash Bonus
Plan and the ratification of the independent accountants. The inspectors of
election will treat abstentions and broker non-votes as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, but
not as shares present and entitled to vote with respect to a specific proposal.
By Order of the Board of Directors,
Kenneth P. Kopelman,
Secretary
New York, New York
March 25, 1994
14
<PAGE> 17
(LOGO)
<PAGE> 18
PROXY
LIZ CLAIBORNE INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1994
The undersigned hereby appoints JEROME A. CHAZEN and HARVEY L. FALK,
and each of them, as proxies, with full power of substitution, to vote all
shares of Common Stock the undersigned is entitled to vote at the Annual
Meeting of Stockholders of LIZ CLAIBORNE, INC., to be held at the offices of
The Chase Manhattan Bank, N.A. at 1211 Avenue of the Americas, 36th Floor, New
York, New York on Thursday, May 12, 1994 at 3:30 p.m., prevailing local time,
and at any adjournments thereof, as set forth on the reverse side hereof.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF LIZ
CLAIBORNE, INC. AND WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED WITH
RESPECT TO THE ELECTION OF DIRECTORS, THE APPROVAL OF THE SECTION 162(m) CASH
BONUS PLAN AS DESCRIBED IN THE PROXY STATEMENT, THE RATIFICATION OF THE
APPOINTMENT OF THE COMPANY'S ACCOUNTANTS, AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AND ANY ADJOURNMENTS THEREOF. TO FOLLOW THE BOARD OF DIRECTORS'
RECOMMENDATIONS, SIMPLY SIGN ON THE REVERSE SIDE; NO BOX NEED BE CHECKED.
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING.
(Please date and sign on the reverse side)
<PAGE> 19
/X/ Please mark your 3693
votes as in this
example.
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 PROPOSALS 1, 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR PROPOSALS 2
AND 3.
1. Election of Directors.
FOR WITHHELD
/ / / /
FOR, except vote withheld from the following nominee(s):
________________________________________________________
NOMINEES TERM EXPIRING
Harvey L. Falk 1997
Ann M. Fudge 1997
J. James Gordon 1997
Louis Lowenstein 1996
2. Approval of section 162(m) Cash Bonus Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of Arthur Andersen & Co. as independent public accountants.
FOR AGAINST ABSTAIN
/ / / / / /
4. In accordance with their discretion, upon such other matters as may properly
come before the meeting and any adjournments thereof.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. The undersigned acknowledges receipt of the
accompanying Notice of Meeting and Proxy Statement for the 1994 Annual Meeting.
_______________________________
_______________________________
SIGNATURE(S) DATE
