<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
KELLWOOD COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] 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
KELLWOOD LOGO
1998
PROXY STATEMENT
<PAGE> 3
KELLWOOD COMPANY
600 KELLWOOD PARKWAY, ST. LOUIS COUNTY, MISSOURI 63017
1998 Proxy Statement
and
Notice of Annual Meeting of Shareowners
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareowners of
Kellwood Company, a Delaware corporation (hereinafter referred to as the
"Company"), will be held at 600 Kellwood Parkway, St. Louis County, Missouri, on
Thursday, August 27, 1998, at 9:00 A.M. for the following purposes:
1. To elect four members to the Board of Directors to hold office for
a period of two years and until their successors are duly elected and
qualified;
2. To consider and vote on one shareholder-proposed resolution
described in the Proxy Statement; and
3. To transact such other business as may properly come before the
meeting, and any adjournments thereof.
The Board of Directors has fixed the close of business on June 29, 1998 as
the record date for determining shareowners entitled to notice of the aforesaid
Annual Meeting and to vote thereat in person or by proxy.
The Proxy Statement is set forth following this Notice of Annual Meeting.
Also accompanying this Notice of Annual Meeting are a Proxy and the Company's
Annual Report for the fiscal year ended April 30, 1998.
By Order of the Board of Directors
/s/ Thomas H. Pollihan
Thomas H. Pollihan
Vice President, Secretary and
General Counsel
St. Louis, Missouri
July 16, 1998
<PAGE> 4
KELLWOOD COMPANY
600 KELLWOOD PARKWAY
ST. LOUIS COUNTY, MISSOURI 63017
APPROXIMATE
MAILING DATE:
JULY 16, 1998
PROXY STATEMENT
ANNUAL MEETING OF SHAREOWNERS -- AUGUST 27, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
the accompanying proxy card by the Board of Directors of Kellwood Company, a
Delaware corporation (the "Company"), for the Annual Meeting of Shareowners to
be held on August 27, 1998. Only shareowners of record at the close of business
on June 29, 1998, are entitled to notice of, and to vote (in person or by proxy)
at the meeting.
This Proxy Statement and proxy card are being mailed on or about July 16,
1998. The Company's Annual Report (including financial statements) to its
shareowners for the fiscal year ended April 30, 1998, accompanies this Proxy
Statement.
The expense of soliciting proxies for the meeting, including the cost of
preparing, assembling and mailing the notice, proxy and Proxy Statement and the
reasonable costs of brokers, nominees and fiduciaries in supplying proxies to
beneficial owners, will be paid by the Company. The solicitation will be made by
the use of the mails, through brokers and banking institutions, and by officers
and regular employees of the Company. In addition, the Company has engaged
Morrow & Co., Inc., a firm specializing in solicitation of proxies, to assist in
the current solicitation for an estimated fee of $4,500, plus reimbursement for
their out-of-pocket expenses.
VOTING PROCEDURES
Shareowners are entitled to one vote per share owned on the record date
and, with respect to the election of directors, shareowners have the right to
cumulative voting. Under cumulative voting, each shareowner is entitled to a
number of votes equal to the number of directors to be elected multiplied by the
number of shares he or she owns, and he or she may cast all of his or her votes
for one nominee or distribute them in any manner he or she chooses among any
number of nominees.
If the accompanying proxy card is signed and returned in time, the shares
represented thereby will be voted, unless otherwise indicated on the proxy card,
in accordance with the specifications thereon. If no contrary specification is
made, the proxies intend to vote the shares so represented to elect the largest
number of the nominees for directors named herein which can be elected under
cumulative voting. If no other persons are nominated for election to the Board,
votes represented by all properly executed proxy cards will be distributed in
approximately equal numbers among the nominees set forth below. If allocation is
necessary, the proxies will use their discretion in making the allocation among
nominees. Shareowners who do not wish to have their votes distributed in
approximately equal numbers among the nominees or do not want to grant the
proxies discretion to allocate, if allocation is deemed necessary by the
proxies, should mark their proxy cards to indicate how they wish to have the
proxies distribute their votes.
The proxies reserve the right not to vote and to return to a shareowner any
proxy card in which the authority to vote shares represented thereby is made
subject to any condition or conditions by such shareowner other than as
expressly provided for in the accompanying proxy card.
1
<PAGE> 5
The four directors receiving the highest number of the votes at the
meeting, present in person or by proxy, will be elected. Those proxies
containing instructions to "Withhold Authority" to vote shares for one or all of
the nominees will be counted for the purpose of determining a quorum to transact
business, but not entitled to vote for the nominee(s) for which voting authority
is being withheld. With respect to proposal 2, abstentions will be counted in
determining voting results, but broker non-votes will not be counted.
The Company's management knows of no matter to be brought before the
meeting other than that referred to in Items 1 and 2 of the foregoing Notice of
Annual Meeting of Shareowners. However, if any other matters properly come
before the meeting, it is intended that the proxy cards in the accompanying form
which are duly signed and returned in time will be voted on those matters in
accordance with the judgment of the person or persons voting the proxy card. Any
shareowner who signs and returns a proxy card may revoke that proxy card at any
time prior to the voting thereof either by revoking the proxy card in person at
the meeting or by delivering a signed written notice of revocation to the office
of the Secretary of the Company before the meeting begins.
SHAREOWNER PROPOSALS
Shareowners wishing to include proposals in the Company's Proxy Statement
for the 1999 Annual Meeting of Shareowners must submit their proposals so that
they are received by the Secretary of the Company at the principal executive
offices in St. Louis by March 18, 1999. Shareowners wishing to bring a proposal
before the 1999 Annual Meeting of Shareowners (but not include it in the
Company's Proxy Statement) must cause written notice of the proposal to be
received by the Secretary of the Company at the principal executive offices in
St. Louis by no later than June 1, 1999. In addition, Section 2.10 of the
Company's By-Laws imposes certain time and information requirements on
shareowners wishing to bring business before a shareowner meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At the close of business on June 29, 1998 (the "record date"), the Company
had 21,604,726 shares outstanding. The table listed below contains information
concerning each person who is known by the Company to be the beneficial owner of
more than five percent of the Company's common stock. To the best of the
Company's knowledge, no other persons are beneficial owners of five percent or
more of the Company's shares.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------- ------------- --------
<S> <C> <C> <C>
Common Stock FMR Corp.
82 Devonshire Street
Boston, MA 02109 1,796,350(1) 8.37%
Common Stock The Prudential Insurance
Company of America
751 Broad Street
Newark, NJ 07102-3777 1,234,785(2) 5.75%
</TABLE>
- ---------
(1) As reported on their Schedule 13G dated February 14, 1998, FMR Corp., a
parent holding company, was the beneficial owner of 1,796,350 shares
representing approximately 8.37% of the total shares outstanding on that
day. The 1,796,350 shares include 1,552,000 shares beneficially owned by its
subsidiary, Fidelity Management & Research Company, a registered Investment
Advisor, and 244,350 shares beneficially owned by FMR's subsidiary, Fidelity
Management Trust Company, a bank. FMR Corp. has sole voting power for
212,150 of the shares, shared voting power for none of the shares and sole
dispositive power for 1,796,350 shares.
(2) As reported on their Schedule 13G dated February 10, 1998, The Prudential
Insurance Company of America, a registered insurance company and investment
advisor, was the beneficial owner of 1,234,785
2
<PAGE> 6
shares representing 5.75% of the total shares outstanding on that day, and
The Prudential Insurance Company of America has sole voting power for 5,000
shares, shared voting power for 1,229,785 shares, sole dispositive power for
5,000 shares, and shared dispositive power for 1,229,785 shares.
ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of not less than three nor more than 15 directors, with
the number of directors to be fixed by the Board, and that the Board shall be
divided into two classes, with one class being elected each year for a two-year
term. On November 21, 1995, the Board of Directors by resolution amended section
3.1 of the Company's By-laws fixing the number of directors at ten and,
accordingly, four directors are to be elected at the annual meeting to serve for
two years or until the 2000 Annual Meeting of Shareowners and until their
respective successors shall have been elected and qualified. The persons named
as proxies in the accompanying proxy card have indicated that they intend to
vote for the election of the largest number of nominees set forth hereinafter
which they can elect under cumulative voting. For a discussion of cumulative
voting, see above.
In the event that any of the following nominees for election as director is
not available to serve as a director at the time of election at the meeting,
proxy cards may be voted for a substitute nominee as well as for the remaining
nominees named herein. However, the Company's management has no reason to
anticipate that any nominees will be unavailable.
NOMINEES FOR ELECTION TO SERVE UNTIL 2000
JERRY M. HUNTER, AGE 46
Director of the Company since 1994. Partner at Bryan Cave (law firm) from
December 1993 to present. General Counsel, National Labor Relations Board,
Washington, D.C., from November 1989 to November 1993. Director, Missouri
Department of Labor and Industrial Relations from 1986 to 1989. Labor Counsel,
Kellwood Company from November 1981 to May 1986.
Member: Audit Committee.
JAMES C. JACOBSEN, AGE 63
Director of the Company since 1975. Vice Chairman since November 22, 1994.
Executive Vice President Administration from May 31, 1989 to November 22, 1994.
Senior Vice President Finance-Administration from 1988 to 1989. Senior Vice
President Finance from 1986 to 1988.
Member: Executive and Finance Committees.
JAMES S. MARCUS, AGE 68
Director of the Company since 1965. A Limited Partner of The Goldman Sachs
Group, L.P. (investment bankers) since March 28, 1989. Director of American
Biltrite, Inc.
Member: Compensation and Stock Option, and Finance Committees.
WILLIAM J. MCKENNA, AGE 71
Director of the Company since 1982. Chairman of the Company from May 1,
1991 to present. Chairman and Chief Executive Officer from November 22, 1994 to
November 25, 1997. Chairman, President and Chief Executive Officer from May 1,
1991 to November 22, 1994. Chief Executive Officer since 1984. President from
1982 to November 22, 1994. Director of Genovese Drug Stores, Inc. and United
Missouri Bancshares, Inc.
Member: Executive and Nominating Committees.
3
<PAGE> 7
DIRECTORS CONTINUING TO SERVE UNTIL 1999
RAYMOND F. BENTELE, AGE 61
Director of the Company since 1993. President and Chief Executive Officer
of Mallinckrodt, Inc. from 1978 until retirement on November 30, 1992. Director
of Mallinckrodt Inc. (manufacturer of medical, specialty chemical and veterinary
products). Director of IMC Global, Inc. (food crop mineral nutrients). Director
of Leggett & Platt, Incorporated (manufacturer of components for the home
furnishings industry).
Member: Compensation and Stock Option, and Nominating Committees.
EDWARD S. BOTTUM, AGE 64
Director of the Company since 1981. Managing Director, Chase Franklin
Corporation (merchant banking) since April 1990. Chairman and Director, Geo. T.
Schmidt, Inc. (manufacturer of machines and dies) since 1991. Director, Azar Nut
Company (food processing) since 1991. Director, Wireless Data Corporation
(manufacturer of measurement instruments for harsh environments), January 1994
to September 1996. Trustee, 231 Funds (family of mutual funds), July 1993 to
July 1995. Trustee, The Time Horizon Funds (mutual funds family) since July
1995. Chairman, Learning Insights, Inc. (publisher of interactive multimedia
training products) since February 1996. Chairman, Pacific Innovations Trust
(mutual fund for variable annuities) since December 1996. Trustee, Underwriters
Laboratories, Inc. (product safety certification) since May 1997. Chairman,
Inplox Custom Extruders, L.L.C. (plastics extruder) since July 1997.
Member: Audit, Finance and Nominating Committees.
KITTY G. DICKERSON, PH.D., AGE 58
Director of the Company since 1991. Professor and Chair of the Department
of Textile and Apparel Management, University of Missouri, Columbia, Missouri
from 1986 to Present.
Member: Audit Committee.
LEONARD A. GENOVESE, AGE 64
Director of the Company since 1995. President, Genovese Drug Stores, Inc.
since 1974. Chairman of the Board of Genovese Drug Stores, Inc. from 1978 to
present (retail chain drug stores). Director, TR Financial Corp. (banking) since
1993. Director, Aid Auto Stores, Inc. (automotive parts supply) since 1995.
Director, The Stephan Company (hair care) since 1997.
Member: Compensation and Stock Option Committee.
HAL J. UPBIN, AGE 59
Director of the Company since 1995. Chief Executive Officer of the Company
since November 25, 1997. President and Chief Operating Officer of the Company
from November 22, 1994 to November 25, 1997. Executive Vice President Corporate
Development from May 28, 1992 to November 22, 1994. Vice President Corporate
Development from November 27, 1990 to May 27, 1992. President of American
Recreation Products, Inc. from March 1, 1989 to May 1, 1992, and Director from
May 1, 1991 to present. American Recreation Products, Inc. is a wholly-owned
subsidiary of the Company.
Member: Executive Committee.
FRED W. WENZEL, AGE 82
Director of the Company since 1961. Chairman Emeritus since May 1, 1991.
Chairman of the Board from 1964 to April 30, 1991.
4
<PAGE> 8
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no compensation for
their service as directors. Non-employee directors were compensated for their
services at the rate of $23,000 per annum. In addition, each non-employee
director receives $1,000 for each Board Meeting and $1,000 for each Committee
meeting attended, not to exceed $2,000 for any one day, and is reimbursed for
expenses incurred in attending those meetings.
Under the 1995 Stock Option Plan for Nonemployee Directors, each person who
remains or becomes a Nonemployee Director of the Company is granted an option to
purchase 1,000 shares of Common Stock on the first business day after the date
of the first annual meeting at which such person was elected or remained a
Nonemployee Director. The option price for each share granted to a Nonemployee
Director is 100% of the fair market value of the shares subject to option on the
date of the option grant. The option price may be paid by check or by the
delivery of shares of Common Stock then owned by the participant. On May 28, the
Board of Directors approved a grant of 100 shares of restricted common stock to
each Nonemployee Director to be issued out of shares held in its treasury
effective immediately following the Annual Meeting each year.
F.W. Wenzel served as an Advisor to the Compensation and Stock Option
Committee which met three times during the fiscal year. He received $800 for
each of the three meetings he attended.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the general performance of the Company. The Board
meets regularly four times per year, and holds special meetings as required. In
fiscal 1998, the Board met four times.
Each director spends considerable time in preparing for and attending Board
and Committee meetings. During the Company's most recent fiscal year, each
director attended at least 75% of the Board meetings and meetings of Committees
to which he or she was appointed.
The Board has an Executive Committee, Finance Committee, Audit Committee,
Compensation and Stock Option Committee and Nominating Committee.
The Executive Committee, between Board meetings, has all the authority of
the Board of Directors in the management of the business affairs of the Company
(except for action relating to dividends, stock issuances, and certain
fundamental corporate changes). The Executive Committee did not meet during
fiscal 1998. On two occasions actions were taken by unanimous written consent
after the Committee reviewed proposals circulated to members. The members of the
Committee were W.J. McKenna, Chairman, J.C. Jacobsen and H.J. Upbin.
The Finance Committee's responsibilities are to study and suggest methods
for obtaining the future financing requirements of the Company. The Finance
Committee met once during fiscal 1998. Members of the Committee were J.C.
Jacobsen, Chairman, E.S. Bottum and J.S. Marcus.
The Audit Committee's responsibilities include recommending to the Board of
Directors the independent accountants to be employed for the purpose of
conducting the annual examination of the Company's financial statements,
discussing with the independent accountants the scope of their examination,
reviewing the Company's financial statements and the independent accountants'
report thereon with Company personnel and the independent accountants, and
inviting the recommendations of the independent accountants regarding internal
controls and other matters. The Audit Committee met two times during fiscal
1998. Members of the Committee were E.S. Bottum, Chairman, K.G. Dickerson and
J.M. Hunter.
The Compensation and Stock Option Committee's responsibilities include
approving salaries of executives of the Company, administering and interpreting
compensation plans, and granting cash bonuses, stock bonuses and other benefits
under such plans. The Compensation and Stock Option Committee met three times
during fiscal 1998. Members of the Committee were J.S. Marcus, Chairman, R.F.
Bentele and L.A. Genovese.
5
<PAGE> 9
The Nominating Committee makes recommendations to the Board with respect to
the size and composition of the Board. In addition, the Committee reviews the
qualifications of candidates, and makes recommendations to the Board with
respect to nominees, for election as directors. The Committee also considers
nominees recommended by shareholders. The By-laws require that notice of
nominations proposed by shareholders be received by the Secretary of the
Company, along with certain other specified material, not less than 60 days nor
more than 90 days prior to the meeting of shareholders at which directors are to
be elected. Any shareholder who wishes to nominate a candidate for election to
the Board should obtain a copy of the relevant section of the By-laws from the
Secretary of the Company. The Committee did not meet in fiscal 1998. Members of
the Committee were W.J. McKenna, Chairman, R.F. Bentele and E.S. Bottum.
6
<PAGE> 10
MANAGEMENT OWNERSHIP
OF THE COMPANY'S STOCK
Under regulations of the Securities and Exchange Commission, persons who
have power to vote or to dispose of shares of the Company, either alone or
jointly with others, are deemed to be beneficial owners of those shares. The
following table shows, as of June 29, 1998, the beneficial ownership of each
present director and each nominee for director, and of all present directors and
executive officers as a group, of shares of the Company's common stock. This
information has been furnished to the Company by the individuals named. As shown
in the last column, in some cases a significant number of the shares indicated
in the center column as being beneficially owned are actually unissued shares
attributable to unexpired options for the Company's common stock which are
presently exercisable or first become exercisable within 60 days after June 29,
1998. With the exception of Mr. McKenna who owns approximately 1.4% of the
outstanding common stock of the Company, no nominee or present director owns
more than 1% thereof. All executive officers and directors as a group own
approximately 4.6% of the outstanding common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF INCLUDED IN PREVIOUS
SHARES COLUMN ATTRIBUTABLE
NAME OF INDIVIDUAL BENEFICIALLY TO UNEXPIRED
OR NUMBER IN GROUP OWNED OPTIONS TO PURCHASE
------------------ ------------ --------------------
<S> <C> <C>
R.F. Bentele................................. 3,750 3,000
E.S. Bottum.................................. 5,650 3,000
K.G. Dickerson............................... 3,400 2,500
L.A. Genovese................................ 4,916 2,000
E. Harding, Jr............................... 18,582 6,200
J.R. Henderson............................... 21,322 17,200
J.M. Hunter.................................. 3,000 3,000
J.C. Jacobsen................................ 127,108 52,540
J.S. Marcus.................................. 3,900 3,000
W.J. McKenna................................. 316,597(1) 232,618
H.J. Upbin................................... 117,091 92,684
F.W. Wenzel.................................. 197,409 3,000
All directors and executive officers as a
group (18 persons including those named)... 1,013,910 548,902
</TABLE>
- ---------
(1) Does not include 202 shares owned by Mr. McKenna's wife, 3,317 shares owned
by his daughter, and 3,317 shares owned by his son. Mr. McKenna disclaims
beneficial ownership of these shares.
7
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the amount of all compensation earned for
services in all capacities to the Company for the last three fiscal years for
(i) the Chief Executive Officer, and (ii) the other four most highly paid
executive officers (the "Named Officers") at April 30, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------- ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND COMPENSATION STOCK OPTIONS LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARD(S)($)(1) (#) PAYOUTS($) ($)(2)
------------------ ---- --------- -------- ------------ -------------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. McKenna 1998 $900,000 $450,000 0 $582,384 76,000 0 $969,478(4)
Chairman, and 1997 850,000 425,000 0 689,748 106,115 0 4,800(6)
Director(3) 1996 820,000 290,000 0 0 96,000 0 4,500(6)
Hal J. Upbin 1998 570,833 400,000 0 343,332 79,000 0 4,608(6)
President and Chief 1997 500,000 300,000 0 303,518 41,560 0 4,400(6)
Executive Officer(5) 1996 450,000 150,000 0 0 30,000 0 5,500(6)
Enoch Harding, Jr. 1998 327,000 350,000 0 144,804 16,000 0 4,992(6)
Executive Vice President 1997 302,000 300,000 0 162,794 21,000 0 4,170(6)
Operations(7) 1996 275,000 200,000 0 0 15,000 0 4,838(6)
James C. Jacobsen 1998 370,000 175,000 0 198,660 23,000 0 4,474(6)
Vice Chairman and 1997 360,000 145,000 0 242,774 33,250 0 3,900(6)
Director 1996 360,000 100,000 0 0 30,000 0 4,500(6)
John R. Henderson 1998 240,000 60,000 0 64,020 10,000 0 4,963(6)
Vice President 1997 191,000 48,000 0 77,246 10,000 0 3,960(6)
Merchandising 1996 185,000 15,000 0 0 12,000 0 4,625(6)
</TABLE>
- ---------
(1) The corporate Development Incentive Plan which provides a restricted stock
award contingent on the achievement of predetermined performance criteria
based on the Company's fiscal year performance, vests over a three-year
period. Dividends are paid on the restricted stock. The amounts shown in the
table represent the dollar value based on the stock price of $33.00 per
share at the June 1, 1998 award date. The restricted awards attributable to
the Named Executives for prior fiscal years and in escrow as of April 30,
1998, excluding the awards in Column (f), which are still subject to
restrictions under the Corporate Development Incentive Plan, valued at the
closing price of $31.9375 on April 30, 1998, are as follows: W. J. McKenna,
17,648 shares at $582,384; H. J. Upbin, 10,404 shares at $343,332; E.
Harding, Jr., 4,388 shares at $144,804; J. C. Jacobsen, 6,020 shares at
$198,660, and J. R. Henderson, 1,940 shares at $64,020.
(2) Excludes income accrued for Executive Deferred Compensation Plan because at
prime plus 1% it is not above market rate.
(3) W. J. McKenna was also Chief Executive Officer until November 25, 1997. He
has a contract of employment through November 30, 1998.
(4) At the age of 70 1/2 W. J. McKenna was eligible for a lump sum payment under
the required minimum distribution rules of the Kellwood Company Pension Plan
for his 15.9 years of service. This number includes $964,870 lump sum
payable April 1, 1998 and $4,608 employer matching 401(k) plan contribution.
(5) H. J. Upbin has a contract of employment through November 30, 1999.
Effective May 1, 1998, his salary was increased to $725,000.
(6) Employer matching 401(k) plan contribution.
(7) By agreement with the Company, E. Harding will be paid a deferred
compensation benefit under a straight-life annuity of $1,032 per month upon
retirement, continuing during his lifetime.
8
<PAGE> 12
The following two tables contain information covering stock options granted
during the fiscal year ended April 30, 1998, to the Named Officers and the
number and value of unexercised stock options held by those officers at the end
of the last fiscal year. No SARs were granted in conjunction with the options.
OPTION GRANTS TABLE
OPTION GRANTS DURING 1998 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF
GRANTED TO STOCK PRICE APPRECIATION FOR
EMPLOYEES IN EXERCISE OR OPTION TERM
OPTIONS FISCAL BASE PRICE EXPIRATION ------------------------------
NAME GRANTED(#) YEAR(1) ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
William J. McKenna........ 65,000 17.53 $25.31 05/29/07 $1,034,626 $2,621,945
11,000 2.97 25.31 05/29/07 175,091 443,714
------ ----- ---------- ----------
76,000 20.50 1,209,717 3,065,659
====== ===== ========== ==========
Hal J. Upbin.............. 36,200 9.76 25.31 05/29/07 576,207 1,460,222
2,800 .76 25.31 05/29/07 44,569 112,945
40,000 10.79 33.78 12/01/07 849,762 2,153,465
------ ----- ---------- ----------
79,000 21.31 1,470,538 3,726,632
====== ===== ========== ==========
Enoch Harding, Jr. ....... 14,000 3.78 25.31 05/29/07 222,842 564,727
2,000 .54 25.31 05/29/07 31,835 80,675
------ ----- ---------- ----------
16,000 4.32 254,677 645,402
====== ===== ========== ==========
James C. Jacobsen......... 18,400 4.96 25.31 05/29/07 292,879 742,212
4,600 1.24 25.31 05/29/07 73,219 185,553
------ ----- ---------- ----------
23,000 6.20 366,098 927,765
====== ===== ========== ==========
John R. Henderson......... 9,000 2.43 25.31 05/29/07 143,256 363,038
1,000 .27 25.31 05/29/07 15,917 40,338
------ ----- ---------- ----------
10,000 2.70 159,173 403,376
====== ===== ========== ==========
</TABLE>
- ---------
(1) Total options granted during 1998 were 370,800 shares to the Named Officers
and all other employees.
OPTION EXERCISES IN 1998 FISCAL YEAR
AND FY-END 04/30/98 VALUE TABLE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT IN-THE-MONEY OPTIONS AT
FY-END(#) FY-END($)
SHARES 04/30/98 04/30/98
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William J. McKenna.......... 70,213 $1,208,255 160,080/288,372 $1,848,600/3,246,900
Hal J. Upbin................ 0 0 65,432/142,128 879,333/1,096,237
Enoch Harding, Jr. ......... 12,700 134,911 0/ 47,100 0/ 520,834
James C. Jacobsen........... 16,200 255,798 50,810/ 83,340 607,918/ 937,440
John R. Henderson........... 0 0 9,800/ 27,200 118,610/ 289,440
</TABLE>
9
<PAGE> 13
RETIREMENT PROGRAM
PENSION PLAN
The Kellwood Company Pension Plan is a defined benefit plan covering a
substantial number of all domestic employees of the Company and its
subsidiaries. The basic annual pension benefit under the Plan for service after
April 30, 1989 is equal to 12 times 0.5% of average monthly earnings times
credited service after April 30, 1989, plus 12 times 0.5% of average monthly
earnings, in excess of covered compensation, multiplied by years of credited
service commencing on or after May 1, 1989 up to 35 years. Covered compensation
is defined as the average social security wage base for the 35 years before an
employee reaches social security retirement age. Average monthly earnings under
the Plan is the average of an employee's monthly earnings defined under the Plan
paid during the highest paid five consecutive full calendar years within an
employee's credited service. The amount of final benefits is not and cannot
readily be calculated for each individual by the Plan's regular actuaries.
Plan participants as of April 30, 1989, who continued as employees after
April 30, 1989, will receive their accrued benefits as of April 30, 1989 plus
benefits earned after that date. For employees earning $150,000 per year or
more, an amended accrued monthly benefit as of April 30, 1994 was calculated. On
April 1, 1998, W.J. McKenna was paid a lump sum from the Kellwood Company
Pension Plan in the amount of $964,870. This payment was made under the minimum
distribution rules which require distribution of pension benefits to employees
upon reaching age 70 1/2. This payment included his amended accrued monthly
benefit at April 30, 1994 in the amount of $9,333.49. The amended accrued
monthly benefits at April 30, 1994 for the remaining officers listed in the
Summary Compensation Table were as follows: H.J. Upbin, President and Chief
Operating Officer, $615.06; E. Harding, Jr., Executive Vice President
Operations, $1,766.95; J.C. Jacobsen, Vice Chairman, $5,560.28; and John R.
Henderson, Vice President Merchandising, $245.79. Upon retirement, Mr. Harding
will also be paid during his lifetime a deferred compensation benefit under a
straight-life annuity of $1,032 per month in recognition of his previous
employment between 1972 and 1977. As of April 30, 1998, of the officers listed
in the Summary Compensation Table, Mr. McKenna, Mr. Upbin, Mr. Harding, Mr.
Jacobsen and Mr. Henderson have approximately four years of credited service
subsequent to May 1, 1994. The table below is indicative of annual benefits for
service after April 30, 1989, using covered compensation for employees retiring
at normal retirement age in calendar 1998. Benefits for employees who retire in
subsequent years will be lower reflecting increases in the average social
security wage base.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------
REMUNERATION 5 10 15 20 30
------------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000................... $1,722 $ 3,444 $ 5,165 $ 6,887 $10,331
100,000................... 4,222 8,444 12,665 16,887 25,331
125,000................... 5,472 10,944 16,415 21,887 32,831
150,000................... 6,722 13,444 20,165 26,887 40,331
160,000................... 7,222 14,444 21,665 28,887 43,301
200,000................... 7,267 14,535 21,802 29,070 43,604
250,000................... 7,267 14,535 21,802 29,070 43,604
350,000................... 7,222 14,444 21,665 28,887 43,331
500,000................... 7,267 14,535 21,802 29,070 43,604
750,000................... 7,267 14,535 21,802 29,070 43,604
1,000,000................... 7,267 14,535 21,802 29,070 43,604
1,300,000................... 7,267 14,535 21,802 29,070 43,604
1,600,000................... 7,267 14,535 21,802 29,070 43,604
</TABLE>
Section 401(a)(17) of the Internal Revenue Code limits annual earnings for
purposes of calculating benefits under Kellwood's pension plan to $160,000.
Section 415 of the Internal Revenue Code limits annual
10
<PAGE> 14
benefits payable from the plan at age 65 to $130,000. However, benefits accrued
prior to the enactment of these limitations were not reduced accordingly.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE ON
EXECUTIVE COMPENSATION
This Report and the following Performance Graph shall not be deemed to be
incorporated by reference by any general statement which incorporates by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, and they shall not otherwise be deemed
filed under such Acts.
OVERVIEW
The Company's Board of Directors has established a three member
Compensation and Stock Option Committee (the "Committee"). Each member of the
Committee is a non-employee director.
The Securities and Exchange Commission has adopted rules which are designed
to enhance disclosure of the policies of companies regulated by the Commission
in regard to executive compensation. In response to these rules the Committee
has prepared a report, as outlined below, on the Company's policies and
practices with respect to executive compensation.
The Company's executive officer compensation program consists of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options and stock awards, and various benefits including
medical, pension, and 401(k) savings plans generally available to employees of
the Company.
COMPENSATION POLICIES
The Committee's executive compensation policies are designed to provide
competitive levels of compensation which integrate pay with the Company's annual
and longer term performance goals, reward above average performance, recognize
individual initiative and achievements, assist the Company in attracting and
retaining qualified executives and build the ownership of Company stock by key
managers. The Committee is of the view that stock ownership by management and
stock-based performance compensation arrangements are beneficial in aligning the
interests of management with the interests of the Company's shareowners which
ultimately enhances shareowner value. The Committee further believes that bonus
and other forms of incentive-based compensation encourage management to attain
preset commercial goals for the Company.
BASE SALARY
The Committee reviews each executive officer's salary annually and
considers recommendations submitted by the Chief Executive Officer. In
determining appropriate salary levels, the Committee considers a variety of
sources, including industry surveys, proxy statements, and outside consultants.
The Committee also considers the level and scope of responsibility, experience,
Company and individual performance, and internal equity. The Committee uses its
discretion to set executive compensation where in its judgment external,
internal, or an individual's circumstances warrant. By design, the Committee
strives to set executives' salaries at competitive market levels. Increases are
based on comparable companies' practices, the Company's achievement of its
financial plan, and the individual's performance. The salary increases in fiscal
1998 were based on the Committee's review of the return on equity, net earnings
as a percent of sales and earnings per share growth over the prior five years.
ANNUAL CASH INCENTIVES
Annual cash incentive compensation awards are made to executives to
recognize and reward corporate and individual performance. Goals for Company and
business unit performance are set at the beginning of each fiscal year. In
determining whether to award cash bonuses, the Committee compares the Company's
financial performance against its annual financial plan, considers individual
performance, and Company
11
<PAGE> 15
performance against that of peer companies. In considering bonuses for
executives other than Mr. Upbin, the Committee considers bonus recommendations
submitted by the Chief Executive Officer. The Committee also receives an
assessment of the performance of each executive from Mr. Upbin and discusses the
assessments with him. When assessing the performance of Mr. Upbin, the Committee
meets privately. Cash bonuses were awarded within the policy guidelines of the
annual cash bonus program. See column (d) of the Summary Compensation Table.
ANNUAL STOCK INCENTIVES
The Committee administers the Company's Restricted Stock Compensation Plan
and the Corporate Development Incentive Plan, both of which award shares of the
Company's common stock. Under the Restricted Stock Compensation Plan, restricted
shares are granted to qualified employees and are released from restrictions
ratably over five years. Awards are limited to an aggregate of 25,000 shares for
any Plan year. In fiscal 1998, no awards were made to any executive officers.
The Committee selects key corporate executives to be participants in the
Corporate Development Incentive Plan based upon its judgment of the executive's
ability to significantly affect major decisions and actions which influence the
continued profitable growth and development of the Company, the value of the
executive's continuing service and the probable detriment of his or her
employment by competitors. The Committee selects participants and sets the
performance goals which must be achieved during the measurement period. The
measures and objectives may be based on earnings per share, earnings before tax
and gains on sale of assets, or other criteria which the Committee establishes.
Payment of awards under the Plan are made in common stock. An award, if any, is
made to a participant by the Company at the time the Committee determines that
performance goals have been met. Restrictions on the shares lapse and shares are
transferred to the participants in installments over approximately three years,
provided the shares have not been forfeited. Awards granted to qualified
employees under the Plan are limited to an aggregate of 157,500 shares for any
Plan year. The shares covered by the awards may not be transferred, sold,
pledged or otherwise disposed of prior to the lapse of restrictions. A target
award level is established for each executive officer based on his or her level
of responsibility. Based on Company earnings, a participant may have the
opportunity to earn awards in excess of the targeted amounts for the Company's
outstanding performance. Threshold standards required to be met before any stock
bonus award is made are also established. In fiscal 1998, the performance goal
was exceeded and awards were made at 102% of the targeted award levels. See
column (f) of the Summary Compensation Table.
STOCK OPTIONS
The Committee administers the Company's 1995 Omnibus Incentive Stock Plan
which provides for awards of incentive stock options, non-qualified stock
options and stock appreciation rights. These awards directly relate the amounts
earned by the executives to the amount of appreciation realized by the Company's
shareowners over comparable periods. Stock options also provide executives with
the opportunity to acquire and build a meaningful ownership interest in the
Company. While the Company encourages stock ownership by executives, it has not
established any target levels for executive stock holdings. Awards are generally
made at a level calculated to be competitive. See the Option Grants During 1998
Fiscal Year Table.
The Committee considers stock option awards on an annual basis. These are
normally awarded in May. In determining the amount of options awarded, the
Committee generally establishes a level of award based on the position held by
the individual and his or her level of responsibility, both of which reflect the
executive's ability to influence the Company's long-term performance. The number
of options previously awarded to and held by executives are also reviewed but
are not an important factor in determining the size of the current award. The
number of options actually awarded in any year is based on an evaluation of the
individual's performance.
12
<PAGE> 16
OTHER BENEFIT PROGRAMS
The Company has adopted an unfunded, unqualified deferred compensation plan
known as the Executive Deferred Compensation Plan (the "Plan") to provide
deferred compensation for a select group of management or highly-compensated
employees. The Plan allows employees to voluntarily defer compensation until
termination or retirement. Under the Plan, any employee whose base salary
exceeds a level set by the Plan Administrator may enroll in the Plan. The Plan
is administered by the Retirement Savings Plan Committee.
For any calendar year, a Participant may defer up to $84,000 in salary as
well as up to $84,000 in cash bonus. The Employer shall credit the deferred
amount to a separate bookkeeping account (the "Account") maintained by the Plan
Administrator in the name of the Participant. The Account shall be increased
monthly by an amount equal to one-twelfth of the sum of the prime rate plus 1%.
The executive officers participate in various health, life and disability
insurance programs, pension plan and a retirement savings 401(k) plan, that are
generally made available to all salaried employees. Executive officers also
receive certain traditional perquisites that are customary for their positions.
The Committee believes that the overall program it has adopted, with its
emphasis on long term compensation, serves to focus the efforts of the Company's
executives on the attainment of a sustained high rate of Company growth and
profitability for the benefit of the Company and its stockholders.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
During fiscal 1998, W.J. McKenna served as the Chief Executive Officer from
May 1, 1997 to November 25, 1997, when H.J. Upbin was appointed to succeed him
in that position, with W.J. McKenna remaining as Chairman.
W. J. McKenna, has an Employment Agreement with the Company, and effective
May 1, 1997, his salary was increased to $900,000 which is comparable to the
compensation paid by companies of similar size. Mr. McKenna has had an
Employment Agreement with the Company since 1982 which was extended to November
30, 1998.
The Committee approved a cash bonus to Mr. McKenna of $450,000 for fiscal
1998.
H.J. Upbin has an Employment Agreement with the Company for a two-year term
extending to November 30, 1999, at an annual salary of $600,000. Effective May
1, 1998, his salary was increased to $725,000.
The Committee approved a cash bonus to Mr. Upbin of $400,000 for fiscal
1998.
In approving the salary increase and the bonus for fiscal 1998 and the
grant of stock options in fiscal 1998 to Mr. McKenna and Mr. Upbin, the
Committee took into account the level and scope of their responsibilities and
contributions to the Company.
COMPANY POLICY ON QUALIFYING COMPENSATION
Internal Revenue Code Section 162(m), adopted in 1993, provides that
publicly-held companies may not deduct in any taxable year compensation in
excess of $1,000,000 paid to the CEO and other executive officers which is not
"performance based" as defined in Section 162(m). The Committee will continue to
monitor the effect of this new provision on the Company's existing compensation
plans and will take appropriate action if warranted in the future to maintain
the deductibility of payments under the plan.
COMMITTEE COMPOSITION
This Report is submitted by the members of the Committee as of April 30,
1998
Raymond F. Bentele
Leonard A. Genovese
James S. Marcus, Chairman
13
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except as stated below, there are no interlocks or insider participation
with any executive officers of the Company or with the members of the Committee,
Messrs. Bentele, Genovese and Marcus. Mr. Genovese, a Director, is Chairman of
the Board and President of Genovese Drug Stores, Inc. Mr. McKenna serves as a
Director on that Board.
Jerry M. Hunter was elected a director at the Annual Meeting of Shareowners
held on August 25, 1994. Mr. Hunter is a partner in the law firm of Bryan Cave
in St. Louis, Missouri. The services of the law firm have been retained during
the last fiscal year and during the current fiscal year. Fees paid by the
Company to Bryan Cave did not exceed five percent of the law firm's gross
revenues for that firm's last fiscal year.
14
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the performance of Kellwood common shares with
that of the S&P 500 and S&P Apparel Indices. The graph plots the growth in value
of an initial $100 investment over the indicated time periods, with dividends
reinvested.
<TABLE>
<CAPTION>
Measurement Period S&P 500 S&P Apparel
(Fiscal Year Covered) Kellwood Co. Index Index
<S> <C> <C> <C>
4/93 100 100 100
4/94 136 105 88
4/95 104 124 85
4/96 97 161 104
4/97 147 202 134
4/98 202 284 164
</TABLE>
OTHER OFFICER AGREEMENTS
The Company has agreements with Messrs. McKenna, Jacobsen, and several of
the other officers providing for compensation in connection with termination of
employment following a Change in Control, as well as if all or substantially all
of the Company's assets are sold by the Company, or the Company is liquidated or
ceases to function as a going concern. These agreements provide for the payment
of a lump sum within five days of the date of termination equal to the sum of
(a) two times the officer's highest base salary in effect during the fiscal year
in which the date of termination occurs, (b) two times the officer's average
annual incentive awards during the last three full fiscal years, (c) the
incentive award which, pursuant to any benefit plan of the Company, had accrued
or would have accrued to the officer during the last full fiscal year, and (d)
the last bonus award earned by the officer under the Company's annual bonus
program.
15
<PAGE> 19
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Securities Exchange Act of 1934 requires all executive officers and
directors to report any changes in the ownership of common stock of the Company
to the Securities and Exchange Commission, the New York Stock Exchange and the
Company.
Based solely upon a review of these reports and written representations
that no additional reports were required to be filed in fiscal 1998, the Company
believes that all reports were filed on a timely basis.
SHAREHOLDER PROPOSED RESOLUTION
REPORT ON CONTRACT SUPPLIER STANDARDS
OPPOSED BY THE BOARD OF DIRECTORS
(PROXY ITEM NO. 2)
The Domestic and Foreign Missionary Society of the Protestant Episcopal
Church in the United States of America, 815 Second Ave., New York, New York,
10017, owner of 15,250 shares of common stock of the Company has submitted the
following proposal:
"WHEREAS: The public is concerned about the conditions under which clothing
and other goods they purchase are produced. The media has made people aware
that many companies are contracting the independent producers for goods and
services outside the United States. A survey conducted by Marymount
University in 1995 indicates that 75 percent of respondents stated that
they would avoid shopping in stores if they were aware that the stores sold
goods made under sweatshop conditions. Seventy-eight percent said they
would be willing to pay a dollar more for a $20 garment not made in
sweatshops.
Disturbing information has surfaced about independent producers in the
apparel industry with regard to working conditions, wage levels, use of child
labor and abuse of workers. Our company faces the challenge of making sure its
vendors and suppliers are in compliance with its standards for vendor partners.
We believe companies must take responsibility for any human rights abuses
in plants where the products they sell are produced. In August 1996, President
Clinton appointed the Apparel Industry Partnership -- a task force made up of
companies, and human rights, religious, labor, and consumer groups -- and
charged it to create a code of conduct to "ensure that the products companies
make and sell are manufactured under decent and humane working conditions." In
April 1997, the President's Task Force issued its report which includes a
Workplace Code of Conduct and Principles of Monitoring. The Apparel Industry
Partnership is seeking apparel companies to join the partnership in its steps to
eliminate sweatshop conditions.
Our company should take steps to assure shareholders and consumers that
employees who work for its suppliers are guaranteed basic rights, including
freedom of association, healthful working conditions, a sustainable living wage,
and a work environment free of child labor and abuse. Through the use of
independent monitoring, as used by The Gap, Inc. in El Salvador, there can be
greater assurance of adherence to our company's contract supplier standards.
RESOLVED: Shareholders request the Board of Directors to report, without
confidential information and at reasonable cost, on its contract supplier
standards, and review compliance mechanisms for vendors, subcontractors and
buying agents where it sources. The report should be available to shareholders
by May 1999.
This review should include:
1. A summary of current company policies regarding supplier standards,
including clear definition of workers' right to organize and required
work hours per week.
2. A report on efforts to ensure that the company does not employ children
under the age of fifteen, or younger than the age for completing
compulsory education where such age is higher than fifteen.
16
<PAGE> 20
3. Policies to implement ongoing adjustment of salaries to ensure adequate
purchasing power and a sustainable community wage.
4. Procedures for internal, external and independent monitoring in
conjunction with local non-governmental organizations.
5. Insuring that the company's vendor standards are translated into the
languages of employees where the company has contracts, and distribution
to employees.
6. Procedures to encourage vendors to raise standards, instead of
terminating its contracts."
RESPONSE TO SHAREHOLDER PROPOSAL
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL FOR THE FOLLOWING REASONS.
The Company has already implemented a Policy on Business Conduct, together
with a Contractor Compliance Program, both of which are designed to ensure that
apparel workers are properly treated. These policies and programs were put into
place because the Company also shares the concerns expressed by the Stockholders
proposing this resolution regarding the conditions under which the Company's
products are made, even if made in the factories of others, and whether made
domestically or outside the borders of the United States. While the proposal
seems to be well intentioned, certain specific aspects are unnecessary,
unrealistic, impractical and/or impossible to administer.
The Company already has a Policy on Business Conduct, which was adopted a
few years ago. Some of the more important requirements of that policy are:
- The prohibition of child labor or prison or forced labor.
- The prohibition of corporal, mental or physical punishment.
- The prohibition of discrimination in hiring and employment practices.
- The provision of a safe and healthy working environment.
- Required compliance with all applicable laws and regulations, including
environmental laws and regulations.
- Required compliance with all applicable laws regarding wages, benefits
and working hours.
- Required posting of the Kellwood Policy on Business Conduct in the local
language and in a place accessible to the workers.
The Company also implemented and administers a Contractor Compliance
Program for both domestic and foreign manufacturers. Monitoring is done
externally by both our buying agents and by independent professional monitoring
organizations. Monitoring is also done internally by Company employees.
Contractors who fail to abide by the Policy on Business Conduct and the laws of
the applicable country are educated as to their non-compliance and required to
correct any problems or risk being eliminated as a supplier. The Company
conducts training sessions for our internal monitoring staff and our buying
agents to be certain that there is a clear understanding of the standards that
must be met in the production of goods on behalf of our Company. The Company's
contractors are required to annually sign their acceptance of the conditions of
our Policy on Business Conduct.
The Company feels that it has already taken significant and effective steps
to ensure the proper treatment of the workers who produce the Company's
products. The Company feels that its pre-existing efforts were already in
substantial compliance with the White House Apparel Industry Partnership
Workplace Code of Conduct, announced in April 1997. The Company already has
extensive procedures for monitoring compliance with the Company's standards. The
Board of Directors feel that the concerns expressed in the Proposal have already
been adequately and effectively addressed by the Company's actions.
17
<PAGE> 21
Most of the Proposal is redundant to the Company's efforts, which have
already been in place for a number of years. Some of the aspects of the Proposal
are impractical or impossible to implement. The Company is not able to determine
what a "sustainable community wage" is at any given time, in any given single
country among the many countries where the Company currently has contractors.
Given the complexity of global economics, it is probably impossible to even get
two experts to agree as to what a "sustainable living wage" is. For the Company
to commit to such a vague and nebulous standard would be neither realistic nor
feasible. Commitment to such a standard would only ensure a constant argument
over what is a "sustainable living wage", and constantly escalating wages, which
could make the Company non-competitive.
The suggestion to do the monitoring in conjunction with "local
non-governmental organizations" is not feasible. First, it is extremely vague as
to who or what these "non-governmental organizations" are. The Company is
unaware of any such organizations which have the experience or expertise to do
effective monitoring in the numerous countries where the Company sources its
manufacturing. There is also a lack of consensus on what monitoring standards or
methods such organizations might use. To the Company's knowledge, there are no
such organizations with sufficient factory inspection experience to conduct the
numerous monitoring inspections required under the Company's program.
The Board of Directors of the Company believes that the concerns raised by
this Proposal have already been adequately and effectively addressed by the
Company's policies and programs, and that the continued implementation of the
Company's policies and programs, including extensive independent monitoring, is
the best way to assure that the Company's contractors treat their employees with
dignity and respect. The Company believes that the interest of its Shareholders
will be best served if the Company focuses its efforts on monitoring and
training in accordance with its existing policy and programs.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL,
AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
INDEPENDENT ACCOUNTANTS
The Audit Committee recommended to the Board and the Board approved on May
28, 1998, the retention of Price Waterhouse LLP to serve as the Company's
independent accountants for fiscal year 1999.
Representatives of Price Waterhouse LLP will be present at the annual
meeting with the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
Thomas H. Pollihan
Vice President, Secretary and
General Counsel
St. Louis, Missouri
July 16, 1998
18
<PAGE> 22
PROXY PROXY
KELLWOOD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS - AUGUST 27, 1998
WILLIAM J. MCKENNA, THOMAS H. POLLIHAN, JANE B. CAMPBELL, and each of them, are
hereby appointed proxies of the Shareowner(s) signing the reverse side hereof,
with power of substitution acting by a majority of the proxies present and
voting, or if only one proxy is present and voting then acting by that one, to
vote the shares of Kellwood Company common stock which the Shareowner(s) is
(are) entitled to vote, at the ANNUAL MEETING OF SHAREOWNERS to be held at 600
Kellwood Parkway, St. Louis, Missouri on August 27, 1998, at 9:00 A.M., and at
any adjournment thereof, with all the powers the signing Shareowners would
possess if present. The proxies are instructed to vote as specified on the
REVERSE SIDE.
1. ELECTION OF DIRECTORS: FOR the maximum number of nominees listed
below (except as indicated on the reverse
side) who (as selected by the Proxies in
their discretion) may be elected pursuant to
cumulative voting.
J.M. Hunter, J.C. Jacobsen, J.S. Marcus, W.J. McKenna
2. Shareholder proposal described in the Proxy Statement.
3. In their discretion any other matter that may properly come before the
meeting or any adjournment thereof.
The shares represented by this Proxy will be voted as specified by the
Shareowner(s), but if no specification is made, this Proxy will be voted FOR
the election of Directors and AGAINST the shareholder proposal set forth ABOVE,
all as set forth in the notice of annual meeting dated July 16, 1998, and the
accompanying Proxy Statement. Discretion will be used with respect to voting
any other matters that properly come before the meeting.
(Continued and to be signed on the reverse side.)
<PAGE> 23
KELLWOOD COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S><C>
1. ELECTION OF DIRECTORS- For Withhold For All
Nominees: J.M. Hunter, J.C. Jacobsen, All All (Except for nominee(s) written below)
J.S. Marcus, W.J. McKenna --------------------------------------------
2. Shareholder Proposal described in the For Against Abstain
Proxy Statements
The Board of Directors recommends a vote
"Against" Item 2.
Dated: , 1998
-------------------
Signature(s)
------------------------------------------
------------------------------------------------------
NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT!
PLEASE COMPLETED, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
