SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
S&K FAMOUS BRANDS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[S & K LOGO]
S & K FAMOUS BRANDS, INC.
P.O. BOX 31800
RICHMOND, VIRGINIA 23294-1800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1996
To the Shareholders of S & K Famous Brands, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of S & K Famous
Brands, Inc. (the "Company") will be held in the Company's store located at
11100 West Broad Street, Richmond, Virginia, at 10:00 a.m., E.D.T., on Thursday,
May 30, 1996, for the following purposes:
1. To elect eight (8) directors to serve for the ensuing year.
2. To ratify the selection of Price Waterhouse LLP as independent
accountants for the Company for the current year.
3. To transact such other business as may come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on April 10, 1996 as the
record date for the determination of Shareholders entitled to notice and to vote
at the meeting and any adjournments thereof.
By Order of the Board of Directors,
Robert E. Knowles
Secretary
April 10, 1996
PLEASE FILL IN, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PREPAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
<PAGE>
S & K FAMOUS BRANDS, INC.
P.O. BOX 31800
RICHMOND, VIRGINIA 23294-1800
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1996
The enclosed proxy is solicited on behalf of the Board of Directors of S & K
Famous Brands, Inc. (the "Company") for use at the Annual Meeting of
Shareholders of the Company, to be held May 30, 1996, or any adjournments
thereof, for the purposes set forth in this Proxy Statement and the attached
Notice of Annual Meeting of Shareholders. This Proxy Statement and related form
of proxy are first being mailed to the Shareholders of the Company on or about
April 10, 1996.
The close of business on April 10, 1996, has been fixed by the Board of
Directors as the record date for determination of Shareholders entitled to
notice of and to vote at the meeting. As of the close of business on that date,
there were 5,066,371 shares of Common Stock, par value $.50 per share, of the
Company ("Common Stock") outstanding and entitled to vote. Each such share of
Common Stock entitles the holder thereof to one vote.
Proxies may be revoked at any time before exercise by written notice to the
Company, by submitting a substitute proxy, or by attending the meeting and
voting in person. Shares represented by proxies in the form enclosed, if
properly executed and returned, will be voted as specified, but when no
specification is made, the shares will be voted for the election of the nominees
for director named herein.
Except for the election of directors, action on a matter submitted to the
shareholders will be approved if the votes cast in favor of the action exceed
the votes cast opposing the action. With respect to the election of directors,
the eight nominees receiving the greatest number of votes cast for the election
of directors will be elected. Presence in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
meeting will constitute a quorum. Shares for which the holder has elected to
abstain or to withhold the proxies' authority to vote (including broker
non-votes) on a matter will count toward a quorum but will have no effect on the
action taken with respect to such matter.
The cost of the solicitation of proxies will be borne by the Company.
Solicitation will be primarily by mail. However, directors and officers of the
Company may also solicit proxies by telephone, telegraph or personal interview
but will receive no compensation therefor other than their regular salaries. The
Company will reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in sending
proxy material to the beneficial owners of such shares.
The principal executive offices of the Company are located at 11100 West
Broad Street, P. O. Box 31800, Richmond, Virginia 23294-1800.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below presents certain information as to the only persons known to
the Company to be the beneficial owners of more than 5% of the Common Stock of
the Company as of March 22, 1996. Except as otherwise noted, each of the
beneficial owners listed below has sole voting and investment power with respect
to the shares listed.
- -----------------------------------------------------------------------------
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- -----------------------------------------------------------------------------
Stuart C. Siegel 1,501,369(1) 29.6
P.O. Box 31800
Richmond, VA 23294-1800
T. Rowe Price Associates, Inc. 410,000(2) 8.1
T. Rowe Price Small
Cap Value Fund Inc.
100 E. Pratt Street
Baltimore, MD 21202
- -----------------------------------------------------------------------------
(1) Includes 172,192 shares held in trust for the benefit of Sara E. Rose,
David A. Rose and Howard L. Rose, the children of Mr. Siegel's sister, Judith R.
Becker. Stuart C. Siegel is trustee and exercises voting and investment power
with respect to these shares.
(2) As of February 14, 1996, T. Rowe Price Small Cap Value Fund, Inc.
("T. Rowe Price Fund"), had sole voting power with respect to 375,000 of these
shares and T. Rowe Price Associates, Inc. ("Price Associates"), which serves T.
Rowe Price Fund as investment advisor, had sole investment power with respect to
all of these shares and sole voting power with respect to 35,000 of these
shares. Price Associates has advised the Company that for purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price Associates
is deemed to be a beneficial owner of these shares; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of these shares.
SECURITY OWNERSHIP OF MANAGEMENT
The table below presents certain information as to the beneficial ownership
of the Company's Common Stock by (i) each director and nominee, (ii) each
executive officer named in the Summary Compensation Table, and (iii) all
executive officers, directors and nominees as a group, as of March 22, 1996.
Except as otherwise noted, each of the persons named below has sole voting and
investment power with respect to the shares listed.
2
<PAGE>
- -----------------------------------------------------------------------------
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- -----------------------------------------------------------------------------
Stuart C. Siegel 1,501,369(1) 29.6
Robert L. Burrus, Jr. 1,000 *
Donald W. Colbert 219,937(2) 4.3
Selwyn S. Herson 600 *
Andrew M. Lewis 7,000 *
Steven A. Markel 55,580(3) 1.1
Troy A. Peery 1,000 *
Richard L. Sharp 4,000 *
Marshall B. Wishnack 1,000 *
Robert J. Taphorn 32,857(4) *
Robert E. Knowles 125,018(5) 2.4
Harry S. Shendow 20,833(6) *
All directors and
executive officers as
a group (13 persons) 2,025,195(7) 38.3
- -----------------------------------------------------------------------------
* Less than 1% of class
(1) See Note 1 under Security Ownership of Certain Beneficial Owners.
(2) Includes 100,733 shares subject to options exercisable within 60 days.
(3) Includes 53,580 shares which are owned or controlled by Markel
Corporation, a publicly held corporation, and its subsidiaries and as to which
such corporations may be deemed to be the beneficial owners as of March 22,
1996. Mr. Markel is currently Vice Chairman and a director of Markel Corporation
and, as such, may be considered a control person of such corporation and its
subsidiaries. Mr. Markel expressly disclaims beneficial ownership of these
shares.
(4) Includes 9,500 shares subject to options exercisable within 60 days.
(5) Includes 200 shares owned jointly by Mr. Knowles and his wife as to
which Mr. Knowles may be deemed to share voting and investment power. Also
includes 65,167 shares subject to options exercisable within 60 days.
(6) All shares are subject to options exercisable within 60 days.
(7) Includes 200 shares owned jointly by an executive officer and his spouse
as to which such officer may be deemed to share voting and investment power.
Also includes 225,000 shares subject to options exercisable within 60 days.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
Eight directors are to be elected to hold office until the next Annual
Meeting of Shareholders is held and their successors are elected. Six of the
eight nominees for election to the Board of Directors are presently serving as
directors. Mr. Richard L. Sharp, who has been a director since 1987, has decided
to retire from the Board of Directors at the time of the meeting and therefore
will not stand for re-election. Under the Company's Bylaws each of the present
directors will hold office until his successor has been elected at the Annual
Meeting of Shareholders.
The persons named as proxies in the accompanying proxy intend to vote for
the election of only the eight persons named below unless the proxy specifies
otherwise. It is expected that each of these nominees will be able to serve, but
in the event that any such nominee is unable to serve for any reason (which
event is not now anticipated) the proxies will vote the proxy for the remaining
nominees and such other person as the Board of Directors may designate.
INFORMATION REGARDING NOMINEES
The following table sets forth certain information regarding each nominee.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION PRESENT POSITIONS
DIRECTOR DURING THE AND OFFICES
NOMINEE AGE SINCE LAST FIVE YEARS WITH THE COMPANY
- ---------------------------- ------ ---------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stuart C. Siegel 53 1970 Chairman of the Board of Chairman of the Board of
Directors and Chief Executive Directors; Chief Executive
Officer of the Company Officer; Director
Robert L. Burrus, Jr. 61 1979 Partner in law firm of McGuire, Director; Chairman,
Woods, Battle & Boothe, L.L.P., Compensation Committee;
Richmond, Virginia Member, Audit Committee
Donald W. Colbert 46 1985 President and Chief Operating President; Chief Operating
Officer of the Company Officer; Director
Selwyn S. Herson 43 1992 President of consulting firm Director; Member,
The Windsor Park Group, Woodland Compensation Committee
Hills, California
Andrew M. Lewis, Ph.D. 50 1983 Assistant Professor, Virginia Director; Member,
Commonwealth University, since Compensation Committee
December 1993; Doctoral Degree
Candidate, University of California,
Berkeley, prior to December 1993
Steven A. Markel 47 Vice Chairman of Markel Corporation None
since March 1992; Executive Vice
President and Treasurer prior to
March 1992
Troy A. Peery 49 President and Chief Operating Officer None
of Heilig-Meyers Company
Marshall B. Wishnack 49 1992 Chairman and Chief Executive Director; Member, Audit
Officer of Wheat First Butcher Committee
Singer Inc., since April 1996;
President and Chief Executive
Officer of Wheat First Butcher
Singer Inc. from August 1992 to
April 1996; President of Wheat First
Butcher Singer Inc. prior to August
1992
</TABLE>
<PAGE>
3
Robert L. Burrus, Jr. is also a director of CSX Corporation, Heilig-Meyers
Company, Concepts Direct, Inc., and O'Sullivan Corp.
Steven A. Markel is also a director of Markel Corporation, Fairfax
Financial Holdings Limited, Lindsey Morden Group Inc. and AVEMCO Corporation.
Troy A. Peery, Jr., is also a director of Heilig Meyers Company.
Marshall B. Wishnack is also a director of Lawyers Title Insurance
Corporation and Best Products Co., Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases certain premises at 6005 North Crestwood Avenue and the
adjacent store at 5918 West Broad Street, Richmond, Virginia, totaling
approximately 22,000 square feet, from Yetta Siegel-Flax pursuant to a lease
which expires in 2002. The fiscal 1996 rent was $127,000. Yetta Siegel-Flax is
the mother of Stuart C. Siegel. The Company operates the store at 5918 West
Broad Street and has sublet the 6005 North Crestwood Avenue premises with fiscal
1996 income of $64,000.
The Company leases its store at the Gayton Crossing Shopping Center,
Richmond, Virginia, totaling approximately 4,500 square feet, from Stuart C.
Siegel pursuant to a lease which expires in 2006, provided that Mr. Siegel may
cancel the lease in December 1996. The fiscal 1996 rent paid to Mr. Siegel was
$45,000.
The Company believes that the rent and other terms provided in the above
two leases are fair and reasonable to the Company as a tenant, are comparable to
the rental terms for similar properties in the same general locations and are as
favorable to the Company as if entered into with an unaffiliated party.
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board of Directors of the Company include an Audit
Committee and a Compensation Committee.
Messrs. Sharp, Burrus and Wishnack are the members of the Audit Committee.
The Audit Committee's principal responsibilities include recommending to the
Board of Directors the firm of independent accountants to be retained by the
Company; reviewing with the Company's independent accountants the scope and
results of their audits; reviewing with the independent accountants and
management the Company's accounting and reporting principles, policies and
practices; and reviewing the adequacy of the Company's accounting and financial
controls. This Committee met twice during the fiscal year ended January 27,
1996.
Messrs. Burrus, Lewis and Herson are the members of the Compensation
Committee. The Compensation Committee has responsibility for recommending to the
Board of Directors the compensation levels and benefits for directors and
officers; administering the Company's stock option plan and stock purchase loan
plan; reviewing the administration of the Company's savings/profit sharing plan;
and advising the Board of Directors and management regarding general personnel
policies. This Committee met three times during the fiscal year ended January
27, 1996.
4
<PAGE>
ATTENDANCE
The Board of Directors held five meetings during the fiscal year ended
January 27, 1996. All directors attended 90 percent or more of the aggregate
number of meetings of the Board and committees of the Board on which they
served.
DIRECTORS' FEES
Each director who is not an employee of the Company is paid a yearly
retainer of $3,600 and a fee of $300 for each Board meeting and for each Board
committee meeting attended.
5
<PAGE>
EXECUTIVE COMPENSATION
The table below summarizes certain information relating to compensation during
the three fiscal years ended January 27, 1996, of the five most highly
compensated executive officers of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------ ----------------------- ----------------
FISCAL RESTRICTED SECURITIES
NAME AND YEAR STOCK UNDERLYING LTIP
PRINCIPAL ENDED SALARY BONUS AWARD(S) OPTIONS/SARs PAYOUTS ALL OTHER
POSITION JANUARY ($) ($) ($) (#) ($) COMPENSATION(1)
- ---------------------- ------------------- ------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stuart C. Siegel 1996 461,500 0 0 0 0 127,300
Chairman of the 1995 459,000 0 0 0 0 109,200
Board and CEO 1994 436,700 0 0 0 0 90,600
Donald W. Colbert 1996 315,800 0 0 24,200 0 26,300
President and 1995 313,700 0 0 30,000 0 21,800
COO 1994 295,100 0 0 16,000 0 16,660
Robert J. Taphorn(2) 1996 198,100 0 0 10,500 0 1,500
Executive VP 1995 232,600 0 0 18,000 0 1,200
Robert E. Knowles 1996 185,000 0 0 10,500 0 14,400
Executive VP and 1995 183,500 0 0 18,000 0 12,000
CFO, Secretary 1994 171,200 0 0 10,000 0 9,400
and Treasurer
Harry S. Shendow 1996 143,200 0 0 2,500 0 23,900
Senior VP 1995 157,400 0 0 8,000 0 22,500
1994 148,200 0 0 8,000 0 20,700
</TABLE>
(1) Includes Company contributions under the Employee Savings/Profit
Sharing Plan, amounts accrued under deferred compensation agreements and the net
value of the benefit to the named executives of the portion of the premiums paid
by the Company under the Split Dollar Life Insurance Plan. During the fiscal
year ended January 27,1996, (i) Company contributions allocated under the
Savings/Profit Sharing Plan to Messrs. Siegel, Colbert, Taphorn, Knowles and
Shendow were $1,500 each; (ii) amounts accrued under deferred compensation
agreements with Messrs. Siegel, Colbert, Taphorn, Knowles and Shendow were
$78,400, $9,600, $0, $4,900 and $22,400, respectively; and (iii) the dollar
value of the benefit of premiums paid by the Company (using an eight percent
interest rate) under the Split Dollar Life Insurance Plan for Messrs. Siegel,
Colbert, Taphorn, Knowles and Shendow were $47,500, $15,200, $0, $7,900 and $0,
respectively.
(2) Mr. Taphorn joined the Company on January 31, 1994. Included in salary
for 1995 is $34,300, representing reimbursed relocation and other expenses.
6
<PAGE>
The following table sets forth information with respect to options granted
during the fiscal year ended January 27, 1996, for each of the executive
officers for whom information is given in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
- -----------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(4)
- ----------------------------------------------------------------------------------------- ------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARs EXERCISE
OPTIONS/SARs GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(2) FISCAL YEAR ($/SH)(3) DATE 5% ($) 10% ($)
- ------------------------- --------------- --------------- ------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Stuart C. Siegel 0 N/A N/A N/A N/A N/A
Donald W. Colbert 24,200 34.1% $8.3125 5/17/2003 96,046 230,047
Robert J. Taphorn 10,500 13.6% $8.3125 5/17/2003 41,673 99,814
Robert E. Knowles 10,500 13.6% $8.3125 5/17/2003 41,673 99,814
Harry S. Shendow 2,500 3.3% $8.3125 5/17/2003 9,922 23,765
- ------------------------- --------------- --------------- ------------ ---------------- -------------- --------------
</TABLE>
(1) No stock appreciation rights ("SARs") have been granted to any
employee.
(2) These options become exercisable in one-third increments over a
three-year period beginning from the date of grant. The Compensation Committee
may accelerate the exercisability of the options.
(3) The exercise price of each option is equal to the fair market value per
share of the Company's Common Stock on the date of grant.
(4) The potential realizable values in the table assume that the market
price of the Company's Common Stock appreciates in value from the date of grant
to the end of the option term at the annualized rates prescribed by the
Securities and Exchange Commission. The actual value, if any, an executive may
realize will depend on the excess, if any, of the stock price over the exercise
price on the date the option is exercised. There is no assurance that the value
actually realized by an executive will be at or near the values indicated in the
table.
The following table sets forth information with respect to options, if any,
exercised during the fiscal year ended January 27, 1996, and the number and
value of options held at the end of such fiscal year for each of the executive
officers from whom information is given in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES(1)
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARs OPTIONS/SARs AT
AT FY-END FY-END(2)
SHARES (#) ($)
ACQUIRED VALUE --------------------- ---------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
(#) ($) UNEXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stuart C. Siegel 0 $ - 0/ 0 -/-
Donald W. Colbert 0 $ - 92,666/49,534 $1,375/$0
Robert J. Taphorn 0 $ - 6,000/22,500 -/$0
Robert E. Knowles 0 $ - 61,666/25,834 $875/$0
Harry S. Shendow 0 $ - 20,000/10,500 $0/$0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No SARs have been granted to or exercised by any employee.
(2) Difference between fair market value and exercise price at fiscal year
end.
7
<PAGE>
STOCK PURCHASE LOAN PROGRAM
In 1995, the Company adopted, with shareholder approval, the Stock Purchase
Loan Plan under which the Compensation Committee may approve loans to officers
and other key management employees of the Company for the purpose of acquiring
shares of the Company's Common Stock. The plan is intended to attract and retain
key employees and to provide incentives for management to achieve the Company's
current and long-term strategic goals. Pursuant to the plan, the Compensation
Committee authorized and the Company made an aggregate of $1.5 million in loans
in 1995 to a total of 17 officers (the "1995 Loan Program"). An aggregate of
214,275 shares of Common Stock were purchased pursuant to the 1995 Loan Program.
Each outstanding loan has a term of seven years but becomes due and payable
up to one year following a termination of the participant's employment. A loan
may be prepaid without penalty at any time and is subject to mandatory
repayments equal to a specified percentage of any net annual cash bonus paid to
the participant. The loans bear interest, compounded annually, at a rate equal
to the Applicable Federal Rate rounded upward to the nearest 0.25%. The interest
rate, which is currently 7 1/2%, will be adjusted annually for changes in the
Applicable Federal Rate. Each loan is secured by a pledge to the Company of the
shares of Common Stock acquired with the loan proceeds. The shares are subject
to additional restrictions on transfer which lapse as to one-third of the shares
on each of the second, third and fifth anniversaries of the date of the loan.
These restrictions do not apply to certain transfers such as those to family
members for tax or estate planning purposes.
The 1995 Loan Program allows participants to achieve forgiveness of all or
a portion of the interest accruing on a loan during a fiscal year (a
"Performance Period") based on the Company's achievement of the performance
goals established by the Compensation Committee for such Performance Period. If
a participant's employment is terminated due to death or disability or a
termination by the Company without cause within two years following a change of
control, all interest accrued during the then current Performance Period as well
as all future interest will be forgiven. A participant who retires at or after
normal retirement age will be entitled to a prorated amount of any interest
forgiveness otherwise achieved for such Performance Period. Otherwise, a
participant must still be employed by the Company at the end of a Performance
Period to be eligible for forgiveness of any interest accrued during such
Performance Period.
The 1995 Loan Program also permits up to 25% of the principal amount of a
participant's loan to be forgiven dependent upon the participant's continued
employment with the Company and retention of the shares acquired with the loan
proceeds. If the participant remains continuously employed by the Company
through the seventh anniversary of the date of the loan, a portion of the loan
principal will be forgiven equal to 25% of the original principal amount
multiplied by the ratio which the number of shares retained on the seventh
anniversary bears to the number of shares originally acquired. Certain types of
transfers, such as those to family members for tax or estate planning purposes,
will not cause a reduction in the amount of loan principal forgiven. If the
participant's employment is terminated prior to the seventh anniversary of the
loan due to death or disability or a termination by the Company without cause
within two years following a change of control, the participant will be entitled
to principal forgiveness on the terms described above. A participant who retires
at or after normal retirement age will be entitled to a prorated amount of such
principal forgiveness based on the portion of the seven year period during which
the participant was employed. Otherwise, a participant must still be employed on
the seventh anniversary of the loan to be eligible for any forgiveness of loan
principal.
The following table shows, for each participating executive officer, the
number of shares of Common Stock acquired with the proceeds of loans under the
plan and the aggregate amount of all loan principal and accrued interest
outstanding as of March 22, 1996.
Number
of Shares Amount
Name Purchased Outstanding ($)
Stuart C. Siegel 55,857 $418,000
Donald W. Colbert 53,142 $397,683
Robert J. Taphorn 23,357 $174,790
Robert E. Knowles 23,357 $174,790
Weldon J. Wirick, III 10,714 $ 80,177
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee, which is composed of three non-management
directors of the Company, sets executive compensation levels and establishes and
administers short-term and long-term incentive programs based on its policies
for executive compensation. The Committee believes that the most effective
executive compensation program is one which provides incentives to achieve both
current and longer-term strategic goals of the Company, with the ultimate
objective of enhancing shareholder value. The Company's compensation package for
its executive officers consists of base salary, annual performance based bonus,
stock option grants and the opportunity to acquire shares of Common Stock under
the Company's Stock Purchase Loan Plan.
Each year, the Committee reviews proposals submitted by the Chief Executive
Officer with respect to annual salary, bonus performance goals and amounts and
stock option grants for each of the executive officers. In evaluating the CEO's
proposals, the Committee considers (1) the individual executive officer's
performance and level of contribution, including evaluations thereof by the CEO
with respect to other executive officers, (2) the Company's performance during
the last fiscal year in relation to its financial goals, measured primarily by
earnings per share, and (3) whether the proposals are consistent with the
Committee's policies on executive compensation, as outlined below. Last year,
the Committee also reviewed the CEO's proposal with regard to the allocation of
loan amounts available for the purchase of Company Common Stock under the
Company's Stock Purchase Loan Plan. In evaluating that proposal, the Committee
considered the individual executive officer's performance and level of
contribution.
The Committee believes that a significant portion of an executive's total
compensation should be subject to Company and individual performance criteria.
Base salary levels are generally set at the minimum levels believed by the
Committee to be necessary to attract and retain qualified individuals when
considered along with the performance-based components of the Company's
compensation package. Although generally the Committee does not consider past
corporate performance in setting base salaries, the Committee accepted
management's recommendation that there be no increase in the executive officers'
base salaries for the fiscal year ended January 27, 1996 ("fiscal 1996") in view
of the fact that the Company did not meet the minimum performance goals in its
annual bonus plan for the preceding fiscal year.
The Company's annual bonus plan provides incentives to achieve current
strategic goals of the Company and to maximize individual performance. At the
beginning of each year, the Committee sets threshold, target and maximum bonus
amounts for each executive officer. Consistent with the Company's compensation
philosophy, these potential bonus amounts are set at a significant percentage of
the executive officer's salary for such year, typically between 10% and 60%. The
determination of the amount of the bonus, if any, to be paid is made by the
Committee based on the degree to which the Company has achieved the performance
goals established by the Committee, measured primarily by earnings per share
(determined last year on both a Company and, for some executive officers, a
divisional basis) and on the executive officer's individual performance and
level of contribution during the previous year. If the minimum, target or
maximum goals are met, the executive officer may receive the threshold, target
or maximum bonus amount, respectively, depending on the Committee's evaluation
of the executive's individual performance. Similarly, if the Company's actual
performance for a year falls between any of these goals, the executive officer
may receive a prorated portion of the next highest bonus amount. In some cases
the Committee may adjust the bonus percentages and performance targets during
the fiscal year on a prospective basis. The Company did not meet its minimum
performance goals for fiscal 1996; consequently, no bonuses were paid for such
year.
Grants of stock options to the Company's executive officers under the 1991
Stock Option Plan provide incentives to achieve the Company's long-term
performance objectives. Because the value of stock options is entirely a
function of the value of the Company's stock, the Committee believes that this
component of the Company's compensation package closely aligns the interests of
executive officers with those of the Company's shareholders. Whether a grant
will be made to an executive officer, and if so in what amount, is determined by
the Committee based on the Committee's subjective evaluation of the executive
officer's potential contribution to the Company's future success, the level of
incentive already provided by the number and terms of the executive officer's
existing stock option holdings and the market price of the Company's Common
Stock.
The Stock Purchase Loan Plan was adopted last year upon the recommendation
of the Committee and with the approval of the Company's shareholders. Pursuant
to the plan, the Committee authorized an aggregate of $1.5 million in loans to
be made by the Company to the executive officers and other key management
employees in 1995 for the purpose of acquiring shares of the Company's Common
Stock (the "1995 loan program"). Management borrowed the full amount authorized
under the 1995 loan program and thereby acquired an aggregate of 214,275 shares.
The 1995 loan program allows participants to achieve forgiveness of all or a
portion of the interest on the loans based upon the Company's achievement of
performance goals established by the Committee. The performance criteria and
goals for fiscal 1996 were the same as those established for purposes of the
Company's annual bonus plan. If the minimum, target or maximum goals had been
met, the Company would have forgiven none, 50% or 100%, respectively, of the
loan interest accruing during fiscal 1996, with the amount
9
<PAGE>
being forgiven prorated for performance that fell between any of the
goals. As previously discussed, the Company did not meet its minimum performance
goals for fiscal 1996; consequently, none of the interest on the loans accruing
during fiscal 1996 was forgiven. The 1995 loan program also permits up to 25% of
the principal amount of a participant's loan to be forgiven dependent upon the
participant's continued employment with the Company and based on the amount of
stock acquired under the program which the participant has retained. A more
detailed description of the 1995 loan program appears elsewhere in the Proxy
Statement. The Committee believes that the plan, by encouraging management's
acquisition and retention of the Company's Common Stock and by tying interest
forgiveness to Company performance, provides even greater incentives for
management to achieve both the Company's long-term performance objectives and
its current strategic goals.
The Committee determined the compensation for Mr. Siegel, the Company's
Chairman and CEO, for the past fiscal year in a manner consistent with the
policies and procedures described above. As previously discussed, the Committee
accepted Mr. Siegel's recommendation that there be no increase in his base
salary for fiscal 1996 compared to his base salary for the prior year. The
Committee historically has not granted stock options to Mr. Siegel because of
his existing significant stock ownership in the Company. Therefore, the
Committee generally sets Mr. Siegel's bonus amounts at a greater percentage of
base salary than those set for other executives. The threshold, target and
maximum potential bonus amounts for Mr. Siegel were set at 24%, 48% and 72%,
respectively, for fiscal 1996; however, as previously discussed, no bonuses were
paid since the minimum performance targets were not met. To provide even greater
incentives for Mr. Siegel to achieve the Company's current strategic goals and
long-term performance objectives, Mr. Siegel was provided an opportunity to
purchase shares under the 1995 loan program on a basis generally comparable to
the other senior executive officers; the amount borrowed by Mr. Siegel and used
to purchase shares under the program represented approximately 85% of his annual
base salary.
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a
$1,000,000 limit on the amount of compensation that will be deductible by the
Company with respect to the Chief Executive Officer and the four other most
highly compensated executive officers. Performance-based compensation that meets
certain requirements will not be subject to the deduction limit. The Committee,
with the assistance of the Company's legal counsel, has reviewed the impact of
Section 162(m) on the Company and believes it is highly unlikely that the
compensation paid to any executive officer during the fiscal year ending January
25, 1997, will exceed the limit. The Committee will continue to monitor the
impact of the Section 162(m) limit and to assess alternatives for avoiding any
loss of tax deductions in future years.
Compensation Committee
Robert L. Burrus, Jr., Chairman
Selwyn S. Herson
Andrew M. Lewis
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Burrus, a member of the Compensation Committee, is a partner in the law
firm of McGuire, Woods, Battle & Boothe, L.L.P., which has served as counsel to
the Company on a regular basis since 1979.
10
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total return on the Company's Common Stock with the cumulative
total return of companies in the Nasdaq Market Value Index for U. S. companies
and the Nasdaq Retail Trade Index for the period of five years commenced on
January 26, 1991 and ended on January 27, 1996.
[GRAPH]
<TABLE>
<CAPTION>
Year Ended 1/26/91 1/25/92 1/30/93 1/29/94 1/28/95 1/27/96
<S> <C> <C> <C> <C> <C> <C>
S&K 100.0 232.3 309.7 335.5 187.1 148.4
Nasdaq Market 100.0 123.5 123.1 155.1 146.6 205.2
Nasdaq Retail 100.0 174.6 157.5 169.4 149.3 169.0
</TABLE>
Media General Financial Services supplied the data for the Company and the
Nasdaq Market Value Index. Center for Research in Security Prices (CRSP)
supplied the data for the Nasdaq Retail Trade Index.
11
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF ACCOUNTANTS
Price Waterhouse LLP, Norfolk, Virginia, has been selected by the Board of
Directors as independent accountants of the Company for the current year,
subject to ratification by the Shareholders. If the Shareholders do not ratify
the selection of Price Waterhouse LLP, the Board of Directors will reconsider
its selection of independent accountants for the current year. Representatives
of Price Waterhouse LLP are expected to be present at the Annual Meeting of
Shareholders and will be given the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR
THE CURRENT YEAR.
OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting; however, if any other matters are properly brought
before the meeting, the persons named in the enclosed proxy or their substitutes
will vote in accordance with their best judgments on such matters.
SHAREHOLDER PROPOSALS FOR
1997 MEETING
Proposals of Shareholders intended to be included in the Proxy Statement
for the 1997 annual meeting must be received by the Company at its principal
executive offices no later than December 19, 1996. Any such proposal must meet
the applicable requirements of the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
By Order of the Board of Directors,
Robert E. Knowles
Secretary
April 10, 1996
12
<PAGE>
S & K FAMOUS BRANDS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints Robert
E. Knowles and Robert F. Videtic, and each of them with full power of
substitution to each, proxies (and if the undersigned is a proxy, substitute
proxies) and attorneys to represent the undersigned at the Annual Meeting of
Shareholders of S & K Famous Brands, Inc., to be held at the Company's Corporate
Headquarters, located at 11100 West Broad Street, Richmond, Virginia, at 10:00
a.m., E.D.T., on May 30, 1996, and at any and all adjournments thereof, and to
vote as designated below, all of the Common Shares of S & K Famous Brands, Inc.,
par value $.50 per share, held of record by the undersigned on April 10, 1996,
as fully as the undersigned could do if personally present.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary) (to vote for all nominees
listed below)
[ ] [ ]
(Instruction: To withhold authority to vote for any individual, strike a line
through the nominee's name in the list provided below.)
S. Siegel, R. Burrus, D. Colbert, S. Herson,
A. Lewis, S. Markel, T. Peery, M. Wishnack
2. PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP as the
independent accountants of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
Receipt of the Secretary's Notice of and the related Proxy Statement
for the Annual Meeting of Shareholders to be held on May 30, 1996, is hereby
acknowledged.
Please sign exactly as name appears below. When shares are held by two or more
persons as joint tenants, any of such persons may sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated ___________________________, 1996
- ---------------------------------------
Shareholder's Signature
- ---------------------------------------
Shareholder's Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
