<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
HARTMARX CORPORATION
(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)(1) 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):
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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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
LOGO
----------------
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS OF HARTMARX CORPORATION
TO BE HELD APRIL 9, 1998
To the Stockholders of HARTMARX CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of HARTMARX
CORPORATION (the "Corporation") will be held at the Omni Berkshire Place
Hotel, Julliard Room, 2nd Floor, 21 East 52nd Street, New York, New York, on
Thursday, April 9, 1998, at 11:00 A.M. for the following purposes:
(1) To elect Directors of the Corporation.
(2)To consider adopting the 1998 Incentive Stock Plan, a copy of which is
set forth in the attached Proxy Statement as Exhibit A.
(3) To consider ratifying the appointment of independent auditors.
(4) To transact such other business as may properly come before the meeting.
The Board of Directors has fixed February 20, 1998, as the record date for
determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting.
In order that the shares of the Corporation may be represented as fully as
possible at the Annual Meeting, every stockholder is requested to vote, date,
sign and mail the enclosed Proxy, as early as practicable, in the accompanying
postage-paid envelope addressed to HARTMARX CORPORATION, c/o First Chicago
Trust Company, P.O. Box 8914, Edison, NJ 08818-9258. If you also attend the
Annual Meeting, you will have the opportunity to vote your shares in person
instead of having the Proxy counted.
A complete list of the stockholders entitled to vote at the Annual Meeting,
showing the address and number of shares registered in the name of each
stockholder, may be examined by any stockholder, for any purpose germane to
the meeting, during regular business hours between March 25, 1998 and April 7,
1998, at the office of Mrs. Kay C. Nalbach, Assistant Secretary of the
Corporation, 101 North Wacker Drive, Chicago, Illinois.
A Proxy Statement with respect to the Annual Meeting is attached hereto. The
Annual Report to Stockholders and the Annual Report on Form 10-K for the
fiscal year ended November 30, 1997, are enclosed herewith.
By Order of the Board of Directors
LOGO
FREDERICK G. WOHLSCHLAEGER,
Secretary
Chicago, Illinois
February 27, 1998
<PAGE>
LOGO
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS OF HARTMARX CORPORATION
TO BE HELD APRIL 9, 1998
The common stock, par value $2.50 ("Common Stock"), of HARTMARX CORPORATION
(the "Corporation") is the only security entitled to vote at the meeting. On
February 20, 1998, the record date for determining the stockholders entitled
to vote at the meeting, the Corporation had 34,031,097 shares of outstanding
Common Stock, each share entitled to one vote, held by approximately 5,915
stockholders (estimated by adding the number of registered holders furnished
by the Corporation's registrar and the number of participants in the Hartmarx
Employee Stock Ownership Plan). All shares represented by valid Proxies
received pursuant to this solicitation will be voted, if the Proxies are not
revoked prior thereto. Any stockholder may revoke a Proxy at any time prior to
the voting by delivering to the Corporation's Secretary a signed notice
specifying the number of shares and clearly identifying the Proxy to be
revoked or by attending the Annual Meeting and voting in person by written
ballot. The Corporation's principal executive offices are located at 101 North
Wacker Drive, Chicago, Illinois 60606, telephone 312/372-6300.
The enclosed Proxy is solicited by the Corporation's Board of Directors (the
"Board"). The cost of preparing and mailing the proxy material will be paid by
the Corporation. The approximate mailing date for this material is February
27, 1998. The Corporation will, upon request, reimburse brokers, banks and
trust companies for the costs incurred in mailing the proxy material to their
customers who are beneficial owners of Common Stock of the Corporation
registered in the names of such brokers, banks and trust companies or their
nominees. In addition to solicitation by mail, officers and regular employees
of the Corporation may solicit Proxies by telephone, telecopier or in person,
but will receive no additional compensation for such activities.
Votes cast by proxy or in person at the meeting will be tabulated by the
inspectors of election appointed by the Board for the meeting. The affirmative
vote of a plurality of the shares represented at the meeting is required to
elect directors, and the affirmative vote of a majority of such shares is
required to ratify the appointment of auditors. Abstentions and broker non-
votes are each included in the determination of shares present and voting for
purposes of determining whether a quorum is present. On other matters,
abstentions are counted as votes cast, while broker non-votes are not counted
in determining whether a proposal has been approved.
ITEM (1)--ELECTION OF DIRECTORS
Votes will be cast pursuant to authority granted by the enclosed Proxy for
the election of the ten nominees named below as directors of the Corporation.
Each elected director's term of office will be for one year or until a
successor is duly elected and qualified. In the event any of these nominees
becomes unavailable for election for any reason, votes will be cast pursuant
to authority granted by the enclosed Proxy for such persons as may be
designated by the Board.
1
<PAGE>
INFORMATION ABOUT NOMINEES FOR DIRECTORS
The information shown below includes the principal business affiliations of
each nominee since 1993.
A. ROBERT ABBOUD, 68--Director since 1974
Mr. Abboud is president of A. Robert Abboud and Company, a
private investment company. He is also a director of AAR Cor-
poration, Inland Steel Company and Alberto-Culver Company.
LOGO
SAMAWAL A. BAKHSH, 29--Director since 1995
Mr. Bakhsh is a director of Traco Group of Companies, a pri-
vately held investment company. He also serves as a director
of several other privately held corporations.
LOGO
JEFFREY A. COLE, 56--Director since 1990
Mr. Cole is chairman, chief executive officer and a director
of Cole National Corporation, a specialty retailer. He is also
a director of Edison Bros. Stores, Inc. and serves on the
Supervisory Board of Pearle B.V.
LOGO
RAYMOND F. FARLEY, 73--Director since 1981
Mr. Farley is retired as president and chief executive officer
of S. C. Johnson & Son, Inc. (SC Johnson Wax). He is also a
director of Johnson International, Inc. and Snap-On
Incorporated.
LOGO
2
<PAGE>
ELBERT O. HAND, 58--Director since 1984
Mr. Hand is chairman and chief executive officer of HARTMARX
CORPORATION. He was president and chief operating officer from
1987 to 1992. He is also a director of Austin Reed PLC, Lon-
don, England.
LOGO
DONALD P. JACOBS, 70--Director since 1980
Mr. Jacobs is Dean of the J. L. Kellogg Graduate School of
Management and Gaylord Freeman Distinguished Professor of Fi-
nance at Northwestern University. He is also a director of
Unicom Corporation and its subsidiary, Commonwealth Edison
Company, The First National Bank of Chicago, a subsidiary of
First Chicago NBD Corporation, Security Capital Industrial
Trust, Unocal Corporation and Whitman Corporation.
LOGO
CHARLES MARSHALL, 68--Director since 1980
Mr. Marshall is retired as vice chairman of the board and a
director of American Telephone and Telegraph Company, a
communications company. He is also a director of Ceridian
Corporation, GATX Corporation, Sonat, Inc. and Sunstrand Corp.
LOGO
HOMI B. PATEL, 48--Director since 1994
LOGO
Mr. Patel is president and chief operating officer of HARTMARX
CORPORATION. He was chairman and chief executive officer of
the Men's Apparel Group from 1991 to 1992, and was named pres-
ident and chief operating officer in 1992. He is also a direc-
tor of the Amalgamated Life Insurance Co.
MICHAEL B. ROHLFS, 46--Director since 1995
Mr. Rohlfs is president and chief executive officer of
Dearborn Financial, Inc., an investment advisory company. From
1992 to September, 1995, he served as executive vice president
and managing director of Dearborn.
LOGO
3
<PAGE>
STUART L. SCOTT, 59--Director since 1993
Mr. Scott is chairman and chief executive officer of LaSalle
Partners Incor- porated, an international real estate services
firm. From 1992 to 1997, he was chairman and chief executive
officer of LaSalle Partners Limited, the predecessor to
LaSalle Partners Incorporated. He was co-chairman from 1990 to
1992, and previously served in various executive positions
with LaSalle Partners. (1)
LOGO
- --------
(1) Affiliates of LaSalle Partners Incorporated manage certain commercial real
estate in which subsidiaries of the Corporation lease offices and
showrooms. During fiscal 1997, this included the Corporation's principal
executive offices. Mr. Scott does not have a direct or indirect material
interest in these transactions.
The Board held five meetings, one of which was the annual meeting, in fiscal
1997. All directors attended at least 75% of the meetings of the Board and
committees on which he served, except for Mr. Bakhsh who attended three of the
five Board meetings, and Mr. Cole who attended four of the five Board meetings
and three of the six committee meetings on which Mr. Cole serves. Board
committees are reconstituted annually at the Annual Meeting of the Board
immediately following the Annual Meeting of Stockholders.
The Audit and Finance Committee now consists of Mr. Scott, chairman, Mr.
Cole, Mr. Jacobs and Mr. Rohlfs. It met two times in fiscal 1997. The
Committee maintains communications between the directors and independent
auditors and assists the Board with its responsibilities relating to corporate
accounting, integrity of financial controls and reporting practices. It
reports to the entire Board periodically on such matters as the Committee or
the Board may specify, approves all significant non-audit work which the
independent auditors perform for the Corporation and approves their fees. It
also oversees the Corporation's investment policies, methods of financing
corporate operations and employee benefit plans.
The Compensation and Stock Option Committee is currently composed of Mr.
Farley, chairman, Mr. Abboud, Mr. Cole and Mr. Marshall. It met five times in
fiscal 1997. It exercises the full powers of the Board with respect to
compensation paid to executives of the Corporation and its subsidiaries. It
also grants employee stock options and makes other determinations regarding
the administration of employee stock option plans. It approves management
incentive (bonus and long-term) plans and determines the standards of
performance for incentive payments.
The Nominating and Governance Committee now consists of Mr. Marshall,
chairman, Mr. Bakhsh, Mr. Jacobs and Mr. Scott. It met once in fiscal 1997.
Its function is to propose to the entire Board qualified nominees for election
to fill vacancies on the Board and to make recommendations on directorship and
corporate governance practices. Stockholders wishing to suggest qualified
candidates for this Committee's consideration should forward their suggestions
to the Nominating and Governance Committee, in care of Mrs. Kay C. Nalbach,
Assistant Secretary, HARTMARX CORPORATION, 101 North Wacker Drive, Chicago,
Illinois 60606.
For fiscal 1997, each of the directors not employed by the Corporation or
any of its subsidiaries ("Outside Directors") was entitled to receive a
$17,500 annual retainer plus $750 for each Board meeting attended and $600 for
each committee meeting attended. Each committee chairman was entitled to
receive $2,500 annually in addition. Some of the directors had the opportunity
to defer payment of all or a portion of annual fees otherwise payable from
January 1, 1986 through 1989. Deferred fees earn interest from the date of
deferral at 110% of the seasoned Moody's Corporate
4
<PAGE>
Bond Index rate. Upon termination of their service as a director, the
Corporation agrees to pay such deferred fees and interest ("Deferral
Account"), either in a lump sum or in installments. The deferral arrangements
also provide for the Corporation's payment of specified death benefits under
certain circumstances. Each director who has deferred fees is an unsecured
general creditor of the Corporation with respect to such Deferral Account.
Some directors have withdrawn or converted their Deferral Account into
Director Stock Options exercisable for $1.00. Outside Directors are also
provided a clothing allowance and, while on Hartmarx business, travel accident
insurance. The cost of such benefits was approximately $3,500 per director.
Director Stock Options ("DSOs") and Director Deferred Stock Awards ("DDSAs")
are granted under the 1995 Stock Plan for Non-Employee Directors ("1995
Directors Plan"). Except as described below, DSOs are generally identical to
employee stock options but are granted only to Outside Directors. The number
of shares of Common Stock covered by DSOs granted to an Outside Director in
any twelve-month period ending each March 31 is obtained by dividing the
amount of the director's annual retainer by the fair market value of a share
of the Corporation's Common Stock on the date or dates of grant, but in no
event can be less than 1,000 shares. In addition, each Outside Director may
choose to receive, on each date of election to the Board, a DSO in lieu of all
or part of the annual retainer payable during such director's term of office.
The number of shares covered by such a DSO is obtained by dividing the unpaid
retainer amount by the excess of the fair market value of a share on such date
over $1.00; the purchase price of each covered share is $1.00. For shares
covered by these DSOs outstanding on a Common Stock dividend record date, the
director is entitled to be paid cash dividend equivalents based on any cash
dividend (or cash value of other property) that would have been received had
such DSO shares been issued and outstanding on the dividend record date. The
1995 Directors Plan provides that DSOs cannot be exercised for six months
after the grant date. DDSAs consist of share units credited to an account for
each Outside Director, each unit representing one share of Common Stock. Each
Outside Director is granted 150 DDSA units on each date of election to the
Board. DDSAs earn dividend equivalents in the same manner as DSOs but any such
dividend equivalents are credited to the director's account as additional
units. Upon the director's death, disability or termination of Board service,
whole units become payable in shares of Common Stock and any fractional units
become payable in cash.
5
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following table shows the compensation for the past three fiscal years
of the Corporation for each of the Corporation's five most highly compensated
executive officers, including the Chief Executive Officer and one other person
who served as an executive officer during fiscal 1997 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------
Annual Compensation Awards
-------------------------- -----------------------
Name and Restricted Securities
Principal Stock Underlying All Other
Position Year Salary(1) Bonus Awards(3) Options/SARs Compensation(4)
--------- ---- --------- -------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Elbert O.
Hand, 1997 $597,083 $795,557(2) $231,600 30,000 $3,906
Chairman and
Chief 1996 565,000 364,280 206,822 25,000 3,702
Executive
Officer 1995 561,667 0 -- 145,000 3,686
Homi B.
Patel, 1997 477,500 623,282(2) 193,000 25,000 3,092
President
and Chief 1996 450,000 285,807 157,993 23,000 2,821
Operating
Officer 1995 447,500 0 -- 135,000 2,898
Glenn R. Mor-
gan 1997 213,750 198,022(2) 77,200 15,000 1,826
Executive
Vice 1996 200,000 138,215 59,950 10,000 1,695
President
and Chief 1995 179,375 0 -- 45,000 1,613
Financial
Officer
Frederick G.
Wohlschlaeger 1997(5) 77,083 64,864 -- 25,000 370
Senior Vice
President, 1996 0 0 -- -- 0
General
Counsel and 1995 0 0 -- -- 0
Secretary
James E.
Condon 1997 132,459 35,848 19,300 7,500 1,436
Vice Presi-
dent, 1996 126,500 27,662 6,732 5,000 1,351
Treasurer 1995 126,291 0 -- 10,000 1,249
Frank A.
Brenner, 1997(6) 125,375 0 -- 0 1,128
Former Vice
President, 1996 160,750 34,394 6,732 5,000 1,530
Marketing
Services 1995 160,104 0 -- 10,000 1,490
</TABLE>
- --------
(1) Includes amounts paid and deferred.
(2) These amounts represent the total of bonuses earned under the Management
Incentive Plan and special bonuses awarded for the achievement of the
Corporation's goal to reduce operating expenses as a percentage of sales.
The amounts earned under the Management Incentive Plan for fiscal 1997
were: Mr. Hand, $640,557; Mr. Patel, $478,282; and Mr. Morgan, $153,022;
and expense goal achievement bonuses awarded were: Mr. Hand, $155,000; Mr.
Patel, $145,000; and Mr. Morgan, $45,000.
(3) The dollar amount shown equals the number of shares of restricted stock
multiplied by the stock price on the grant date. This valuation does not
take into account the diminution in value attributable to the restrictions
placed on the shares. On July 9, 1997, the following restricted shares
were awarded to the Named Executive Officers and vest on the first to
occur of (i) July 9, 2007; (ii) the closing stock price on the New York
Stock Exchange exceeds $11.50 for 30 consecutive calendar days; (iii)
retirement at age 65; or (iv) with the consent of the Compensation
Committee: Mr. Hand, 30,000; Mr. Patel, 25,000; Mr. Morgan, 10,000; and
Mr. Condon, 2,500. The number and value of aggregate restricted stock
holdings at the end of fiscal year 1997 were: Mr. Hand, 55,000 ($446,875);
Mr. Patel, 45,000 ($365,625); Mr. Morgan, 17,500 ($142,188); Mr.
Wohlschlaeger, 0 ($0); Mr. Condon, 2,500 ($20,313); and Mr. Brenner, 0
($0).
(4) These amounts represent the Corporation's contributions to the Hartmarx
Employee Stock Ownership Plan and premiums paid for term life insurance.
The amounts contributed to the Plan in 1997 were: Mr. Hand, $800; Mr.
Patel, $800; Mr. Morgan, $800; Mr. Wohlschlaeger, $0; Mr. Condon, $800;
and Mr. Brenner, $636. The premiums for term life insurance in 1997 were:
Mr.
6
<PAGE>
Hand, $3,106; Mr. Patel, $2,292; Mr. Morgan, $1,026; Mr. Wohlschlaeger,
$370; Mr. Condon, $636; and Mr. Brenner, $492.
(5) Mr. Wohlschlaeger's employment with the Corporation commenced on July 1,
1997.
(6) Mr. Brenner retired from the Corporation on November 30, 1997.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Effective August 1, 1996, the Corporation entered into separate employment
and severance agreements with each of Messrs. Hand, Patel and Morgan,
replacing existing agreements with each of them. The Corporation also entered
into separate employment and severance agreements with Mr. Wohlschlaeger
effective July 1, 1997. The employment agreements are for an initial term
expiring December 31, 1998, and automatically renew for an additional two year
period unless cancelled in accordance with their terms. They provide that
Messrs. Hand, Patel, Morgan and Wohlschlaeger will receive annual salaries at
least equal to their respective annual salaries on the date the agreements
were signed (with increases to be determined by the Compensation and Stock
Option Committee of the Board of Directors), and provide for participation in
the Management Incentive Plan ("MIP"), described below, and in any other
fringe benefits, including any long- term incentive plan, available to key
executives. In the event that any of these executives is discharged without
cause or resigns with good reason, which includes resignation due to a change
in duties or cancellation of his employment agreement prior to December 31,
2000, the executive will be entitled to continuation of salary and fringe
benefits for 24 months. In addition, all unpaid incentive compensation under
the MIP (including all contingent compensation which would have been payable
for the full fiscal year in which such executive's employment is terminated
and for the following fiscal year) is to be paid as and when MIP payments are
made to other MIP participants for such periods. All unpaid incentive
compensation under any long-term incentive plan (including all contingent
compensation which would have been payable for uncompleted performance
periods) becomes immediately payable; and all stock options and restricted
stock granted to such executive under the Corporation's stock option plans
become immediately exercisable and fully vested, as the case may be.
The severance agreements are for an initial period ending December 31, 1997
(the initial term under Mr. Wohlschlaeger's severance agreement ends on
December 31, 1998), and, commencing January 1, 1998, renew for successive
periods of one year unless notice of non- renewal is given by the Corporation
or executive not later than the immediately preceding July 15. Pursuant to the
severance agreements, the Corporation has agreed to pay each executive
severance benefits in the event the executive's employment is terminated
within 24 months following a change in control of the Corporation for any
reason other than (i) death, disability or retirement, (ii) cause, or (iii)
resignation without good reason. The severance payment, payable as a lump sum
in lieu of the salary continuation, bonus and long-term incentive compensation
payments described above, would equal three times the higher of executive's
annual base salary as of the date the executive's employment is terminated and
executive's annual base salary in effect immediately prior to the change in
control plus three times two-thirds of the executive's maximum bonus
opportunity under the MIP for such year. In addition, all stock options and
restricted stock granted to such executive under the Corporation's stock
option plans would become immediately exercisable and fully vested, as the
case may be, and the executive would also be entitled to receive any unpaid
contingent or other incentive compensation in the same manner as described
above. All such amounts would be due and payable within ten days of the date
of termination. Fringe benefits would continue to be provided for a period of
36 months. In the event that total severance benefits to be received by the
executive in connection with a change in control would be subject to any
excise tax imposed under Section 4999 of the Internal Revenue Code, then the
Corporation shall pay to executive an additional amount such that after
deduction of any excise tax on such severance benefits and any federal, state
and local income and employment taxes and excise tax on such additional
amount, the net amount retained by executive shall be equal to the severance
benefits to be paid to such executive.
7
<PAGE>
Mr. Condon has agreed to remain in the employ of the Corporation, subject to
the Corporation's agreement to pay him severance benefits if such employment
is terminated within 24 months following an actual change in control for any
reason other than (i) death, disability or retirement, (ii) for cause, or
(iii) resignation without good reason. Generally, the severance payment, net
of additional amounts agreed to be paid by the Corporation, if necessary, in
respect of any excise tax imposed by Section 4999 of the Internal Revenue Code
on such severance benefits (and any federal, state and local taxes on such
additional amounts), would equal one and one-half times his average annual
compensation for the three calendar years immediately preceding the year in
which the change in control occurs; and he would also be entitled to receive
any appreciation in the value of Common Stock covered by stock options
theretofore granted to him under the Corporation's stock option plans (whether
or not then fully exercisable).
STOCK OPTION GRANTS
The following tables provide information on the Named Executive Officers'
option grants in fiscal 1997, option exercises in fiscal 1997 and the value of
unexercised options at November 30, 1997.
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Appreciation
for Option
Individual Grants Term(1)
- ---------------------------------------------------------------------- ---------------
Percent
of Total
Options
Number of Granted
Securities to
Underlying Employees Exercise or
Options in Fiscal Base Price Expiration
Name Granted Year(2) ($/Share)(3) Date 5% ($) 10% ($)
---- ---------- --------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Elbert O. Hand.......... 30,000(4) 7.9 7.72 07/08/2007 145,652 369,111
Homi B. Patel........... 25,000(4) 6.6 7.72 07/08/2007 121,377 307,592
Glenn R. Morgan......... 15,000(4) 4.0 7.72 07/08/2007 72,826 184,555
Frederick G.
Wohlschlaeger.......... 25,000(5) 6.6 8.06 06/30/2007 126,722 321,139
James E. Condon......... 7,500(4) 2.0 7.72 07/08/2007 36,413 92,278
</TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
- --------
(1) The amounts shown above for each of the Named Executive Officers as
potential realizable values are based on arbitrarily assumed annualized
rates of stock price appreciation of 5% and 10% over the full ten year
term of the options, as required by applicable regulations of the
Securities and Exchange Commission. Actual gains, if any, on stock option
exercises and common stock holdings will be dependent on the future
performance of the Corporation and overall stock market conditions.
(2) The Corporation granted options representing 378,000 shares to employees
in fiscal 1997. No stock appreciation rights were granted in tandem with
these options.
(3) The exercise price may be paid by delivery of already owned shares and the
withholding obligations related to exercise may be paid by offset of the
underlying shares subject to certain conditions. The fair market value on
the date of grant of the shares underlying the July 9 options was $7.72
per share, except that the fair market value on the date of grant of the
shares underlying the options granted to Mr. Wohlschlaeger on July 1,
1997, was $8.06 per share.
(4) These options were granted on July 9, 1997, become fully exercisable on
July 9, 1998, and are subject to termination between 90 days to three
years following termination of employment in certain events.
(5) These options were granted on July 1, 1997, and become exercisable in a
thirty-three percent (33%) installment on July 1, 1998, and in a thirty-
four percent (34%) installment on July 1, 1999, with full vesting
occurring on July 1, 2000, and are subject to termination between 90 days
to three years following termination of employment in certain events.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value ($) of Unexercised
Acquired Underlying Unexercised In-the-Money Options at
on Value ($) Options at Nov. 30, 1997 Nov. 30, 1997
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- --------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Elbert O. Hand.......... 0 0 382,759/55,000 970,120/84,025
Homi B. Patel........... 0 0 277,576/48,333 687,219/77,207
Glenn R. Morgan......... 0 0 78,041/23,333 184,493/30,023
Frederick G.
Wohlschlaeger.......... 0 0 0/25,000 0/ 1,625
James E. Condon......... 0 0 28,260/ 7,500 63,747/ 3,038
Frank A. Brenner........ 0 0 29,218/ 0 66,501/ 0
</TABLE>
PENSION PLAN
The Hartmarx Retirement Income Plan (the "Plan"), a trusteed plan, provides
for contributions to be made by the Corporation and designated affiliates on
an actuarial basis, and provides for defined benefits in the event of
retirement after certain age and service requirements have been met. Survivor
benefits are also provided in the event of a participant's death after certain
other age and service requirements are met. Regular eligible employees of the
Corporation or a designated affiliate who participate in The Hartmarx Savings-
Investment Plan, a trusteed defined contribution plan, automatically
participate in the Plan. Normal retirement age under the Plan is 65 and early
retirement at any time after a vested participant attains age 55 results in
actuarially reduced benefits. Maximum benefits under the Plan are based upon
50% of the highest average annual earnings (base salary, commissions, bonus
and overtime), up to $235,840 (reduced to $150,000 for annual earnings after
1993, and to $160,000 for annual earnings after 1996), paid to an employee for
any five consecutive years included within the final 10 consecutive years of
employment by the Corporation (or subsidiary adopting the Plan), less 50% of
the primary Social Security benefit, for 30 years of service, prorated
downward to one-sixth of such benefits for the minimum of five years normally
required for vested rights.
The following table shows the estimated annual benefits payable upon
retirement at age 65 to participants in the Plan, in specified classifications
as to compensation and years of service. These single-life benefits are
actuarially reduced when the spouse is named as joint annuitant or if the
employee withdraws his or her pre-1984 contributions to the Plan prior to
retirement. In certain instances, benefits are subject to limitations imposed
by the Employee Retirement Income Security Act of 1974, as amended. The
Corporation has authorized additional non-qualified pension payments based
upon the benefits which could have been earned in accordance with the formula
described in the previous paragraph but for the application of such
limitations. Compensation covered by the Plan for the Named Executive Officers
generally corresponds with the earned salary, bonus and cash portion of any
long-term incentive payout shown in the Summary Compensation Table. Full years
of service credited under the Plan as of November 30, 1997, were 28 for Mr.
Hand, 17 for Mr. Patel, 16 for Mr. Morgan, 0 for Mr. Wohlschlaeger, 13 for Mr.
Condon, and 19 for Mr. Brenner.
<TABLE>
<CAPTION>
Average Annual Earnings Years of Credited Service
(Highest 5 Years of Last 10 -------------------------------------------------
years) 5 10 15 20 25 30 or more
---------------------------- ------ ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000.................. 15,325 30,649 46,974 61,299 76,623 91,948
250,000.................. 19,491 38,983 58,474 77,965 97,457 116,948
300,000.................. 23,658 47,316 71,974 94,632 118,290 141,948
350,000.................. 27,825 55,649 83,474 111,299 139,123 166,948
400,000.................. 31,991 63,983 95,974 127,965 159,957 191,948
450,000.................. 36,158 72,316 108,474 144,632 180,790 216,948
500,000.................. 40,325 80,649 120,974 161,299 201,623 241,948
550,000.................. 44,491 88,983 133,474 177,965 222,457 266,948
600,000.................. 48,658 97,316 145,974 194,632 243,290 291,948
650,000.................. 52,825 105,649 158,474 211,299 264,123 316,948
700,000.................. 56,991 113,983 170,974 227,965 284,957 341,948
800,000.................. 65,325 130,649 195,974 261,299 326,623 391,948
900,000.................. 73,658 147,316 220,974 294,632 368,290 441,948
1,000,000.................. 81,991 163,983 245,974 327,965 409,957 491,948
</TABLE>
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
EXECUTIVE COMPENSATION PROGRAM
Compensation Committee Approach
The Compensation and Stock Option Committee (the "Compensation Committee"),
which is composed of four independent directors of the Corporation, sets
executive compensation levels and establishes and administers short-term and
long-term incentive programs based upon a set of guiding principles. These
principles, which are designed to align executive compensation with
management's execution of business strategies and initiatives as well as the
achievement of long-term financial performance and growth in shareholder
values, are as follows:
. Integration of the elements of the compensation package into a reward
program which will attract and retain key executives critical to the long-
term success of the Corporation.
. Awarding of short-term incentives on terms closely tied to operating unit
performance and based upon the achievement of business goals for the
performance period.
. Alignment of executive and shareholder interests through a stock-based long-
term incentive program which will reward executives for enhancement of
shareholder values.
In determining the appropriate levels of executive compensation for fiscal
1997, the Compensation Committee took into account both the Corporation's
financial performance for the year and the executive group's achievement of
improved profitability. Future compensation will continue to be closely tied
to performance and its impact on the growth in shareholder value.
The total compensation program consists of three components:
Base Salary
The base salaries and salary ranges for executives are determined in
relation to competitive market data provided in national executive
compensation surveys and subject to periodic review by independent
compensation consultants. Compensation surveys utilized include the Management
Compensation Services (a Division of Hewitt Associates) Project 777 Executive
Compensation Study containing information from 329 manufacturing companies
ranging in sales from $100 million to over $8 billion; the Hay Executive
Compensation Report including information from 559 operating units of 400
industrial organizations (32% nondurable manufacturing, 32% durable
manufacturing, 33% non-manufacturing) ranging in sales from less than $300
million to over $10 billion; and the American Apparel Manufacturers'
Association Management Compensation Study based upon information from 32
apparel manufacturing companies ranging in sales from less than $100 million
to over $4 billion. Salary ranges are reviewed on an annual basis and adjusted
as warranted to maintain a competitive position of slightly above the median
survey results.
Salaries are reviewed on an annual basis and salary changes are based upon
individual performance and position in salary ranges within the context of an
annual salary budget. The salary budget is determined in relation to
competitive market data provided in national salary planning surveys and the
financial performance of the Corporation and its operating units. Salary
planning surveys utilized include those conducted by the American Compensation
Association, Hewitt Associates, William M. Mercer, Sibson & Company, Towers
Perrin and The Wyatt Company. If the financial performance of the Corporation
results in achieving sales and earnings targeted in the business plan, the
overall salary budget is established at the survey national average and is
allocated to operating units based upon the level of achievement of their
individual business plans.
In fiscal 1996, sales and earnings were achieved in accordance with the
business plan and an overall salary budget of 3.9% was administered for 1997.
Better performing operating units had higher salary budgets while those with
lower performance had less. Actual salary increases averaged 3.3% throughout
the Corporation. Above average salary increases were awarded in January to
Messrs. Patel, Morgan and Condon in recognition of their individual
contributions to the improved profitability of the Corporation. Mr.
Wohlschlaeger joined the Corporation in July of 1997 and
10
<PAGE>
Mr. Brenner retired at the end of the fiscal year. The salary of the Chief
Executive Officer is separately discussed below.
The employment agreements for Messrs. Hand, Patel and Morgan provide for
their respective annual salaries to be at least equal to their annual salaries
for 1996, and for Mr. Wohlschlaeger, equal to his 1997 salary. Salaries for
the Named Executive Officers are slightly below average competitive levels,
with the competitiveness of the overall compensation package significantly
dependent upon the reward opportunities created by achievement of objectives
under the Corporation's short-term and long-term incentive plans.
Short-Term Incentives
Executives are eligible for annual bonuses under the Management Incentive
Plan ("MIP"). Effective in fiscal 1997, incentive opportunities for Messrs.
Hand, Patel, Morgan and Wohlschlaeger were restructured as a result of a
competitive market analysis conducted by Frederic W. Cook & Co., an
independent compensation consulting firm. Incentive opportunities for the
remaining Management Incentive Plan participants have been restructured for
fiscal 1998 based on competitive market data as provided in the aforementioned
national executive compensation surveys and recommendations from Frederic W.
Cook & Co. Awards are based upon the achievement of financial goals
established for individual operating units and on a consolidated basis in
accordance with the Corporation's business plan. Individual awards for
corporate executives are based upon the achievement of both consolidated and
operating unit goals weighted according to sales volume. Operating unit
executives are measured on the goals appropriate to the unit within which they
report with unit heads also accountable for consolidated goals. For fiscal
1997, 40 executives participated in the plan. Corporate executives were
measured on consolidated pre-tax income and operating unit sales-weighted
earnings before interest and taxes and adjusted net asset goals. Operating
unit executives were measured on earnings before interest and taxes, sales and
adjusted net asset goals with unit heads also measured on consolidated pre-tax
income. No bonuses would have been earned if the Corporation had not achieved
positive income results. Bonuses paid for 1997 averaged 38.7% of eligible
salaries and 72.0% of maximum incentive opportunities.
Long-Term Incentives
Executives are eligible for awards of stock options and/or restricted stock
under the Corporation's 1995 Incentive Stock Plan. Awards are determined in
relation to competitive practice and an individual's position. In July, under
the Long Term Incentive Plan, selected senior executives received a
combination of stock option grants utilizing length of service vesting and
restricted stock awards utilizing performance based vesting whereby increments
of the award will vest when the stock price exceeds a certain level for thirty
consecutive calendar days. Messrs. Patel, Morgan and Condon received such
awards. The amount and terms of the options already held by the Named
Executive Officers, as well as competitive practice, was taken into
consideration in determining the size of the awards. As reflected in the Table
of Option Grants In The Last Fiscal Year, one stock option grant was awarded
to each of the Named Executive Officers at an exercise price equal to the fair
market value of the Corporation's stock on the date of the grant.
Chief Executive Officer Compensation
The Compensation Committee increased the salary of the Chief Executive
Officer 6.2% to $600,000 on January 1, 1997. The determination of the Chief
Executive Officer's salary was based upon the salary range for the position,
the salary budget established for 1997 and in recognition of Mr. Hand's
leadership in achieving continued improvement in the financial performance of
the Corporation. Mr. Hand's salary remains somewhat below average when
compared to other Chief Executive Officers of organizations in the same sales
volumes as reported in the national surveys analyzed. His fiscal 1997 MIP
bonus award was based upon the achievement of consolidated pre-tax income and
sales-weighted individual operating unit achievement of earnings before
interest and taxes and adjusted net asset goals. The Chief Executive Officer
received a stock option grant and a
11
<PAGE>
restricted stock award from the Corporation's 1995 Incentive Stock Plan,
described above. These awards provide an incentive for future performance and
the enhancement of shareholder value.
The Compensation Committee has reviewed the provisions of the Omnibus Budget
Reconciliation Act of 1993 as they relate to limitations on tax deductibility
for certain compensation exceeding $1 million for Named Executive Officers.
Based upon regulations issued by the Internal Revenue Service, the Committee
believes that gains from the exercise of outstanding stock options or future
options will be exempted from this deduction limitation.
It is the intention of the Compensation Committee, to the extent consistent
with sound compensation policy and incentive program design, that compensation
for the Named Executive Officers be provided in such a way as to remain tax
deductible for the Corporation. It is possible, however, that certain types of
compensation awarded to members of the executive group would not qualify as
wholly deductible under applicable tax law if otherwise in excess of the
general deduction limitation. The Committee will continue to review and
respond to the relevant tax law and regulations as appropriate.
COMPENSATION COMMITTEE
Raymond F. Farley, Chairman
A. Robert AbboudJeffrey A. ColeCharles Marshall
PERFORMANCE GRAPH
TOTAL CUMULATIVE SHAREHOLDER RETURN FOR FIVE-YEAR PERIOD ENDING NOVEMBER 30,
1997
LOGO
<TABLE>
<CAPTION>
Hartmarx Corp. S&P 500 Peer Group
-----------------------------------------------
<S> <C> <C> <C>
1992 100 100 100
1993 124.44 110.08 98.38
1994 95.56 111.26 96.97
1995 80 152.34 94.06
1996 93.33 194.8 110.08
1997 144.44 249.92 132.05
</TABLE>
The Peer Group consists of: Crystal Brands, Inc., Genesco, Inc., Hartmarx
Corporation; Oxford Industries, Inc.; Russell Corporation; and Spring
Industries, Inc. However, due to the suspension of trading on its stock on
9/30/94 following its filing for bankruptcy, Crystal Brands, Inc. has been
excluded from peer group returns for 1994, 1995, 1996 and 1997.
12
<PAGE>
ITEM (2)--1998 INCENTIVE STOCK PLAN
The Board of Directors has approved, and recommends that the stockholders
adopt, the 1998 Incentive Stock Plan (the "1998 Incentive Plan" or the
"Plan"). The Board believes that the 1998 Incentive Plan will aid the
Corporation in attracting and retaining key personnel of outstanding ability
and will promote the interests of the Corporation and its stockholders by
providing key employees with an opportunity to acquire a proprietary interest
in the Corporation and thereby to develop a stronger incentive to put forth
maximum effort for the continued success and growth of the Corporation and its
subsidiaries. The Board also notes that there exist an insufficient number of
shares available for future grants under the existing plan. The 1998 Incentive
Plan has been designed so that certain stock awards to senior executives will
constitute performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
The affirmative vote of the majority of shares of Common Stock voting at the
meeting is required for adoption of the 1998 Incentive Plan. If approved, the
1998 Incentive Plan will become effective immediately. The material provisions
of the 1998 Incentive Plan and other information relating to the Plan are
described below.
SHARES AVAILABLE
The 1998 Incentive Plan authorizes a total of 1,675,000 shares of Common
Stock of the Corporation ("Shares") to be granted as options, Stock
Appreciation Rights ("SARs") and Restricted Stock Awards ("RSAs"); however, no
more than 500,000 Shares may be subject to RSAs. The aggregate number of
Shares represented by awards granted to any single individual will not exceed
500,000 shares over any consecutive three year period. Shares which are
currently available for grant or become available for grant under the 1995
Incentive Stock Plan (the "1995 Plan") of the Corporation will be added to the
aggregate number of Shares authorized under the 1998 Incentive Plan and all
subsequent grants will be made pursuant to the terms of the Plan. As of
November 30, 1997, 35,921 shares were available for grant under the 1995 Plan.
Shares which are subject to awards that are forfeited, expire or are
canceled will remain available for the granting of other awards. If an
individual tenders any Shares as full or partial payment to the Corporation in
connection with any exercise of a stock option, the number of Shares available
under the Plan will increase by the number of Shares tendered. If an
individual settles an SAR in cash, the Shares covered by such award will
remain available for other awards under the Plan. In addition, any Shares that
are issued by the Corporation, and any awards that are granted through the
assumption of, or in substitution for, outstanding awards previously granted
by an acquired entity will not be counted against the Shares available for
awards under the Plan. All shares available under the 1998 Incentive Plan are
subject to adjustments that may be made for a merger, recapitalization, stock
dividend, stock split or other similar change affecting the number of
outstanding Shares.
ADMINISTRATION
The 1998 Incentive Plan will be administered by a Committee of the Board of
Directors (the "Committee"), which is comprised of two or more non-employee
members, who will qualify to administer the Plan as contemplated by Rule 16b-3
under the Securities and Exchange Act of 1934 (the "1934 Act") and Section
162(m) of the Code. The Committee will have full and exclusive power to
interpret the Plan and to adopt such rules, regulations and guidelines for
carrying out the Plan as it deems necessary or proper, including, but not
limited to, selecting award recipients, establishing all award terms and
conditions, amending award terms and conditions and adopting procedures and
regulations governing such awards.
13
<PAGE>
ELIGIBILITY
Awards may be granted to employees of the Corporation and its subsidiaries,
as selected from time to time by the Committee, who, in the opinion of the
Committee, are in a position to make a significant contribution to the success
of the Corporation and in consideration of competitive practices. Eligible
employees include officers of the Corporation who are directors but directors
who are not employees of the Corporation will not be eligible to receive
awards under the Plan. Employees may also include employees of an entity
acquired by or merged into the Corporation pursuant to the assumption,
replacement or substitution of awards previously issued by such entity.
TYPES OF AWARDS
Awards may be granted singly, in combination or in tandem and may be the
payment form for grants or rights under any other employee or compensation
plan of the Corporation, including any long term incentive plan which the
Corporation presently has in effect or which the Corporation may subsequently
adopt.
Options granted under the Plan may be in the form of incentive stock options
("ISOs") which comply with Section 422 of the Code, provided, however, that
the number of Shares covered by awards in the form of ISOs will not exceed
1,000,000. ISOs are, generally, identical to other options but have different
tax consequences to the optionee and the Corporation. The purchase price per
Share for each stock option will be not less than 100% of the fair market
value on the date of grant. Fair market value is defined for all purposes
under the Plan as the average of the high and low prices of a Share as
reported in The Wall Street Journal or similar readily available public
source. Shares covered by stock options may be purchased at the time of
exercise by cash payment or such other method permitted by the Committee. The
Committee may grant stock options that provide for the grant of a subsequent
restoration stock option if the exercise price has been paid for by tendering
Shares to the Corporation.
SARs will be payable in cash, Shares or a combination of both and will be
equal to the excess of the fair market value of a specified number of Shares
on the exercise date over the fair market value of such Shares on the grant
date, except that SARs granted retroactively in tandem with or in substitution
for a stock option will be valued no lower that the fair market value on the
date such stock option was granted.
RSAs may be made in Shares or denominated in units equivalent in value to
Shares and will be subject to such conditions and restrictions as are
established by the Committee.
The Committee may provide that any awards under the Plan earn dividend or
dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to an individual's account.
The benefits and amounts to be received under the Plan are not presently
determinable as no awards, contingent on Stockholder approval of the Plan,
have been made, and the Plan grants the Committee broad discretion in
determining the nature, size and terms of awards. However, if the 1998
Incentive Plan is approved, it is likely that the Committee will continue to
make awards of options to a group of eligible employees selected annually from
key employees of the Corporation and its subsidiaries. In addition, the
Corporation has in effect a stock-based long term incentive plan for a
significantly smaller group of the Corporation's most senior executives which
provides for larger individual grants based on performance criteria, including
growth in stockholder value, over a longer term.
14
<PAGE>
PAYMENTS
Payment of the awards may be in the form of cash, Shares, other awards or
combinations thereof as the Committee will determine and with such
restrictions as the Committee may impose. The Committee also may require or
permit participants to elect to defer the issuance of Shares or the settlement
of awards in cash under such rules and procedures as it may establish under
the Plan.
RESTRICTIONS ON TRANSFERABILITY
Except as otherwise provided by the Committee in the award document, awards
shall not be transferable except as designated by a participant by will or the
laws of descent and distribution or pursuant to a domestic relations order.
The Committee may provide for the transferability of particular awards: by
gift or other transfer to (A) any trust or estate in which the original award
recipient or such person's spouse or other immediate relative has a
substantial beneficial interest or (B) a spouse or other immediate relative.
AMENDMENT AND TERMINATION
The Board of Directors may amend, suspend or terminate the 1998 Incentive
Plan provided that no such amendment, suspension or termination may, without
the consent of the individual to whom any award will have been previously
granted, adversely affect the rights of such individual under such award and,
provided further that the Committee may not, without further shareholder
approval, materially increase the number of Shares available for issuance or
cause the Plan to fail to comply with Section 16b-3 of the 1934 Act or Section
162(m) of the Code. The term of the Plan is indefinite.
FEDERAL INCOME TAX TREATMENT
Under the present Code, the Federal income tax consequences of the grant and
exercise of options to purchase Shares, and the sale of such Shares, will
depend upon whether or not the option is an incentive stock option. No tax is
imposed on the grantee, and no deduction is available to the Corporation, at
the time of grant of an option or an SAR. Upon the exercise of an option
(other than an incentive stock option) or an SAR, generally the grantee will
be treated as receiving compensation (and the Corporation will be entitled to
a deduction) equal to the excess of the fair market value of the related
shares at the time of exercise over the exercise price. If Shares are
delivered by the optionee in exercise of an option (other than an incentive
stock option), no amount will be includable in the optionee's gross income
with respect to the number of shares received, up to the number delivered, and
the optionee's basis in the number of shares so acquired will be the same as
his basis in the number of shares delivered; the fair market value of any
additional shares so received will be includable in the optionee's gross
income and this amount will become the basis for those shares. According to
proposed regulations issued by the Internal Revenue Service, the fair market
value of any additional shares received upon the exercise of an incentive
stock option by delivery of Shares would not be includable in the optionee's
gross income and the optionee's basis for such additional shares will be zero.
Upon the exercise of an incentive stock option no tax is imposed on the
optionee, and no deduction is available to the Corporation, if the optionee
was an employee of the Corporation or a subsidiary within three months prior
to the date of exercise (or within one year if the optionee is disabled), and
does not sell the shares thereby acquired less than two years from the date of
grant or one year from the date of exercise. If a deceased optionee's estate
exercises an incentive stock option, the employment and holding periods are
inapplicable. However, the excess of the fair market value of incentive stock
option shares at the time of exercise over the option price for such shares
15
<PAGE>
will be an item of tax preference for the optionee at the time of exercise,
and upon the sale of such shares following expiration of the applicable
holding period, the excess of the sales proceeds over the exercise price will
be treated as a capital gain to the optionee, and no tax deduction will be
available for the Corporation. Except as discussed above, if an optionee sells
such shares prior to the expiration of the applicable holding periods (or if
the option is otherwise disqualified from receiving incentive stock option
treatment), the federal income tax consequences of the grant and exercise of
the incentive stock option and the sale of such shares will be the same as
those applicable to other options for both the optionee and the Corporation.
Ownership of shares covered by RSAs granted under the Plan will be subject
to a "substantial risk of forfeiture" within the meaning of the Code. The
grantee will be treated as receiving compensation (and the Corporation will be
entitled to a deduction, subject to the limitations of Section 162(m) of the
Code) equal to the fair market value of the shares on the date such
restrictions lapse. Any payments to the grantee in respect of dividends
otherwise payable on shares still subject to restrictions under the Plan will
also be treated as compensation and a corresponding deduction will be
available to the Corporation. Under certain circumstances, however, an RSA
will be taxable and a corresponding deduction will be available to the
Corporation at the time the RSA is granted. In this event, payments to the
grantee in respect of dividends will not be deductible by the Corporation. The
difference between the amount received upon the sale or other transfer of
shares previously subject to restrictions and the fair market value on the
date the restrictions lapse (or the date of the grant of the RSA) will be
treated as a short-term or long-term capital gain or loss under the Code
depending upon the length of time such shares are held after the RSA is first
taxable to the grantee.
The February 20, 1998 closing price of the Corporation's Common Stock on the
New York Stock Exchange--Composite Transactions was $8.00.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF
THE ADOPTION OF THE 1998 INCENTIVE STOCK PLAN
NEW PLAN BENEFITS
As of the date of this Proxy Statement, no awards have been made under the
1998 Incentive Stock Plan. Because awards will be authorized by the Committee,
the benefits or amounts to be received under the 1998 Incentive Stock Plan by
any particular employee or group of employees are not presently determinable.
ITEM (3)--APPOINTMENT OF AUDITORS
Stockholders will be asked to ratify the appointment of Price Waterhouse
LLP, certified public accountants, as independent auditors of the accounts of
the Corporation and its subsidiaries for the 1998 fiscal year. Price
Waterhouse has been regularly engaged in this capacity by the Corporation for
over 80 years. A representative of Price Waterhouse will attend the Annual
Meeting where he will have the opportunity to make a statement if he so
desires and will be available to respond to appropriate questions. Stockholder
ratification is not required; however, the Corporation considers such
ratification to be a desirable practice and if the affirmative vote is less
than a majority of the shares represented at the meeting, the Board would
reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
RATIFICATION OF THE APPOINTMENT OF THE AUDITORS
16
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
<TABLE>
<S> <C> <C> <C> <C> <C>
<CAPTION>
Shares Subject
Beneficial DDSA Other to Acquisition Percentage
Name Ownership Units(1) Ownership Within 60 Days of Class
- ---- ---------- -------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
A. Robert Abboud........ 47,841(1) 1,781 -- 8,733 *
Samawal A. Bakhsh....... 2,633(1) 300 -- 2,633 *
Jeffrey A. Cole......... 37,488(1) 1,226 -- 36,238 *
Raymond F. Farley....... 42,135(1) 1,781 -- 42,135 *
Elbert O. Hand.......... 525,149(2) -- 300(3) 462,759(2) 1.53%(2)
Donald P. Jacobs........ 55,874(1) 1,781 3,000(4) 43,497 *
Charles Marshall........ 54,162(1) 1,781 -- 8,733 *
Homi B. Patel........... 416,179(2) -- -- 345,909(2) 1.22%(2)
Michael B. Rohlfs....... 5,744(1) 300 -- 5,744 *
Stuart L. Scott......... 46,204(1) -- -- 31,204 *
Glenn R. Morgan......... 132,280(2) -- -- 103,874(2) *
Frederick G.
Wohlschlaeger.......... 2,800 -- -- 0 *
James E. Condon......... 51,788(2) -- -- 30,760(2) *
Frank A. Brenner........ 39,249(2) -- -- 29,128(2) *
All Directors and Execu-
tive Officers as a
Group (16 persons)..... 1,517,238(2) 9,700 3,300 1,191,077(2) 4.43%(2)
</TABLE>
- --------
*Less than 1%.
(1) Includes Director Deferred Stock Awards ("DDSAs"). DDSAs are granted under
the 1995 Stock Plan for Non-Employee Directors, and were granted under the
Corporation's 1988 stock option plan, and consist of share units credited
to an account for each Outside Director, each unit representing one share
of Common Stock. Each Outside Director is granted 150 DDSA units on each
date of election to the Board. Upon the director's death, disability or
termination of Board service, whole units become payable in shares of
Common Stock and any fractional units become payable in cash.
(2) Includes all shares actually or potentially subject to acquisition through
the exercise of stock options within 60 days: either of vested options or
of options which vest when the closing stock price on the New York Stock
Exchange exceeds $10 for 30 consecutive calendar days. All options are
granted at the market price on the date of grant and are not discounted.
Also includes shares of restricted stock which vest when the closing stock
price exceeds $9 or $11.50, respectively, for 30 consecutive calendar
days. The beneficial ownership of all directors and executive officers as
a group includes 1,191,077 shares (3.48%) which are actually or
potentially subject to acquisition within 60 days through the exercise of
stock options, the vesting of restricted stock awards, or the settlement
of DDSAs.
(3) 100 shares held by Mr. Hand's wife; and 200 shares in the name of Mr. Hand
as custodian for his child.
(4) Shares held by Mr. Jacobs' wife.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation believes that all filing requirements under Section 16(a) of
the Securities Exchange Act of 1934 were complied with in fiscal 1997, except
that Linda J. Valentine, Vice President, Compensation & Benefits of the
Corporation, filed one late Form 4 reporting an open market sale of 1,791
shares of the Corporation's Common Stock in May, 1997, and inadvertently
failed to report an April, 1996 loan transaction with the Corporation's 401(k)
plan involving the Corporation's Common Stock.
17
<PAGE>
OWNERSHIP OF COMMON STOCK
Beneficial owners of more than five percent of the Corporation's Common
Stock, as shown by information received by the Corporation, are listed below*:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
------------------------------------------
Voting Power Investment Power
---------------- ---------------- Percent
Name and Address of
Beneficial Owner Sole Shared Sole Shared of Class
------------------- --------- ------ --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Abdullah Taha Bakhsh
c/o Traco,
P.O. Box 459,
Jeddah, Saudi Arabia......... 5,213,810 5,213,810 15.2(1)
CTC Illinois Trust Company,
Trustee
of the Corporation's Savings-
Investment Plan and ESOP,
209 W. Jackson Blvd.,
Chicago, Illinois 60606...... -- -- -- -- --(2)
Norwest Corporation
Norwest Center,
Sixth and Marquette,
Minneapolis, Minnesota 55479. 1,869,625 1,866,300 225 5.5(3)
Sasco Capital, Inc.
10 Sasco Hill Road
Fairfield, Connecticut 06430. 1,709,600 3,252,900 9.5(4)
</TABLE>
- --------
* On December 31, 1997, the Corporation had outstanding 34,217,134 shares of
common stock.
(1) The shares are held of record by Emerson Investments, Ltd. ("Emerson").
Emerson has represented to the Corporation that it is wholly-owned by Mr.
Bakhsh and that he has sole power to direct the vote and disposition of
Emerson's shares.
(2) CTC Illinois Trust Company acts as Trustee of The Hartmarx Savings-
Investment Plan and the Hartmarx Employee Stock Ownership Plan ("ESOP").
At December 31, 1997, the Trustee held 1,389,753 shares (4%) for the
Savings-Investment Plan and 609,873 shares (1.8%) for the ESOP. The
Trustee votes all shares held by the respective Plan Trusts proportionally
as directed by participants' instructions, except that shares held in
certain participant sub-accounts in the ESOP are voted only as directed by
participants' instructions.
(3) The aggregate amount beneficially owned at December 31, 1997, was
1,869,625 shares, which includes 1,859,600 shares deemed to be
beneficially owned by Norwest Bank Colorado, a National Association and a
subsidiary of Norwest Corporation. Norwest Corporation has represented to
the Corporation that these shares are held in a fiduciary or
representative capacity, and that for purposes of the reporting
requirements of the Securities Exchange Act of 1934, Norwest and its
subsidiaries are deemed to be beneficial owners of such shares; however,
Norwest and its subsidiaries have expressly disclaimed that they are, in
fact, the beneficial owners of such shares.
(4) The aggregate amount beneficially owned at December 31, 1997 was 3,252,900
shares.
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PROPOSALS BY SECURITY HOLDERS
NOMINATIONS FOR THE BOARD OF DIRECTORS
The Corporation's By-Laws provide that written notice of proposed
stockholder nominations for the election of directors at an Annual Meeting
must be given to the Secretary of the Corporation no earlier than December 15
and no later than February 15 immediately preceding the meeting, and with
respect to an election to be held at a special meeting of stockholders for the
election of directors, no later than the close of business on the fifteenth
day following (i) the date on which notice of such meeting is first given to
stockholders or (ii) the date on which public disclosure of such meeting is
first made, whichever is earlier. Notice to the Corporation from a stockholder
who proposes to nominate a person for election as a director must contain
certain information about that person, including age, business and residence
addresses and such other information as would be required to be included in a
proxy statement soliciting proxies to nominate that person. The notice shall
also contain the consent of the nominee to serve as a director if so elected.
If the Chairman of the Annual Meeting determines that a person was not
nominated in accordance with the foregoing procedures, such person shall not
be eligible for election.
OTHER PROPOSALS
Any proposal which a security holder intends to call upon the Corporation to
include in its 1999 Proxy Statement must be received at the principal office
of the Corporation no later than October 31, 1998.
In addition, the Corporation's By-Laws require that written notice of
proposals to be presented at an Annual Meeting be delivered to the Secretary
of the Corporation at its principal executive offices no earlier than December
15 and no later than February 15 immediately preceding the meeting. Such
notice to the Corporation must set forth (i) a brief description of the
business desired to be brought before the Annual Meeting and the reasons for
conducting such business at the Annual Meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such business. If the Chairman of the Annual
Meeting determines that business was not properly brought before the meeting
in accordance with the foregoing procedures, such business shall not be
transacted.
OTHER MATTERS
The Board knows of no other business to be presented at the meeting, but if
other matters do properly come before the meeting, it is the intention of the
persons named in the enclosed Proxy to vote the Proxy in accordance with their
best judgment on such matters.
By Order of the Board of Directors
LOGO
FREDERICK G. WOHLSCHLAEGER,
Secretary
Chicago, Illinois
February 27, 1998
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EXHIBIT A
1998 INCENTIVE STOCK PLAN
HARTMARX CORPORATION
1. PURPOSE OF THE PLAN
The purpose of the 1998 Incentive Stock Plan (the "Plan") is to promote the
interests of Hartmarx Corporation, a Delaware Corporation (the "Company") and
its stockholders by providing key employees of the Company and its
subsidiaries with opportunities to acquire a proprietary interest in the
Company and thereby develop a stronger incentive to put forth maximum effort
for the success and growth of the Company and its subsidiaries. In addition,
the opportunity to acquire a proprietary interest in the Company will aid in
attracting and retaining key personnel of outstanding ability.
2. AVAILABLE SHARES OF COMMON STOCK
2.1 Limitations--Subject to the provisions of Section 2.3 of the Plan, the
aggregate number of shares of Common Stock of the Company ("Shares") subject
to options, Stock Appreciation Rights ("SARs") and Restricted Stock Awards
("RSAs") which may be issued to participants under the Plan shall be 1,675,000
Shares, provided that no more than 500,000 of such shares shall be granted as
RSAs. Shares which are currently available for grant or become available for
grant under the existing stock option plans of the Company will be added to
the aggregate number of shares authorized under this Plan, and all subsequent
grants will be made pursuant to this Plan. The aggregate number of Shares that
may be represented by awards granted to any single individual under the Plan
shall not exceed 500,000 Shares within any consecutive three year period of
time. Further, the aggregate number of Shares that may be covered by awards
made in the form of Incentive Stock Options ("ISOs") intended to comply with
Section 422 of the Code shall not exceed 1,000,000.
2.2 Usage and Replenishment--Shares subject to an award under the plan which
is forfeited, expires, or is canceled shall remain available for the granting
of other awards. Any Shares tendered, either actually or by attestation, by a
person as full or partial payment made to the Company in connection with any
exercise of a stock option under the Plan shall increase the number of Shares
available under the Plan. In instances where an SAR or an award granted
pursuant to Section 6.3 of the Plan is settled in cash, the Shares covered by
such award shall remain available for awards under the Plan. Likewise, cash
dividends and dividend equivalents paid in cash in conjunction with
outstanding awards shall not be counted against the Shares available for
issuance under the Plan. Further, any Shares that are issued by the Company,
and any awards that are granted through the assumption of, or in substitution
for, outstanding awards previously granted by an acquired entity shall not be
counted against the Shares available for awards under the Plan.
Any Shares issued under the Plan may consist in whole or in part of
authorized and unissued shares or of treasury shares of Common Stock, and no
fractional Shares shall be issued under the Plan. Cash may be paid in lieu of
any fractional Shares in settlements of awards under the Plan.
2.3 Adjustments--In the event of any stock dividend, stock split,
combination or exchange of equity securities, merger, consolidation,
recapitalization, spin-off or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting
Shares or share price, such proportionate adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such changes shall
be made with respect to: (i) the limitations on the numbers of Shares that may
be issued and represented by awards under the Plan as set forth in Section
2.1; (ii) the number of Shares under each outstanding award made under the
Plan; and (iii) the exercise price per Share for any outstanding stock
options, SARs or similar awards under the Plan.
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3. PLAN ADMINISTRATION
3.1 Committee--The Committee (the "Committee") of the Board of Directors
(the "Board") of the Company designated by the Board shall be responsible for
administering the Plan. The Committee shall be comprised of two or more non-
employee members of the Board who shall qualify to administer the Plan as
contemplated by both Rule 16b-3 under the Securities and Exchange Act of 1934
(the "1934 Act"), and Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). Each member of the Committee shall serve for such term
as the Board may determine, subject to removal by the Board at any time.
3.2 Committee Authority--The Committee shall have full and exclusive power
to interpret the Plan and to adopt such rules, regulations and guidelines for
carrying out the Plan as it may deem necessary or proper, all of which power
shall be executed in the best interests of the Company and in keeping with the
objectives of the Plan. This power includes, but is not limited to, selecting
award recipients, establishing all award terms and conditions, adopting
modifications, amendments, procedures and regulations governing awards, and to
make all other determinations necessary or advisable for the administration of
this Plan. The Committee may delegate such non-discretionary administrative
duties under the Plan as it shall deem necessary and advisable. All decisions
made by the Committee shall be final and binding on all persons affected by
such decisions.
4. ELIGIBILITY
Awards may be granted under the Plan to those employees of the Company as
the Committee may from time to time select. This may include employees of an
entity acquired by or merged into the Company pursuant to the assumption,
replacement or substitution of awards previously issued by such entity. In no
event may an award be granted under the Plan to any person who is not an
employee, except in circumstances involving the grant of an award made in
tandem with or replacement of an earlier award made under the Plan to a former
employee of the Company. For purposes of participation in the Plan, the term
"Company" shall include any entity that is directly or indirectly controlled
by the Company or any entity, including an acquired entity, in which the
Company has a significant equity interest, as determined by the Committee.
5. FAIR MARKET VALUE
"Fair Market Value" for all purposes under the Plan shall mean the average
of the high and low prices of a Share as reported in The Wall Street Journal
or similar readily available public source for the date in question. If no
trading of Shares occurred on such date, the average price of a Share as
reported for the preceding day on which sales of Shares were made shall be
used.
6. AWARDS
6.1 General--The Committee shall determine the type or types of award(s) to
be made to each participant. Awards may be granted singly, in combination or
in tandem. Awards also may be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form for grants or
rights under any other employee or compensation plan of the Company including
the plan of any acquired entity. The types of awards that may be granted under
the Plan are:
6.2 Stock Options--A stock option shall represent a right to purchase a
specified number of Shares during a specified period as determined by the
Committee. The purchase price per Share for each stock option shall be not
less than 100% of the Fair Market Value on the date of grant. A stock option
may be in the form of an ISO which, in addition to being subject to the
applicable terms, conditions, and limitations established by the Committee,
complies with all applicable provisions of Section 422 of the Code, and any
rules and regulations promulgated thereunder. The Shares covered by a stock
option may be purchased at the time of the exercise by cash payment or such
other
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method permitted by the Company, including (i) tendering (either actually or
by attestation) Shares valued at the Fair Market Value at the date of
exercise; (ii) authorizing a third party to sell the Shares (or a sufficient
portion thereof) acquired upon exercise of a stock option, and assigning the
delivery to the Company of a sufficient amount of the sale proceeds to pay for
all the Shares acquired through such exercise and any tax withholding
obligations resulting from such exercise; or (iii) any combination of the
above. The Committee may grant stock options that provide for the grant of a
subsequent restoration stock option if the exercise price has been paid for by
tendering Shares to the Company. Any restoration stock option will cover the
number of Shares tendered in exercising the predecessor option and may include
the number of shares withheld to settle appropriate tax withholding, with the
stock option purchase price set at the then-current Fair Market Value, and
would not extend beyond the remaining term of the original option.
6.3 Stock Appreciation Rights--An SAR shall represent a right to receive a
payment, in cash, Shares or as a combination, equal to the excess of the Fair
Market Value of a specified number of Shares on the date the SAR is exercised
over the Fair Market Value on the date the SAR was granted as set forth in the
applicable award agreement, except if an SAR is granted retroactively in
tandem with or in a substitution for a stock option, the designated Fair
Market Value in the applicable award agreement may be no lower than the Fair
Market Value on the date such stock option was granted. The Committee shall
never grant an SAR in conjunction with a stock option which permits more than
one-half of the gain in the market price from the time of grant to the time of
exercise to be paid in the form of a cash payment for any individual optionee
with respect to any single grant. In lieu of exercising such SAR, an optionee
to whom the SAR is granted by the Committee may elect to purchase all, or any
portion of, such shares at the date of exercise.
6.4 Restricted Stock Awards--An RSA shall represent an award made in Shares
or denominated in units equivalent in value to Shares. All or part or any RSA
will be subject to conditions and restrictions established by the Committee,
and set forth in the award agreement, which may include, but are not limited
to, continuous service with the Company, and/or the achievement of performance
goals which may be measured based on absolute Company or business unit
performance or based on comparative performance with other companies. Among
the performance measures that may be used are targeted stock price, total
stockholders' return, earnings and revenue growth, and performance ratios such
as profit return on assets, stockholders' equity or revenues.
7. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide that any awards under the Plan earn dividends or
dividend equivalents. Such dividends or dividend equivalents may be paid
currently or may be credited to a participant's account. Any crediting of
dividends or dividend equivalents may be subject to such restrictions and
conditions as the Committee may establish, including reinvestment in
additional Shares or share equivalents.
8. PAYMENTS AND PAYMENT DEFERRALS
Payment of awards may be in the form of cash, Shares, other awards or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
participants to elect to defer the issuance of Shares or the settlement of
awards in cash under such rules and procedures as it may establish under the
Plan. It also may provide that deferred settlements include the payment or
crediting of interest on the deferral amounts, or the payment or crediting of
dividend equivalents where the deferral amounts are denominated in share
equivalents.
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9. TRANSFERABILITY
Except as otherwise provided by the Committee, awards granted under the Plan
shall not be transferable or assignable other than as designated by the
participant by will or by the laws of descent and distribution, or pursuant to
a domestic relations order. The Committee may provide for the transferability
of particular awards: by gift or other transfer to (A) any trust or estate in
which the original award recipient or such person's spouse or other immediate
relative has a substantial beneficial interest or (B) a spouse or other
immediate relative; provided, however, that any award so transferred shall
continue to be subject to all the terms and conditions contained in the
agreement evidencing such award. And, if so permitted by the Committee, a
participant may designate a beneficiary or beneficiaries to exercise the
rights of the participant and receive any distribution under the Plan upon the
death of the participant.
10. CHANGE-IN-CONTROL
The Committee may provide for appropriate adjustments (including the
acceleration of vesting) and settlements of awards, either at the time an
award is granted or at a subsequent date, either in contemplation of or in the
event that the Company undergoes a change in control or is not to be the
surviving corporation in a merger or consolidation with another corporation,
or in the event of a liquidation or reorganization of the Company.
11. AWARD AGREEMENTS
Awards under the Plan shall be evidenced by agreements that set forth the
terms, conditions and limitations for each award, which may include the term
of the award, the provisions applicable in the event the participant's
employment terminates, and any Company authority to amend, modify, suspend,
cancel or rescind any award. The Committee need not require the execution of
any such agreement, in which case acceptance of the award by the respective
participant shall constitute agreement by the participant to the terms of the
award.
12. PLAN AMENDMENT
The Committee may terminate or amend the Plan or any portion thereof at any
time, including but not limited to amendments to the Plan necessary to comply
with the requirements of Section 16(b) of the 1934 Act, except that the
Committee may not materially increase the maximum number of Shares which may
be issued under the Plan, extend the maximum period during which any award may
be exercised, decrease the minimum option price to less than the Fair Market
Value of the underlying security on the date of the grant of the option or
change the employees or class of employees eligible to participate in the Plan
without stockholder approval as required by Rule 16b-3 of the 1934 Act. The
termination or any modification or amendment of the Plan shall not, without
the consent of a participant, adversely affect his rights under an award
previously granted. Notwithstanding the foregoing, stockholder approval under
this Section 12 shall only be required at such time as Rule 16b-3 of the 1934
Act, as such Rule may be amended from time to time, shall require the approval
of the stockholders of the Corporation to any material amendment to any
employee benefit plan of the Corporation or as necessary to continue to
qualify compensation payable under the Plan for purposes of section 162(m) of
the Code.
13. TAX WITHHOLDING
The Company shall have the right to deduct from any settlement of an award
made under the Plan, including the delivery or vesting of Shares, a sufficient
amount to cover withholding of any federal, state or local taxes required by
law or such greater amount of withholding as the Committee shall determine
from time to time, or to take such other action as may be necessary to satisfy
any such withholding obligations. If the Committee permits or requires Shares
to be used to satisfy
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<PAGE>
required tax withholding, such Shares shall be valued at the Fair Market Value
as of the tax recognition date for such award.
14. OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee, settlements of
awards received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan or severance program.
Further, the Company may adopt such other compensation programs, plans or
arrangements as it deems appropriate or necessary.
15. REGULATORY APPROVALS
The implementation of the Plan, the granting of any award under the Plan,
and the issuance of Shares upon the exercise or settlement of any award shall
be subject to the Company's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the awards
granted under it or the Shares issued pursuant to it.
16. FUTURE RIGHTS
No person shall have any claim or rights to be granted an award under the
Plan, and no participant shall have any rights under the Plan to be retained
in the employ of the Company. Likewise, participation in the Plan will not in
any way affect the Company's right to terminate the employment of the
participant at any time with or without cause.
17. GOVERNING LAW
The validity, construction and effect of the Plan and any actions taken or
relating to the Plan shall be determined in accordance with the laws of the
State of Illinois and applicable federal law.
18. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a participant,
including, without limitation, the estate of such participant and the
executor, administrator or trustee of such estate, or any receiver or trustee
in bankruptcy or representative of the participant's creditors. However, no
award or other interest in the Plan may be assigned, pledged or otherwise
alienated, except to the extent permitted in accordance with Section 9 of the
Plan and the applicable award agreement.
19. EFFECTIVE DATE AND STOCKHOLDER APPROVAL OF PLAN
The Plan shall become effective as of April 9, 1998, subject to the approval
and ratification of the Plan at the Annual Meeting of Stockholders of the
Company held on April 9, 1998, by the affirmative vote of the majority of the
Shares voting at the meeting. The Plan shall remain in effect until terminated
by the Board. If the Plan is terminated, the terms of the Plan and rights of
participants shall continue to apply to all awards made prior to such
termination.
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LOGO
<PAGE>
PROXY Solicited by the Board of Directors of HARTMARX CORPORATION
Elbert O. Hand, Homi B. Patel, Frederick G. Wohlschlaeger, and each of
them, is hereby appointed, with full power of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of HARTMARX CORPORATION on
April 9, 1998, and at any adjournment thereof, with the full power to vote all
of the shares of stock which the undersigned is entitled to vote:
(1) ELECTION OF DIRECTORS
[_] FOR all nominees listed below (except as marked to the contrary
--------------------------------
below):
-----
A. Robert Abboud Raymond F. Farley Charles Marshall Michael B.Rohlfs
Samawal A. Bakhsh Elbert O. Hand Homi B. Patel Stuart L. Scott
Jeffrey A. Cole Donald P. Jacobs
To withhold authority to vote for any individual nominees write names in the
----------------------------------------------------------------------------
space below.
-----------
- --------------------------------------------------------------------------------
[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
(2) TO ADOPT the 1998 Incentive Stock Plan (Item (2) of Notice of Annual
-----------------------------
Meeting)
--------
[_] FOR [_] AGAINST [_] ABSTAIN
(3) TO RATIFY the appointment of independent auditors (Item (3) of Notice
------------------
of Annual Meeting).
-----------------
[_] FOR [_] AGAINST [_] ABSTAIN
(4) TO TRANSACT such other business as may properly come before the
meeting.
(Continued, and to be signed, on other side)
--------------------------------------------
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE STOCKHOLDER BUT IF NO CHOICE
IS SPECIFIED IT WILL BE VOTED FOR ELECTION OF THE ABOVE NOMINEES FOR DIRECTORS
AND IN FAVOR OF THE PROPOSALS SET FORTH IN ITEMS (2) and (3).
Dated this ____ day of ________________, 1998
(Seal) (Seal)
- -------------------------------- --------------------------------
(Signature of Stockholder) (Signature of Stockholder)
- -------------------------- --------------------------
Signature must agree with name as shown above. For shares held in joint
tenancy, each of the joint tenants is requested to sign.
