<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
[ ] 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 Rule 14a-11(c) or Rule 14a-12
Hyde Athletic Industries, Inc.
(Name of Registrant as Specified in Its Charter)
M
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
<TABLE>
<C> <S>
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:
------------------------------------------------------------
</TABLE>
[ ] 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.
<TABLE>
<C> <S>
1) Amount Previously Paid:
------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------
</TABLE>
<PAGE> 2
HYDE ATHLETIC INDUSTRIES, INC.
CENTENNIAL INDUSTRIAL PARK
13 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 21, 1998
The Annual Meeting of Stockholders of Hyde Athletic Industries, Inc. (the
"Company") will be held at the offices of the Company, Centennial Industrial
Park, 13 Centennial Drive, Peabody, Massachusetts, on Thursday, May 21, 1998 at
11:00 a.m., local time, to consider and act upon the following matters:
1. To elect five directors.
2. To approve an amendment to the Company's Restated Articles of
Organization, as amended, to change the name of the Company to "Saucony,
Inc."
3. To ratify the selection by the Board of Directors of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the current
fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of record of the Company's Class A Common Stock at the close of
business on April 3, 1998 will be entitled to vote at the meeting or any
adjournment thereof.
By Order of the Board of Directors,
David E. Redlick, Clerk
Peabody, Massachusetts
April 27, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE> 3
HYDE ATHLETIC INDUSTRIES, INC.
CENTENNIAL INDUSTRIAL PARK
13 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hyde Athletic Industries, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on May 21,
1998 and at any adjournment of that meeting (the "Annual Meeting"). All shares
of Class A Common Stock, $.33 1/3 par value per share, of the Company (the
"Class A Common Stock") for which proxies are submitted will be voted in
accordance with the stockholders' instructions, and if no choice is specified,
the shares will be voted in favor of the matters set forth in the accompanying
Notice of Meeting. Any proxy may be revoked by a stockholder at any time before
its exercise by delivery of written revocation to the Clerk of the Company or by
voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended January 2, 1998
("fiscal 1997") is being mailed to stockholders with the mailing of this Notice
and Proxy Statement, which is first being mailed to stockholders on or about
April 27, 1998.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 2, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER UPON WRITTEN REQUEST TO CHARLES A. GOTTESMAN, EXECUTIVE VICE
PRESIDENT, HYDE ATHLETIC INDUSTRIES, INC., CENTENNIAL INDUSTRIAL PARK, 13
CENTENNIAL DRIVE, PEABODY, MASSACHUSETTS 01960. EXHIBITS WILL BE PROVIDED UPON
WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
VOTING SECURITIES AND VOTES REQUIRED
The Board of Directors has fixed April 3, 1998 as the record date (the
"Record Date") for determining holders of Class A Common Stock who are entitled
to vote at the Annual Meeting. At the close of business on the Record Date,
there were outstanding and entitled to vote 2,703,227 shares of Class A Common
Stock. Each share is entitled to one vote. The holders of the Company's Class B
Common Stock, $.33 1/3 par value per share (the "Class B Common Stock"), are not
entitled to vote at the Annual Meeting.
The holders of a majority of the shares of Class A Common Stock outstanding
and entitled to vote at the Annual Meeting shall constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Class A Common Stock
present in person or represented by proxy (including shares which abstain or do
not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum exists at
the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of Class A
Common Stock voting on the matter is required for the election of directors. The
affirmative vote of the holders of a majority of the outstanding shares of Class
A Common Stock is required for the approval of the amendment to the Company's
Restated Articles of Organization, as amended (the "Restated Articles"). The
affirmative vote of the holders of a majority of the shares of Class A Common
Stock voting on the matter is required to ratify the selection of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the current fiscal
year.
<PAGE> 4
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and also will not
be counted as shares voting on such matter. Accordingly, abstentions and "broker
non-votes" will have no effect on the voting on a matter that requires the
affirmative vote of a certain percentage of the shares voting on the matter.
However, in determining whether the proposal to approve the amendment to the
Restated Articles has received the requisite number of votes, abstentions and
broker non-votes will be treated as outstanding shares and, accordingly, will
have the same effect as a vote against such proposal.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information concerning beneficial ownership of
the Company's Class A Common Stock and Class B Common Stock (collectively, the
"Common Stock") by (i) each stockholder known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Class A Common
Stock, (ii) all directors, (iii) each of the executive officers named in the
Summary Compensation Table set forth in "Compensation of Executive Officers"
below (the "Named Executive Officers") and (iv) all directors and executive
officers as a group. Unless otherwise indicated in the footnotes to the table,
all information set forth in the table is as of March 31, 1998.
The number of shares beneficially owned by each person is determined under
rules of the Commission, and the information is not necessarily indicative of
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the person has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire within
60 days after March 31, 1998 through the exercise of any stock option or other
right. Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares set forth in the following table. The inclusion
herein of any shares of Common Stock deemed beneficially owned does not
constitute an admission by such stockholder of beneficial ownership of those
shares of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED CLASS OUTSTANDING
---------------------- --------------------
5% STOCKHOLDERS CLASS A CLASS B CLASS A CLASS B
--------------- --------- ------- ------- -------
<S> <C> <C> <C> <C>
Phyllis H. Fisher............................. 414,472 5,002 15.3% *
c/o Hyde Athletic Industries, Inc.
Centennial Industrial Park
13 Centennial Drive
Peabody, MA 01960
John H. Fisher................................ 409,054(1) 194,151(2) 15.1 5.4%
c/o Hyde Athletic Industries, Inc.
Centennial Industrial Park
13 Centennial Drive
Peabody, MA 01960
Charles A. Gottesman and Merrill F.
Gottesman................................... 409,054(3) 182,987(4) 15.1 5.1
c/o Hyde Athletic Industries, Inc.
Centennial Industrial Park
13 Centennial Drive
Peabody, MA 01960
Dimensional Fund Advisors Inc................. 193,500(5) 261,300(5) 7.2 7.4
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED CLASS OUTSTANDING
---------------------- --------------------
5% STOCKHOLDERS CLASS A CLASS B CLASS A CLASS B
--------------- --------- ------- ------- -------
<S> <C> <C> <C> <C>
OTHER DIRECTORS
Jonathan O. Lee............................... -- 22,000(6) * *
Robert J. LeFort, Jr.......................... -- 6,000(7) * *
John J. Neuhauser............................. -- 22,000(8) * *
OTHER NAMED EXECUTIVE OFFICERS
Wolfgang Schweim.............................. -- 4,525(9) * *
James H. Noyes, Jr............................ 400(10) 11,676(10) * *
Kenneth W. Graham............................. 1,000(11) 11,150(11) * *
All directors and executive officers as a
group (13 persons).......................... 1,234,700(12) 461,111(13) 45.6 12.3
</TABLE>
- ---------------
* Represents holdings of less than one percent.
(1) Includes 83,410 shares held in trust for the benefit of Mr. Fisher for
which Mr. Fisher and his sister, Merrill F. Gottesman, are trustees and
share investment and voting power; 10,800 shares held in a generation
skipping trust for which Mr. Fisher exercises sole voting and investment
power; 6,382 shares held in trust for the benefit of Mr. Fisher's children
for which Mr. Fisher is the trustee and exercises sole investment and
voting power; and 1,333 shares held in the name of Mr. Fisher's daughter.
Excludes 83,410 shares held in trust for the benefit of Mrs. Gottesman for
which Mr. Fisher and Mrs. Gottesman are trustees and share investment and
voting power. Mr. Fisher is the son of Phyllis H. Fisher.
(2) Includes 23,410 shares held in trust for the benefit of Mr. Fisher for
which Mr. Fisher and his sister, Merrill F. Gottesman, are trustees and
share investment and voting power; 10,800 shares held in a generation
skipping trust for which Mr. Fisher exercises sole voting and investment
power; 1,582 shares held in trust for the benefit of Mr. Fisher's daughter
for which Mr. Fisher is the trustee and exercises sole investment and
voting power; and 58,728 shares which Mr. Fisher has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1998. Excludes 23,410 shares held in trust for the benefit of Mrs.
Gottesman for which Mr. Fisher and Mrs. Gottesman are trustees and share
investment and voting power.
(3) Includes 71,731 shares which Mr. Gottesman jointly owns with his wife,
Merrill F. Gottesman, who is the daughter of Phyllis H. Fisher; 7,964
shares held in trust for the benefit of Mr. and Mrs. Gottesman's daughters
for which Mrs. Gottesman is trustee and exercises sole investment and
voting power; 83,410 shares held in trust for the benefit of Mrs. Gottesman
for which Mrs. Gottesman and her brother, John H. Fisher, are trustees and
share investment and voting power; 25,750 shares held in the name of Mr.
Gottesman; 217,533 shares held in the name of Mrs. Gottesman; and an
aggregate of 2,666 shares held in the names of Mr. and Mrs. Gottesman's two
daughters. Excludes 83,410 shares held in trust for the benefit of John H.
Fisher for which John H. Fisher and Mrs. Gottesman are trustees and share
investment and voting power.
(4) Includes 94,781 shares which Mr. Gottesman jointly owns with his wife,
Merrill F. Gottesman; 3,164 shares held in trust for the benefit of Mr. and
Mrs. Gottesman's daughters for which Mrs. Gottesman is trustee and
exercises sole investment and voting power; 23,410 shares held in trust for
the benefit of Mrs. Gottesman for which Mrs. Gottesman and her brother,
John H. Fisher, are trustees and share investment and voting power; 10,800
shares held in the name of Mrs. Gottesman; and 50,832 shares which Mr.
Gottesman has the right to acquire pursuant to outstanding options
exercisable within 60 days after March 31, 1998. Excludes 23,410 shares
held in trust for the benefit of John H. Fisher for which John H. Fisher
and Mrs. Gottesman are trustees and share investment and voting power.
3
<PAGE> 6
(5) The information reported is based on a Schedule 13G filed with the
Commission on February 10, 1998 by Dimensional Fund Advisors Inc.
("Dimensional") and certain other written information provided by
Dimensional on February 6, 1998. Dimensional is a registered investment
advisor and deemed to have beneficial ownership of all of such shares.
These shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust Company, a Delaware business trust, or the DFA Group Trust
and DFA Participating Group Trust, investment vehicles for qualified
employee benefit plans. Dimensional serves as investment manager for all of
such entities. Dimensional disclaims beneficial ownership of all such
shares.
(6) Consists of 22,000 shares which Mr. Lee has the right to acquire pursuant
to outstanding options exercisable within 60 days after March 31, 1998.
(7) Consists of 6,000 shares which Mr. LeFort has the right to acquire pursuant
to outstanding options exercisable within 60 days after March 31, 1998.
(8) Consists of 22,000 shares which Mr. Neuhauser has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1998.
(9) Consists of 4,500 shares which Mr. Schweim has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1998. Mr. Schweim also has the right to acquire (a) 4,500 shares of Class B
Common Stock pursuant to an outstanding option exercisable within 60 days
after March 31, 1998 if the closing price of the Company's Class B Common
Stock (based on the average closing price over a period of 20 trading days)
exceeds $6.75 per share and (b) 4,500 shares of Class B Common Stock
pursuant to an outstanding option exercisable within 60 days after March
31, 1998 if the closing price of the Company's Class B Common Stock (based
on the average closing price over a period of 20 trading days) exceeds
$9.25 per share.
(10) Consists of 400 shares and 11,676 shares of Class A Common Stock and Class
B Common Stock, respectively, which Mr. Noyes has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1998.
(11) Consists of 1,000 shares and 11,150 shares of Class A Common Stock and
Class B Common Stock, respectively, which Mr. Graham has the right to
acquire pursuant to outstanding options exercisable within 60 days after
March 31, 1998.
(12) Includes a total of 1,800 shares which all executive officers and directors
have the right to acquire pursuant to outstanding options exercisable
within 60 days after March 31, 1998.
(13) Includes a total of 188,186 shares which all executive officers and
directors have the right to acquire pursuant to outstanding options
exercisable within 60 days after March 31, 1998.
There are no agreements among any of the foregoing persons or entities with
respect to the voting of shares of Class A Common Stock of the Company.
4
<PAGE> 7
ELECTION OF DIRECTORS
Unless otherwise instructed, the persons named in the accompanying proxy
will vote to elect as directors the five nominees named below, all of whom are
presently directors of the Company. The proxy may not be voted for more than
five directors. If a nominee becomes unable or unwilling to serve as a director,
the person acting under the proxy may vote the proxy for the election of a
substitute. It is not presently contemplated that any of the nominees will be
unwilling to serve as a director.
Set forth below are the name and age of each nominee for director and the
positions and offices held by him or her with the Company, his or her principal
occupation and business experience during the past five years, the names of
other publicly held companies of which he or she serves as a director and the
year of the commencement of his or her term as a director of the Company.
JOHN H. FISHER, age 50, has been a director since 1980. Mr. Fisher has been
Chief Executive Officer of the Company since 1991. He served as Chief Operating
Officer from 1985 to 1991, as Executive Vice President from 1981 to 1985 and as
Vice President, Sales from 1979 to 1981. Mr. Fisher is a member of the World
Federation of Sporting Goods Industries, is the former Chairman of the Athletic
Footwear Council of the Sporting Goods Manufacturers Association, and is a
member of various civic associations. Mr. Fisher is the son of Phyllis H.
Fisher.
PHYLLIS H. FISHER, age 75, has been a director since 1982. In addition to
her services as a director of the Company, Mrs. Fisher provides consulting
services to the Company, which include maintaining certain longstanding
relationships with sporting goods associations, representing the Company at
certain trade shows and coordinating the Company's civic and charitable events.
CHARLES A. GOTTESMAN, age 47, has been a director since 1983. Mr. Gottesman
has served as Executive Vice President and Chief Operating Officer of the
Company since 1992, Executive Vice President, Finance from 1989 to 1992, Senior
Vice President from 1987 to 1989, Vice President from 1985 to 1987, Treasurer
from 1983 to 1989, and in a number of other capacities beginning in 1977. Mr.
Gottesman is the son-in-law of Phyllis H. Fisher.
ROBERT J. LEFORT, JR., age 44, has been a director since 1997. Mr. LeFort
has served as the President and Chief Executive Officer of the Magnetix Group,
an audio duplication, fulfillment and marketing services company, since 1992.
JOHN J. NEUHAUSER, age 54, has been a director since 1989. Mr. Neuhauser
has been Dean of Boston College's Carroll School of Management (business school)
since 1978. From 1971 to 1977, he held the position of Associate Professor and
Chairman of the Computer Science Department of Boston College. Mr. Neuhauser
serves as a director of all of the mutual funds of the Colonial Group and is a
director of Interactive Media Solutions, Inc., a software company. He currently
is a Corporator of Emerson Hospital and is a former member of the Executive
Committee of the Boston Management Consortium.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met twice during fiscal 1997 and acted by written
consent on five occasions. Each director attended at least 75% of the aggregate
number of Board meetings and the number of meetings held by all committees on
which he or she then served.
The Company has a standing Audit Committee of the Board of Directors, which
reviews the effectiveness of the auditors during the annual audit, reviews the
adequacy of financial statement disclosures, discusses the Company's internal
control policies and procedures and considers and recommends the selection of
the
5
<PAGE> 8
Company's independent accountants. The Audit Committee met once during fiscal
1997. The members of the Audit Committee are Messrs. Gottesman, Lee and
Neuhauser.
The Company also has a standing Compensation Committee of the Board of
Directors, which is responsible for establishing compensation policies with
respect to the Company's executive officers, including the Chief Executive
Officer and the other Named Executive Officers, and setting the compensation
levels for these individuals. The Compensation Committee also considers and
makes recommendations to the Board of Directors with respect to such matters as
the establishment and implementation of employee incentive plans and administers
the Company's 1993 Equity Incentive Plan, as amended. The Compensation Committee
held two meetings during fiscal 1997. The members of the Compensation Committee
are Messrs. Lee and Neuhauser. See "Report of the Compensation Committee on
Executive Compensation."
The Company has no standing nominating committee of the Board of Directors.
COMPENSATION OF DIRECTORS
Under the Company's 1993 Director Stock Option Plan (the "Director Option
Plan"), non-employee directors of the Company (other than Phyllis H. Fisher) are
granted non-statutory stock options to purchase shares of Class B Common Stock.
Options are granted automatically to eligible directors as follows: (i) each
eligible director was granted an option to purchase 6,000 shares of Class B
Common Stock on the 60th day following stockholder approval of the Director
Option Plan; (ii) each person who becomes an eligible director after May 25,
1993 (the date of approval of the Director Option Plan by the stockholders)
shall be granted an option to purchase 6,000 shares of Class B Common Stock on
the date of his or her initial election to the Board of Directors; and (iii)
each eligible director shall be granted an option to purchase 4,000 shares of
Class B Common Stock on April 15 of each year (or the next following business
day if April 15 is not a business day), provided he or she is an eligible
director on such date. All options granted under the Director Option Plan have
an exercise price equal to the fair market value of the Class B Common Stock on
the date of grant and will be exercisable at any time prior to the fifth
anniversary of the date of grant.
On April 15, 1997, each of Messrs. Neuhauser and Lee was granted an option
to purchase 4,000 shares of Class B Common Stock at $4.625 per share. On
September 16, 1997, the Company's Board of Directors elected Mr. LeFort to serve
as a director, filling the vacancy created by the resignation of James A.
Buchanan. Upon Mr. LeFort's election to serve as a director of the Company, Mr.
LeFort was granted an option to purchase 6,000 shares of Class B Common Stock at
$4.625 per share.
Non-employee directors are paid an annual retainer of $15,000. During 1997,
the Company paid a consulting fee of $90,000 to Mrs. Fisher under a consulting
agreement that expired on January 3, 1998. See "Employment and Consulting
Agreements and Other Arrangements."
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table. The following table sets forth certain
information with respect to the compensation, for the last three fiscal years,
of the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers during fiscal 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS(1)
---------------------------- ---------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(2)
--------------------------- ---- -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
John H. Fisher............... 1997 $305,660 $ -- 12,750 $12,696
President and 1996 277,821 73,762 -- 12,553
Chief Executive Officer 1995 277,960 105,967 30,000 12,000
Charles A. Gottesman......... 1997 275,094 -- 12,750 13,026
Executive Vice President 1996 250,039 73,762 -- 14,302
and Chief Operating Officer 1995 250,164 105,967 25,000 13,360
Wolfgang Schweim............. 1997 213,561 -- 12,750 3,183
President, Saucony 1996 210,848 -- -- 3,183
International 1995 206,987 8,289 22,500 1,169
James H. Noyes, Jr. ......... 1997 167,962 11,880 7,000 11,100
Vice President, 1996 188,952 28,949 -- 12,072
International 1995 159,609 22,572 -- 10,643
Kenneth W. Graham............ 1997 149,269 -- 9,800 4,931
Senior Vice President 1996 135,000 -- -- 4,688
Research & Development, 1995 137,596 -- -- 4,813
Textiles
</TABLE>
- ---------------
(1) The Company does not have a long-term compensation plan that includes
long-term incentive payouts. No stock appreciation rights (SARs) have been
granted to or are held by any of the Named Executive Officers.
(2) Amounts shown in this column represent (i) the Company's payment of
split-dollar life insurance premiums, (ii) the Company's contributions under
its tax-qualified and deferred 401(k) savings plan, (iii) the Company's
contributions under its Non-Qualified Retirement Plan and (iv) the value of
below-market loans made by the Company to the Named Executive Officers (the
value based on the difference between the market interest rate and the
actual interest rate). The Company paid split-dollar life insurance premiums
of $10,500, $11,050, $2,666, $8,333 and $3,000 for Messrs. Fisher,
Gottesman, Schweim, Noyes and Graham, respectively, for the last fiscal
year. The Company's contributions under its 401(k) savings plan for Mr.
Graham for the last fiscal year was $1,931. The Company's contributions
under its Non-Qualified Retirement Plan for Messrs. Fisher, Gottesman and
Noyes for the last fiscal year were $2,196, $1,976 and $2,767, respectively.
In addition, Mr. Schweim received $517 in the last fiscal year, representing
the value of a below-market loan in the original principal amount of $54,600
made by the Company to Mr. Schweim. See "Employment and Consulting
Agreements and Other Arrangements."
7
<PAGE> 10
Option Grant Table. The following table sets forth certain information
regarding options granted during fiscal 1997 by the Company to the Named
Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------
NAME GRANTED(1) YEAR SHARE DATE 5% 10%
---- ---------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John H. Fisher............. 12,750 8.7% $4.4375 09/09/02 $15,631 $34,542
Charles A. Gottesman....... 12,750 8.7 4.4375 09/09/02 15,631 34,542
Wolfgang Schweim........... 12,750 8.7 4.4375 09/09/02 15,631 34,542
James H. Noyes, Jr......... 7,000 4.8 4.4375 09/09/02 8,582 18,964
Kenneth W. Graham.......... 9,800 6.7 4.4375 09/09/02 12,015 26,550
</TABLE>
- ---------------
(1) The securities underlying the options are shares of Class B Common Stock.
The options granted are exercisable in five equal annual installments.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. This table does not take into account actual
appreciation in the price of the Common Stock to date. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock and the date on which the options are exercised. The gains
shown are net of the option exercise price, but do not reflect taxes or
other expenses associated with the exercise.
Fiscal Year-End Option Table. The following table sets forth certain
information regarding stock options held as of January 2, 1998 by the Named
Executive Officers. None of the Named Executive Officers exercised any options
during fiscal 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John H. Fisher............................. 58,728(2) 31,900(2) $1,796 $23,938
Charles A. Gottesman....................... 50,832(2) 29,970(2) 1,615 21,525
Wolfgang Schweim........................... 13,500(2) 21,750(2) 0 0
James H. Noyes, Jr......................... 12,076(3) 14,516(2) 2,005 9,395
Kenneth W. Graham.......................... 12,150(4) 16,564(2) 3,884 8,455
</TABLE>
- ---------------
(1) Value based on last sale price of the Common Stock at the fiscal year end
($4.00 per share of Class A Common Stock and $3.75 per share of Class B
Common Stock) less the exercise price.
(2) Represents shares of Class B Common Stock.
(3) Consists of 400 shares of Class A Common Stock with an in-the-money value of
$700 and 11,676 shares of Class B Common Stock with an in-the-money value of
$1,305.
(4) Consists of 1,000 shares of Class A Common Stock with an in-the-money value
of $1,750 and 11,150 shares of Class B Common Stock with an in-the-money
value of $2,134.
8
<PAGE> 11
EMPLOYMENT AND CONSULTING AGREEMENTS AND OTHER ARRANGEMENTS
The Company was a party to an employment agreement with Wolfgang Schweim
covering an employment period from June 1, 1995 until May 31, 1997. Under the
agreement, Mr. Schweim's base salary was $200,000 and he was eligible to receive
a cash bonus of up to 50% of his base salary, provided, however, that the Board
of Directors, in its sole discretion, could award a bonus of greater than 50%.
So long as Mr. Schweim is employed by the Company, and for a period of two years
thereafter, he is prohibited from engaging in the business of developing,
producing, marketing or selling products competitive with those of the Company,
or under active consideration by the Company, while Mr. Schweim was employed by
the Company.
The Company has a compensation arrangement with Mr. Noyes whereby Mr. Noyes
received a base salary of $121,492 in fiscal 1997 and commissions at specified
rates and participates in the Vice President Bonus Plan (described below).
All Vice Presidents of the Company are eligible to participate in the
Company's Vice President Bonus Plan, which was approved by the Board of
Directors, upon recommendation of the Compensation Committee. To be eligible for
this plan, an executive must be a Vice President for the entire fiscal year.
Bonuses awarded to a Vice President under this plan are capped at 25% of such
Vice President's salary for the previous fiscal year, and are based on the level
of attainment of certain sales and pre-tax profit objectives of the Company or
the division for which the Vice President is responsible.
The Company was a party to a consulting agreement with Phyllis H. Fisher
that expired on January 3, 1998. Under the Agreement, the Company paid $90,000
to Mrs. Fisher in fiscal 1997. Mrs. Fisher's consulting services included
maintaining certain long-standing relationships with sporting goods
associations, representing the Company at certain trade shows and coordinating
the Company's civic and charitable events.
On August 16, 1996, Wolfgang Schweim, President of Saucony International,
borrowed $54,600 from the Company. As consideration for this loan, Mr. Schweim
issued the Company a promissory note that bears interest at 6.0% and is
collateralized by a mortgage to the Company on a parcel of real estate. Since
the beginning of fiscal 1997, the largest amount of indebtedness outstanding
under the note was $45,612. On June 18, 1997, Mr. Schweim repaid the loan in
full.
Effective July 4, 1997, Brookfield Athletic Co., Inc. ("Brookfield"), a
wholly owned subsidiary of the Company, sold substantially all of the assets
used in Brookfield's business to Brookfield International, Inc. (the "Buyer").
Prior to the sale, James A. Buchanan was the President of Brookfield and a
director of the Company. As of the Closing, Mr. Buchanan became Chief Executive
Officer of the Buyer, and resigned as President of Brookfield and as a director
of the Company. The sale was approved by (i) the Boards of Directors of
Brookfield and the Company and (ii) the Company, as the sole stockholder of
Brookfield. The terms of the sale were determined on the basis of arm's-length
negotiations between Brookfield and the Buyer. The Buyer paid $6,841,000 in cash
to the Company in 1997 as consideration for Brookfield's assets.
Also, effective as of July 4, 1997, the Company and the Buyer entered into
a Transitional Services Agreement under which the Company provided certain
transitional services to the Buyer in substantially the same manner and to
substantially the same extent as the Company provided such services to
Brookfield before that date. The Company completed its obligations under the
Transitional Services Agreement on February 1, 1998. The Buyer paid $670,000 to
the Company in fiscal 1997 for such transitional services.
In July 1993, Mr. Buchanan borrowed $100,000 from the Company. As
consideration for this loan, Mr. Buchanan issued the Company a promissory note
that was interest free through July 1994 and currently bears interest at the
prevailing prime rate and is collateralized by a mortgage to the Company on two
parcels of real estate. As of April 1, 1998, the amount of indebtedness
outstanding under the note was $100,000, the largest amount of indebtedness
outstanding since the beginning of fiscal 1997.
9
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors consists of
Messrs. Lee and Neuhauser. No executive officer of the Company has served as a
director or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, one of whose executive officers served
as a director of or member of the Compensation Committee of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the Company's
executive officers, including the Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, and setting the
compensation for these individuals.
The Compensation Committee seeks to achieve three broad goals in connection
with the Company's executive compensation programs and decisions regarding
individual compensation. First, the Compensation Committee structures executive
compensation programs in a manner that the Committee believes will enable the
Company to attract and retain key executives. In order to ensure continuity of
certain key members of management, the Compensation Committee has approved in
the past multi-year employment contracts. Second, the Compensation Committee
establishes compensation programs that are designed to reward executives for the
achievement of specified business objectives of the Company and/or the
individual executive's particular business unit. By tying compensation in part
to particular goals, the Compensation Committee believes that a
performance-oriented environment is created for the Company's executives.
Finally, the Company's executive compensation programs are intended to provide
executives with an equity interest in the Company so as to link a portion of the
compensation of the Company's executives with the performance of the Company's
Common Stock.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to its chief executive officer or any of its four other most highly
compensated executive officers. Qualifying performance-based compensation is not
subject to the deduction limit if certain requirements, such as stockholder
approval of a compensation plan, are met. Although the Compensation Committee
has considered the limitations on the deductibility of executive compensation
imposed by Section 162(m) in designing the Company's executive compensation
programs, the Committee believes that it is unlikely that such limitations will
affect the deductibility of the compensation to be paid to the Company's
executive officers in the near term. Based in part on this judgment, the
Compensation Committee has determined not to recommend to the Company's Board of
Directors that the bonus arrangements for the Company's executive officers be
submitted to the Company's stockholders for their approval. At the annual
meeting of the Company's stockholders on May 15, 1997, the stockholders approved
the continuance of the 1993 Equity Incentive Plan, as amended through the date
of that meeting (the "Equity Incentive Plan"). Among other things, the approval
of the continuance of the Equity Incentive Plan permits option grants and stock
awards to qualify as performance-based compensation for purposes of Section
162(m).
The compensation programs for the Company's executives established by the
Compensation Committee consist of three elements based upon the objectives
described above: base salary; annual cash bonus; and a stock-based equity
incentive in the form of participation in the Equity Incentive Plan. In
establishing base salaries for executives, the Compensation Committee monitors
salaries at other companies, considers historic salary levels of the individual
and the nature of the individual's responsibilities and compares the
individual's base salary with those of other executives at the Company. To the
extent determined to be appropriate, the Compensation Committee also considers
general economic conditions, the Company's financial performance and the
individual's performance in establishing base salaries of executives.
10
<PAGE> 13
During the first five months of 1997, Mr. Schweim was a party to an
employment agreement with the Company that fixed his annual base salary during
the term of the agreement, subject to adjustment for changes in the consumer
price index. Thus, the only adjustment during the first five months of 1997 to
the base salary of Mr. Schweim was a cost-of-living adjustment in accordance
with the terms of his employment agreement. In 1997, the Compensation Committee
approved a 10% increase in the base salaries of Messrs. Fisher and Gottesman.
The Compensation Committee believes that the Chief Executive Officer's base
salary for fiscal 1997 was appropriate based on its evaluation of Mr. Fisher's
performance during fiscal 1996 and his historic and anticipated future
contributions to the Company. The Compensation Committee also believes that the
base salary levels of its other executive officers were appropriate in light of
the factors described in the preceding paragraph.
The Compensation Committee generally structures cash bonuses by linking
them to the achievement of specified Company and/or business unit performance
objectives. Historically, the bonuses awarded to Messrs. Fisher and Gottesman
have been based upon a percentage of the Company's pre-tax net income. As the
Company had a pre-tax net loss for fiscal 1997, the Compensation Committee did
not award bonuses to Messrs. Fisher and Gottesman. The Board of Directors, upon
recommendation of the Compensation Committee, has adopted a Vice President Bonus
Plan pursuant to which Vice Presidents of the Company are eligible for bonuses
(calculated as a percentage of annual salary) upon the attainment of certain
sales and pre-tax profit objectives which are fixed by the Board of Directors
for the Company or certain of its divisions. The Compensation Committee believes
that these arrangements tie the executive's performance closely to a key measure
of success of the Company or the executive's business unit.
Stock option grants in fiscal 1997 were designed to make a portion of the
overall compensation of the executive officers, including the Chief Executive
Officer, receiving such awards vary depending upon the performance of the
Company's Common Stock. Such grants, as a result of the applicable vesting
arrangements, also serve as a means for the Company to retain the services of
these individuals. The Chief Executive Officer received an option to purchase
12,750 shares of Class B Common Stock in fiscal 1997 as part of a new round of
option grants. The 12,750 share stock option grant to Mr. Fisher was based on
the Compensation Committee's evaluation of Mr. Fisher's overall performance in
fiscal 1996.
Jonathan O. Lee
John J. Neuhauser
11
<PAGE> 14
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five fiscal
years ended January 2, 1998 with the total return on the S&P 500 Composite Index
and a peer group of companies (the "Shoes Index"). The comparison assumes $100
was invested on December 31, 1992 in the Company's then outstanding Common Stock
(the "Prior Common Stock") and in each of the foregoing indices and assumes
reinvestment of dividends. On May 26, 1993, the Prior Common Stock ceased
trading and the Class A Common Stock and Class B Common Stock began trading on
the Nasdaq National Market.
<TABLE>
<CAPTION>
Hyde
Athletic
Measurement Period Industries,
(Fiscal Year Covered) Inc. S & P Index Shoes Index
<S> <C> <C> <C>
1992 100 100 100
1993 67 110 81
1994 58 111 61
1995 47 153 42
1996 60 191 51
1997 47 253 50
</TABLE>
- ---------------
(1) Shoes Index includes L.A. Gear, Inc., K-Swiss Inc. and Vans, Inc., and the
returns of each component company of the Shoes Index is weighted according
to the respective company's stock market capitalization at the beginning of
the period. The 1997 stock price used for L.A. Gear, Inc. was the closing
price of L.A. Gear's stock on December 18, 1997, the last day in 1997 that
L.A. Gear stock traded on the Nasdaq National Market.
12
<PAGE> 15
APPROVAL OF AMENDMENT TO RESTATED
ARTICLES OF ORGANIZATION
The Board of Directors has adopted, and is recommending to the stockholders
for their approval at the Annual Meeting, a resolution to amend the Company's
Restated Articles to change the Company's name to "Saucony, Inc."
In the judgment of the Board of Directors, the change of corporate name
will better reflect the importance of the Company's Saucony business to its
overall operations. A substantial percentage of the Company's revenues over the
last several years has been attributable to sales of the Company's Saucony
products, and, with the recent sale of the assets of Brookfield, the importance
of the Company's Saucony business has become more pronounced. If the proposed
name change is adopted, it is the intent of the Company to use the name
"Saucony, Inc." in its communications with stockholders and the investment
community. The Company will also seek to change its Nasdaq trading symbols from
"HYDEA" and "HYDEB" to "SCNYA" and "SCNYB," respectively, effective upon the
filing of the amendment to the Restated Articles. The Company anticipates that
the cost of implementing and publicizing its name change will not be
significant.
If the amendment is adopted, stockholders will not be required to exchange
outstanding stock certificates for new certificates. If approved by the
stockholders, the amendment to the Restated Articles will become effective upon
the filing of Articles of Amendment to the Restated Articles with the Secretary
of State of the Commonwealth of Massachusetts, which filing is expected to take
place shortly after the Annual Meeting. If this proposal is not approved by the
stockholders, then the Articles of Amendment will not be filed.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT TO THE
RESTATED ARTICLES IS IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS
AND THEREFORE RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board of Directors, on the
recommendation of its Audit Committee, has selected the firm of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the current fiscal
year. Coopers & Lybrand L.L.P. has been the Company's independent accountants
for the seven most recent fiscal years. Although stockholder approval of the
Board of Directors' selection of Coopers & Lybrand L.L.P. is not required by
law, the Board of Directors believes that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors will reconsider this selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
("Reporting Persons") to file with the Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Except as set forth below, and based solely on its review of
copies of reports filed by the Reporting Persons and furnished to the Company,
the Company believes that during 1997 its officers, directors and holders of
more than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements. Roger P. Deschenes, John H. Fisher, Charles A. Gottesman,
Kenneth W. Graham, Daniel
13
<PAGE> 16
Horgan and Wolfgang Schweim did not timely file Form 5 with the Commission in
connection with their receipt, effective September 9, 1997, of incentive stock
options to purchase shares of Class B Common Stock. Arthur E. Rogers, Jr. did
not timely file a Form 3 with the Commission in connection with his designation
as a Reporting Person on March 19, 1998. The Form 3 reflected Mr. Rogers' share
and option holdings as of March 19, 1998.
OTHER MATTERS
Management does not know of any other matters which may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
All costs of solicitations of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telecopy, personal interviews, and other means. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
out-of-pocket expenses in connection therewith.
Stockholder proposals to be included in the Company's proxy statement for
the 1998 Annual Meeting of Stockholders must be received by the Company, for
consideration, on or before December 28, 1998.
By Order of the Board of Directors,
David E. Redlick, Clerk
April 27, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
14
<PAGE> 17
PROXY HYDE ATHLETIC INDUSTRIES, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS - MAY 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE COMPANY.
The undersigned, having received notice of the meeting and the proxy
statement therefor, and revoking all prior proxies, hereby appoint(s) John H.
Fisher and Charles A. Gottesman, and each of them, attorneys or attorney of the
undersigned (with full power of substitution in them and each of them) for and
in the name(s) of the undersigned to attend the Annual Meeting of Stockholders
of Hyde Athletic Industries, Inc. (the "Company") to be held at the Company's
headquarters, Centennial Industrial Park, 13 Centennial Drive, Peabody,
Massachusetts 01960 at 11:00 a.m. (local time), on Thursday, May 21, 1998 and
any adjourned sessions thereof, and there to vote and act upon the following
matters in respect of shares of Class A Common Stock of the Company which the
undersigned would be entitled to vote or act upon, with all powers the
undersigned would possess if personally present. Each of the following matters
is being proposed by the Company.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT THEREOF.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 18
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
PRINT THAT NOMINEE'S NAME IN THE LINE PROVIDED BELOW.)
1. Election of directors [ ] FOR [ ] WITHHELD
FOR (all nominees except as marked below)
- -----------------------------------------
NOMINEES: John H. Fisher, Phyllis H. Fisher, Charles A. Gottesman, Robert J.
LeFort, Jr. and John J. Neuhauser
2. Approval of an amendment to the Company's Restated Articles of
Organization, as amended, to change the name of the Company to "Saucony,
Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO OFFICE
OR PROPOSAL.
Attendance of the undersigned at the meeting or at any adjourned session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person. If the undersigned hold(s) any of the shares of the Company in
a fiduciary, custodial or joint capacity or capacities, this proxy is signed by
the undersigned in every such capacity as well as individually.
<PAGE> 19
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S)_______________________________________ DATE ____________________
NOTE: Please sign name(s) exactly as appearing hereon. When signing as attorney,
executor, administrator, or other fiduciary, please give your full title
as such. Joint owners should each sign personally.
