<PAGE>
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 (S)240.14a-11(c) or (S)240.14a-12
CONVERSE INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CONVERSE 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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<PAGE>
Converse Inc.
One Fordham Road
North Reading, Massachusetts 01864
Telephone: (978) 664-1100
June 1, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
2000 Annual Meeting of Stockholders of Converse Inc. ("Converse" or the
"Company"). The Annual Meeting will be held at the Company's headquarters, One
Fordham Road, North Reading, Massachusetts at 10:00 a.m., local time, on
Thursday, June 29, 2000.
The accompanying Notice of Annual Meeting and Proxy Statement describe the
formal matters to be acted on at the Meeting. During the Annual Meeting we will
also report on the operations of the Company.
It is important that your shares be represented and voted at the Meeting.
Accordingly, please sign, date and return the enclosed proxy card promptly,
whether or not you plan to attend the Annual Meeting in person. If you plan to
attend the Meeting, please mark the appropriate box on your proxy card.
I look forward to seeing you at the Meeting; and on behalf of the Board of
Directors and management of the Company, I would like to express my appreciation
for your interest in Converse.
Sincerely,
Glenn N. Rupp
Chairman of the Board and
Chief Executive Officer
<PAGE>
CONVERSE INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2000 Annual Meeting of Stockholders of Converse Inc. (the "Company")
will be held at 10:00 a.m., local time, on Thursday, June 29, 2000, at the
Company's headquarters, One Fordham Road, North Reading, Massachusetts, for the
following purposes:
I. To elect ten directors;
II. To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent auditors
for the fiscal year ending December 30, 2000;
III. To amend the Converse Inc. 1994 Stock Option Plan to permit
grants to non-employee directors; and
IV. To transact such other business as may properly come before the
Meeting and at any adjournments thereof.
The Board of Directors has fixed May 26, 2000 as the record date for the
Meeting. Accordingly, only stockholders of record at the close of business on
such date will be entitled to notice of and to vote during the 2000 Annual
Meeting and during any adjournment or adjournments thereof.
By order of the Board of Directors,
Jack A. Green,
Senior Vice President Administration,
General Counsel and Secretary
North Reading, Massachusetts
June 1, 2000
IMPORTANT
---------
Whether or not you plan to attend the Meeting, please complete, date
and sign the enclosed proxy card, and return it PROMPTLY in the
enclosed envelope which requires no postage if mailed in the United States.
<PAGE>
CONVERSE INC.
One Fordham Road
North Reading, Massachusetts 01864
______________________________________________________
PROXY STATEMENT
2000 Annual Meeting of Stockholders
______________________________________________________
This Proxy Statement is furnished to the stockholders of Converse Inc., a
Delaware corporation ("Converse" or the "Company"), in connection with the
solicitation of proxies on behalf of the Board of Directors (the "Board") of
Converse for use during the 2000 Annual Meeting of Stockholders (the "Meeting")
to be held at 10:00 a.m., local time, on Thursday, June 29, 2000 at the
Company's headquarters; One Fordham Road, North Reading, Massachusetts and at
any adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders.
The cost of the solicitation of proxies will be borne by Converse and will
consist primarily of printing, postage and handling, including the expenses of
brokers, nominees and other fiduciaries in forwarding proxy materials to
beneficial owners. Directors, officers and other employees of Converse may also
solicit proxies personally or by telephone or telecopy. In addition, Converse
has engaged Morrow & Co. to assist in the solicitation from brokers, bank
nominees and institutional holders for a fee of $5,000.00 plus out-of-pocket
expenses. The Notice of Meeting, this Proxy Statement and the form of proxy are
expected to be mailed to stockholders on or about June 1, 2000. A copy of the
Company's 1999 Annual Report containing financial statements for the year ended
January 1, 2000, accompanies this Proxy Statement, but does not form a part of
the proxy solicitation materials.
Voting Procedure
Stockholders of record at the close of business on May 26, 2000 (the
"Record Date") are entitled to vote during the Meeting and may cast one vote for
each share of the Company's common stock ("Common Stock") held on the Record
Date on each matter that may properly come before the Meeting. On the Record
Date there were 17,513,861 shares of Common Stock outstanding.
<PAGE>
The presence of holders of a majority of the shares entitled to vote, in
person or by proxy, will constitute a quorum. Directors are to be elected by a
plurality of the votes cast at the Meeting. The affirmative vote of the holders
of a majority of the shares voting at the Meeting is required to ratify the
engagement of independent auditors, to amend the Converse Inc. 1994 Stock Option
Plan or to take action with respect to any other matter that may properly be
brought before the Meeting. Shares cannot be voted at the Meeting unless the
holder of record is present in person or by proxy. The enclosed proxy is a means
by which a stockholder may authorize the voting of his or her shares at the
Meeting. The shares of Common Stock represented by each properly executed proxy
card will be voted at the Meeting in accordance with each stockholder's
direction. Stockholders are urged to specify their choices by marking the
appropriate boxes on the enclosed proxy card; if no choice has been specified,
the shares will be voted as recommended by the Board. If any other matters are
properly presented to the Meeting for action, the proxy holders will vote the
proxies (which confer discretionary authority to vote on such matters) in
accordance with their best judgment.
With regard to the election of directors, votes may be cast in favor of a
nominee or withheld; votes that are withheld will be excluded entirely from the
vote and will have no effect, other than for purposes of determining the
presence of a quorum. Abstentions may be specified on the proposal to ratify the
engagement of independent auditors, but not for the other proposals. Abstentions
will be considered present and entitled to vote at the Meeting, but will not be
counted as votes cast, and therefore will have the effect of a vote against a
matter. A broker non-vote on a matter will be considered not entitled to vote on
the matter and will not be counted in determining whether a matter requiring
approval of a majority of the shares present and entitled to vote has been
approved.
Proxies may be revoked at any time prior to the time that the vote is taken
at the Meeting. Proxies may be revoked by filing with the Secretary of the
Company a written revocation or another proxy bearing a date later than the date
of the proxy previously furnished. A proxy may also be revoked by attending the
Meeting and voting in person. Attendance at the Meeting will not in and of
itself constitute revocation of a proxy.
Your vote is important. Accordingly, you are asked to complete, sign and
return the accompanying proxy whether or not you plan to attend the Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information (as of May 10, 2000,
except as otherwise noted) regarding the beneficial ownership of shares of
Common Stock by (i) each person known by Converse to beneficially own more than
5% of the outstanding shares of Common Stock, (ii) each executive officer named
in the Summary Compensation Table below, (iii) each director of Converse and
(iv) the directors and executive officers of Converse as a group.
2
<PAGE>
<TABLE>
<CAPTION>
Number of Percent of
--------- ----------
Shares Common Stock
------ ------------
Beneficially Beneficially
------------ ------------
Greater than 5% Stockholders Owned Owned
---------------------------- ----- -----
<S> <C> <C>
Apollo Investment Fund, L.P., c/o Apollo Advisors, L.P.
and Lion Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577 (1)............................. 11,230,365 64.1%
Directors and Executive Officers
--------------------------------
Glenn N. Rupp (2)....................................... 427,000 2.4
James E. Solomon (2).................................... 130,000 *
Alistair M. Thorburn (2)................................ 84,000 *
Jack A. Green (2)....................................... 28,195 *
Donald J. Camacho (2)................................... 90,000 *
Donald J. Barr (2)...................................... 7,500 *
Julius W. Erving (2).................................... 37,500 *
Robert H. Falk (1)(3)................................... 11,230,365 64.1
Gilbert Ford (2)........................................ 10,000 *
Michael S. Gross (1)(3)................................. 11,230,365 64.1
John J. Hannan (1)(3)................................... 11,230,365 64.1
Joshua J. Harris (1)(3)................................. 11,230,365 64.1
John H. Kissick (1)(3).................................. 11,230,365 64.1
Richard B. Loynd (2).................................... 44,666 *
Michael D. Weiner (1)(3)................................ 11,230,365 64.1
Directors and executive officers of the
Company as a group (17 persons).......................... 12,142,223 69.3%
</TABLE>
-----------------------------------------------------------
* Less than 1%.
(1) Includes (i) 5,616,306 shares beneficially owned by Apollo Investment Fund,
L.P. ("AIF") and (ii) 5,614,059 shares beneficially owned by Lion Advisors,
L.P. ("Lion Advisors") for the benefit of an investment account under
management over which Lion Advisors has sole investment, voting and
dispositive power. The managing general partner of AIF is Apollo Advisors,
L.P. ("Apollo Advisors") whose general partner is Apollo Capital
Management, Inc. ("Apollo Capital"). The general partner of Lion Advisors
is Lion Capital Management, Inc. ("Lion Capital"), which is affiliated with
Apollo Capital.
(2) Shares beneficially owned represent options to purchase Converse Common
Stock that are exercisable within 60 days, except for shares held of record
by the following: Mr. Rupp 15,000 shares, Mr. Solomon 2,000 shares, Mr.
Green 195 shares, Mr. Camacho 5,000 shares, Mr. Ford 10,000 shares, and Mr.
Loynd 37,166 shares.
(3) Mr. Hannan is a director and officer of Apollo Capital and Lion Capital.
Messrs. Falk, Gross, Harris and Weiner are officers of Apollo Capital and
Lion Capital. Mr. Kissick is an officer of Lion Capital and a consultant to
Apollo Capital. Each such director disclaims beneficial ownership of, and a
personal pecuniary interest in, the shares beneficially owned by AIF and
Lion Advisors.
3
<PAGE>
PROPOSAL ONE - ELECTION OF DIRECTORS
General
The Company's board has one class of directors and, subject to their
earlier resignation or removal, all directors serve until the next Annual
Meeting and until their successors are elected and qualified. Ten persons are to
be elected directors during the Meeting. Directors are to be elected by a
plurality of the votes cast at the Meeting. The names of the nominees and
certain information with respect to them are presented below. All of the
nominees were elected at the 1999 Annual Meeting.
Should any of the director nominees become unable or unwilling to continue
to serve, an event that is not expected to occur, proxies (except proxies marked
to the contrary) will be voted for another person designated by the Board unless
the Board decides to reduce the number of directors to be elected.
The Board unanimously recommends a vote FOR each of the nominees for
director.
<TABLE>
<CAPTION>
Converse
Name, Age, Principal Occupation Director
or Position, Other Directorships Since
----------------------------------------------------------------------------------------------------------
<S> <C>
Donald J. Barr, 65 1994
Retired; Formerly Executive Vice President of Time Inc.
Mr. Barr was an Executive Vice President of Time Inc. from October 1990
until his retirement in 1996. Prior to 1990, Mr. Barr was the publisher of
Sports Illustrated (1985-1990) and Vice President of Time Inc. (1987-1990).
Mr. Barr was an employee of Time Inc. for 39 years.
Julius W. Erving, 50 1994
President, The Erving Group and Vice President of RDV Sports and
Executive Vice President of the Orlando Magic.
Mr. Erving has been the President of The Erving Group since 1979 and Vice
President of RDV Sports and Executive Vice President of the Orlando Magic
since 1997. Mr. Erving is also a part owner of Philadelphia Coca-Cola
Bottling Company. He was a member of the Philadelphia 76'ers basketball
team until April 1987 and has been an endorser of Converse products since
1975. Mr. Erving is also a director of Philadelphia Coca-Cola Bottling
Company, The Sports Authority, Inc., Saks Holding Co., Inc. and Darden
Restaurants, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Robert H. Falk, 61 1994
Officer of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.
Mr. Falk has been an officer of Apollo Capital and Lion Capital since 1992.
Mr. Falk is also a director of Florsheim Group Inc. and Samsonite Corporation.
Gilbert Ford, 68 1987
Consultant; Formerly the Chairman of the Board and
Chief Executive Officer of Converse.
Mr. Ford served as Vice Chairman of the Board of Converse from April 11,
1996 to December 1, 1996, at which time Mr. Ford retired from Converse. Mr.
Ford served as Chairman of the Board of Converse from September 1994 to
April 1996 and as Chief Executive Officer of Converse from October 1986 to
April 1996. Previously, Mr. Ford held various positions within Converse,
including President (October 1986 to September 1994), and was an employee
of Converse for over 34 years.
Michael S. Gross, 38 1992
Officer of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.
Mr. Gross is one of the founding principals of Apollo Advisors and Lion
Advisors and has served as an officer of Apollo Capital and Lion Capital
since 1990. Mr. Gross is also a director of Allied Waste Industries, Inc.,
Encompass Services Corporation, Florsheim Group Inc., Rare Medium, Inc.,
Saks Incorporated and United Rentals, Inc.
John J. Hannan, 47 1994
Officer and Director of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.
Mr. Hannan is one of the founding principals of Apollo Advisors, Lion
Advisors and Apollo Real Estate Advisors, L.P. and has served as an officer
and director of Apollo Capital and Lion Capital since 1990 and of Apollo
Real Estate Management Inc. since 1993. Mr. Hannan is also a director of
Florsheim Group Inc. and United Auto Group, Inc.
Joshua J. Harris, 35 1992
Officer of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.
Mr. Harris is an officer of Apollo Capital and Lion Capital, having been
associated with them since 1990. Mr. Harris is also a director of Florsheim
Group Inc., NRT, Incorporated, Pacer Logistics, Inc. and Quality
Distribution, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
John H. Kissick, 58 1994
Officer of Lion Capital Management, Inc. and Advisor to
Apollo Capital Management, Inc.
Mr. Kissick is one of the founding principals of Apollo Advisors and Lion
Advisors and has served as an officer of Lion Capital and consultant to
Apollo Capital since 1991. Mr. Kissick is also a director of Continental
Graphics Holdings, Inc., Florsheim Group Inc. and Quality Distribution,
Inc.
Glenn N. Rupp, 55 1996
Chairman of the Board and Chief Executive Officer of Converse
Mr. Rupp was elected Chairman of the Board and Chief Executive Officer by
Converse's Board of Directors on April 11, 1996. From August 1994 to April
1996, Mr. Rupp was the Acting Chairman of McKenzie Sports Products, Inc.
and a Strategic Planning Advisor for CRC Industries, Inc. Mr. Rupp was
President and Chief Executive Officer of Simmons Upholstered Furniture Inc.
("Simmons") from August 1991 until May 1994. Prior to 1991, Mr. Rupp held
various positions with Wilson Sporting Goods Co., including President and
Chief Executive Officer from 1987 to 1991. Mr. Rupp is also a director of
Consolidated Papers, Inc. and Johnson Outdoors, Inc.
Michael D. Weiner, 47 1996
Officer of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.
Mr. Weiner has been an officer of Apollo Capital and of Lion Capital since
1992 and of Apollo Real Estate Management, Inc. since 1993. Prior to 1992,
Mr. Weiner was a partner in the law firm of Morgan, Lewis & Bockius LLP.
Mr. Weiner is also a director of Continental Graphics Holdings, Inc.,
Florsheim Group Inc., Quality Distribution, Inc. and NRT, Incorporated.
</TABLE>
Organization and Compensation of the Board of Directors
There were five meetings of the Board during 1999 and, with the exception
of Messrs. Falk and Hannan, who attended three of the five meetings, each
incumbent director who served during 1999 attended at least 75% of the Board
meetings and the meetings held by committees on which he served.
The Board has a number of standing committees, including an Executive
Committee, an Audit Committee and an Executive Compensation and Stock Option
Committee. The Board does not currently have a nominating committee.
6
<PAGE>
The Executive Committee, which currently consists of Mr. Loynd, Chairman,
and Messrs. Rupp, Gross and Harris, has the full power of the Board between
meetings, with certain limitations relating to major corporate matters. This
Committee did not meet in 1999, but took actions from time to time pursuant to
resolutions adopted by unanimous written consent in lieu of meeting.
The Audit Committee, which currently consists of Mr. Loynd, Chairman, and
Messrs. Barr and Erving, recommends the selection and retention of independent
accountants; reviews auditing and financial accounting and reporting matters,
the adequacy of internal accounting controls and asset security, audit fees and
expenses, and compliance with the code of corporate conduct; and counsels
regarding auditing and financial accounting and reporting matters. This
Committee met four times in 1999.
The Executive Compensation and Stock Option Committee, which currently
consists of Mr. Gross, Chairman, and Messrs. Harris and Loynd, reviews and
recommends compensation of officers and directors; administers supplementary
retirement, performance incentive and stock option plans; and counsels regarding
compensation of other key employees, management development and succession, and
major personnel matters. This Committee met three times in 1999.
Each Converse director who is not an employee of Converse or any Converse
subsidiary is paid a monthly fee of $1,000 and a fee of $1,500 plus expenses for
each meeting of the Board attended. In addition, for attending a meeting of a
committee of the Board, each director who is not an employee of Converse or any
Converse subsidiary is paid a fee of $800 plus expenses if such director is a
member of the committee or $900 plus expenses if such director is the Chairman
of the committee.
In March 1995, the Executive Committee of the Company's Board of Directors
adopted a Non-Employee Director Stock Option Plan (the "1995 Plan"), which
provides for a one-time grant of options to each director who is not employed by
Converse or employed by, or affiliated with, Lion Advisors or AIF (a "Non-
Employee Director"), to purchase 7,500 shares of Common Stock at its fair market
value on the date the options are granted. The Company's stockholders approved
the 1995 Plan at the 1995 Annual Meeting of Stockholders. These options become
exercisable in one-third increments on each of the first three anniversaries of
the grant date. Currently, Messrs. Loynd, Erving and Barr have been granted
options under the 1995 Plan.
As described later in this Proxy Statement under "Proposal Three -Amendment
of the Converse Inc. 1994 Stock Option Plan to Permit Grants to Non-Employee
Directors," the Company's Board of Directors is recommending that the 1994 Plan
be amended to permit grants to Non-Employee Directors under the 1994 Plan.
7
<PAGE>
Executive Officers
The executive officers of Converse are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Glenn N. Rupp........................................... 55 Chairman of the Board and
Chief Executive Officer
Donald J. Camacho....................................... 49 Senior Vice President and
Chief Financial Officer
Jack A. Green........................................... 54 Senior Vice President
Administration, General Counsel
and Secretary
James E. Lawlor......................................... 46 Vice President, Finance and
Treasurer
Herbert R. Rothstein.................................... 58 Senior Vice President, Product
James E. Solomon........................................ 44 Senior Vice President, Sales and
Marketing
Alistair Thorburn....................................... 42 Senior Vice President,
International
and U.S. Operations
</TABLE>
Mr. Rupp's biography appears previously under "Election of Directors".
Mr. Camacho has served as Senior Vice President and Chief Financial Officer
since September 1994. Previously, Mr. Camacho held positions of increasing
responsibility with Converse since 1974.
Mr. Green has served as Senior Vice President Administration, General
Counsel and Secretary since May 1998. Prior to that, Mr. Green served as Senior
Vice President, General Counsel and Secretary since August 1985, having joined
the Company as Vice President, Legal in 1983. Since 1996, Mr. Green also serves
as an Adjunct Professor at Emmanuel College in Boston, Massachusetts and Tufts
University in Medford, Massachusetts. Mr. Green is a director of Arrow Mutual
Liability Insurance Company.
Mr. Lawlor has served as Vice President, Finance and Treasurer since June
1995. Previously, Mr. Lawlor held the positions of Vice President and Treasurer
from September 1994 to June 1995, and other positions of increasing
responsibility since 1975.
Mr. Rothstein has served as Senior Vice President, Product since December
1999. Previously, Mr. Rothstein was Senior Vice President, Production from 1996
to 1999, Senior Vice President, Sourcing from 1992 to 1996, Senior Vice
President of Materials Management and Manufacturing from 1991 to 1992 and Vice
President of Materials Management from 1988 to 1991. Before joining Converse,
Mr. Rothstein held several senior management positions with Reebok International
Ltd. from 1985 to 1988, Morse Shoe Inc. from 1973 to 1985, BGS Shoe Corporation
from 1969 to 1972 and Signet from 1964 to 1969.
8
<PAGE>
Mr. Solomon has served as Senior Vice President, Sales and Marketing since
May 1998. Prior to that, Mr. Solomon served as Senior Vice President, Marketing
since October 1996. Previously, Mr. Solomon worked for Lenox Inc. from August
1990 to September 1996 in a number of senior positions, including President and
Chief Operating Officer of the Dansk International Design division from May 1994
to September 1996 and Gorham, Kirk-Stieff, Dansk division from July 1991 to May
1994. He also has experience in the athletic footwear industry, having served as
Executive Vice President of Kangaroos USA from 1989 to 1990, Vice President,
Marketing of Avia Athletic Footwear from 1985 to 1988, and Group Product
Manager, New Balance Athletic Shoes from 1981 to 1983.
Mr. Thorburn has served as Senior Vice President, International and U.S.
Operations since January 2000. Previously, Mr. Thorburn was Senior Vice
President, International from 1993 to 1999. Prior to joining the Company, Mr.
Thorburn was Vice President Europe/Asia Pacific for the Wilson Sporting Goods
Co., Ltd. from 1987 to 1993.
9
<PAGE>
Executive Compensation
The following table sets forth certain information for each period
presented with respect to compensation awarded to, earned by or paid to
Converse's Chief Executive Officer during 1999 and to the four most highly
compensated executive officers of Converse other than Converse's Chief Executive
Officer who were serving at January 1, 2000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- -----------------------
Awards
------
Securities
Other Annual Restricted Stock Underlying All Other
Name and Principal Year Salary ($) Bonus ($)/(1)/ Compensation ($) Award(s) ($)/(2)/ Options (#) Compensation ($)
Position
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Glenn N. Rupp 1999 500,000 0 0 184,375 0 2,500/(4)/
Chairman and Chief 1998 500,000 0 0 222,500 0 2,500
Executive Officer 1997 476,538 0 129,965 0 30,000 2,375
James E. Solomon 1999 300,000 0 0 147,500 0 2,500/(4)/
Senior Vice President 1998 295,192 0 0 0 0 95,500
Sales & Marketing 1997 285,577 0 54,181 0 20,000 93,000
Alistair Thorburn 1999 247,262 0 66,203/(3)/ 147,500 0 24,250/(5)/
Senior Vice President 1998 235,000 0 69,287 166,875 0 24,598
International & U.S. 1997 230,792 0 83,181 0 10,000 23,731
Operations
Jack A. Green 1999 211,769 0 0 73,750 0 2,500/(4)/
Senior Vice President 1998 197,227 0 0 55,625 0 2,500
Administration, General 1997 186,727 0 0 0 15,000 2,375
Counsel and Secretary
Donald J. Camacho 1999 203,235 0 0 73,750 0 2,500/(4)/
Senior Vice President 1998 192,500 0 0 55,625 0 2,500
Chief Financial Officer 1997 192,837 0 0 0 0 2,375
</TABLE>
(1) The Company generally pays bonuses to its executives in the first quarter
of each fiscal year based on the Company's results in the prior year. The
Company paid no bonuses to any Named Executive Officers in 1997, 1998 or
1999.
(2) Amounts shown represent the dollar value of restricted stock awards
calculated by multiplying the closing price of the Company's Common Stock
on the date of grant by the number of shares awarded. The values of all
restricted stock awards at January 1, 2000 based on the closing price of
the Company's Common Stock on the last trading day of the fiscal year
($1.375) were $123,750, $55,000, $96,250, $41,250, and $41,250 for Messrs.
Rupp, Solomon, Thorburn, Green and Camacho, respectively.
(3) Amount shown represents $39,772 worth of relocation and temporary housing
expenses incurred by Mr. Thorburn in connection with his move from the
United Kingdom to Massachusetts, an $18,000 car allowance, and $8,431
relating to amounts reimbursed for the payment of taxes.
(4) Except as otherwise noted, all amounts shown represent payments by the
Company relating to the Company's matching contribution under the Converse
Inc. Thrift Savings Plan.
(5) Amounts represent payment to the Converse U.K. Retirement Benefit Plan in
lieu of Mr. Thorburn's participation in the Converse Inc. Retirement Plan
(see "Retirement Plans" below). Mr. Thorburn does not participate in the
Converse Inc. Thrift Savings Plan.
Retirement Plans
Messrs. Rupp, Solomon, Green and Camacho are participants in the Converse
Inc. Retirement Plan (the "Retirement Plan"), a noncontributory, defined benefit
pension plan designed to provide retirement benefits upon normal retirement at
age 65. Covered remuneration is base salary and, based on a straight life
annuity, annual benefits at normal retirement are equal to the greater of (a)
2.25% of average final compensation (the highest 60 consecutive calendar months
of the last 120 months) multiplied by years of credited service up to a maximum
of 15 years, plus 1.75% of average
10
<PAGE>
final compensation multiplied by service in excess of 15 years up to a maximum
of 15 years, less 1.67% of the Social Security benefit multiplied by credited
service up to a maximum of 30 years, or (b) $10 multiplied by years of credited
service. Benefits payable under the Retirement Plan are limited by certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code"). A
supplemental executive retirement plan ("SERP") has been adopted by Converse to
provide for payments from general funds to Messrs. Rupp and Solomon of any
retirement income that would otherwise be payable pursuant to the Retirement
Plan in absence of any such limitations. Set forth below is the credited service
under the Retirement Plan as of January 1, 2000 and estimated annual benefits
payable upon the normal retirement of each of the Named Executive Officers,
assuming continuation of current covered remuneration. In the cases of Messrs.
Rupp and Solomon such amount includes amounts payable under the SERP.
<TABLE>
<CAPTION>
Years of
Credited Service Annual
Name at January 1, 2000 Benefits Payable
---- ------------------ ----------------
<S> <C> <C>
Glenn N. Rupp..................................... 3.75 142,395
James E. Solomon.................................. 3.25 136,952
Jack A. Green..................................... 16.17 84,038
Donald J. Camacho................................. 25.34 92,202
</TABLE>
Mr. Thorburn is not eligible to participate in the Retirement Plan because
he is not a citizen of the United States. In lieu of Mr. Thorburn's
participation in the Retirement Plan, Converse contributes an amount equal to
approximately 10% of Mr. Thorburn's annual salary directly to the Converse U.K.
Retirement Benefit Plan. See "Summary Compensation Table"
Stock Options
The Company granted no stock options or stock appreciation rights to any
Named Executive Officers in 1999.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at FY-End Options at FY-End /(1)/
----------------------------- ---------------------------------
Shares Acquired on Value
Exercise Realized Exercisable Unexercisable (#) Exercisable Unexercisable
-------- -------- ----------- ----------------- ----------- -------------
(#) ($/sh) (#) (#) ($/sh) ($/sh)
<S> <C> <C> <C> <C> <C> <C>
Glenn N. Rupp 0 0 412,000 118,000 0 0
James E. Solomon 0 0 128,000 92,000 0 0
Alistair Thorburn 0 0 84,000 26,000 0 0
Jack A. Green 0 0 28,000 7,000 0 0
Donald J. Camacho 0 0 85,000 10,000 0 0
</TABLE>
(1) Based on the $1.375 per share closing price of the Common Stock on the New
York Stock Exchange ("NYSE") December 31, 1999.
11
<PAGE>
Employment Contracts
Mr. Rupp entered into a three year employment agreement with the Company in
April 1996. In March 1999, this agreement was extended for a rolling two year
period, so that at any point in time the term remaining under this agreement
shall be two years. Under the agreement, Mr. Rupp was initially entitled to a
base salary of no less than $450,000 plus a bonus of up to 70% of Mr. Rupp's
salary as determined pursuant to the Company's Executive Incentive Plan. In
October 1997, Mr. Rupp's annual base salary was increased to $500,000. At all
times during the term of his agreement, Mr. Rupp shall be entitled to
participate in Converse's medical, dental, 401(k), insurance, retirement and
other employee benefit plans. If Mr. Rupp's employment is terminated by Converse
during the term of the agreement other than for cause (as defined), or if Mr.
Rupp chooses to terminate his employment after being required to relocate his
principal office without his consent, Mr. Rupp shall continue to receive his
annual salary for the longer of (i) the remaining balance of the term of the
agreement or (ii) two years from the date of termination. In addition, in the
event Mr. Rupp's employment is terminated by Converse during the term of the
agreement other than for cause (as defined), all unvested restricted stock
awards held by Mr. Rupp at such time shall automatically vest.
Mr. Solomon entered into an employment agreement with the Company in
September 1996. Under the agreement, Mr. Solomon is entitled to a base salary of
$275,000 annually plus a bonus at a target amount of 55% of Mr. Solomon's
salary. In addition, Mr. Solomon was entitled to allowance payments in the
amount of $93,000 on October 1, 1996, October 1, 1997 and October 1, 1998, which
were intended to compensate Mr. Solomon for certain guaranteed payments that he
would have received from his former employer had he not accepted employment with
Converse. The agreement provides that Mr. Solomon be granted options to purchase
200,000 shares of Common Stock at a price equal to the closing price of such
stock on the date of grant. Such options were granted to Mr. Solomon on
September 16, 1996 at an exercise price of $6.50 per share. These options vest
in 20% increments on each of the first five anniversaries of the grant, except
that in the event Mr. Solomon's employment is terminated, other than by
resignation or for cause, 50% of the then unvested options shall vest. Mr.
Solomon is entitled to participate in Converse's medical, dental, 401(k),
insurance, retirement and other employee benefit plans. The agreement provides
that if Mr. Solomon's employment is involuntarily terminated by the Company, he
would be entitled to 12 months of base salary.
Mr. Thorburn, Mr. Green and Mr. Camacho each entered into employment
agreements with the Company in October 1995. Under the terms of these
agreements, the Company will pay to the employee an amount equal to his annual
salary in the event that his employment with Converse is involuntarily
terminated.
Executive Compensation and Stock Option Committee Report
The Executive Compensation and Stock Option Committee (the "Committee") of
the Board is responsible for reviewing the compensation levels of the Company's
principal executive officers and determining stock option awards and restricted
stock awards to be granted under the 1994 Employee Stock Option Plan, as amended
(the "1994 Plan") and making recommendations to the
12
<PAGE>
Board relating to these matters. In making compensation determinations, the
Committee is guided by certain fundamental considerations, including:
. the need to attract and retain talented management;
. the need to set and maintain compensation levels that are competitive
with those in similar businesses; and
. the need to provide substantial short-term as well as long-term
incentives for management to maximize the value of the Company.
The Company's executive compensation consists of three basic elements: (i)
base salaries; (ii) incentive bonuses; and (iii) stock options and restricted
stock awards.
Base Compensation. Base compensation is intended to be competitive as
compared to salary levels for equivalent positions at other comparable
companies. In April 1996, the Company hired Mr. Rupp as Chairman of the Board
and Chief Executive Officer. The Company entered into an employment agreement
with Mr. Rupp providing for an annual salary of $450,000 which the Committee
determined to be a competitive salary after taking into account Mr. Rupp's
business experience in the sporting goods industry and his past success in
turning around troubled companies. In October 1997, Mr. Rupp's annual salary was
increased to $500,000.
Annual Incentive Bonus. Each executive is eligible to receive an annual
cash bonus under the Company's Executive Incentive Plan. The Company's annual
incentive bonuses are based in part on the Company's performance for the year
with respect to operating earnings compared to the Company's budgeted plan, and
in part on achievement of pre-established individual performance goals. Under
the Company's Executive Incentive Plan, the Company's key personnel (including
the CEO) are eligible to earn a "target" bonus equal to a percentage of his or
her base salary (the target percentage of the CEO being 70% and those of the
other Named Executive Officers being 55%). Approximately 75% of the bonus is
based on Converse's degree of achievement against budgeted objectives (operating
earnings) and 25% on achievement of individual performance goals. These target
levels are intended to motivate the Company's executives by providing
substantial bonus payments for the achievement of financial goals within the
Company's business plan. In addition, the Committee may grant discretionary
bonuses under the Executive Incentive Plan. For the year 2000, the Committee has
required the CEO and certain other senior executives, including the Named
Executive Officers, to submit individual performance goals. Incentive bonuses,
if any, for this group will be based on Company and individual performance.
Incentive bonuses, if any, for other employees will be granted at the discretion
of the Committee based on the Company's performance against budgeted objectives.
The Company did not achieve its budgeted objectives for 1999, and therefore
there were no bonuses based on 1999 results. The Committee also decided not to
grant discretionary bonuses to Mr. Rupp or the other Named Executive Officers
for 1999.
Stock Options and Restricted Stock. The Company uses grants of stock
options and/or restricted stock awards to attract and retain qualified managers
and to provide incentives for management to increase stockholder value by
creating a direct link between the executive's compensation and stockholder
return. During 1999, the Committee determined not to grant stock
13
<PAGE>
options to Mr. Rupp or the other Named Executive Officers. In February 1999 the
Committee did, however, grant 50,000 shares of restricted stock to Mr. Rupp and
an aggregate of 120,000 shares of restricted stock to the Named Executive
Officers. This restricted stock may not be sold by the grantees until the third
anniversary of the grant date at which time the restricted stock becomes 100%
vested. The grantee forfeits these shares in the event that he ceases to be an
employee of Converse prior to the third anniversary of the date of grant. The
grant of the foregoing restricted stock was intended to give to officers a
significant incentive to increase the value of the stock of the Company.
Section 162 (m). Section 162 (m) of the Code limits the deduction that may
be claimed by a public company for total compensation in excess of $1 million
paid to its chief executive officer or to any of the other four most highly
compensated officers except to the extent that any compensation in excess of $1
million qualifies as performance-based compensation. Grants of options under the
1994 Plan prior to the 1996 Annual Meeting of Stockholders were designed to be
performance-based compensation.
Members of the Executive Compensation and Stock Option Committee
Michael S. Gross, Chairman
Joshua J. Harris
Richard B. Loynd
Compensation Committee Interlocks and Insider Participation
Messrs. Gross and Harris, directors and members of the Executive
Compensation and Stock Option Committee of the Board, are associated with Apollo
Advisors, Lion Advisors and AIF. In November 1994, Converse entered into a
Consulting Agreement with Apollo Advisors pursuant to which it provides
corporate advisory, financial and other consulting services to the Company. Fees
under the agreement are payable at an annual rate of $500,000 plus out-of-pocket
expenses for a one-year term and the Consulting Agreement is automatically
renewable for successive one-year terms unless terminated by the Board. Converse
has granted registration rights to Lion Advisors and AIF, with respect to their
shares of Common Stock. Lion Advisors and AIF can require Converse to file
registration statements and to include their shares in registration statements
otherwise filed by Converse. Costs and expenses of preparing such registration
statements are required to be paid by Converse.
14
<PAGE>
Certain Transactions
Mr. Erving has a contract with Converse whereby he has agreed to perform
certain services. The agreement provides for Mr. Erving's endorsement of the
Company's footwear and activewear, the right to use his name and likeness to
advertise the Company's products, promotional appearances, and advertising
production and product development consultation. The agreement provides for an
annual fee of $200,000 and expires on September 30, 2000.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and certain other
officers and persons who own more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent stockholders are required by SEC regulations to furnish
the Company with copies of forms they file. To the Company's knowledge, based
solely on review of the copies of such reports furnished to the Company and
written representations that no reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were satisfied during 1999, except that Mr. Erving did not
file on a timely basis one report, which was due in April 1999, with respect to
his purchase of 30,000 shares of Common Stock in March 1999.
Performance Graph
The following graph compares the total return on Common Stock from December
30, 1995 through January 1, 2000 to that of (i) the Standard & Poor's 500 Stock
Index and (ii) the Standard & Poor's Shoe Index (the "Shoe Index") which at
January 1, 2000 was composed of Reebok International Ltd. and Nike, Inc. The
cumulative total return represents the change in stock price and the amount of
dividends received during the indicated period, assuming reinvestment of
dividends. The graph assumes an investment of $100 on December 31, 1994.
The historical stock price performance of the Common Stock shown on the
Performance Graph set forth below is not necessarily indicative of future price
performance.
15
<PAGE>
The Performance Graph set forth below shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the 1934 Act and shall not otherwise be deemed filed under such Acts.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Symbol Dec. 30, Dec. 28, Jan. 3, Jan. 2, Jan. 1,
1995 1996 1998 1999 2000
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CVE/CVEO 34.72 127.31 50.93 20.16 11.67
S&P 500 Index + 137.58 172.64 227.28 292.24 353.73
S&P Shoe Index 135.59 230.90 155.16 151.87 180.12
</TABLE>
16
<PAGE>
PROPOSAL TWO - RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
Upon recommendation of its Audit Committee, the Board continued the
engagement of PricewaterhouseCoopers LLP, certified public accountants
("PricewaterhouseCoopers"), as independent auditors for the fiscal year ending
December 30, 2000. A formal statement by representatives of
PricewaterhouseCoopers is not planned for the Meeting; however, representatives
of PricewaterhouseCoopers are expected to be present during the Meeting and
available to respond to appropriate questions.
To be approved, the proposal to ratify the engagement of independent
auditors must receive the vote of a majority of the shares present, or
represented by proxy, and entitled to vote at the Meeting.
The Board unanimously recommends a vote FOR approval of ratification of
PricewaterhouseCoopers LLP as the Company's independent auditors for the next
fiscal year.
PROPOSAL THREE - AMENDMENT OF THE CONVERSE INC.
1994 STOCK OPTION PLAN TO PERMIT
GRANTS TO NON-EMPLOYEE DIRECTORS
The Board of Directors adopted the 1994 Plan to encourage ownership of
Common Stock by key employees and consultants and enable Converse to attract and
retain the services of outstanding employees in competition with other
employers. The 1994 Plan, as amended to date, authorizes grants of incentive
stock options, non-qualified stock options and restricted stock to key
employees, including executive officers of Converse and its subsidiaries.
Converse incentive stock options must be granted with an exercise price of not
less than 100% of the fair market value per share of Common Stock on the date of
grant. The Committee has discretion to grant non-qualified options at less than
100% of the fair market value per share of the Common Stock on the date of
grant. Option prices are payable in full and in cash, upon the exercise of a
stock option, and the proceeds are added to the general funds of the Company.
The 1994 Plan currently provides for the issuance of options or shares of
restricted stock up to an aggregate limit of 3,300,000 shares, subject to
adjustment upon the occurrence of certain contingencies. The maximum number of
shares with respect to which options or restricted stock may be granted to any
individual during any calendar year and during the term of the 1994 Plan is
500,000 and 750,000, respectively. Options under the 1994 Plan generally expire
nine years from the grant date. The 1994 Plan will terminate in October 2004,
subject to the right of the Board of Directors to suspend or discontinue the
1994 Plan at any prior date and the rights of holders of options to exercise
options after such date in accordance with the terms of such options.
In 1995 the Board of Directors adopted the 1995 Non-Employee Director Plan
(the "1995 Plan") as a means of promoting the long-term financial success of the
Company by attracting and retaining Non-Employee Directors of outstanding
ability. Converse has reserved an aggregate of 45,000 shares for issuance under
the 1995 Plan. Under the 1995 Plan, grants to Non-Employee Directors are limited
to a one time grant of options to purchase 7,500 shares. Options to purchase
22,500 shares were granted to the eligible directors (Messrs. Barr, Erving and
Loynd) during 1995 at the fair market value on the date of grant of $9.88. No
other grants have been made since 1995. The options granted in 1995 became
exercisable in equal one-third increments on the anniversaries of the grant date
beginning on March 22,
17
<PAGE>
1996 and will expire in March 2005, ten years from the date of grant. None of
these options have been exercised and all remain outstanding.
Since the adoption of the 1995 Plan, the SEC has revised the regulations
that govern stock option plans. The regulations now permit, among other things,
discretionary grants to be made by the Committee to Non-Employee Directors under
a plan or plan amendment that has been approved by the stockholders of the
Company. In July 1999, the Company's Board of Directors approved, subject to
stockholder approval (i) an amendment to the 1994 Plan which would permit making
grants under the 1994 Plan to Non-Employee Directors of the Company who are not
affiliated with AIF or Lion Advisors and (ii) a grant to each of the three
eligible Non-Employee Directors of stock options to purchase 5,000 shares of
Common Stock (for a total of 15,000 shares for all three Non-Employee
Directors), at an exercise price of $3.4375 per share, which was the closing
price of the common stock on the NYSE on the day of the grant. The options are
to vest in five equal installments on the first five anniversaries of the date
of the grant. The Board of Directors approved this amendment and grant, and
recommends them to the stockholders, to bring the Company's stock based
compensation plans into alignment with current practices for Board compensation
and thereby promote the original purpose of the 1995 Plan. The proposed
amendment is subject to the approval of the Company's stockholders at the Annual
Meeting. Approval of the amendment will also constitute approval of the grants.
A copy of the proposed amendment will be provided to any stockholder who
requests it by contacting the Converse Investor Relations Department at (978)
664-7573.
To be approved, the amendment of the 1994 Plan to permit grants to Non-
Employee Directors must receive the vote of a majority of the shares present, or
represented by proxy, and entitled to vote at the Meeting.
The Board unanimously recommends a vote FOR the amendment to the Converse
Inc. 1994 Stock Option Plan to permit grants to Non-Employee Directors.
STOCKHOLDER PROPOSALS
Stockholder proposals submitted for inclusion in the Company's proxy
materials for the 2001 Annual Meeting should be addressed to the Secretary of
Converse and must be received at Converse's executive offices no later than
February 2, 2001. Upon receipt of any such proposal, the Company will determine
whether or not to include such proposal in the proxy materials in accordance
with SEC regulations governing the solicitation of proxies.
OTHER BUSINESS
Neither the Board nor management knows of any matters other than those
items set forth above that will be presented for consideration during the
Meeting. However, if other matters should properly come before the Meeting, it
is intended that the persons named in the proxies will vote, act and consent in
accordance with their best judgment with respect to any such matters.
18
<PAGE>
Form 10-K
Further information regarding the Company is set forth in the Company's
Annual Report on Form 10-K which has been filed with the Securities and Exchange
Commission. The Form 10-K (including financial statements and schedules, but
excluding exhibits) is available without charge by writing to the Secretary of
Converse Inc. at One Fordham Road, North Reading, Massachusetts 01864. Copies of
exhibits to the Form 10-K will be furnished upon request and the payment of a
reasonable duplication fee.
By order of the Board of Directors,
Jack A. Green,
Senior Vice President Administration,
General Counsel and Secretary
June 1, 2000
North Reading, Massachusetts
19
<PAGE>
DETACH HERE
PROXY
CONVERSE INC.
Proxy Solicited on Behalf of the Board of Directors of the Company
for the 2000 Annual Meeting of Stockholders, June 29, 2000
The undersigned hereby appoints Glenn N. Rupp and Jack A. Green, and each of
them, with power of substitution, proxy or proxies, to represent the undersigned
and vote all shares of Common Stock the undersigned would be entitled to vote at
the annual meeting of stockholders of Converse Inc. to be held at the Company's
headquarters, One Fordham Road, North Reading, Massachusetts, at 10:00 a.m.,
local time, on Thursday, June 29, 2000, and at any adjournments thereof, on all
matters coming before said meeting.
The Board of Directors recommends a vote FOR
1. Election of Ten Directors, Nominees:
(01) Donald J. Barr, (02) Julius W. Erving, (03) Robert H. Falk,
(04) Gilbert Ford, (05) Michael S. Gross, (06) John J. Hannan,
(07) Joshua J. Harris, (08) John H. Kissick, (09) Glenn N. Rupp,
(10) Michael D. Weiner
2. Ratification of the selection of independent auditors.
3. Amendment of the Converse Inc. 1994 Stock Option Plan to permit grants to
non-employee directors.
4. In their discretion, upon such other matters as may properly come before
the meeting.
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
<TABLE>
<S> <C> <C>
------------------- -------------------
SEE REVERSE PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY SEE REVERSE
SIDE SIDE
------------------- -------------------
</TABLE>
<PAGE>
DETACH HERE
-----
Please mark
X votes as in
this example.
-----
1. Election of FOR WITHHELD
Directors [_] [_]
(see reverse)
For, except vote withheld from the following nominee(s)
____________________________
2. Ratification of selection of FOR AGAINST ABSTAIN
independent auditors. [_] [_] [_]
3. Amendment of the Converse, Inc. FOR AGAINST ABSTAIN
1994 Stock Option Plan to permit [_] [_] [_]
grants to non-employee directors.
4. Other business: I authorize the FOR AGAINST ABSTAIN
aforementioned Proxies in their [_] [_] [_]
discretion to vote upon such other
business as may properly come
before the Annual Meeting and any
adjournments thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
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.
Signature: Date: Signature: Date:
