<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
LIZ CLAIBORNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(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
LIZ CLAIBORNE 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 Company's offices at One
Claiborne Avenue, North Bergen, New Jersey, on Thursday, May 15, 1997 at 10:00
A.M., prevailing local time, for the following purposes:
1. To elect two directors to serve until the 2000 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To ratify the appointment of Arthur Andersen LLP as independent
public accountants of the Company for the 1997 fiscal year; and
3. 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 21, 1997 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. Directions to the meeting site
are provided with the accompanying form of proxy. 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 CARD
IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/ ROBERTA SCHUHALTER KARP
ROBERTA SCHUHALTER KARP
Vice President -
Corporate Affairs,
General Counsel
and Secretary
New York, New York
March 28, 1997
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR
PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 3
LIZ CLAIBORNE LOGO
------------------------
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about March 28, 1997 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
Thursday, May 15, 1997, 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 "Proposal 1--Election of Directors--Nominees for
Election", FOR the ratification of the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the 1997 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 the Company's
principal executive offices at 1441 Broadway, New York, New York 10018 at any
time prior to the voting thereof.
Only stockholders of record at the close of business on March 21, 1997 are
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on March 21, 1997, there were 70,844,639 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.
Abstentions may be specified on all proposals being submitted other than
election of directors. The inspectors of election will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions will not be treated as shares present and
voting on the proposals set out in this Proxy Statement, and will have no effect
on the outcome of such proposals.
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 set out in this Proxy Statement. The inspectors of
election will treat 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 voting on a specific proposal, thus having no effect on the outcome
of such proposal.
If a stockholder participates in the Company's Dividend Reinvestment Plan
(the "DRIP"), the proxy to vote shares represents the number of shares held in
custody for the stockholder pursuant to the DRIP, as well as shares registered
in the stockholder's own name. Accordingly, First Chicago Trust Company of New
York, as Agent for the DRIP, will cause shares held for the account of
stockholders participating in the DRIP 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
DRIP 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, two Directors will be elected to serve a three-year term (until the
third succeeding annual meeting, in 2000) and until their respective successors
are duly
<PAGE> 4
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. Directors are elected by a plurality of the shares of Common Stock
present in person or by proxy at the Annual Meeting and entitled to vote on the
election of directors. 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.
Ann M. Fudge and Paul E. Tierney, Jr., 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 2000, and
until their respective successors are duly elected and qualified.
Jerome A. Chazen, 70, who has served as a Director of the Company and in
various senior executive positions with the Company, including Chairman of the
Board, since 1977, 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
six 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 2000:
ANN M. FUDGE -- Ms. Fudge, 45, was elected a Director of the Company in
1993. She has served in various executive positions with General Foods USA, and
its successor business, Kraft Foods, Inc., a multinational food company and 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 AlliedSignal, Inc., an advanced systems and
equipment manufacturer.
PAUL E. TIERNEY, JR. -- Mr. Tierney, 54, was elected a Director of the
Company in 1995. Mr. Tierney is a co-founder and principal of Development
Capital, LLC, a private investment vehicle formed in 1996. From 1978 to 1996,
Mr. Tierney served as Managing Director of Gollust, Tierney & Oliver, an
investment banking partnership. He is Chairman of the Board of Directors of
TechnoServe, Inc., a not-for profit corporation, and also serves as a director
of UAL Corporation, an air transportation company, C & B Publishing (UK), The
Argentine Investment Fund, St. John's College, and D.C. United, a major league
soccer team, and as a partner of International Venture Partners of Brazil.
DIRECTORS WHOSE TERMS EXPIRE IN 1998:
LEE ABRAHAM -- Mr. Abraham, 69, was elected a Director of the Company in
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 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.
EILEEN H. BEDELL -- Ms. Bedell, 45, was elected a Director of the Company
in March 1996. Since 1994, she has served as Vice President at Booz, Allen &
Hamilton, Inc., a worldwide management consulting firm. From 1988 to 1994, she
served as a Managing Director of Bankers Trust Company.
KENNETH P. KOPELMAN -- Mr. Kopelman, 45, was elected a Director of the
Company in October 1996. Mr. Kopelman has been a partner in the New York City
law firm of Kramer, Levin, Naftalis & Frankel, corporate counsel to the Company,
for more than 10 years. He had served as the Company's Corporate Secretary since
1989.
DIRECTORS WHOSE TERMS EXPIRE IN 1999:
PAUL R. CHARRON -- Mr. Charron, 54, joined the Company as Vice Chairman and
Chief Operating Officer, and became a Director, in 1994. In 1995, Mr. Charron
became President, a position he held until
2
<PAGE> 5
October 1996, and Chief Executive Officer of the Company. In May 1996, Mr.
Charron became Chairman of the Board of the Company. 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.
J. JAMES GORDON -- Mr. Gordon, 66, 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.
Mr. Gordon is also a director of Cornerstone Bank, a regional commercial bank.
KAY KOPLOVITZ -- Ms. Koplovitz, 51, was elected a Director of the Company
in 1992. Since 1980, she has served as Founder, Chairman and Chief Executive
Officer of USA Networks, an international cable television programming company.
Ms. Koplovitz also serves on the board of directors of General Re Corporation, a
diversified reinsurance company, and Nabisco Holdings Corp., a food products
company.
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD
The Board of Directors met twelve times during the 1996 fiscal year. During
such year, each Director attended more than 75% of the meetings held by the
Board of Directors and the committees on which he or she served. The Company's
Board also acts from time to time by unanimous written consent in lieu of
meetings.
The Board of Directors has four standing committees, all of which are
composed solely of non-management Directors of the Company: the Audit Committee,
the Compensation Committee, the Committee on Directors and the Finance
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, Eileen H. Bedell, Ann M.
Fudge, J. James Gordon, Kenneth P. Kopelman and Kay Koplovitz (chair), held two
meetings during the 1996 fiscal year.
Compensation Committee. This Committee determines the salaries and bonuses
for the Chief Executive Officer and President, approves the general policies
applicable to salaries and bonuses for the other executive officers, makes all
award decisions regarding equity-based compensation plans, and makes
recommendations to the Board and senior management regarding Company
compensation programs. The Committee, whose present members are J. James Gordon
(chair), Kay Koplovitz and Paul E. Tierney, Jr., held five meetings during the
1996 fiscal year.
Committee on Directors. This Committee is responsible for making
recommendations with respect to the nominations by the Board of qualified
candidates to serve as Directors of the Company and reviewing and advising the
Board on issues of corporate governance and corporate responsibility, as well as
directorship practices. The Committee, whose present members are Lee Abraham
(chair), Ann M. Fudge and J. James Gordon, held four meetings during the 1996
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.
Finance Committee. This Committee advises the Board on a variety of
corporate finance issues, including the Company's policies regarding dividends,
issuances and purchases of securities, capital expenditures and proposed
acquisition and divestiture matters. The Committee, whose present members are
Lee Abraham and Paul E. Tierney, Jr. (chair), held seven meetings during the
1996 fiscal year.
The Company currently pays its non-management Directors an annual retainer
of $30,000, $15,000 of which is paid in shares of the Company's Common Stock as
described below, plus $1,000 for each Board meeting and committee meeting
attended. In addition, each committee chair receives an additional annual
3
<PAGE> 6
retainer of $3,000. 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.
The Company has, since 1991, paid a portion of each Director's annual
retainer in shares of Common Stock pursuant to the stockholder-approved Liz
Claiborne, Inc. Outside Directors' 1991 Stock Ownership Plan. The Company's
stockholders approved a variety of amendments to such Plan at last year's annual
meeting of stockholders, including amendments providing for annual grants of
options to Directors and the ability to defer Director fees (such Plan, as so
amended, the "Outside Director Plan").
Under the Outside Director Plan, each non-management Director having served
as such for at least six months receives an annual award of shares of Common
Stock having a value of $15,000 on the first business day of each fiscal year;
newly elected non-management Directors receive such an award upon their election
to the Board. The following awards of shares of Common Stock were made under the
Outside Director Plan: 378 shares on December 30, 1996 to each of Mss. Bedell,
Fudge and Koplovitz and Messrs. Abraham, Chazen, Gordon and Tierney, and 352
shares on October 30, 1996 (his date of election) to Mr. Kopelman (all such
Directors, collectively, the "Outside Directors"). 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.
The Outside Director Plan also provides for each non-management Director to
receive a grant of options to purchase 1,000 shares of Common Stock on the first
business day of each fiscal year of the Company. Non-management Directors as of
May 16, 1996 also received such an option grant on such date, upon stockholder
approval of the amendments to the Outside Director Plan. All options granted
under such Plan carry terms substantially equivalent to options granted to
Company employees under the stockholder-approved Liz Claiborne, Inc. 1992 Stock
Incentive Plan, as amended (the "1992 Plan"): an exercise price equal to the
market price on the grant date, a term of ten years, and a vesting schedule of
25% on each of the first and second anniversaries of the grant date, with the
remaining 50% vesting on the third anniversary, subject to earlier vesting on a
change of control (as defined in the Outside Director Plan) or upon death or
retirement from the Board after at least five years of service. During 1996, the
following awards of options were made under the Outside Director Plan: options
covering 1,000 shares on December 30 (at an exercise price of $39.625) to each
of the Outside Directors; options covering 1,000 shares on May 16 (at an
exercise price of $36.75) to each of the Outside Directors other than Mr.
Kopelman and to Sherwin Kamin, who retired from the Board in October 1996; and
options covering 1,000 shares on October 30 (at an exercise price of $42.875) to
Mr. Kopelman.
The Outside Director Plan further enables each non-management Director to
elect prior to any calendar year to defer cash and/or Common Stock fees
otherwise payable in that and succeeding calendar years. Deferred cash fees are
deemed invested in phantom shares of Common Stock or credited with imputed
interest at the prime rate plus one percent, whichever the Director specifies at
the time of election. Deferred Common Stock fees are deemed invested in phantom
shares of Common Stock, with dividends deemed reinvested in additional phantom
shares.
Effective May 16, 1996, upon his retirement as Chairman of the Board, the
Company entered into a two-year consulting agreement with Mr. Chazen, providing
for an annual fee of $400,000. During fiscal 1996, Mr. Chazen received $337,046
from the Company as compensation for services rendered as Chairman of the Board
through May 16, 1996, and $246,154 as payment under his consulting agreement. In
addition, the Company distributed to Mr. Chazen upon his retirement (i)
$1,692,541, which had previously been credited to his account under the terms of
an unfunded deferred compensation arrangement established for him in 1992, and
(ii) $617,183, which had previously been credited to his account under the
Company's Supplemental Executive Retirement Plan.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation for
services in all capacities for the 1996, 1995 and 1994 fiscal years of the chief
executive officer and the other four most highly compensated executive officers
of the Company as of December 28, 1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION(1) ------------------------
----------------------------------- SECURITIES PAYOUTS
OTHER RESTRICTED UNDERLYING -------
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(2) COMPENSATION AWARDS SARS(#)(3) PAYOUTS COMPENSATION(4)
- ------------------------ ---- --------- ------------------------- ------------ ----------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul R. Charron......... 1996 $ 894,200 $1,208,000 $ 67,525(6) -- 50,000 -- $ 484,472
Chairman of the Board 1995 $ 681,700 $1,319,000 $ 244,835 $1,782,500(7) 30,000 -- $ 65,564
and
Chief Executive Officer 1994(5) $ 369,200 $ 300,000 $ 610,111 $2,040,000(8) 55,000 -- $ 42,684
- ------------------------------------------------------------------------------------------------------------------
Denise V. Seegal........ 1996(5) $ 96,800 $ 680,000 $ 218,750(9) $ 437,500(10) 35,000 -- $ 8,225
President 1995 -- -- -- -- -- -- --
1994 -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Samuel M. Miller........ 1996 $ 343,800 $ 220,000 -- -- 8,000 -- $ 35,977
Senior Vice President-- 1995 $ 318,300 $ 210,000 -- $ 465,000(7) 7,500 -- $ 33,586
Finance and Chief 1994 $ 306,700 $ 130,000 -- -- 18,000 -- $ 33,910
Financial Officer
- ------------------------------------------------------------------------------------------------------------------
Robert J. Zane.......... 1996 $ 288,900 $ 175,000 -- $ 330,000(7) 5,625 -- $ 21,786
Senior Vice President -- 1995(5) $ 82,200 $ 50,000 -- -- 9,375 -- --
Manufacturing and 1994 -- -- -- -- -- -- --
Sourcing
- ------------------------------------------------------------------------------------------------------------------
John R. Thompson........ 1996 $ 279,200 $ 175,000 -- -- 8,000 -- $ 25,694
Senior Vice President-- 1995(5) $ 220,000 $ 175,000 $ 127,112 $ 445,625(7) 17,000 -- $ 20,258
Service, Systems and 1994 -- -- -- -- -- -- --
Reengineering and Chief
Information Officer
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The Company has concluded that the aggregate amount of perquisites and
other personal benefits paid to each of the Named Executive Officers other
than Mr. Charron and Ms. Seegal for fiscal 1996 did not exceed the lesser
of 10% of each such officer's total annual salary and bonus for such year,
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 (the "Compensation Committee Report").
(3) For fiscal 1996, 1995 and 1994 includes options granted on January 9, 1997,
January 11, 1996 and January 3, 1995, respectively, under the 1992 Plan.
For Mr. Charron, fiscal 1996 includes options covering 10,000 shares
subject to a special vesting condition. For Ms. Seegal also includes
options granted on October 24, 1996 pursuant to her employment agreement.
See "Option Grants Table for Fiscal 1996" below.
(4) For fiscal 1996 includes for each of the Named Executive Officers other
than Ms. Seegal and Mr. Zane (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 1996 includes
for each of the Named Executive Officers other than Ms. Seegal 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.
Charron - $9,197; Mr. Miller - $6,757; Mr. Zane - $5,962; and Mr.
Thompson - $1,959. For fiscal 1996 includes for Mr. Zane $4,016 contributed
under the Company's Profit-Sharing Plan. For fiscal 1996 includes for each
of the Named Executive Officers amounts accrued under an unfunded
Supplemental Executive Retirement Plan with respect to services rendered
during fiscal 1996, as follows: Mr. Charron - $63,259; Ms. Seegal - $8,225;
Mr. Miller - $16,470; Mr. Zane - $11,808; and Mr. Thompson - $10,985. For
fiscal 1996 includes for Mr. Charron (a) $347,850 accrued as of December
31, 1995 under an unfunded deferred compensation plan established in 1996
and (b) $51,416 representing above-market earnings on such accrued amount,
5
<PAGE> 8
as calculated pursuant to the terms of such plan. See "Employment
Arrangements -- Employment Agreement with Paul R. Charron" below.
(5) Reflects a partial year, including any guaranteed bonus payments.
(6) Includes (a) $25,635 representing reimbursement of certain transportation
expenses; and (b) $21,972 representing reimbursement of certain tax
obligations as provided for pursuant to Mr. Charron's employment agreement.
(7) Represents the value (based on the closing price of the Common Stock on (i)
June 20, 1995, the date of grant for Messrs. Charron, Miller and Thompson,
and (ii) December 29, 1995, the last trading day preceding the date of
grant, January 1, 1996, for Mr. Zane) of the following shares of restricted
stock issued under the 1992 Plan pursuant to the Company's Career Share
Program ("Career Shares"): Mr. Charron - 92,000 Career Shares; Mr.
Miller - 24,000 Career Shares; Mr. Zane - 12,000 Career Shares; and Mr.
Thompson - 23,000 Career Shares. See the Compensation Committee Report
below. Career Shares are subject to restrictions on transfer and risk of
forfeiture until earned by continued service, and vest on December 20,
2004; vesting may be accelerated if and to the extent the cumulative total
return to the Company's stockholders exceeds the total stockholder returns
achieved by a group of peer companies, such comparison to be made for each
of three consecutive three-year performance periods, with the first
performance period commencing January 1, 1995. Prior to vesting, dividends
on Career Shares are held in escrow and deemed reinvested in phantom shares
of Common Stock. On December 28, 1996, all such Career Shares remained
restricted, with a value (based on the closing price of the Common Stock on
December 27, 1996) as follows: Mr. Charron - $3,645,500; Mr. Miller -
$951,000; Mr. Zane - $475,500; and Mr. Thompson - $911,375.
(8) Represents the value (based on the closing price of the Common Stock on May
9, 1994, the date of grant) of 85,000 restricted shares issued under the
1992 Plan pursuant to Mr. Charron's employment agreement. Pursuant to such
employment agreement, (a) 10,000 restricted shares vested on the last day
of each of the Company's 1994 and 1995 fiscal years, (b) one-third of the
balance of the restricted shares (or 21,665 shares) vested on October 31,
1996, in accordance with the accelerated vesting provisions of the
agreement, as the average closing price per share of the Company's Common
Stock equalled or exceeded the predetermined level of $36 for such day and
the preceding consecutive 74 trading days, and (c) 6,667 restricted shares
vested on the last day of the Company's 1996 fiscal year. The remaining
restricted shares are subject to restrictions on transfer and risk of
forfeiture until earned by continued service, and vest on the last day of
each of the Company's fiscal years 1997 through 2000 at the rate of 6,667
shares per year, with 10,000 shares vesting on the last day of fiscal 2001;
vesting may be accelerated if the market value of the Common Stock attains
a certain predetermined level and upon a change of control (as defined in
Mr. Charron's employment agreement). Prior to vesting, dividends on such
restricted shares are held in escrow and deemed reinvested in phantom
shares of Common Stock. On December 28, 1996, 36,668 of such shares
remained restricted, with a value (based on the closing price of the Common
Stock on December 27, 1996) of $1,452,970.
(9) Represents the value (based on the closing price of the Common Stock on
October 24, 1996, the date of grant) of 5,000 unrestricted shares of Common
Stock issued under the 1992 Plan pursuant to Ms. Seegal's employment
agreement.
(10) Represents the value (based on the closing price of the Common Stock on
October 24, 1996, the date of grant) of 10,000 restricted shares issued
under the 1992 Plan pursuant to Ms. Seegal's employment agreement. These
shares are subject to restrictions on transfer and risk of forfeiture until
earned by continued service, and vest on the last day of each of the
Company's 1997 and 1998 fiscal years at the rate of 5,000 shares per year.
Prior to vesting, dividends on such restricted shares are held in escrow
and deemed reinvested in phantom shares of Common Stock. On December 28,
1996, all of such 10,000 shares remained restricted, with a value (based on
the closing price of the Common Stock on December 27, 1996) of $396,250.
OPTION GRANTS TABLE FOR FISCAL 1996
The following table sets forth additional information concerning stock
option grants made during fiscal 1996 to the Named Executive Officers. For
purposes of the table, grants made on January 9, 1997 are treated as having been
made during fiscal 1996 and grants made on January 11, 1996 are treated as
having been made
6
<PAGE> 9
during fiscal 1995; these grants are also so reflected in the Summary
Compensation Table. In addition, in accordance with SEC disclosure rules, the
hypothetical gains, or "option spreads", for each option grant are shown based
on compound annual rates of stock price appreciation of 5% and 10% from the
grant date to the expiration date. The assumed rates of growth are prescribed by
the SEC and are for illustration purposes only; they are not intended to predict
future stock prices, which will depend upon market conditions and the Company's
future performance and prospects. All options were issued under the 1992 Plan.
The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS(1) AT
-------------------------------------------------------- ASSUMED ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES APPRECIATION FOR OPTION
UNDERLYING % OF TOTAL OPTIONS EXERCISE TERM(2)
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION --------------------------
NAME GRANTED(#) IN FISCAL 1996(3) ($/SHARE) DATE 5%($) 10%($)
- -------------------- ---------- -------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Charron..... 50,000(4) 6.11% $ 38.75 1/9/07 $1,218,500 $3,088,000
- ------------------------------------------------------------------------------------------------------------
Denise V. Seegal.... 20,000 2.44% $ 43.75 10/24/06 $ 550,200 $1,394,600
15,000 1.83% $ 38.75 1/9/07 $ 365,550 $ 926,400
- ------------------------------------------------------------------------------------------------------------
Samuel M. Miller.... 8,000 0.98% $ 38.75 1/9/07 $ 194,960 $ 494,080
- ------------------------------------------------------------------------------------------------------------
John R. Thompson.... 8,000 0.98% $ 38.75 1/9/07 $ 194,960 $ 494,080
- ------------------------------------------------------------------------------------------------------------
Robert J. Zane...... 5,625 0.69% $ 38.75 1/9/07 $ 137,801 $ 347,400
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Except as set forth in footnote (4) below, options 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. 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.
(2) Assumes that the stock price on the relevant grant date ($38.75 on January
9, 1997 and $43.75 on October 24, 1996) has grown, as indicated, at (a) 5%
per annum over the term of the option to $63.12 and $71.26, respectively, or
(b) at 10% per annum over the term of the option to $100.51 and $113.48,
respectively.
(3) During fiscal 1996, the Company granted to 682 employees options to purchase
an aggregate of 818,385 shares. All grants were made at exercise prices
equal to the market price on the grant date.
(4) Includes options covering 10,000 shares which vest only if Mr. Charron is
employed full-time as Chairman of the Board ("Chairman") and Chief Executive
Officer of the Company on December 28, 2002 (unless his employment is
terminated before such time by reason of death, disability or a change of
control).
7
<PAGE> 10
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION VALUE TABLE
The following table provides information concerning all exercises of stock
options during fiscal 1996 by the Named Executive 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 12/28/96 AT 12/28/96(1)
NUMBER OF SHARES VALUE --------------------------- ---------------------------
NAME ACQUIRED BY EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
- ------------------------- -------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Charron.......... -- -- 15,830 119,170 $ 298,906 $ 1,192,969
- ------------------------------------------------------------------------------------------------------------------
Denise V. Seegal......... -- -- -0- 35,000 $ -0- $ 13,125
- ------------------------------------------------------------------------------------------------------------------
Samuel M. Miller......... 4,546 $17,466 10,532 85,268 $ 159,357 $ 498,268
- ------------------------------------------------------------------------------------------------------------------
John R. Thompson......... -- -- 2,500 22,500 $ 57,813 $ 269,688
- ------------------------------------------------------------------------------------------------------------------
Robert J. Zane........... -- -- 1,875 13,125 $ 30,703 $ 120,938
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Options are "in-the-money" as of December 28, 1996 to the extent that the
market price of the Common Stock (based on the closing price of the Common
Stock on December 27, 1996) exceeded the exercise price of such options.
(2) Includes grants made on January 9, 1997.
EMPLOYMENT ARRANGEMENTS
EMPLOYMENT AGREEMENT WITH PAUL R. CHARRON. The Company has an employment
agreement with Paul R. Charron, which expires on April 30, 1998, with automatic
one year renewal terms. Such agreement was amended with effect from Mr.
Charron's election to the additional position of Chairman in May 1996 to provide
for a minimum annual base salary of $1,000,000, an annual target bonus
commencing in the 1997 fiscal year equal to 75% of base salary, and the annual
grant of options covering 50,000 shares of Common Stock, 10,000 of which are
subject to a special vesting condition. See "Option Grants Table for Fiscal
1996." The agreement also provides that if his employment is terminated either
by the Company other than for cause or by him for certain specified reasons, Mr.
Charron shall receive a severance payment of $1,750,000; provided that in the
event he terminates his employment after a change of control (as defined in his
agreement), such severance payment shall be $2,250,000.
As part of the amendments to his employment agreement, the Company
established an arrangement to provide Mr. Charron with certain deferred
compensation (the "Accumulation Plan"). Under the Accumulation Plan, the Company
has established two unfunded bookkeeping accounts: a Retirement Income Account
and a Deferred Salary Account. Upon cessation for any reason of Mr. Charron's
full-time employment as Chairman and Chief Executive Officer, he (or his
beneficiary) will be entitled to receive the amount credited to the Deferred
Salary Account (which is fully vested at all times), plus the amount credited to
the Retirement Income Account to the extent vested, plus, in each case, imputed
earnings thereon.
As of December 31, 1995 (the first day of the Company's 1996 fiscal year)
and as of the first day of each of the subsequent five fiscal years, the
Retirement Income Account is credited with an amount equal to 15% of the sum of
Mr. Charron's base salary for such fiscal year and his cash bonus (if any) for
the immediately preceding fiscal year. The Retirement Income Account becomes
fully vested on December 28, 2002, provided Mr. Charron is then employed
full-time as Chairman and Chief Executive Officer of the Company; vesting is
accelerated upon death, disability or termination in connection with a change of
control (as defined in the Accumulation Plan). As of December 29, 1996 (the
first day of the Company's 1997 fiscal year) and as of the first day of each
subsequent fiscal year, the Deferred Salary Account is credited with an amount
equal to the portion of Mr. Charron's base salary for such fiscal year that
exceeds $1 million (and is therefore deferred pursuant to his employment
agreement). As of December 28, 1996 (the last day of the Company's 1996 fiscal
year) and as of the last day of each subsequent fiscal year, each of the
Retirement Income and Deferred Salary Accounts is credited with an amount equal
to the balance standing credited thereto on the first day of such fiscal year
multiplied by an imputed earnings rate. For the 1996-2001 fiscal years, the
imputed earnings
8
<PAGE> 11
rate is the greater of (i) the Company's after-tax rate of return on average
capital (as defined in the Accumulation Plan) for such fiscal year and (ii) the
Federal mid-term rate at the first day of such year. After the 2001 fiscal year,
or earlier if Mr. Charron's employment terminates prior to December 30, 2001,
the imputed earnings will be the Federal mid-term rate at the first day of the
fiscal year.
In September 1996, Mr. Charron repaid a $250,000 loan previously advanced
by the Company under the terms of his employment agreement to assist him in
purchasing his principal residence.
EMPLOYMENT AGREEMENT WITH DENISE V. SEEGAL. The Company entered into an
employment agreement with Denise V. Seegal, the Company's President, in
September 1996. Such agreement expires on September 30, 1999 and provides for a
minimum base salary of $680,000, plus bonus. As provided in such employment
agreement, the Company paid Ms. Seegal a bonus of $680,000 for fiscal 1996, and
issued to Ms. Seegal (i) 5,000 unrestricted shares of Common Stock, (ii) 10,000
restricted shares of Common Stock (which vest on the last day of the Company's
1997 and 1998 fiscal years at the rate of 5,000 shares per year) and (iii)
options covering 20,000 shares of Common Stock. The agreement also provides that
if her employment is terminated either by the Company other than for cause or by
her for certain specified reasons, Ms. Seegal will be entitled to continue to
receive her base salary under such agreement through August 30, 1999, but not
less than $1 million.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee is composed of three independent,
disinterested Directors who meet the test for independence under the Company's
stockholder-approved sec.162(m) Cash Bonus Plan (the "sec.162(m) Plan"). The
Committee (i) determines the salaries for the Chairman/Chief Executive Officer
("CEO") and the President, (ii) administers the sec.162(m) Plan, including the
determination of bonuses for participants thereunder, (iii) approves the general
policies applicable to salaries and bonuses for the other executive officers and
reviews and acts on bonuses for those officers, (iv) makes all award decisions
regarding equity-based compensation to executive officers and other employees
under the Company's stockholder-approved 1992 Stock Incentive Plan, as amended
(the "1992 Plan"), and (v) makes recommendations to the full Board and senior
management with respect to the adoption and administration of Company
compensation programs.
OVERVIEW. During 1995, the Committee, assisted by an executive
compensation consulting firm, performed a wide ranging review of Company
compensation programs which culminated in the Board's adoption of a new
executive compensation program (the "Program") effective for fiscal years
commencing with 1995. During 1996, the Committee sought to continue the "pay for
performance" approach inherent in the Program, while providing Company
executives with a highly competitive total compensation opportunity through a
balancing of rewards based on short-term performance (measured principally by
annual business unit results) with rewards based on long-term performance
(measured principally by stock price appreciation over time).
The Program components are base salary, an annual incentive bonus, and
long-term incentives encompassing stock option grants and restricted stock
grants to certain senior executives. Base pay is generally set within a range
comparable to the competitive median, while the annual incentive bonus (if
targets are achieved) and long-term incentive components provide
performance-based opportunities which may result in rewards significantly higher
than the competitive median.
The annual incentive cash bonus plan applies to all salaried employees
(except participants in the sec.162(m) Plan) and emphasizes the annual
achievement of objectively measurable goals. Quantitatively measurable
performance targets which attempt to best measure the implementation of each
business unit's critical business strategies are set annually. For executives in
corporate departments which serve a number of operating divisions, a majority of
the annual bonus amount is determined on the performance of the operating
divisions served and overall corporate performance. The long-term performance
component of the Program rewards executives for the collective success of all
business units, as measured by stock price appreciation, using both an absolute
standard (i.e., increase in the Company's share price, rewarded through stock
options) and, through the Career Shares, a relative-to-industry peer group
standard.
9
<PAGE> 12
1996 COMPENSATION
CASH COMPENSATION. Salary. Salary adjustments are typically made
annually, under the same increase guideline that applies to all salaried
employees. The guideline for 1996 was 3.5%; this level has been adopted for 1997
as well.
Incentive Cash Bonuses. sec.162(m) Plan. Mr. Charron was the sole
participant in the sec.162(m) Plan in 1996. As required pursuant to the Internal
Revenue Code (the "Code") and the sec.162(m) Plan, the Committee establishes, in
advance, quantitatively measurable objective performance goals for each
participant and the maximum bonus potentially payable under the Plan to such
participant. For fiscal 1996, the Committee established under the Plan two
objective earnings-based goals, relating to improvements in earnings per share
and in return on capital employed in operations. The Committee also set in
advance the maximum bonus payable based on the Company's levels of achievement
as against these goals. In addition, the Committee established a number of
individual goals; to the extent that the Committee determined that such
individual goals were not fully achieved, the maximum bonus otherwise determined
under the objective Plan formula could be reduced in the discretion of the
Committee. (The Committee further retains absolute discretion to reduce the
actual bonuses paid below such maximum levels 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. Although the Committee intends to continue to structure the
compensation arrangements for executive officers in a manner that will generally
avoid the deduction limitation imposed by sec.162(m) of the Code, 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 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. The Committee has designated Mr. Charron and Ms. Seegal as the only
participants in the Plan for fiscal 1997.
Cash Incentive Bonus Plan. Under the cash incentive bonus plan, all
salaried employees, including the three participating Named Executive Officers,
were eligible to receive a bonus for 1996 based upon (i) where applicable, the
achievement of targeted levels of divisional direct operating profit and/or
departmental performance considerations; and (ii) a combination of growth in
earnings per share and return on invested capital as measured against
pre-established targets. During 1996, business unit performance against target
resulted in payouts under the divisional component of the bonus program ranging
from zero to 200% of divisional target bonus amounts. The performance goals set
for the three departments for which the three participating Named Executive
Officers had responsibilities for 1996 were significantly exceeded, and, as a
result, significant bonus awards were earned by them under the departmental
component of the bonus program. The corporate performance goals set for 1996
were also exceeded by a significant margin, and, as a result, significant bonus
awards were earned under the corporate component of the bonus program. The 1996
bonus awards to the three participating Named Executive Officers were also
influenced by 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 CEO).
SHARE COMPENSATION. The Company provides equity-based compensation to its
executives under its stock option program and Career Share plan, administered by
the Committee under the 1992 Plan.
Career Shares. The Company has awarded an aggregate of 459,500 shares of
restricted stock ("Career Shares") to a group of senior Company executives. The
near-term incentive value of Career Shares derives in large part from the
Company's ability to produce stockholder returns in excess of those of an
industry peer group ("Peer Group") comprised of 31 public company competitors
selected by the Committee in 1995 from within the apparel, retail and related
fields (see "Performance Graph" below). Career Shares are subject to
restrictions on transfer and the risk of forfeiture until earned by continued
service, and will not vest until December 20, 2004, unless certain performance
targets are reached. Thus, Career Shares may vest at the end of any three-year
performance period ending on the third, sixth or ninth anniversaries of the
start of the initial performance period if the Company's total stockholder
return (share price appreciation plus reinvestment of any dividends; "TSR") for
the prior three-year performance period ranks at or above the 50th percentile of
the TSR of the companies comprising the Peer Group, as follows: at the 50th
percentile: 50% vesting; at or above the 75th percentile: full vesting; between
the 50th and 75th percentiles: proportional vesting. If the Company's
10
<PAGE> 13
TSR does not attain the 50th percentile, the Career Shares remain unvested and a
new three-year performance period begins. Vested Career Shares may not be sold
or transferred (other than to pay related taxes) unless the participant
continues to own, directly or indirectly, Company shares having a value equal to
annual base salary. Career Share vesting will be accelerated upon a change in
control that results in Company shares no longer being quoted on an established
market. The Company's TSR through the first 27 months of the initial three-year
performance period ranked in excess of the 75th percentile of the TSR of the
Peer Group companies.
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
long-term incentive compensation component that emphasizes the importance of
increasing stockholder value. In January 1997, concurrent with the annual grant
to employees, the Committee granted options to all executive officers at an
exercise price equal to the market price on the grant date. See "Option Grants
Table for Fiscal 1996" above. These options vest 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, and carry a 10-year term. Individual grants
(other than for the CEO) are recommended by the CEO and approved by the
Committee.
CEO COMPENSATION. Last year the Committee reported that it was working on
a variety of amendments to Mr. Charron's employment arrangements. This process
was undertaken in light of Mr. Charron's elevation to the additional position of
Chairman and the Board's strong desire to assure that Mr. Charron would continue
to be available to serve as the Company's Chairman and CEO for an extended
period to carry forward long-range strategies and meet future objectives and
challenges as they arise. In this process, the Committee was keenly aware of Mr.
Charron's personal leadership role in improving Company operating performance
and developing and implementing its strategic plan. Of necessity, the Committee
also took into account compensation at other major corporations and the
entrepreneurial and other opportunities which might be available to Mr. Charron
in the absence of a new, long-term arrangement providing highly competitive
levels of current compensation and significant performance incentives.
Against this background, the Committee, assisted by an executive
compensation consulting firm, developed, and the full Board approved, the
multi-year arrangements with Mr. Charron described under "Employment
Arrangements -- Employment Agreement with Paul R. Charron" above. The
compensation elements retain the structure of a competitive salary coupled with
annual and long-term incentives which may result in rewards significantly higher
than the competitive median. Of particular significance to the Committee are the
long-term performance-based elements built into the stock option and deferred
income components. Moreover, Mr. Charron's realization of many of the benefits
under these new arrangements are contingent on his continuing to serve as
Chairman and CEO of the Company, at the pleasure of the Board, through the end
of fiscal 2002.
The 1996 corporate performance targets set under the sec.162(m) Plan were
exceeded by a significant margin. Earnings per share increased from $1.69 to
$2.15, or 27%, and return on invested capital increased from 29.1% to 42.6%, or
an increase of 46%. Moreover, the Committee determined that Mr. Charron had
fulfilled his individual goals (which included the development and launch of
marketing initiatives, the implementation of sourcing strategies to increase
responsiveness and reduce cost, continued upgrading of management capabilities
and structure, and continued progress on reengineering initiatives) set under
the Plan. Accordingly, the Committee awarded Mr. Charron the maximum cash bonus
permitted under its pre-determined sec.162(m) Plan formula, equal to $1.208
million.
J. JAMES GORDON (Chair)
KAY KOPLOVITZ
PAUL E. TIERNEY, JR.
11
<PAGE> 14
PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder 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 an index comprised of the
following (the "Peer Group"): AnnTaylor Stores Corporation; Benetton Group;
Bernard Chaus, Inc.; Charming Shoppes, Inc.; Chic by H.I.S., Inc.; Cintas
Corporation; Cygne Designs, Inc.; Farah Incorporated; Fruit of the Loom, Inc.;
The Gap, Inc.; Haggar Corp.; Hartmarx Corporation; Jones Apparel Group, Inc.;
Kellwood Company; The Limited, Inc.; Liz Claiborne, Inc.; The Neiman-Marcus
Group, Inc.; Nordstrom, Inc.; Oshkosh B'Gosh, Inc.; Oxford Industries, Inc.;
Petrie Stores Corporation; Philips-Van Heusen Corporation; Russell Corporation;
Salant Corporation; Spiegel, Inc.; Starter Corporation; The Talbots, Inc.; Tommy
Hilfiger Corporation; Tultex Corporation; VF Corporation; The Warnaco Group,
Inc.; and Woolworth Corporation.
The Peer Group is comprised of the same companies that comprise the Peer
Group selected by the Compensation Committee in 1995 to gauge the Company's
relative performance on a total stockholder return basis under the Company's
Career Share program. See the Compensation Committee Report above.
In accordance with SEC disclosure rules, the measurements are indexed to a
value of $100 at December 28, 1991 (the last trading day before the beginning of
the Company's 1992 fiscal year) and assume that all dividends were reinvested.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) LIZ CLAIBORNE INC. S&P 500 INDEX PEER GROUP #2
<S> <C> <C> <C>
1991 $ 100.00 $ 100.00 $ 100.00
1992 99.52 107.62 105.36
1993 54.95 118.46 94.01
1994 42.13 120.03 83.57
1995 69.66 165.13 88.05
1996 99.07 203.05 111.10
</TABLE>
12
<PAGE> 15
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, as of March 4, 1997,
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>
FMR Corp................................................... 4,806,610(1) 6.79%
Edward C. Johnson, 3rd
Abigail P. Johnson
Fidelity Management & Research Company
82 Devonshire Street
Boston, MA 02109
Chancellor LGT Asset Management, Inc....................... 3,786,976(2) 5.35%
Chancellor LGT Trust Company
LGT Asset Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
Invesco PLC................................................ 3,592,100(3) 5.07%
11 Devonshire Square
London EC2M 4YR
England
</TABLE>
- ---------------
(1) Based upon information as of December 31, 1996 contained in a Schedule 13G
dated February 14, 1997 filed with the SEC by FMR Corp. ("FMR"), Edward C.
Johnson 3rd, Abigail P. Johnson and Fidelity Management & Research Company
("Fidelity"). According to the Schedule 13G, Mr. Johnson is Chairman of FMR
and owns 12% of the outstanding voting stock of FMR. Ms. Johnson is a
Director of FMR and owns 24.5% of the outstanding voting stock of FMR. The
Johnson family group and trusts for the benefit of Johnson family members,
through their ownership of voting common stock and the execution of a
shareholders' voting agreement, may form a controlling group with respect to
FMR. According to the Schedule 13G, the shares of Common Stock listed
include (i) 4,624,035 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; (ii)
81,675 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 certain institutional accounts; and (iii) 100,900
shares beneficially owned by Fidelity International Limited, a Bermudian
joint stock company which acts as an investment advisor to various
investment companies and institutional investors ("FIL"). According to the
Schedule 13G, 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' Board of Trustees. Fidelity
carries out the voting of the shares under written guidelines established by
the funds' Board of Trustees. Mr. Johnson and FMR have sole voting and
dispositive power over the shares beneficially owned by FMT. According to
the Schedule 13G, FIL operates as an entity independent of FMR and Fidelity.
A partnership controlled by Mr. Johnson and members of his family own 47.22%
of the total votes which may be cast by all holders of FIL voting stock. Mr.
Johnson is the Chairman of FIL. According to the Schedule 13G, investment
decisions of FIL are generally made independently of FMR, and FMR and FIL
claim that they are not acting as a "group" for purposes of Section 13(d)
under the Securities Exchange Act of 1934, and that the shares held by FIL
were included in the Schedule 13G on a voluntary basis. FIL has sole power
to vote and dispose of the shares of Common Stock beneficially owned by it.
(2) Based upon information as of December 31, 1996 contained in Schedule 13G
dated February 7, 1997 filed with the SEC by Chancellor LGT Asset
Management, Inc. ("Chancellor Asset"), an investment advisor, Chancellor LGT
Trust Company ("Chancellor Trust"), an investment manager and wholly owned
subsidiary of Chancellor Asset, and LGT Asset Management, Inc. ("LGT"),
parent holding company for Chancellor Asset. Chancellor Asset and Chancellor
Trust, as investment advisors for various fiduciary accounts, have sole
power to vote or to direct the vote, and sole power to dispose or to direct
the
13
<PAGE> 16
disposition, of all of the shares listed. Chancellor Asset is a wholly owned
subsidiary of LGT. LGT is an indirect, wholly owned subsidiary of
Liechtenstein Global Trust, AG, which has numerous worldwide affiliates and
is controlled by the Prince of Liechtenstein Foundation, a parent
organization for the various business enterprises of the Princely Family of
Liechtenstein.
(3) Based upon information as of December 31, 1996 contained in an Amendment to
Schedule 13G dated February 12, 1997 filed with the SEC by Invesco PLC, a
parent holding company ("Invesco") and certain of its subsidiaries.
According to the amended 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.
14
<PAGE> 17
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 4, 1997, the number of shares
of Common Stock (the Company's only voting security) beneficially owned by each
Director, each of the Named Executive Officers, 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>
Paul R. Charron(3)........................................... 211,291 *
Lee Abraham(4)............................................... 4,987 *
Eileen H. Bedell............................................. 378 *
Jerome A. Chazen(5).......................................... 2,017,556 2.85%
Ann M. Fudge................................................. 1,972 *
J. James Gordon.............................................. 2,088 *
Kenneth P. Kopelman.......................................... 352 *
Kay Koplovitz................................................ 1,629 *
Paul E. Tierney, Jr.......................................... 15,360 *
Denise V. Seegal(6).......................................... 15,000 *
Samuel M. Miller(7).......................................... 43,953 *
John R. Thompson(8).......................................... 30,750 *
Robert J. Zane(9)............................................ 15,343 *
All executive officers and Directors as a group (14
persons)(10)............................................... 2,386,851 3.36%
</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 70,785,884 shares outstanding as of March 4, 1997, except as
otherwise indicated.
(3) Includes 36,668 restricted shares issued pursuant to Mr. Charron's
employment agreement under the 1992 Plan, which vest on the last day of
each of fiscal 1997 through 2000 at the rate of 6,667 shares per year, with
10,000 shares vesting on the last day of fiscal 2001, subject to
accelerated vesting in certain events. Also includes 30,830 shares issuable
upon the exercise of currently exercisable stock options under the
Company's stock option plans and 92,000 restricted Career Shares.
(4) Includes 220 shares owned by Mr. Abraham's wife, as to which shares he
disclaims beneficial ownership and as to which he does not have voting or
investment power.
(5) Includes (a) 255,968 shares as to which Mr. Chazen, as trustee, has shared
voting and investment power, and (b) 340,808 shares held in a grantor
retainer annuity trust over which Mr. Chazen's wife serves as sole trustee,
and 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.
(6) Includes 10,000 restricted shares issued pursuant to Ms. Seegal's
employment agreement under the 1992 Plan, which vest in equal installments
on the last day of each of fiscal 1997 and 1998.
(7) Includes 16,907 shares issuable upon the exercise of currently exercisable
stock options under the Company's stock option plans and 24,000 restricted
Career Shares.
(8) Includes 6,750 shares issuable upon the exercise of currently exercisable
stock options under the Company's stock option plans and 23,000 restricted
Career Shares.
(9) Includes 2,343 shares issuable upon the exercise of currently exercisable
stock options under the Company's stock option plans and 12,000 restricted
Career Shares.
15
<PAGE> 18
(10) Includes 69,595 shares issuable upon the exercise of currently exercisable
stock options under the Company's stock option plans (the percentage is
calculated based on the number of shares which would be outstanding
following the exercise of such options), 210,668 restricted shares issued
under the 1992 Plan and 152 shares held under the Company's Savings Plan.
PROPOSAL 2 -- 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 28, 1996, as
the Company's independent public accountants for the fiscal year ending January
3, 1998.
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.
VOTING ON PROPOSAL
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the Annual Meeting and voting thereon is
required for ratification of Arthur Andersen LLP as the Company's independent
public accountants for the fiscal year ending January 3, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF SUCH
APPOINTMENT.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 annual meeting
of stockholders must be received by the Company, addressed to the attention of
the Company's Secretary at its principal executive offices at 1441 Broadway, New
York, New York 10018, no later than November 28, 1997 in order to be included in
the Company's proxy statement relating to that meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons owning more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such equity securities with the Securities
and Exchange Commission and the New York Stock Exchange. To the Company's
knowledge, based solely on the information furnished to the Company and written
representations by such persons, all filing requirements under Section 16(a)
have been complied with, except that one transaction was inadvertently reported
late by Mr. Jerome A. Chazen, a Director of the Company.
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 or 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.
16
<PAGE> 19
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
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.
By Order of the Board of Directors
ROBERTA SCHUHALTER KARP
Vice President - Corporate Affairs,
General Counsel and Secretary
New York, New York
March 28, 1997
17
<PAGE> 20
LIZ CLAIBORNE LOGO
<PAGE> 21
COMMAND FINANCIAL PRESS CORP.-- NEW YORK (212) 274-0070 6727 PROXY, 1
REV 09.0 16:42 03/26/96 IR
LIZ CLAIBORNE, INC.-- PROXY CARD (FIRST CHICAGO/REGULAR)
- --------------------------------------------------------------------------------
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 15, 1997
The undersigned hereby appoints PAUL R. CHARRON and DENISE V SEEGAL,
and each of them, as proxies, with full power of substitution,
P 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
R held at the offices of Liz Claiborne, Inc. at One Claiborne Avenue,
North Bergen, New Jersey, on Thursday, May 15, 1997 at 10:00 a.m.,
O prevailing local time, and at any adjournments thereof, as set forth on
the reverse side hereof.
X
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF LIZ
Y CLAIBORNE, INC. AND WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED
WITH RESPECT TO THE ELECTION OF DIRECTORS, 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)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
ANNUAL MEETING OF STOCKHOLDERS
LIZ CLAIBORNE
MAY 15, 1997
10:00 A.M.
OFFICES OF THE COMPANY
ONE CLAIBORNE AVENUE
NORTH BERGEN, NEW JERSEY
(201) 295-6000
WE INVITE YOU TO JOIN US.
YOUR VOTE IS IMPORTANT
======================
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 22
COMMAND FINANCIAL PRESS CORP.-- NEW YORK (212) 274-0070 6727 PROXY, 2
REV 09.0 16:42 03/26/96 IR
LIZ CLAIBORNE, INC.-- PROXY CARD (FIRST CHICAGO/REGULAR)
- --------------------------------------------------------------------------------
/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 the nominees named herein and FOR Proposal 2.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees
and FOR Proposal 2.
- --------------------------------------------------------------------------------
1. Election FOR WITHHELD
of Directors. / / / / NOMINEES TERM EXPIRING
Ann M. Fudge 2000
Paul E. Tierney, Jr. 2000
FOR, except vote withheld from the following nominee(s):
- ---------------------------------------------------------
2. Ratification of Arthur Andersen
LLP as independent public / / / / / /
accountants.
3. 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 1997 Annual Meeting.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
DIRECTIONS TO LIZ CLAIBORNE, INC.
NORTH BERGEN, NEW JERSEY
DIRECTIONS FROM MANHATTAN
FROM LINCOLN TUNNEL
From Lincoln Tunnel, follow signs to Route 495. Proceed on Route 495 and follow
sign to Route 3 West, Secaucus, to Secaucus Service Road (local lane). Exit at
North Bergen (just after Tops' Appliance) which brings you to Paterson Plank
Road. After 1st traffic light, bear right, following the sign to West Side
Avenue, and take the jug handle turn on the right
(just after Space Station Storage). Follow jug handle turn around proceeding
straight through the traffic light, which will put you on West Side
Avenue. Proceed on West Side Avenue for approximately 1-1/2 miles. Turn left at
1st traffic light into Liz Claiborne, Inc.
FROM THE GEORGE WASHINGTON BRIDGE
From the George Washington Bridge, take the New Jersey Turnpike South to exit 17
(Lincoln Tunnel/Secaucus). After toll plaza, follow signs to Secaucus. Turn
right at traffic light onto Paterson Plank Road. After 1st traffic light, bear
right, following the sign to West Side Avenue, and take jug handle turn on the
right (just after Space Station Storage). Follow the jug handle turn around
proceeding straight through the traffic light, which will put you on West Side
Avenue. Proceed on West Side Avenue for approximately 1-1/2 miles. Turn left at
the 1st traffic light into Liz Claiborne, Inc.
DIRECTIONS FROM NEW JERSEY
FROM NEW JERSEY TURNPIKE NORTH
Take the New Jersey turnpike North to exit 16E. At 16E, use middle toll booths
to exit (sign over toll booth reads "NJ 3 Secaucus"). After toll booth, follow
sign to Secaucus. At 1st traffic light, turn right onto Paterson Plank Road.
After 1st traffic light, bear right, following the sign to West Side Avenue,
and take the jug handle turn to the right (just after Space Station Storage).
Follow jug handle turn around proceeding straight through the traffic light,
which will put you on West Side Avenue. Proceed on West Side Avenue for
approximately 1-1/2 miles. Turn left at 1st traffic light into Liz Claiborne,
Inc.
FROM NEW JERSEY TURNPIKE SOUTH
Take the New Jersey Turnpike South to exit 17 (Lincoln Tunnel/Secaucus). After
toll plaza, follow signs to Secaucus. Turn right at traffic light onto Paterson
Plank Road. After 1st traffic light, bear right, following the sign to West Side
Avenue, and take jug handle turn on the right (just after Space Station
Storage). Follow jug handle turn around proceeding straight through the traffic
light, which will put you on West Side Avenue. Proceed on West Side Avenue for
approximately 1-1/2 miles. Turn left at the 1st traffic light into Liz
Claiborne, Inc.
FROM ROUTE 3 EAST
Take Route 3 East to Secaucus Service Road (local lane), exit at North Bergen.
The exit will bring you onto Paterson Plank Road. After the 1st traffic light,
bear to right, following the sign to West Side Avenue, and take the jug handle
turn on the right (just after Space Station Storage). Follow the jug handle turn
around proceeding straight through the traffic light, which will put you on West
Side Avenue. Stay on West Side Avenue for approximately 1-1/2 miles, making a
left at the first traffic light, into Liz Claiborne, Inc.
FROM ROUTE 3 WEST
Take Route 3 West, bear to right and take the Secaucus Service Road. Follow sign
to North Bergen (at Tops' Appliance). This will bring you onto Paterson Plank
Road. After the 1st traffic light, bear to right, following the sign to West
Side Avenue, and take the jug handle turn on the right (just after Space Station
Storage). Follow the jug handle turn around proceeding straight through the
traffic light, which will put you on West Side Avenue. Stay on West Side Avenue
for approximately 1-1/2 miles, making a left at the 1st traffic light, into Liz
Claiborne, Inc.
FROM ROUTE 80
When Route 80 ends, follow signs to Route 95 South. Take Route 95 South to the
New Jersey Turnpike (then follow directions as shown under "FROM THE GEORGE
WASHINGTON BRIDGE").
