<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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
HARTMARX CORPORATION
(Name of Registrant as Specified In Its Charter)
.......................................................................
(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check 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):
.....................................................................
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[HARTMARX LOGO]
---------------
NOTICE
of
ANNUAL MEETING OF STOCKHOLDERS OF HARTMARX CORPORATION
TO BE HELD APRIL 14, 1999
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 Doubletree Guest Suites,
The Lakeshore Ballroom, 3rd Floor, 198 East Delaware Street, Chicago, Illinois,
on Wednesday, April 14, 1999, at 11:00 A.M. for the following purposes:
(1) To elect Directors of the Corporation.
(2) To consider approval of the Corporation's Management Incentive Plan, the
material terms of which are set forth under the caption "Item (2)--The
Management Incentive Plan" in the attached Proxy Statement, in order to qualify
under Section 162(m) of the Internal Revenue Code.
(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 16, 1999, 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, a division of EquiServe, 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 29, 1999 and April 9,
1999, 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, 1998, are enclosed herewith.
By Order of the Board of Directors
[FREDERICK G. WOHLSCHLAEGER]
-----------------------------------------
FREDERICK G. WOHLSCHLAEGER, Secretary
Chicago, Illinois
February 25, 1999
<PAGE>
[HARTMARX LOGO]
----------------
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS OF HARTMARX CORPORATION
TO BE HELD APRIL 14, 1999
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 16, 1999, the record date for determining the stockholders entitled
to vote at the meeting, the Corporation had 34,652,113 shares of outstanding
Common Stock, each share entitled to one vote, held by approximately 5,675
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
25, 1999. 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 eleven 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.
<PAGE>
INFORMATION ABOUT NOMINEES FOR DIRECTORS
The information shown below includes the principal business affiliations of
each nominee since 1994.
A. ROBERT ABBOUD, 69--Director since 1974
Mr. Abboud is president of A. Robert Abboud and Company, a
private investment company. He is also a director of AAR
Corporation, Inland Steel Company and Alberto-Culver Company.
[PHOTO OF A. R. ABROUD]
SAMAUAL A.T. BAKHSH, 30--Director since 1995
Mr. Bakhsh is a director of Traco Group of Companies, a
privately held investment company. He also serves as a
director of several other privately held corporations.
[PHOTO OF S. BAKHSH]
JEFFREY A. COLE, 57--Director since 1990
Mr. Cole is chairman, chief executive officer and a director of
Cole National Corporation, a specialty retailer, and is a
director of Cole National Group, a wholly-owned subsidiary. He
is also a director of Edison Brothers Stores, Inc. and Pearle
Europe B.V.
[PHOTO OF J. COLE]
RAYMOND F. FARLEY, 74--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 emeritus of Snap-On Incorporated.
[PHOTO OF R. FARLEY]
ELBERT O. HAND, 59--Director since 1984
Mr. Hand has been chairman and chief executive officer of
HARTMARX CORPORATION since 1992. He is also a director of
Austin Reed PLC, London, England.
[PHOTO OF E. HAND]
2
<PAGE>
DONALD P. JACOBS, 71--Director since 1980
Mr. Jacobs is Dean of the J. L. Kellogg Graduate School of
Management and Gaylord Freeman Distinguished Professor of
Finance at Northwestern University. He is also a director of
Unicom Corporation and its subsidiary, Commonwealth Edison
Company, ProLogis Trust (formerly Security Capital Industrial
Trust), Everen Capital Corporation and Terex Corporation.
[PHOTO OF D. JACOBS]
CHARLES MARSHALL, 69--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.
[PHOTO OF C. MARSHALL]
HOMI B. PATEL, 49--Director since 1994
Mr. Patel has been president and chief operating officer of
HARTMARX CORPORATION since 1993. He is also a director of the
Amalgamated Life Insurance Co.
[PHOTO H. PATEL]
MICHAEL B. ROHLFS, 47--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.
[PHOTO OF M. ROHLFS]
STUART L. SCOTT, 60--Director since 1993
Mr. Scott is chairman and chief executive officer of LaSalle
Partners Incorporated, 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. Mr. Scott is also chairman of
the board of LaSalle Hotel Properties, a publicly traded REIT.
(1)
[PHOTO OF S. SCOTT]
3
<PAGE>
ELLA D. STRUBEL, 58--Director since 1998
Ms. Strubel served as Executive Vice President, Corporate
Affairs, of Leo Burnett Company, Inc. from 1992 to 1997, where
she concurrently served as Executive Vice President, Client
Public Relations, Leo Burnett U.S.A. She chairs the board of
directors of the Rehabilitation Institute of Chicago and is a
director of Parson Group, L.L.C.
[PHOTO OF E.D. STRUBEL]
- --------
(1) Affiliates of LaSalle Partners Incorporated manage certain commercial real
estate in which subsidiaries of the Corporation lease offices, showrooms
and outlet store space. During a portion of fiscal 1998, 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 four meetings, one of which was the annual meeting, in fiscal
1998. All directors attended at least 75% of the meetings of the Board and
committees on which they served, except for Mr. Bakhsh who attended two of the
five Board and committee meetings on which he served. 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. Abboud, chairman, Mr.
Jacobs, Mr. Marshall and Mr. Rohlfs. It met two times in fiscal 1998. 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. Cole, Mr. Jacobs and Mr. Scott. It met four times in
fiscal 1998. 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, Mr. Scott and Ms. Strubel. It met once in
fiscal 1998. 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. The first increases in compensation to
Outside Directors since 1986 became effective with each director's election to
the Board in April 1998. Upon election, each director's annual retainer was
increased to $20,000, and fees for meeting attendance were increased to $1,000
for each Board meeting and $1,000 for each committee meeting attended.
Committee chairman fees remained unchanged at $2,500.
4
<PAGE>
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 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. 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 shall 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 DDSA units on each date of election to the Board. For
1998, the number of DDSA units granted to each director is equal to the
nearest number of whole units obtained by dividing the annual retainer amount
by the fair market value of a share of Common Stock on the date of election.
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 (the "Named
Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------
Annual Compensation Awards
-------------------------- -----------------------
All
Name and Restricted Securities Other
Principal Stock Underlying Compen-
Position Year Salary(1) Bonus Awards(3) Options/SARs sation(4)
- --------- ---- -------- ----- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Elbert O. Hand, 1998 $636,667 $499,032(2) $404,500 50,000 $4,096
Chairman and
Chief 1997 597,083 795,557 231,600 30,000 3,906
Executive Of-
ficer 1996 565,000 364,280 206,822 25,000 3,702
Homi B. Patel, 1998 502,917 367,547(2) 283,150 35,000 3,214
President and
Chief 1997 477,500 623,282 193,000 25,000 3,092
Operating Of-
ficer 1996 450,000 285,807 157,993 23,000 2,821
Glenn R. Morgan 1998 228,750 119,588(2) 121,350 20,000 1,898
Executive Vice 1997 213,750 198,022 77,200 15,000 1,826
President and
Chief 1996 200,000 138,215 59,950 10,000 1,695
Financial Of-
ficer
Frederick G.
Wohlschlaeger 1998 189,167 96,190(2) 40,450 10,000 1,620
Senior Vice
President, 1997(5) 77,083 64,864 -- 25,000 370
General Coun-
sel and 1996 0 0 -- -- 0
Secretary
James E. Condon 1998 138,500 40,073(2) 20,225 7,500 1,517
Vice Presi-
dent, 1997 132,459 35,848 19,300 7,500 1,436
Treasurer 1996 126,500 27,662 6,732 5,000 1,351
</TABLE>
- --------
(1) Includes amounts paid and deferred.
(2) These amounts represent the total of bonuses earned under the Management
Incentive Plan for fiscal 1998.
(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 April 9, 1998, the following restricted shares
were awarded to the Named Executive Officers and vest on the first to
occur of (i) April 9, 2008; (ii) the closing stock price on the New York
Stock Exchange equals or exceeds $12.50 for 30 consecutive calendar days;
(iii) retirement at age 65; or (iv) with the consent of the Compensation
Committee: Mr. Hand, 50,000; Mr. Patel, 35,000; Mr. Morgan, 15,000; Mr.
Wohlschlaeger, 5,000; and Mr. Condon, 2,500. The number and value of
aggregate restricted stock holdings at the end of fiscal year 1998 were:
Mr. Hand, 105,000 ($616,875); Mr. Patel, 80,000 ($470,000); Mr. Morgan,
32,500 ($190,937); Mr. Wohlschlaeger, 5,000 ($29,375); and Mr. Condon,
5,000 ($29,375).
(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 1998 were: Mr. Hand, $800; Mr.
Patel, $800; Mr. Morgan, $800; Mr. Wohlschlaeger, $732; and Mr. Condon,
$852. The premiums for term life insurance in 1998 were: Mr. Hand, $3,296;
Mr. Patel, $2,414; Mr. Morgan, $1,098; Mr. Wohlschlaeger, $888; and Mr.
Condon, $665.
(5) Mr. Wohlschlaeger's employment with the Corporation commenced on July 1,
1997.
6
<PAGE>
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 were for an initial term
expiring December 31, 1998, and automatically renewed for an additional two
year period. 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 were for an initial period ending December 31, 1997
(the initial term under Mr. Wohlschlaeger's severance agreement ended on
December 31, 1998), and, commencing January 1, 1998 (January 1, 1999, with
respect to Mr. Wohlschlaeger), will continue to 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.
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)
7
<PAGE>
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 1998, option exercises in fiscal 1998 and the value of
unexercised options at November 30, 1998.
Option Grants in the Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Appreciation
for Option Term
Individual Grants (1)
- -------------------------------------------------------------------------- ---------------
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or
Options Fiscal Base Price Expiration
Name Granted Year(2) ($/Share)(3) Date 5% ($) 10% ($)
- ---- ---------- ------------- ------------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Elbert O. Hand.......... 50,000(4) 10.0 8.09 04/08/2008 254,000 644,500
Homi B. Patel........... 35,000(4) 7.0 8.09 04/08/2008 178,150 451,150
Glenn R. Morgan......... 20,000(4) 4.0 8.09 04/08/2008 101,800 257,800
Frederick G.
Wohlschlaeger.......... 10,000(5) 2.0 8.09 04/08/2008 50,900 128,900
James E. Condon......... 7,500(4) 1.5 8.09 04/08/2008 38,175 96,675
</TABLE>
- --------
(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 498,000 shares to employees
in fiscal 1998. 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 options was $8.09 per
share.
(4) These options were granted on April 9, 1998, become fully exercisable on
April 9, 1999, and are subject to termination between 90 days to three
years following termination of employment in certain events.
(5) These options were granted on April 9, 1998, and become exercisable in a
thirty-three percent (33%) installment on April 9, 1999, and in a thirty-
four percent (34%) installment on April 9, 2000, with full vesting
occurring on April 9, 2001, and are subject to termination between 90 days
to three years following termination of employment in certain events.
8
<PAGE>
Aggregated Option Exercises In The Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value ($) of
Unexercised Unexercised In-
Shares Options at Nov. the-Money Options
Acquired Value 30, 1998 at Nov. 30, 1998
on ($) Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- ---- -------- -------- ---------------- -----------------
<S> <C> <C> <C> <C>
Elbert O. Hand............ 0 0 412,759 / 75,000 104,727 / 10,158
Homi B. Patel............. 0 0 302,576 / 58,333 68,899 / 9,480
Glenn R. Morgan........... 0 0 93,041 / 28,333 16,269 / 3,386
Frederick G.
Wohlschlaeger............ 0 0 8,250 / 26,750 0 / 0
James E. Condon........... 0 0 35,760 / 7,500 4,981 / 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.
9
<PAGE>
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, 1998, were 29 for Mr.
Hand, 18 for Mr. Patel, 17 for Mr. Morgan, 0 for Mr. Wohlschlaeger, and 14 for
Mr. Condon.
<TABLE>
<CAPTION>
Average Years of Credited Service
Annual Earnings ----------------------------------------------
(Highest 5 Years 30 or
of Last 10 Years) 5 10 15 20 25 more
- ----------------- ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000....................... 15,294 30,587 45,881 61,175 76,468 91,762
250,000....................... 19,460 38,921 58,381 77,841 97,302 116,762
300,000....................... 23,627 47,254 70,881 94,508 118,135 141,762
350,000....................... 27,794 55,587 83,381 111,175 138,968 166,762
400,000....................... 31,960 63,921 95,881 127,841 159,802 191,762
450,000....................... 36,127 72,254 108,381 144,508 180,635 216,762
500,000....................... 40,294 80,587 120,881 161,175 201,468 241,762
550,000....................... 44,460 88,921 133,381 177,841 222,302 266,762
600,000....................... 48,627 97,254 145,881 194,508 243,135 291,762
650,000....................... 52,794 105,587 158,381 211,175 263,968 316,762
700,000....................... 56,960 113,921 170,881 227,841 284,802 341,762
800,000....................... 65,294 130,587 195,881 261,175 326,468 391,762
900,000....................... 73,627 147,254 220,881 294,508 368,135 441,762
1,000,000....................... 81,960 163,921 245,881 327,841 409,802 491,762
</TABLE>
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.
10
<PAGE>
In determining the appropriate levels of executive compensation for fiscal
1998, 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 330 manufacturing companies
ranging in sales from $100 million to over $8 billion; the Hay Executive
Compensation Report including information from 603 operating units of 409
industrial organizations (33% nondurable manufacturing, 31% durable
manufacturing, 36% 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 31
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 1997, sales and earnings were achieved in accordance with the
business plan and an overall salary budget of 4.0% was administered for 1998.
Better performing operating units had higher salary budgets while those with
lower performance had less. Actual salary increases averaged 3.9% throughout
the Corporation. Above average salary increases were awarded in January to
Messrs. Patel, Morgan and Condon, and in July to Mr. Wohlschlaeger, in
recognition of their individual contributions to the improved profitability of
the Corporation. 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 within the range of 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"). Incentive opportunities are determined in relation to
competitive market data provided in the aforementioned national executive
compensation surveys and are subject to periodic review by
11
<PAGE>
independent compensation consultants. 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 and are also accountable for consolidated goals. For
fiscal 1998, 43 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 and on consolidated pre-tax income. No bonuses would
have been earned if the Corporation had not achieved positive income results.
Bonuses paid for 1998 averaged 36.3% of eligible salaries and 57.5% of maximum
incentive opportunities.
Long-Term Incentives
Executives are eligible for awards of stock options and/or restricted stock
under the Corporation's 1998 Incentive Stock Plan. Awards are determined in
relation to competitive practice and an individual's position. In April, 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 equals or exceeds a certain level
for thirty consecutive calendar days. Messrs. Patel, Morgan, Wohlschlaeger 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 6.7% to $640,000 on January 1, 1998. The determination of the Chief
Executive Officer's salary was based upon the salary range for the position,
the salary budget established for 1998 and in recognition of Mr. Hand's
leadership in achieving continued improvement in the financial performance of
the Corporation. Mr. Hand's salary is within a competitive range when compared
to other chief executive officers of organizations in the same sales volumes
as reported in the national surveys analyzed. His fiscal 1998 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 restricted stock award from the Corporation's 1998
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 currently
intended that any amendment to the Corporation's Incentive Stock Plan which
may be necessary in the future in order to preserve this exemption will be
presented for shareholder approval as and when required.
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.
12
<PAGE>
COMPENSATION COMMITTEE
Raymond F. Farley, Chairman
Jeffrey A. Cole Donald P. Jacobs Stuart L. Scott
PERFORMANCE GRAPH
Total Cumulative Shareholder Return for Five-Year Period Ending November 30,
1998
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HARTMARX CORP. S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period HARTMARX S&P
(Fiscal Year Covered) CORPORATION 500 INDEX PEER GROUP
- ------------------- ----------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
11/30/1993 $100.00 $100.00 $100.00
FYE 11/30/1994 $ 76.79 $103.48 $ 98.85
FYE 11/30/1995 $ 64.29 $138.86 $ 95.95
FYE 11/30/1996 $ 75.00 $177.76 $112.12
FYE 11/30/1997 $116.07 $228.60 $134.44
FYE 11/30/1998 $ 83.93 $282.09 $101.52
</TABLE>
The Peer Group consists of: Crystal Brands, Inc., Genesco, Inc., Hartmarx
Corporation; Oxford Industries, Inc.; Russell Corporation; and Spring
Industries, Inc. However, Crystal Brands, Inc. has been excluded from peer
group returns for 1994 through 1998 due to the suspension of trading on its
stock on 9/30/94 following its filing for bankruptcy.
ITEM (2)--THE MANAGEMENT INCENTIVE PLAN
The Corporation has had an incentive plan for many years, currently called
the Hartmarx Corporation Management Incentive Plan (the "Management Incentive
Plan"). The Management Incentive Plan is designed to reinforce the achievement
of the Corporation's performance goals by providing key employees with an
opportunity to earn financial rewards based upon the attainment of both
consolidated corporate and individual operating unit goals.
As part of the Corporation's overall effort to optimize growth,
profitability and enhance shareholder value, the Corporation's Board of
Directors has adopted the Management Incentive Plan, and stockholders are
being asked to approve the material terms of the Management Incentive Plan in
order to qualify the plan under Section 162(m) of the Internal Revenue Code
and the regulations thereunder (the "Code"). The Board has determined that the
Management Incentive Plan will provide key employees of the Corporation
(including the Chief Executive Officer and the Named Executive
13
<PAGE>
Officers) with meaningful incentives to set forth maximum effort to meet the
Corporation's short-term and long-term goals, while at the same time providing
key employees with tangible compensation rewards, consistent with sound
compensation policy and competitive practices if and when such goals are met.
Under Section 162(m) of the Code, the amount which the Corporation may
deduct on its federal income tax returns for compensation paid to certain
"covered employees" (generally the Chief Executive Officer and the four
highest paid executive officers other than the Chief Executive Officer) in any
taxable year is generally limited to $1 million per individual. However,
compensation which qualifies as "performance-based compensation" is not
subject to the $1 million deduction limitation. In order for compensation to
qualify as "performance-based" for this purpose, it must meet certain
conditions, one of which is that the material terms of the performance goals
under which the compensation is to be paid must be disclosed to and approved
by stockholders. The plan is being submitted to stockholders for approval so
that any compensation paid pursuant to the Management Incentive Plan will
qualify as "performance-based compensation" and be deductible by the
Corporation.
The material provisions of the Management Incentive Plan and other
information relating to the Management Incentive Plan are set forth below.
Purpose
The purpose of the Management Incentive Plan is to provide an annual
incentive to reinforce achievement of the performance goals of the
Corporation; to link a significant portion of a participating employee's
compensation to the achievement by the Corporation, and in certain cases, an
operating unit, of performance goals; and to attract, motivate and retain key
employees on a competitive basis. The Management Incentive Plan is intended to
assure that key employees of the Corporation have an opportunity to earn
competitive levels of direct compensation, consistent with the total
compensation policies of the Corporation and to reward the key employees of
the Corporation for their contributions to its growth and profitability.
Administration
The Management Incentive Plan is administered by the Compensation and Stock
Option Committee of the Board of Directors (the "Compensation Committee")
which has broad authority to administer the Management Incentive Plan,
establish policies under the Management Incentive Plan, approve participants,
determine the size, terms and conditions of awards, approve awards, make
conclusive and binding decisions and interpretations under the Management
Incentive Plan, and terminate the Management Incentive Plan in its discretion.
No later than 90 days after the commencement of each fiscal year of the
Corporation which begins on December 1 (or such other deadline as may apply
under Section 162(m) of the Code), the Compensation Committee will approve the
persons who will participate in the Management Incentive Plan in such fiscal
year and establish in writing the performance goals for that fiscal year as
well as the method for computing the amount of compensation which each such
participant will be paid if such performance goals are met in whole or in
part. Such method will be stated in terms of an objective formula or standard;
neither the Compensation Committee nor the Corporation has any discretion to
increase the amount that will be due upon attainment of the goals.
Eligibility and Participation
Participation in the Management Incentive Plan is limited to key employees
of the Corporation, who are in a position to have a significant, positive
impact on the Corporation's results, as approved
14
<PAGE>
by the Compensation Committee. At present, approximately 45 individuals,
including the Chief Executive Officer and Named Executive Officers, will be
eligible to receive awards under the Management Incentive Plan. Directors who
are not executive officers and employees of the Corporation are not eligible
to receive benefits under the Management Incentive Plan.
Performance Measures
Under the Management Incentive Plan, performance goals will be established
for each fiscal year based on any one or more of the following criteria: pre-
tax income, earnings before interest and taxes, return on investment, sales,
adjusted net assets, return on assets, gross margin improvement, inventory
turnover, inventory reduction, expense reduction, net income or loss per
common share, return on equity, return on capital, debt reduction and
strategic plan objectives. The performance goals may be defined on a
corporate, operating unit or individual basis. Each performance goal shall
have a minimum performance standard below which no payments will be made as
well as a maximum performance standard above which no additional payments will
be made for such fiscal year, and may be based on an analysis of historical
performance and growth expectations, financial results of other comparable
businesses, and progress toward achieving the Corporation's long-term plan.
The performance goals and determination of results shall be based entirely on
objective measures for all Management Incentive Plan participants. After
performance goals have been established, discretion may not be used to modify
award results except as permitted under Section 162(m) of the Code.
The target incentive compensation percentage (expressed as a percentage of
base salary) for each participant will be based on the level and functional
responsibility of his or her position, competitive practices and, assuming
annual increases in base salary, the maximum amount payable to any participant
pursuant to the Management Incentive Plan for any fiscal year will be $1.1
million.
Awards are payable in cash, stock or partly in cash and partly in stock, as
determined by the Compensation Committee at the start of each fiscal year.
Awards are paid after the end of each fiscal year, following certification by
the Compensation Committee that the performance goals were in fact satisfied.
Effective Date
Subject to shareholder approval, the Management Incentive Plan shall be
effective commencing with the fiscal year which started on December 1, 1998.
Amendments
The Management Incentive Plan may be amended by action of the Compensation
Committee without stockholder approval unless such approval is required under
Section 162(m) of the Code or other applicable laws. The Corporation and the
Compensation Committee may make such amendments to the Management Incentive
Plan as are necessary to comply with Section 162(m) and the regulations
thereunder.
Federal Income Tax Consequences
The Corporation and the Compensation Committee have taken Section 162(m)
into consideration in designing the Management Incentive Plan, and intend that
awards payable thereunder will satisfy the requirements for deductibility.
Awards are treated as ordinary income to each participant and are subject to
income and payroll tax withholding by the Corporation.
Plan Benefits
The benefits or amounts that will be received by or allocated to the Chief
Executive Officer, the Named Executive Officers and officers who are not
executive officers under the Management
15
<PAGE>
Incentive Plan are not presently determinable. Amounts received by Mr. Hand,
the Chief Executive Officer, and the other executive officers during the last
fiscal year are set forth in the Summary Compensation Table on page 6. Amounts
received by or allocated to the executive officers as a group for fiscal 1998
equaled $1,274,661. Amounts received by or allocated to the participants,
including officers who were not executive officers, for fiscal 1998 equaled
$1,492,625.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF
APPROVAL OF THE MANAGEMENT INCENTIVE PLAN
ITEM (3)--APPOINTMENT OF AUDITORS
Stockholders will be asked to ratify the appointment of
PricewaterhouseCoopers, LLP, certified public accountants, as independent
auditors of the accounts of the Corporation and its subsidiaries for the 1999
fiscal year. PricewaterhouseCoopers has been regularly engaged in this
capacity by the Corporation for over 80 years. A representative of
PricewaterhouseCoopers 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>
<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........ 51,785(1) 4,253 -- 8,424 *
Samaual A.T. Bakhsh..... 10,398(1) 2,772 -- 7,626 *
Jeffrey A. Cole......... 28,247(1) 3,698 -- 12,749 *
Raymond F. Farley....... 46,079(1) 4,253 -- 41,826 *
Elbert O. Hand.......... 715,734(2) -- 300(3) 592,759(2) 2.05%(2)
Donald P. Jacobs........ 59,818(1) 4,253 3,000(4) 43,188 *
Charles Marshall........ 80,927(1) 4,253 -- 8,424 *
Homi B. Patel........... 602,959(2) -- -- 440,909(2) 1.73%(2)
Michael B. Rohlfs....... 11,176(1) 2,772 -- 8,404 *
Stuart L. Scott......... 54,457(1) 3,222 -- 36,235 *
Ella D. Strubel......... 3,000 -- -- -- *
Glenn R. Morgan......... 192,531(2) -- -- 153,874(2) *
Frederick G.
Wohlschlaeger.......... 20,350(2) -- -- 16,550(2) *
James E. Condon......... 73,814(2) -- -- 48,260(2) *
All Directors and
Executive Officers as a
Group (17 persons)..... 2,250,418(2) 29,476 3,300 1,675,985(2) 6.46%(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. 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 DDSA units on
each date of election to the Board. For 1998, the number of DDSA units
granted to each director is equal to the nearest number of whole units
obtained by dividing the annual retainer amount by the fair market value
of a share of Common Stock on the date of election. 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, and shares of restricted stock which vest when the closing stock
price equals or exceed $12.50 for 30 consecutive calendar days. The
beneficial ownership of all directors and executive officers as a group
includes 1,675,985 shares (4.81%) 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 1998.
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
Name and Address of ---------------- ---------------- Percent
Beneficial Owner Sole Shared Sole Shared of Class
- ------------------- --------- ------ --------- ------ --------
<S> <C> <C> <C> <C> <C>
Abdullah Taha Bakhsh
c/o Traco,
P.O. Box 459,
Jeddah, Saudi Arabia............ 5,182,610 0 5,182,610 0 15.0(1)
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th floor
Santa Monica, California 90401.. 2,760,800 0 2,760,800 0 8.0(2)
Sasco Capital, Inc.
10 Sasco Hill Road
Fairfield, Connecticut 06430.... 1,401,400 0 2,624,393 0 7.6(3)
Capital Research and Management
Company
333 South Hope Street
Los Angeles, California 90071... 1,787,900 0 1,787,900 0 5.2(4)
CTC Illinois Trust Company,
Trustee of the Corporation's
Savings-Investment Plan
and ESOP,
209 W. Jackson Blvd.,
Chicago, Illinois 60606......... -- -- -- -- -- (5)
</TABLE>
- --------
*On December 31, 1998, the Corporation had outstanding 34,386,431 shares of
common stock eligible to vote.
(1) The shares are held of record by Emerson Investments, Ltd. ("Emerson"),
except for 20,000 shares which are held of record by Traco International,
N.V. ("Traco"), both of which are corporations controlled by Mr. Bakhsh.
Emerson has represented to the Corporation that Mr. Bakhsh has sole power
to direct the vote and disposition of Emerson's shares.
(2) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to be the beneficial owner of 2,760,800 shares as of
December 31, 1998, all of which shares are held in various investment
companies registered under the Investment Company Act of 1940. Dimensional
serves as investment manager and investment advisor for such entities.
Dimensional has disclaimed beneficial ownership of all such shares.
(3) The aggregate amount beneficially owned at December 31, 1998 was 2,624,393
shares.
(4) Capital Research and Management Company ("Capital") is a registered
investment advisor and is deemed to be the beneficial owner deemed to be
the beneficial owner of 1,787,900 shares as of December 31, 1998, all of
which shares are held in various investment companies registered under the
Investment Company Act of 1940. Capital serves as investment advisor for
such entities. Capital has disclaimed beneficial ownership of all such
shares.
(5) CTC Illinois Trust Company acts as Trustee of The Hartmarx Savings-
Investment Plan and the Hartmarx Employee Stock Ownership Plan ("ESOP").
At December 31, 1998, the Trustee held 1,915,484 shares 5.6% for the
Savings-Investment Plan and 587,201 shares 1.7% 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.
18
<PAGE>
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 2000 Proxy Statement must be received at the principal office of
the Corporation no later than October 31, 1999.
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
[FREDERICK G. WOHLSCHLAEGER LOGO]
----------------------------------------
FREDERICK G. WOHLSCHLAEGER, Secretary
Chicago, Illinois
February 25, 1999
19
<PAGE>
[HARTMARX 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 14, 1999, 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 Stuart L. Scott
Samaual A.T. Bakhsh Elbert O. Hand Homi B. Patel Ella D. Strubel
Jeffrey A. Cole Donald P. Jacobs Michael B. Rohlfs
To withhold authority to vote for any individual nominees write names in the
----------------------------------------------------------------------------
space below.
-----------
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[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
(2) TO APPROVE the Management Incentive Plan (Item (2) of Notice of Annual
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Meeting).
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[_] FOR [_] AGAINST [_] ABSTAIN
(3) TO RATIFY the appointment of independent auditors (Item (3) of Notice
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of Annual Meeting).
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[_] FOR [_] AGAINST [_] ABSTAIN
(4) TO TRANSACT such other business as may properly come before the
meeting.
(Continued, and to be signed, on other side)
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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 ________________, 1999
______________________________(Seal) __________________________________(Seal)
(Signature of Stockholder) (Signature of Stockholder)
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Signature must agree with name as shown above. For shares held in joint
tenancy, each of the joint tenants is requested to sign.
