<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SAUCONY, INC.
(Name of Registrant as Specified In Its Charter)
SAUCONY, INC.
(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
SAUCONY, INC.
13 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
--------------------------------
The Annual Meeting of Stockholders of Saucony, Inc. (the "Company") will be
held at the offices of the Company, 13 Centennial Drive, Peabody, Massachusetts,
on Thursday, May 20, 1999 at 11:00 a.m., local time, to consider and act upon
the following matters:
1. To elect six directors.
2. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
current fiscal year.
3. 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 1, 1999 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 16, 1999
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
SAUCONY, INC.
13 CENTENNIAL DRIVE
PEABODY, MASSACHUSETTS 01960
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Saucony, Inc. (the "Company") for use at
the Annual Meeting of Stockholders to be held on May 20, 1999 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 1, 1999
("fiscal 1998") 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 16, 1999.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1999 as filed with the Securities and Exchange Commission (the
"Commission"), excluding exhibits, will be furnished without charge to any
stockholder upon written request to Terence P. Chin, Chief Financial Officer,
Saucony, Inc., 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 1, 1999 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 2,679,027 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.
Although Massachusetts law no longer requires that the Company's auditors
be approved each year by the holders of Class A Common Stock, the Board of
Directors continues the practice of submitting such action to the holders of
Class A Common Stock for their approval because the Board deems it appropriate
to do so. 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 shares of
<PAGE> 4
Class A Common Stock voting on the matter is required to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
current fiscal year.
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.
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) each director, (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, 1999.
The number of shares beneficially owned by each person and shown below 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, 1999 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 under
the rules of the Commission to be 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>
John H. Fisher.................................. 890,936(1) 239,261(2) 33.3% 6.6%
c/o Saucony, Inc.
13 Centennial Drive
Peabody, MA 01960
Charles A. Gottesman and Merrill F. Gottesman... 890,936(3) 226,167(4) 33.3% 6.3%
c/o Saucony, Inc.
13 Centennial Drive
Peabody, MA 01960
PooRoo LLC...................................... 382,472(5) -- 14.3% --
c/o Saucony, Inc.
13 Centennial Drive
Peabody, MA 01960
Dimensional Fund Advisors Inc. ................. 179,300(6) -- 6.7% --
1299 Ocean Avenue
Santa Monica, CA 90401
OTHER DIRECTORS
John M. Connors, Jr............................. -- 13,500(7) -- 0.4%
</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>
Phyllis H. Fisher............................... -- 12,502(8) -- 0.4%
Robert J. LeFort, Jr............................ -- 18,500(9) -- 0.5%
John J. Neuhauser............................... -- 28,500(10) -- 0.8%
OTHER NAMED EXECUTIVE OFFICERS
Terence P. Chin................................. -- 12,500 -- 0.4%
Arthur E. Rogers, Jr............................ 11,750 3,220(11) 0.4% 0.1%
Wolfgang Schweim................................ 800 9,350(12) -- 0.3%
Kenneth W. Graham............................... 1,000(13) 9,724(13) -- 0.3%
All directors and executive officers as a group
(14 persons).................................. 1,247,350(14) 533,154(15) 46.5% 14.2%
</TABLE>
- ---------------
(1) Includes 382,472 shares held by PooRoo LLC of which each of Mr. Fisher and
his sister, Merrill F. Gottesman, has a 50% membership interest and shares
investment and voting power; 166,820 shares held in trust for the benefit
of Mr. Fisher and Mrs. Gottesman for which Mr. Fisher and Mrs. Gottesman
are trustees and share investment and voting power; 1,333 shares held by
Mr. Fisher's daughter for which Mr. Fisher exercises sole voting and
investment power; 311,129 shares held by Mr. Fisher for which he exercises
sole investment and voting power; 4,000 shares held by Mrs. Donna Fisher,
Mr. Fisher's wife; 14,382 shares held in trust for the benefit of Mr.
Fisher's children, for which Mr. Fisher is the trustee and exercises sole
voting power; and 10,800 shares held in a generation skipping trust for
which Mr. Fisher exercises sole voting and investment power. Beneficial
ownership is determined pursuant to Rule 13d-3 under the Securities and
Exchange Act of 1934, as amended. Mr. Fisher disclaims beneficial ownership
of 191,236 shares held by PooRoo LLC of which Mr. Fisher and Mrs. Gottesman
share investment and voting power, and further disclaims beneficial
ownership of 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.
(2) Includes 46,820 shares held in trust for the benefit of Mr. Fisher and Mrs.
Gottesman for which Mr. Fisher and Mrs. Gottesman are trustees and share
investment and voting power; 10,800 shares held in a generation skipping
trust for which Mr. Fisher exercises sole 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; 128,359
shares held by Mr. Fisher for which he exercises sole investment and voting
power; and 51,700 shares which Mr. Fisher has the right to acquire pursuant
to outstanding options exercisable within 60 days after March 31, 1999.
Beneficial ownership is determined pursuant to Rule 13d-3 under the
Securities and Exchange Act of 1934, as amended. Mr. Fisher disclaims
beneficial ownership of 23,410 shares on which Mr. Fisher and Mrs.
Gottesman share investment power.
(3) Includes 382,472 shares held by PooRoo LLC of which each of Merrill F.
Gottesman and John H. Fisher has a 50% membership interest and shares
investment and voting power; 166,820 shares held in trust for the benefit
of Mrs. Gottesman and Mr. Fisher for which Mrs. Gottesman and Mr. Fisher
are trustees and share investment and voting power; 10,666 shares held by
Mr. and Mrs. Gottesman's daughters for which Mr. and Mrs. Gottesman
exercise shared investment and voting power; 7,964 shares held in trust for
the benefit of Mr. and Mrs. Gottesman's daughters for which Mrs. Gottesman
is the trustee and exercises sole investment and voting power; 101,481
shares held in the name of Mr. Gottesman; and 221,533 shares held in the
name of Mrs. Gottesman. Beneficial ownership is determined pursuant to Rule
13d-3 under the Securities and Exchange Act of 1934, as amended.
3
<PAGE> 6
Mr. Gottesman disclaims beneficial ownership of 191,236 shares held by
PooRoo LLC of which Mrs. Gottesman and Mr. Fisher share investment and
voting power, and further disclaims beneficial ownership or benefit of
83,410 shares held in trust for the benefit of Mr. Fisher for which Mrs.
Gottesman and Mr. Fisher are trustees and share investment and voting
power.
(4) Includes 120,613 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 power; 46,820 shares held in trust for the
benefit of Mrs. Gottesman and Mr. Fisher for which Mrs. Gottesman and Mr.
Fisher are trustees and share investment and voting power; 10,800 shares
held in the name of Mrs. Gottesman; and 44,770 shares which Mr. Gottesman
has the right to acquire pursuant to outstanding options exercisable within
60 days after March 31, 1999. Beneficial ownership is determined pursuant
to Rule 13d-3 under the Securities and Exchange Act of 1934, as amended.
Mr. Gottesman disclaims beneficial ownership of 23,410 shares on which Mrs.
Gottesman and Mr. Fisher share investment power.
(5) The information reported is based on a Schedule 13D, dated February 26,
1999, filed with the Commission by PooRoo LLC, PooRoo, Inc., John H. Fisher
and Charles A. Gottesman and Merrill F. Gottesman. PooRoo LLC is the direct
owner of 382,472 shares. PooRoo, Inc. is the managing member of PooRoo LLC
and as a result is deemed to have an indirect interest in and the power to
direct the vote and disposition of the 382,472 shares held by PooRoo LLC.
(6) The information reported is based on a Schedule 13G, dated December 31,
1998, filed with the Commission by Dimensional Fund Advisors Inc.
("Dimensional"). Dimensional is a registered investment advisor and deemed
to have beneficial ownership of all of such shares. These shares are held
in investment vehicles, including commingled group trusts, to which
Dimensional serves as investment advisor and investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(7) Consists of 13,500 shares which Mr. Connors has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1999.
(8) Includes 7,500 shares of Class B Common Stock which Mrs. Fisher has the
right to acquire pursuant to outstanding stock options exercisable within
60 days of March 31, 1999 and 5,002 shares held by Mrs. Fisher for which
she exercises sole investment power.
(9) Consists of 18,500 shares which Mr. LeFort has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1999.
(10) Consists of 28,500 shares which Mr. Neuhauser has the right to acquire
pursuant to outstanding options exercisable within 60 days after March 31,
1999.
(11) Consists of 3,220 shares which Mr. Rogers has the right to acquire pursuant
to outstanding options exercisable within 60 days of March 31, 1999.
(12) Includes 8,550 shares which Mr. Schweim has the right to acquire pursuant
to outstanding options exercisable within 60 days after March 31, 1999. Mr.
Schweim also has the right to acquire (a) 3,000 shares of Class B Common
Stock pursuant to an outstanding option exercisable within 60 days after
March 31, 1999 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) 3,000 shares of Class B Common Stock
pursuant to an outstanding option exercisable within 60 days after March
31, 1999 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.
(13) Consists of 1,000 shares and 9,724 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,
1999.
4
<PAGE> 7
(14) Includes a total of 1,900 shares which all executive officers and directors
have the right to acquire pursuant to outstanding options exercisable
within 60 days after March 31, 1999.
(15) Includes a total of 192,394 shares which all executive officers and
directors have the right to acquire pursuant to outstanding options
exercisable within 60 days after March 31, 1999.
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.
ELECTION OF DIRECTORS
Unless otherwise instructed, the persons named in the accompanying proxy
will vote to elect as directors the six nominees named below, all of whom are
presently directors of the Company. The proxy may not be voted for more than six
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 M. CONNORS, JR., age 56, has been a director since 1998. Mr. Connors
has been Chief Executive Officer of Hill, Holliday, Connors, Cosmopulos, Inc.,
an advertising firm, since 1968. He is a member of the board of directors of
Lycos, Inc., an Internet company, and Geerlings & Wade, Inc., a direct marketer
of wines.
JOHN H. FISHER, age 51, 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
and the brother-in-law of Charles A. Gottesman.
PHYLLIS H. FISHER, age 76, is a retired investor and has been a director
since 1982.
CHARLES A. GOTTESMAN, age 48, 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 and the brother-in-law of John
H. Fisher.
ROBERT J. LEFORT, JR., age 45, has been a director since 1997. Mr. LeFort
has served since 1992 as President of Magnetix Group, an audio duplication and
fully integrated order fulfillment company.
JOHN J. NEUHAUSER, age 56, 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. He is presently a
director of all of the mutual funds of the Colonial Group and is a director of
Logic World, Inc. and of Wakefield Software Systems, Inc., companies engaged in
the computer industry. He currently is a Corporator of Emerson Hospital and is a
former member of the Executive Committee of the Boston Management Consortium.
5
<PAGE> 8
BOARD AND COMMITTEE MEETINGS
The Board of Directors met four times during fiscal 1998 and acted by
written consent on eight 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 Company's independent accountants. The Audit Committee met once during
fiscal 1998. The members of the Audit Committee are Messrs. LeFort 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. The Compensation Committee acted by
written consent on three occasions during fiscal 1998. The members of the
Compensation Committee are Messrs. LeFort 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
Non-employee directors are paid an annual retainer of $15,000.
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 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
---------------------
ANNUAL COMPENSATION AWARDS
--------------------------- ---------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(2)
--------------------------- ---- -------- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
John H. Fisher.................... 1998 $315,406 $220,646 -- $12,866
President and 1997 305,660 -- 12,750 12,696
Chief Executive Officer 1996 277,821 73,762 -- 12,553
Charles A. Gottesman.............. 1998 283,865 220,646 13,885
Executive Vice President 1997 275,094 -- 12,750 13,026
and Chief Operating Officer 1996 250,039 73,762 -- 14,302
Arthur E. Rogers, Jr.............. 1998 180,000(3) 87,500 -- 7,353
President, Saucony North 1997 130,000 -- 11,100 1,625
America 1996 121,923 -- -- 1,524
Wolfgang Schweim.................. 1998 224,536 10,000 -- 2,666
President, Saucony 1997 213,561 -- 12,750 3,183
International 1996 210,848 -- -- 3,183
Kenneth W. Graham................. 1998 165,735 10,000 -- 5,045
Senior Vice President 1997 149,269 -- 9,800 4,931
Research & Development 1996 135,000 -- -- 4,688
</TABLE>
6
<PAGE> 9
- ---------------
(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, $5,000, $2,666 and $3,000 for Messrs. Fisher,
Gottesman, Rogers, Schweim, and Graham, respectively, for the last fiscal
year. The Company's contributions under its Non-Qualified Retirement Plan
for Messrs. Fisher, Gottesman, Rogers, and Graham for the last fiscal year
were $2,366, $2,835, $2,353, and $2,045, respectively.
(3) Mr. Rogers was promoted to the position of President, Saucony North America
in January 1998.
Aggregated Option Exercises in last Fiscal Year and Fiscal Year End Option
Table. The following table sets forth certain information regarding stock
options exercised during fiscal 1998 and held as of January 1, 1999 by the Named
Executive Officers. None of the Named Executive Officers were granted any stock
options during fiscal 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(2)
ON VALUE ---------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John H. Fisher........... 28,728(3) $44,888 51,700(3) 10,200(3) $121,434 $18,488
Charles A. Gottesman..... 25,832(3) $40,363 44,770(3) 10,200(3) $106,697 $18,488
Arthur E. Rogers, Jr..... -- -- 3,070(3) 9,130(3) $ 5,386 $16,545
Wolfgang Schweim......... -- -- 20,550(3) 14,700(3) $ 40,622 $27,488
Kenneth Graham........... -- -- 10,724(4) 7,840(3) $ 37,793 $14,210
</TABLE>
- ---------------
(1) Value based on last sale price of the Class B Common Stock on the date of
exercise less the exercise price.
(2) Value based on last sale price of the Common Stock at the fiscal year end
($7.125 per share of Class A Common Stock and $6.250 per share of Class B
Common Stock) less the exercise price.
(3) Represents shares of Class B Common Stock.
(4) Consists of 1,000 shares of Class A Common Stock with an in-the-money value
of $4,875 and 9,724 shares of Class B Common Stock with an in-the-money
value of $32,918.
EXECUTIVE COMPENSATION
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.
7
<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors consists of
Messrs. LeFort 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.
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.
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.
The Compensation Committee believes that the Chief Executive Officer's base
salary for fiscal 1998 was appropriate based on its evaluation of Mr. Fisher's
performance during fiscal 1998 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. In accordance with the provisions of their expired employment
agreements, the bonuses awarded to Messrs. Fisher and Gottesman were based upon
a percentage of pre-tax net income of the Company. The bonus for Mr. Fisher for
fiscal 1998 of $220,646 was equal to approximately 4% of the Company's pre-tax
profit. The Compensation Committee believes that awarding Mr. Fisher this type
of bonus effectively aligns Mr. Fisher's compensation with the success of the
Company and was appropriate based upon the Compensation Committee's evaluation
of Mr. Fisher's performance in fiscal 1998. Key quantitative factors affecting
the Compensation Committee's evaluation of Mr. Fisher included the Company's
revenues and pre-tax profit. The key qualitative factor affecting the
Compensation Committee's evaluation of Mr. Fisher was his leadership of the
Company.
8
<PAGE> 11
For other executive officers, the Board of Directors, upon recommendation
of the Compensation 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.
Reflecting Company performance in 1997, no stock option grants were made to
any Executive Officer in fiscal 1998.
Robert J. LeFort, Jr.
John J. Neuhauser
9
<PAGE> 12
STOCK PERFORMANCE CHART
Since 1993, total shareholder return's on the Company's outstanding Common
Stock has been compared against the Shoes Index and the S&P 500. Beginning with
the current Proxy Statement, total shareholder returns on Company stock will be
compared against a Saucony Footwear Group Index to reflect the cessation of
traded shares in one component (L.A. Gear) of the old Shoes Index and to broaden
the number of included companies. In addition, the Company's performance will be
compared against the broader market based Russell 2000 Index. These changes in
benchmarks are being undertaken to provide better comparability between the
Company and an established identifiable peer group, and to recognize the modest
market capitalization of the Company's shares in contrast to the larger
companies reflected in the S&P 500.
PERFORMANCE CHART
<TABLE>
<CAPTION>
SAUCONY FOOTWEAR S&P 500
SAUCONY, INC. RUSSELL 2000 INDEX INDEX (1) COMPOSITE INDEX SHOES INDEX (2)
------------- ------------------ ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
'1993' 100.00 100.00 100.00 100.00 100.00
'1994' 87.31 96.82 72.32 101.37 108.65
'1995' 70.44 122.19 63.73 139.82 99.22
'1996' 89.61 140.23 102.46 173.66 120.61
'1997' 70.16 169.00 82.21 230.67 143.94
'1998' 121.72 163.18 54.97 296.17 99.59
</TABLE>
(1) Saucony Footwear Index consists of Converse, Inc., Fila Holdings SPA,
K-Swiss, Inc. - Class A, Stride Rite Corp., Timberland Co. - Class A, and
Vans, Inc. The returns of each component company of the Saucony Footwear
Index is weighted according to the respective company's stock market
capitalization at the beginning of the period.
(2) Shoes Index includes K-Swiss, Inc. - Class A 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.
10
<PAGE> 13
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
PricewaterhouseCoopers LLP as the Company's independent accountants for the
current fiscal year. PricewaterhouseCoopers LLP (or one of its predecessor
firms) has been the Company's independent accountants for the six most recent
fiscal years.
Representatives of PricewaterhouseCoopers LLP 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 Securities and Exchange 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 1998 its officers,
directors and holders of more than 10% of the Company's Common Stock complied
with all Section 16(a) filing requirements. Phyllis H. Fisher, John H. Fisher
and Charles A. Gottesman and Merrill F. Gottesman did not timely file a Form 4
with the Commission in connection with certain gifts of Class A Common Stock
made by Mrs. Fisher during December 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.
Any proposal that a stockholder of the Company wishes to be considered for
inclusion in the Company's proxy statement and proxy card for the Company's 2000
Annual Meeting of Stockholders (the "2000 Annual Meeting") must be submitted to
the Clerk of the Company at its offices, 13 Centennial Drive, Peabody,
Massachusetts 01960, no later than December 31, 1999.
If a stockholder of the Company wishes to present a proposal before the
2000 Annual Meeting, but does not wish to have the proposal considered for
inclusion in the Company's proxy statement and proxy card, such stockholder must
also give written notice to the Clerk of the Company at the address noted above.
The Clerk must receive such notice no later than March 22, 2000. If a
stockholder fails to provide timely notice of a proposal to be presented at the
2000 Annual Meeting, the proxies designated by the Board of Directors of the
Company will have discretionary authority to vote on any such proposal.
By Order of the Board of Directors,
David E. Redlick, Clerk
April 16, 1999
11
<PAGE> 14
------------------------
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.
12
<PAGE> 15
PROXY SAUCONY, INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS - MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY.
This 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 Saucony, Inc. (the "Company") to be held at the Company's headquarters, 13
Centennial Drive, Peabody, Massachusetts 01960 at 11:00 a.m. (local time), on
Thursday, May 20, 1999 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> 16
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
SAUCONY, INC.
MAY 20, 1999
Please Detach and Mail in the Envelope Provided
A [X] PLEASE MARK YOUR
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.)
FOR WITHHELD
1. Election of [ ] [ ] NOMINEES:
Directors John M. Connors, Jr.
John H. Fisher
FOR (ALL NOMINEES EXCEPT AS MARKED BELOW) Phyllis H. Fisher
Charles A. Gottesman
Robert J. LeFort, Jr.
John J. Neuhauser
- -----------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as the
Company's independent accountants.
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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S) DATE , 1999
------------------------------------------- ---------------
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.
