<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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Liz Claiborne, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 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 11, 1995 at 3:30 P.M., prevailing local time, for the following
purposes:
1. To elect three directors to serve until the 1998 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To vote on a stockholder proposal relating to the declassification
of the Company's Board of Directors;
3. To ratify the appointment of Arthur Andersen LLP as independent
public accountants of the Company for the 1995 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 22, 1995 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,
/S/
KENNETH P. KOPELMAN,
Secretary
New York, New York
March 31, 1995
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR
PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 3
[LOGO]
------------------------
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about March 31, 1995 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
11, 1995, and any adjournments thereof (the "Annual Meeting"), 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 Annual
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", AGAINST the adoption of
the stockholder proposal relating to the declassification of the Company's Board
of Directors, FOR the ratification of the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the 1995 fiscal year, and in
the discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the Annual Meeting. 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 22, 1995 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on March 22, 1995, there were 74,920,645 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 Annual Meeting. 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 adoption of the stockholder proposal included herein.
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. At the Annual
Meeting, three Directors will be elected to serve a three-year term (until the
third succeeding annual meeting, in 1998) and 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 a Director as the
holders of the proxies may, in their discretion, determine.
<PAGE> 4
Lee Abraham, Paul R. Charron and Sherwin Kamin, 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 until the third succeeding annual meeting, in
1998, and until their respective successors are duly elected and qualified. In
accordance with the Company's Director retirement policy under which incumbent
directors are required to retire at the annual meeting next following their 71st
birthday, Leonard Boxer, a Director of the Company since its inception, will be
retiring from the Board at the expiration of his current term at the Annual
Meeting.
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 Annual Meeting
appears below. See "Security Ownership of Management" for information regarding
such persons' holdings of Common Stock.
NOMINEES TO SERVE UNTIL 1998:
LEE ABRAHAM--Mr. Abraham, 67, was elected a Director of the Company in
January 1993. He 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; two mutual funds: Smith Barney Shearson
Income Funds and Smith Barney Shearson Equity Funds; and Signet Group plc, a
leading U.K.-based jewelry retailer.
PAUL R. CHARRON--Mr. Charron, 52, joined the Company as Vice Chairman and
Chief Operating Officer, and became a Director, in May 1994. Effective at the
Annual Meeting, he will become President and Chief Executive Officer. Prior to
joining the Company, Mr. Charron served as Executive Vice President of VF
Corporation, an apparel manufacturer, from 1993, and as a Group Vice President
of VF Corporation from 1988 to 1993.
SHERWIN KAMIN--Mr. Kamin, 68, has served as a Director of the Company since
1983. He is 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.
DIRECTORS WHOSE TERMS EXPIRE IN 1996:
JEROME A. CHAZEN--Mr. Chazen, 68, has served in various senior executive
positions and as a Director of the Company since 1977. He has served as Chairman
of the Board since 1989. Mr. Chazen also serves on the board of directors of
Taubman Centers, Inc., an owner and operator of regional shopping centers.
KAY KOPLOVITZ--Mr. Koplovitz, 49, was elected a Director of the Company in
1992. Since 1980, she 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.
LOUIS LOWENSTEIN--Mr. Lowenstein, 69, 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 1997:
ANN M. FUDGE--Mr. Fudge, 43, was elected a Director of the Company in March
1993. She has served in various executive positions with General Foods USA, and
its successor business, Kraft Foods, Inc., a subsidiary of Philip Morris
Companies, Inc., since 1986. She was elected an Executive Vice President of
General Foods USA in 1991, and became Executive Vice President of Kraft Foods,
Inc. in 1995. Since 1994, she has been President of the Maxwell House Coffee
Company; for the prior three years she was the General Manager of the Dinners
and Enhancers Division of General Foods. Ms. Fudge also serves on the board of
directors of Allied Signal, Inc.
2
<PAGE> 5
J. JAMES GORDON -- Mr. Gordon, 64, 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.
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD
The Board of Directors of the Company met fourteen times during the 1994
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 Committee on Directors.
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
1994 fiscal year.
Compensation Committee. This Committee determines the compensation of the
Company's management Directors, approves the compensation policies and
parameters applicable to other executive officers and reviews and acts on salary
increases and bonuses for these officers, makes all award decisions regarding
equity-based compensation to executive officers and administers the Company's
sec.162(m) Cash Bonus Plan. The Committee, whose present members are J. James
Gordon, Kay Koplovitz and Louis Lowenstein, held four meetings during the 1994
fiscal year.
Committee on Directors. The Board established an ad hoc committee in 1993
to assist in addressing certain strategic issues for the Company, including
long-term planning and management structure and development. During 1994, the
Board asked the ad hoc committee, which consisted of Lee Abraham, Ann M. Fudge
and J. James Gordon, to evaluate and report to the Board on the Company's
corporate governance practices. In February 1995, acting on the ad hoc
committee's recommendations, the Board formalized its corporate governance
guidelines. As part of this process, a new committee, the Committee on
Directors, was established. This Committee, whose present members are Lee
Abraham, Ann M. Fudge and J. James Gordon, succeeds to the functions of the
Board's former Nominating Committee, and is also responsible for reviewing and
advising the Board on issues of corporate governance and corporate
responsibility, as well as directorship practices. The Nominating Committee,
which consisted in 1994 of Lee Abraham, Ann M. Fudge, J. James Gordon and
Sherwin Kamin, was responsible for making recommendations with respect to the
nominations by the Board of qualified candidates to serve as directors of the
Company; it did not meet during the 1994 fiscal year. The Company's Certificate
of Incorporation provides procedures under which stockholders may nominate
persons for election as directors. Written notice of any nomination must be
delivered to the Secretary of the Company at 1441 Broadway, New York, New York
10018 not less than 14 days nor more than 50 days prior to the date of the
meeting at which directors are to be elected and must contain the name, age,
business and residence address and principal occupation or employment of, and
the number of shares of Common Stock beneficially owned by, each nominee.
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. 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 "Outside Director Plan"),
each non-management Director receives an annual award of shares of Common Stock
having a value of $10,000. Pursuant to the Outside Director Plan, awards of 588
shares were made to each of Lee Abraham, Leonard Boxer, Ann M. Fudge, J. James
Gordon, Sherwin Kamin, Kay
3
<PAGE> 6
Koplovitz and Louis Lowenstein on January 1, 1995. All shares awarded under the
Outside Director 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 1994, each ad hoc committee member received a
special stipend of $26,500 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. Pursuant to this
arrangement, Mr. Abraham received $12,000 in 1994 for such services.
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 31, 1994,
December 25, 1993 and December 26, 1992 of those persons who were 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
-------------------------------------
ANNUAL COMPENSATION(1) AWARDS
------------------------------------------- -------------------------- PAYOUTS
OTHER RESTRICTED -------
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION AWARDS SARS(#)(3) PAYOUTS COMPENSATION(4)
---------------------------- ---- --------- --------- --------------- ------------ ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen............ 1994 $ 600,000 -0- -- -- -- -- $ 464,736(5)
Chairman of the Board 1993 $ 574,100 -0- -- -- -- -- $ 629,961(5)
1992 $ 549,300 $ 550,000 -- -- -- -- $ 49,526
------------------------------------------------------------------------------------------------------------------
Paul R. Charron............. 1994 $ 369,200 $ 300,000 $ 610,111(7) $2,040,000(8) 55,000 -- $ 42,684
Vice Chairman of the Board 1993 -- -- -- -- -- -- --
and Chief Operating 1992 -- -- -- -- -- -- --
Officer(6)
------------------------------------------------------------------------------------------------------------------
Harvey L. Falk.............. 1994 $ 600,000 $ 200,000 -- -- -- -- $ 74,138(10)
Vice Chairman of the Board 1993 $ 574,100 $ 275,000 -- -- 25,000 -- $ 197,379
and President(9) 1992 $ 549,300 $ 550,000 -- -- 525,000(11) -- $ 35,256
------------------------------------------------------------------------------------------------------------------
Jack Listanowsky............ 1994 $ 363,200 $ 138,000 -- -- 18,000 -- $ 35,693
Executive Vice President 1993 $ 347,200 $ 155,000 -- -- 25,000 -- $ 71,260
Manufacturing and 1992 $ 330,600 $ 165,700 -- -- 54,475(11) -- $ 22,472
Operations(12)
------------------------------------------------------------------------------------------------------------------
Samuel M. Miller............ 1994 $ 306,700 $ 138,000 -- -- 18,000 -- $ 33,910
Senior Vice 1993 $ 295,000 $ 120,000 -- -- 10,000 -- $ 46,851
President-- Finance
and Chief Financial Officer 1992 $ 283,000 $ 101,400 -- -- 53,800(11) -- $ 21,261
------------------------------------------------------------------------------------------------------------------
</TABLE>
---------------
(1) The Company has concluded that the aggregate amount of perquisites and other
personal benefits paid to each of the Five Named Officers other than Mr.
Charron for the 1994 fiscal year did not exceed the lesser of 10% of such
officer's total annual salary and bonus for 1994, 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) Includes options granted on January 3, 1995 under the Company's
stockholder-approved 1992 Stock Incentive Plan (the "Stock Incentive Plan").
See "Option Grants Table for Fiscal 1994" below.
(4) For fiscal 1994 includes for each of the Five Named Officers other than Mr.
Charron (a) $9,000 contributed under the Company's Profit-Sharing Retirement
Plan and (b) $3,750 contributed as matching contributions under the
Company's Savings Plan. For fiscal 1994 includes for each of the Five Named
Officers (a) 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 is entitled to any cash
surrender value under the policy, providing coverage equal to two times
annual base salary, as follows: Mr. Chazen $21,827; Mr. Charron $7,607; Mr.
Falk $12,029; Mr. Listanowsky $2,687; and Mr. Miller $6,279, and (b) amounts
accrued under an unfunded Supplemental Executive Retirement Plan (the
"SERP") with respect to services rendered during fiscal 1994, as follows:
Mr. Chazen $42,659; Mr. Charron $35,077; Mr. Falk $42,658; Mr. Listanowsky
$20,256; and Mr. Miller $14,881. The fiscal 1993 amounts include a one-time
"catch-up" benefit credited under the SERP to provide participants with a
retroactive benefit for the prior years (from 1985 for Messrs. Chazen and
Falk and from 1987 for Messrs. Listanowsky and Miller) in which legal
limitations had affected their tax qualified allocations.
4
<PAGE> 7
(5) Includes an annual accrual of $375,000 under an unfunded deferred
compensation arrangement (the "UDCA") established in 1992 under which up to
two additional annual accruals of $375,000 may become payable based on
continued service. Amounts accrued under the UDCA bear interest at a market
rate and are payable only upon retirement. The fiscal 1994 amount also
includes $12,500 of premiums paid by the Company under a supplemental
$1,000,000 term life insurance policy owned by Mr. Chazen.
(6) Mr. Charron joined the Company in May 1994. His salary and bonus amounts
reflect a partial year.
(7) Includes the following provided for pursuant to Mr. Charron's employment
agreement: (a) $240,000 representing the value of 10,000 unrestricted
shares of Common Stock issued on May 9, 1994; (b) $170,000 representing the
value of 10,000 unrestricted shares of Common Stock issued on December 31,
1994; (c) $40,691 representing reimbursement of relocation expenses; and
(d) $138,000 representing reimbursement of certain tax obligations arising
as a result of the employment agreement.
(8) Represents the value (based on the closing sales price of the Common Stock
on May 9, 1994, the date of grant) of 85,000 restricted shares issued under
the Stock Incentive Plan pursuant to Mr. Charron's employment agreement.
These shares, which are subject to restrictions on transfer and subject to
risk of forfeiture until earned by continued service, vest on the last day
of each of the Company's fiscal years 1994 through 2000 at the rate of
10,000 shares per year, with 15,000 shares vesting on the last day of
fiscal 2001. Vesting may be accelerated if the market value of the Common
Stock attains certain predetermined levels and upon a change of control (as
defined below). Prior to vesting, dividends on restricted shares are held
in escrow and deemed reinvested in phantom shares of Common Stock. On
December 31, 1994, Mr. Charron held 75,000 unvested restricted shares with
a value of $1,275,000 (based on the closing sales price on such date).
(9) Mr. Falk retired from the Company effective December 31, 1994.
(10) Includes $6,700 of premiums paid by the Company under a supplemental
$1,000,000 term life insurance policy owned by Mr. Falk.
(11) Includes premium-priced options (issued at an exercise price of $58.50,
equal to 150% of the market price on the date of grant) which become
exercisable on October 21, 1998. Effective upon his retirement, Mr. Falk
surrendered the 500,000 premium-priced options previously granted to him.
(12) Mr. Listanowsky's employment with the Company terminated effective March
30, 1995.
OPTION GRANTS TABLE FOR FISCAL 1994
The following table sets forth additional information concerning stock
option grants made during or with respect to fiscal 1994 to the Five Named
Officers. For purposes of the table, grants made on January 3, 1995 are treated
as having been made in fiscal 1994; these grants are also reflected in the
Summary Compensation Table. In addition, in accordance with SEC disclosure
rules, the hypothetical gains or "option spreads" for each option grant are
shown based on compound annual rates of stock price appreciation of 5% and 10%
from the grant date to the expiration date. The assumed rates of growth are
prescribed by the SEC and are for illustration purposes only; they are not
intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance and prospects. All options were
issued under the Stock Incentive Plan. The Company has not granted any stock
appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
----------------------------------------------------------- ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES APPRECIATION FOR
UNDERLYING % OF TOTAL OPTIONS EXERCISE OPTION TERM
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED(#) IN FISCAL 1994(1) ($/SHARE) DATE 5%($)(2) 10%($)(3)
---------------------------------- --------------------- ------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen........ -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------
Paul R. Charron......... 25,000(4) 2.18% $24.000 5/09/01 $244,250 $569,250
30,000(5) 2.61% $17.125 1/03/02 $209,250 $487,350
--------------------------------------------------------------------------------------------------------------
Harvey L. Falk.......... -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------
Jack Listanowsky........ 18,000(5) 1.57% $17.125 1/03/02 $125,550 $292,410
--------------------------------------------------------------------------------------------------------------
Samuel M. Miller........ 18,000(5) 1.57% $17.125 1/03/02 $125,550 $292,410
</TABLE>
5
<PAGE> 8
---------------
(1) During fiscal 1994, the Company granted to 711 employees options to purchase
an aggregate of 1,148,975 shares. All grants were made at exercise prices
equal to the market price on the grant date.
(2) Assumes that the stock price on the relevant grant date ($24.00 on May 9,
1994 and $17.125 on January 3, 1995) has grown at 5% per annum for seven
years, to $33.77 and $24.10, respectively.
(3) Assumes that the stock price on the grant date ($24.00 on May 9, 1994 and
$17.125 on January 3, 1995) has grown at 10% per annum for seven years, to
$46.77 and $33.37, respectively.
(4) The $24.00 options, which were issued on May 9, 1994 and expire on the
seventh anniversary of the grant date, become exercisable in six equal
annual installments commencing on the first anniversary of the grant date,
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.
(5) The $17.125 options, which were issued on January 3, 1995 and expire on the
seventh anniversary of the grant date, become exercisable in three annual
installments with 25% becoming exercisable on each of the first and second
anniversaries of the grant date and 50% on the third anniversary, subject to
earlier vesting upon a change of control.
AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information concerning all exercises of stock
options during fiscal 1994 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>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/94 AT 12/31/94(1)
NUMBER OF SHARES VALUE ------------------------------ ---------------------------
NAME ACQUIRED BY EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
-------------------- -------------------- ----------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome A. Chazen.... -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------
Paul R. Charron..... -- -- -- 55,000 -- $ -0-
------------------------------------------------------------------------------------------------------------------
Harvey L. Falk...... -- -- 26,413 39,312 $ -0- $ -0-
------------------------------------------------------------------------------------------------------------------
Jack Listanowsky.... -- -- 11,850 92,938 $ -0- $ -0-
------------------------------------------------------------------------------------------------------------------
Samuel M. Miller.... -- -- 8,157 79,818 $ -0- $ -0-
</TABLE>
---------------
(1) Options would be "in-the-money" if on December 31, 1994 the market price of
the Common Stock ($17.00) exceeded the exercise price of such options.
(2) Includes grants made on January 3, 1995.
EMPLOYMENT AND CONSULTING ARRANGEMENTS
The Company entered into an employment agreement with Paul R. Charron in
May 1994 (the "Employment Agreement"). The Employment Agreement expires on April
30, 1998 and provides for a minimum annual base salary of $600,000, plus bonus.
Pursuant to the Employment Agreement, the Company issued to Mr. Charron (i)
20,000 unrestricted shares of Common Stock, (ii) 85,000 restricted shares of
Common Stock (which vest in installments over eight years, subject to
accelerated vesting in certain events), and (iii) 25,000 stock options. The
Employment Agreement also calls for Mr. Charron to be reimbursed for his
relocation expenses, as well as for certain tax obligations arising as a result
of the Employment Agreement, and to receive from the Company a two-year $250,000
loan in connection with his relocation. See "Summary Compensation Table" above
and "Certain Relationships and Related Transactions" below. The Employment
Agreement provides that if Mr. Charron's employment terminates under certain
conditions, he is entitled to receive his base salary for the balance of the
Employment Agreement, but not less than $1 million, as well as coverage under
the Company's benefit plans for a period of 12 months following termination.
6
<PAGE> 9
Effective December 31, 1994, the Company and Harvey L. Falk entered into a
two-year consulting agreement which provides for Mr. Falk to receive a
consulting fee of $600,000 during 1995 (during which he will be subject to a
non-compete covenant) and $290,000 during 1996. Mr. Falk's stock options (other
than his premium-priced options to purchase 500,000 shares granted in October
1992, which were surrendered under the arrangement) continue to vest during the
term of his consultancy, subject to certain conditions, and will vest in full
upon the expiration of his consulting agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As provided for in the Employment Agreement, in connection with his
relocation, in September 1994 the Company advanced to Mr. Charron a two-year
$250,000 loan which bears interest at the rate of 5% per annum payable
quarterly.
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 was an executive officer of the Company during part of
1994, is married to David German, an owner of AGH. During fiscal 1994, the
Company paid AGH a total of $1,327,000 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 Chairmen, (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, (iii) makes all
award decisions regarding equity-based compensation to executive officers, and
(iv) administers the Company's sec.162(m) Cash Bonus Plan.
Overall Objectives and Approach. In making its determinations, the
Committee evaluates, on both an absolute and relative basis, the Company's
financial results, 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 to fairly represent the industry group within which the Company competes for
experienced talent. In 1994, the Committee reviewed data on more than 25 such
companies, including the other companies within the Standard & Poor's Textiles
Index (which is used in the performance graph following this report). In making
its determinations, the Committee seeks to recognize achievements on an annual
basis while emphasizing the value and importance of sustained long-term
performance.
Cash Compensation. The Committee has not in recent years targeted
aggregate cash compensation levels, or any component thereof, to any specific
compensation range of any particular comparator group. The Committee has
generally granted annual salary increases to the executive officer group using
the same increase guideline that has been applied to all salaried employees. For
1993, the Company-wide guideline was 5%; for 1994, it was 4%; for 1995, it is
3.5%.
Under the incentive bonus plan for 1994, most salaried employees, including
all executive officers, were eligible to receive a bonus based upon base salary
and (i) levels of corporate operating income and return on capital compared to
specified targets; (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 1994 were not met, and as a result, no bonus
awards were earned under the corporate component of the bonus program.
Accordingly, inasmuch as no executive officer had any divisional operating
responsibilities, the 1994 bonus awards to executive officers were based solely
upon the Committee's assessment of the level and quality of individual
initiatives and achievements (taking into account, with regard to the other
executive officers, the evaluations of the Chairman and the Chief Operating
Officer). In making its 1994 bonus determinations, the Committee was fully
cognizant of the Company's diminished performance in 1994 and the resulting
impact on the Company's stock price. At the same time, the Committee took into
account the continued financial strength of the Company in a very difficult
competitive environment and the need to continue to pay competitive aggregate
cash compensation. The weighting given to these factors in the 1994 review
varied from executive to executive
7
<PAGE> 10
based, among other things, on the experience and caliber of the executive, and
the nature of his actual contributions during the year.
As discussed below, Mr. Chazen chose not to be considered for any bonus in
respect of fiscal 1994. Mr. Falk's 1994 bonus was 27% less than his 1993 bonus
and 64% less than his 1992 bonus. A substantial portion of Mr. Charron's 1994
bonus was guaranteed under his employment contract; in determining the
discretionary portion of the bonus for Mr. Charron, who joined the Company in
May 1994 and who will become Chief Executive Officer at the upcoming annual
meeting, the Committee considered especially the progress made in implementing a
more formalized strategic planning process for the Company, including the
reevaluation of the Company's retail businesses, as well as in restructuring the
Company's management organizations, especially within the Company's Sportswear
and Moderate businesses. Total bonus payments to the four named executive
officers other than Mr. Charron aggregated $468,000, a decline of 65% from the
$1.367 million paid to such executives in 1992 and a decline of 15% from the
$550,000 paid to such executives in 1993.
Stock Options. The Company has a long-standing 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
stockholder value. In January 1995, concurrent with the annual grant to
employees, the Committee granted options with a seven-year term (the "Fiscal
1994 Options") to all executive officers other than the Chairman, at an exercise
price equal to the market price on the grant date. See "Option Grants Table for
Fiscal 1994." In contrast with the 1993 and 1992 at-market grants, which carry a
six-year level vesting schedule, the Fiscal 1994 Options will become exercisable
at the rate of 25% on each of the first and second anniversaries of the grant
date, with the remaining 50% vesting on the third anniversary. The Committee
believes that this new vesting schedule, which it understands to be generally
comparable with broad market practices, will strengthen the incentive value of
the Fiscal 1994 Options.
CEO Compensation. Mr. Chazen's salary was increased at the beginning of
1994 in accordance with the same 4% Company-wide guideline that applied to all
other salaried employees. His salary level for 1995 has been raised in
accordance with the applicable 3.5% Company-wide guideline for 1995. With
respect to the cash bonus program, Mr. Chazen requested, in light of the
Company's performance during fiscal 1994, that the Committee not consider him
for any bonus in respect of the 1994 year; the Committee respected his request.
Mr. Chazen's "All Other Compensation" for 1994, which aggregates approximately
$465,000, primarily reflects, in addition to benefits paid or accrued to all
executive officers on an equivalent basis, the accrual of $375,000 under his
unfunded deferred compensation arrangement adopted in October 1992. Such amount
is payable only upon Mr. Chazen's retirement. As in past years, Mr. Chazen did
not participate in the Company's stock option program.
sec.162(m) Cash Bonus Plan. The Company's stockholders approved the
Company's sec.162(m) Cash Bonus Plan (the "sec.162(m) Plan") at last year's
annual meeting. The Compensation Committee has designated Messrs. Chazen and
Charron as the only participants in the sec.162(m) Plan for fiscal 1995, as they
are the only executive officers with a base salary in excess of $500,000 or
whose compensation is reasonably expected to exceed the $1 million deduction
ceiling under sec.162(m) of the Internal Revenue Code. In accordance with the
terms of the sec.162(m) Plan, the Committee has established for fiscal 1995
objective performance goals using earnings-based measures based upon earnings
per share and return on capital targets. While the degree of achievement of the
objective goals will determine the maximum bonus potentially payable to each
participant, the Committee has absolute discretion to reduce the actual payment
below that level to the extent that it considers appropriate. The terms of the
sec.162(m) Plan provide that the maximum bonus payable to any Plan participant
in respect of any fiscal year shall not exceed $1.5 million. The Committee and
the Board continue to 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
sec.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.
Ongoing Review of Compensation Programs. Since the latter part of 1994,
the Compensation Committee has worked with an executive compensation consulting
firm engaged by management to conduct a wide ranging review of the Company's
compensation programs. The Committee has met with representatives of the
consulting firm at various points during the course of this review; a report is
expected to be completed, and recommendations implemented, by the summer of
1995. As a result of the progress to date on this project, the Committee has
approved a cash incentive "pay for performance" bonus program for the 1995
fiscal year which
8
<PAGE> 11
will place increased emphasis on the achievement of specified target levels of
objective divisional and departmental goals, as contrasted with corporate and/or
subjective individual performance.
J. JAMES GORDON
KAY KOPLOVITZ
LOUIS LOWENSTEIN
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 Index") and the Standard & Poor's Textiles
Index ("S & P Textiles"). In accordance with SEC disclosure rules, the
measurements are indexed to a value of $100 at December 30, 1989 (the last
trading day before the beginning of the Company's 1990 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>
1989 100.00 100.00 100.00
1990 124.02 96.44 89.34
1991 177.34 123.05 133.56
1992 179.66 137.14 150.49
1993 91.25 149.81 109.07
1994 75.36 151.79 111.55
</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................................................ 5,535,023(1) 7.30%
11 Devonshire Square
London EC2M 4YR
England
Sanford C. Bernstein & Co., Inc. .......................... 5,401,698(2) 7.10%
767 Fifth Avenue
New York, NY 10153
FMR Corp.
Edward C. Johnson 3rd
Fidelity Management &
Research Company .......................................... 4,748,539(3) 6.27%
82 Devonshire Street
Boston, MA 02109
</TABLE>
---------------
(1) Based upon information as of December 31, 1994 contained in an Amendment to
Schedule 13G dated February 10, 1995, filed with the SEC by Invesco PLC, a
parent holding company ("Invesco") and certain of its subsidiaries.
According to the 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) Based on information as of December 31, 1994 contained in a Schedule 13G
dated February 7, 1995, filed with the SEC by Sanford C. Bernstein & Co.,
Inc., an investment advisor/broker dealer ("Bernstein"). According to the
Schedule 13G, Bernstein has sole dispositive power with respect to all
5,401,698 shares and sole voting power with respect to 3,009,110 shares and
the shares are held for accounts of discretionary clients who have the right
to receive dividends from, and the proceeds of the sale of, the shares. The
Schedule 13G does not indicate that any one account holds in excess of 5% of
the Company's common stock.
(3) Based on information as of December 31, 1994 contained in a Schedule 13G
dated February 13, 1995, filed with the SEC by FMR Corp. ("FMR"), Edward C.
Johnson 3rd and Fidelity Management & Research Company ("Fidelity"). Mr.
Johnson is the Chairman of FMR and owns 24.9% of the outstanding voting
common stock of FMR. Various Johnson family members and trusts for the
benefit of Johnson family members own FMR voting stock, and these family
members, through their ownership of voting common stock and the execution of
a family shareholder's voting agreement, form a controlling group with
respect to FMR. According to the Schedule 13G, the shares listed include (i)
4,113,254 shares beneficially owned by Fidelity, a wholly owned subsidiary
of FMR and a registered investment advisor, as a result of acting as
investment advisor to several registered investment companies, and (ii)
635,285 shares beneficially owned by Fidelity Management Trust Company, a
wholly owned subsidiary of FMR ("FMT"), as a result of FMT serving as
investment manager for institutional account(s). Mr. Johnson and FMR each
has sole power to dispose of the shares beneficially owned by Fidelity.
Neither FMR nor Mr. Johnson has the sole power to vote or direct the voting
of the shares beneficially owned by Fidelity, which power resides with the
funds' Boards of Trustees. Fidelity carries out the voting of shares under
written guidelines established by the funds' Boards of Trustees. Mr. Johnson
and FMR have (i) sole dispositive power over the shares beneficially owned
by FMT and (ii) sole power to vote or to direct the voting of 426,885 of
such shares, with no power to vote or to direct the voting of 208,400 of
such shares.
10
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 1, 1995, 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 3.10%
Paul R. Charron(4)........................................... 106,196 *
Harvey L. Falk(5)............................................ 66,413 *
Lee Abraham.................................................. 4,029 *
Leonard Boxer(6)............................................. 439,599 *
Ann M. Fudge................................................. 1,234 *
J. James Gordon.............................................. 2,539 *
Sherwin Kamin................................................ 3,939 *
Kay Koplovitz................................................ 1,269 *
Louis Lowenstein............................................. 4,039 *
Jack Listanowsky(7).......................................... 11,850 *
Samuel M. Miller(8).......................................... 9,657 *
All executive officers and Directors as a group (12
persons)(9)................................................ 2,931,907 3.87%
</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 75,640,645 shares outstanding as of March 1, 1995, except as
otherwise indicated.
(3) Includes 485,968 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 75,000 restricted shares issued under the Stock Incentive Plan,
which vest on the last day of each of fiscal 1995 through 2000 at the rate
of 10,000 shares per year, with 15,000 shares vesting on the last day of
fiscal 2001, subject to accelerated vesting in certain events.
(5) Includes 26,413 shares issuable upon the exercise of stock options under the
Company's stock option plans which are currently exercisable.
(6) Includes 200,000 shares as to which Mr. Boxer, as trustee, has shared voting
and investment power.
(7) Includes 11,850 shares issuable upon the exercise of stock options under the
Company's stock option plans which are currently exercisable. Does not
include 2,818 shares of Common Stock held under the Company's Savings Plan
as of December 31, 1994.
(8) Includes 8,157 shares issuable upon the exercise of stock options under the
Company's stock option plans which are currently exercisable.
(9) Includes 46,420 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).
11
<PAGE> 14
PROPOSAL 2 -- STOCKHOLDER PROPOSAL
Mr. William Steiner, 4 Radcliff Drive, Great Neck, New York 11024, owner of
150 shares of the Company's Common Stock, has informed the Company that he plans
to present the following resolution at the Annual Meeting:
"RESOLVED: That the stockholders of the Company request that the Board
of Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner that does not
affect the unexpired terms of directors previously elected."
Mr. Steiner's statement in support of the resolution is as follows:
"The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable
for its implementation of those policies. I believe that the classification
of the Board of Directors, which results in only a portion of the Board
being elected annually, is not in the best interests of the Company and its
stockholders.
"The Board of Directors of the Company is divided into three classes
serving staggered three-year terms. I believe that the Company's classified
Board of Directors maintains the incumbency of the current Board and
therefore of current management, which in turn limits management's
accountability to stockholders.
"The elimination of the Company's classified Board would require each
new director to stand for election annually and allow stockholders an
opportunity to register their views on the performance of the Board
collectively and each director individually. I believe this is one of the
best methods available to stockholders to insure that the Company will be
managed in a manner that is in the best interests of the stockholders.
"I am a founding member of the Investors Rights Association of America
and I believe that concerns expressed by companies with classified boards
that the annual election of all directors could leave companies without
experienced directors in the event that all incumbents are voted out by
stockholders, are unfounded. In my view, in the unlikely event that
stockholders vote to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and reflect the
need for change.
"I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE STOCKHOLDER PROPOSAL
The Board of Directors believes that the stockholder proposal is not in the
best interests of the Company or its stockholders and recommends that
stockholders vote AGAINST the proposal.
The Company has had a staggered board provision in place since 1981. This
is relatively common; a 1993 survey by an independent organization reported that
approximately 58% of the nearly 1,500 U.S. public companies surveyed had a
similar system. The Board believes that the Company's current election system
enhances its ability to plan for a reasonable period into the future and to
maintain the continuity of corporate strategies and policies. The Board also
believes that in the event of any unsolicited proposal to take over the Company,
the current election system, by limiting an acquiror's ability to obtain control
of the Board and remove management, would provide the Board additional time to
negotiate with the acquiring person, to consider alternative proposals and to
help assure that stockholder value is maximized.
The stockholder proposal seeks to have the Board take the necessary steps
to provide for the annual election of directors. It does not propose an
amendment to the Certificate of Incorporation to eliminate the staggered board
system; such an amendment must be adopted by the Board and approved by at least
75% of the outstanding shares entitled to vote generally in the election of
directors. Approval of the stockholder proposal by the stockholders, therefore,
would not itself establish the annual election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
12
<PAGE> 15
PROPOSAL 3 -- APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has retained Arthur Andersen LLP, the Company's
independent public accountants for the fiscal year ended December 31, 1994, as
the Company's independent public accountants for the fiscal year ending December
30, 1995.
The stockholders will be asked to ratify the appointment of Arthur Andersen
LLP as independent public accountants of the Company for the fiscal year ending
December 30, 1995. The Board of Directors recommends that the stockholders vote
FOR the ratification of such appointment.
It is expected that representatives of Arthur Andersen LLP 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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1996 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 December 2, 1995 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 Annual Meeting. If, however,
any other matters properly come before the Annual 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 EXPENSE OF SOLICITATION
The cost of the solicitation of proxies in the accompanying form will be
borne by the Company. In addition to solicitations by mail, the Company's
officers, directors and other employees may, without additional compensation,
personally solicit proxies by telephone, telegraph or similar means. The Company
has engaged Georgeson & Company, 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 mailing proxy material to their principals.
Independent inspectors of election will be appointed to inspect all stockholder
proxies and ballots and to tabulate quorum and voting information. 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 proposals
being submitted other than the stockholder proposal included herein. 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 31, 1995
13
<PAGE> 16
[LOGO] LIZ CLAIBORNE
<PAGE> 17
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 11, 1995
The undersigned hereby appoints JEROME A. CHAZEN and PAUL R. CHARRON,
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 11, 1995 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 STOCKHOLDER PROPOSAL 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> 18
---
X Please mark your 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 and 3 and AGAINST Proposal 2.
The Board of Directors recommends a vote FOR all nominees, FOR Propsoal 3
and AGAINST Proposal 2.
1. Election of Directors ___ FOR ___ WITHHELD Nominees Term Expiring
Lee Abraham 1998
Paul R. Charron 1998
Sherwin Kamin 1998
FOR, except votes withheld from the following nominee(s)
--------------------------------------------------------
2. Approval of the Stockholder Proposal relating to the declassification of the
Board of Directors.
____ FOR ___ AGAINST ___ ABSTAIN
3. Ratification of Arthur Andersen LLP 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 adjustments 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 1995 Annual Meeting.
__________________________________________
__________________________________________
Signature(s) Date
