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
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
Movado Group, Inc.
________________________________________________________________________________
(Name of Registrant as Specified in its Charter)
Movado Group, Inc.
________________________________________________________________________________
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check 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:
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 No.:
3) Filing Party:
4) Date Filed:
<PAGE>
MOVADO GROUP, INC.
125 CHUBB AVENUE
LYNDHURST, NJ 07071
PROXY STATEMENT
---------------
INFORMATION CONCERNING THE SOLICITATION
This proxy statement and the accompanying proxy are being furnished to
shareholders of Movado Group, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used for
voting at the Annual Meeting of shareholders of the Company to be held on
Friday, June 14, 1996 at 10:00 A.M., Eastern Daylight Time, at the offices of
Simpson, Thacher & Bartlett, 425 Lexington Avenue, New York, New York and at any
adjournments thereof (the "Annual Meeting"). It is expected that this proxy
statement and the form of proxy will first be sent to shareholders on or about
May 20,1996.
At the Annual Meeting, the holders of the Company's Common Stock and Class
A Common Stock (together the "Capital Stock") will be asked to consider and vote
upon the following proposals:
1. To elect six directors to serve until the next Annual Meeting and until
their successors are elected and qualified;
2. To ratify the selection of Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending January 31, 1997;
3. To consider and vote upon the approval of the Company's 1996 Stock
Incentive Plan which amends the Company's 1993 Employee Stock Option
Plan;
4. To consider and vote upon the approval of the Company's Amended and
Restated Deferred Compensation Plan for Executives; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors knows of no other business to be presented at the
Annual Meeting. If any other business is properly presented, the persons named
in the enclosed proxy will have the power to vote all proxies received, and not
theretofore revoked, in accordance with the recommendations of the Board of
Directors. If the enclosed proxy is properly executed, duly returned to the
Company in time for the Annual Meeting and not revoked, your shares will be
voted in accordance with the instructions contained thereon. Where a signed
proxy is returned, but no specific instructions are indicated, your shares will
be voted FOR the nominees for Directors identified below, FOR the ratification
of the appointment of Price Waterhouse LLP as the Company's independent
accountants for fiscal year 1997, FOR approval of the Company's 1996 Stock
Incentive Plan and FOR the approval of the Company's Amended and Restated
Deferred Compensation Plan for Executives.
Abstentions will be treated as present for purposes of determining a
quorum for the Annual Meeting, but will not be counted as voting in respect of
any matter as to which the abstention is indicated. Proxies returned by brokers
as "non-votes" will neither be treated as present for purposes of determining
the presence of a quorum nor counted as voting.
Any shareholder who executes and returns a proxy may revoke it in writing
at any time before it is voted at the Annual Meeting by: (i) filing with the
Secretary of the Company, at the above address, written notice of such
revocation bearing a later date than the proxy or a subsequent proxy relating to
the same shares or (ii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy).
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors. The entire cost of soliciting these proxies will be borne by
the Company. In addition to use of the mails, proxies may be solicited
personally or by telephone by officers, directors and employees of the Company,
who will receive no additional compensation for such activities. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of shares
held of record by such persons, who will be reimbursed for their reasonable
expenses incurred in such connection.
<PAGE>
OUTSTANDING VOTING SECURITIES
The Board of Directors has fixed the close of business on May 13, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting (the "Record Date"). Only holders of record of the
Capital Stock at the close of business on the Record Date are entitled to notice
of and to vote at the Annual Meeting or any and all adjournments thereof. On the
Record Date there were 3,418,731 shares of Common Stock outstanding and
2,572,950 shares of Class A Common Stock outstanding. Each share of Common Stock
is entitled to one vote, and each share of Class A Common Stock is entitled to
10 votes. The holders of a majority in voting power of the outstanding shares of
Capital Stock entitled to vote at the Annual Meeting , present in person or
represented by proxy, constitute a quorum at the Annual Meeting. The affirmative
vote of the holders of a majority in voting power, present in person or
represented by proxy and entitled to vote, is required to approve the proposals
described herein, except that the affirmative vote by such holders of a
plurality in voting power is sufficient for the election of Directors.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Class A Common Stock and the Common Stock as of the
Record Date (except as otherwise noted in footnotes 4, 5, 9 and 11), by (i) each
shareholder who is known by the Company to beneficially own in excess of 5% of
the outstanding shares of Class A Common Stock or of the outstanding shares of
Common Stock, (ii) each director, (iii) each named executive officer and (iv)
all executive officers and directors as a group. Unless otherwise noted, all
shares are beneficially owned by the persons indicated.
PERCENT OF OUTSTANDING
SHARES OF CAPITAL STOCK
-----------------------
<TABLE><CAPTION>
SHARES OF
CLASS A SHARES OF
COMMON COMMON PERCENT OF
STOCK STOCK CLASS A TOTAL
NAME AND ADDRESS OF BENEFICIALLY BENEFICIALLY COMMON COMMON VOTING
BENEFICIAL OWNER OWNED OWNED STOCK STOCK POWER(1)
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Margaret Hayes Adame (2) ............. -- 1,000 -- * *
Kenneth J. Adams (2) (3) ............. -- 3,005 -- * *
FMR Corp. (4) ........................ -- 538,500 -- 15.7% 1.8%(4)
Goldman Sachs Equity ................. -- 751,300 -- 21.9% 2.6%
Portfolios, Inc. (5)
Efraim Grinberg (2) (6) .............. 458,188 46,735 17.8% 1.4% 15.9%
Gedalio Grinberg (2) (7) ............. 1,344,030 31,735 52.2% * 46.2%
Sonia Grinberg (2) (8) ............... 537,819 -- 20.9% -- 18.4%
Timothy F. Michno (2) ................ -- 5 -- * *
Oppenheimer Group, Inc. (9) .......... -- 178,300 -- 5.2% *
Donald Oresman (2) ................... 1,046 -- * -- *
John Pistner (2) ..................... 1,401 5 * * *
Leonard L. Silverstein (2) (10) ..... 264,898 17,506 10.3% * 9.1%
Thomson Hortsmann & Bryant, Inc. (11) -- 320,300 -- 9.3% 1.0%
All officers and directors as a group 1,804,665 81,211 70.1% 2.4% 62.2%
(10 persons) (12)
- - ------------------
</TABLE>
* Denotes less than one percent.
2
<PAGE>
(1) In calculating the percent of total voting power, the voting power of
shares of Common Stock (one vote per share) and Class A Common Stock (10
votes per share) has been aggregated.
(2) The address of Messrs. Adams, E. Grinberg, G. Grinberg, Michno, Oresman,
Pistner, and Silverstein and Ms. Hayes Adame and Mrs. Sonia Grinberg is c/o
Movado Group, Inc., 125 Chubb Avenue, Lyndhurst, New Jersey 07071.
(3) The total shares of Common Stock reported as beneficially owned by Mr.
Adams includes 3,000 shares which he has the right to acquire by the
exercise of options under the Company's 1993 Employee Stock Option Plan.
(4) In a joint filing on Schedule 13G dated February 14, 1996, under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), FMR
Corp., through its wholly owned subsidiary, Fidelity Management and
Research Company, and Edward C. Johnson 3d and Abigail P. Johnson each
reported beneficial ownership of 538,500 shares of Common Stock as to which
each such reporting person has sole dispositive power. Each reporting
person reported having no shared dispositive power as to any of such shares
nor any voting power, either sole or shared, as to any such shares. Each
such reporting person also reported that all of the shares of Common Stock
which it beneficially owns were acquired in the ordinary course of business
and not for the purpose or with the effect of changing or influencing
control of the Company, or in connection with any transaction having such
purpose or effect. The address of FMR Corp. and Mr. and Mrs. Johnson is 82
Devonshire Street, Boston, Massachusetts 02109.
(5) On February 14, 1996, in a joint filing on Schedule 13G under the Exchange
Act, Goldman Sachs Equity Portfolios, Inc. on behalf of Goldman Sachs Small
Cap Equity Fund ("GS Equity"), reported beneficial ownership of 721,700
shares of Common Stock as to which it has shared investment and voting
power. The Goldman Sachs Group, L.P. ("Group") and Goldman, Sachs & Co.
("GS & Co.") each reported beneficial ownership of 751,300 shares of Common
Stock, including the shares owned by GS Equity. Each of Group and GS & Co.
reported that it has shared investment and voting power as to all 751,300
shares of Common Stock. None of Group, GS & Co. or GS Equity reported
having sole voting or investment power as to any of the shares of Common
Stock, and each reported in their Schedule 13G filing that all these shares
were acquired in the ordinary course of business and not for the purpose,
or with the effect, of changing or influencing the control of the Company,
or in connection with any transaction having such purpose or effect. The
address of Group, GS & Co., and GS Equity is 85 Broad Street, New York, New
York 10004.
(6) The total number of shares of Class A Common Stock beneficially owned by
Mr. Efraim Grinberg includes an aggregate of 150,216 shares held by several
trusts for the benefit of Mr. E. Grinberg's siblings and himself, of which
trusts Mr. E. Grinberg is sole trustee. As sole trustee, Mr. E. Grinberg
has sole investment and voting power with respect to the shares held by
such trusts. In addition, the amount of shares of Class A Common Stock
reported for Mr. E. Grinberg includes an aggregate of 230,119 shares of
Class A Common Stock held by several trusts for the benefit of Mr. E.
Grinberg's siblings and himself, of which trusts Mr. E. Grinberg is
co-trustee with Mr. Leonard L. Silverstein. As a co-trustee, Mr. E.
Grinberg has shared investment and voting power with Mr. Silverstein with
respect to the shares of Class A Common Stock held by such trusts. The
total number of shares of Common Stock owned by Mr. E. Grinberg includes
29,735 shares of Common Stock held under the Company's Employee Savings and
Investment Plan ("401(k) Plan"), the trustees of which are Messrs. G.
Grinberg and E. Grinberg, both of whom have shared investment and voting
power as to such shares. Mr. E. Grinberg disclaims beneficial ownership as
to the 254,460 shares of Class A Common Stock held by the trusts for the
benefit of his siblings of which he is trustee or co-trustee and of the
29,735 shares of Common Stock held under the Company's 401(k) Plan except
to the extent of his pecuniary interest therein. The total number of shares
of Common Stock owned by Mr. E. Grinberg also includes 16,000 shares of
Common Stock which he has the right to acquire by the exercise of options
under the Company's 1993 Employee Stock Option Plan.
3
<PAGE>
(7) The total number of shares of Class A Common Stock beneficially owned by
Mr. G. Grinberg includes 34,779 shares of Class A Common Stock owned by the
Grinberg Foundation, a non-profit corporation of which Mr. G. Grinberg,
Sonia Grinberg and Mr. Leonard L. Silverstein are the directors and
officers and as to which shares these three individuals have shared
investment and voting power. The total number of shares of Common Stock
owned by Mr. G. Grinberg includes 29,735 shares of Common Stock held under
the Company's 401(k) Plan, the trustees for which are Messrs. G. Grinberg
and E. Grinberg, both of whom have shared investment and voting power as to
such shares. Mr. G. Grinberg disclaims beneficial ownership as to the
34,779 shares of Class A Common Stock owned by the Grinberg Foundation and
the 29,735 shares of Common Stock owned by the Company's 401(k) Plan except
to the extent of his pecuniary interest therein.
(8) The total number of shares of Class A Common Stock beneficially owned by
Mrs. Sonia Grinberg includes 34,779 shares of Class A Common Stock owned by
the Grinberg Foundation, a non-profit corporation of which Mr. G. Grinberg,
Sonia Grinberg and Mr. Leonard L. Silverstein are the directors and
officers and as to which shares all of whom have shared investment and
voting power. Mrs. Grinberg disclaims beneficial ownership of the shares of
Class A Common Stock owned by the Grinberg Foundation.
(9) In a filing on Schedule 13G under the Exchange Act dated February 1, 1996
Oppenheimer Group, Inc. ("OGI") reported beneficial ownership of 178,300
shares of Common Stock. OGI reported that it has shared voting and
investment power with respect to all 178,300 shares of Common Stock. OGI
reported having sole investment or voting power with respect to none of the
shares of Common Stock and that all shares were acquired in the ordinary
course of business and not for the purpose, or with the effect, of changing
or influencing the control of the Company, or in connection with any
transaction having such purpose or effect. The address of OGI is
Oppenheimer Tower, World Financial Center, New York, New York 10281.
(10) The total number of shares of Class A Common Stock beneficially owned by
Mr. Leonard L. Silverstein includes an aggregate of 230,119 shares of Class
A Common Stock held by several trusts for the benefit of Mr. G. Grinberg's
three children, of which trusts Mr. Silverstein is co-trustee with Mr. E.
Grinberg, with whom he has shared investment and voting power as to the
shares held by such trusts. The total number of shares of Class A Common
Stock reported for Mr. Silverstein also includes 34,779 shares of Class A
Common Stock owned by the Grinberg Foundation, of which Mr. G. Grinberg,
his wife and Mr. Silverstein are the directors and officers and as to which
shares these three individuals have shared investment and voting power. Mr.
Silverstein disclaims beneficial ownership of the shares of Class A Common
Stock held by the trusts and the Grinberg Foundation.
(11) Thomson Hortsmann & Bryant, Inc. ("TH&B"), in a filing under the Exchange
Act on Schedule 13G dated January 12, 1996, reported beneficial ownership
of 320,300 shares of Common Stock. TH&B reported that it has sole voting
power with respect to 204,500 of such shares and shared voting power as to
5,200 of such shares. TH&B also reported that it has sole investment power
as to 329,200 shares of Common Stock, shared investment power as to no such
shares and that all of the shares of Common Stock which it beneficially
owns were acquired in the ordinary course of business and not for the
purpose, or with the effect, of changing or influencing control of the
Company, or in connection with any transaction having such purpose or
effect. The address of TH&B is Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663.
(12) Excludes double counting of shares deemed to be beneficially owned by more
than one person. Unless otherwise indicated, the individuals named have
sole investment and voting power.
- - ------------------
4
<PAGE>
ITEM 1 - ELECTION OF DIRECTORS
Directors hold office until the next annual meeting of shareholders and
until the election and qualification of their successors. The Company's By-laws
provide that the number of directors constituting the Board may be changed by
action of the Board of Directors, so long as the number is not less than three.
The Board currently consists of six directors. All of the nominees, with the
exception of Michael Bush, are members of the present Board of Directors. If any
nominee for election to the Board of Directors of the Company should be unable
to accept nomination or election as a director, which is not expected, the
proxies may be voted with discretionary authority for a substitute or
substitutes designated by the Board of Directors. THE BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES. PROXIES SOLICITED BY THE
BOARD WILL BE SO VOTED EXCEPT WHERE AUTHORITY HAS BEEN WITHHELD.
The following table lists information with respect to the nominees for
election as directors of the Company.
NAME AGE POSITION
---- --- --------
Margaret Hayes Adame 56 Director
Michael Bush 35 Executive Vice President
and Chief Operating Officer
Gedalio Grinberg 64 Chief Executive Officer and
Chairman
of the Board of Directors
Efraim Grinberg 38 President and Director
Donald Oresman 70 Director
Leonard L.Silverstein 74 Director
There are no family relationships between any of the Company's directors
with the exception of Efraim Grinberg, who is the son of Gedalio Grinberg. There
are no arrangements between any director and any other person pursuant to which
any of them was elected director.
Ms. Hayes Adame was elected to the Board of Directors of the Company on
September 8, 1993. Ms. Hayes Adame is the President of Fashion Group
International, Inc. which she joined in March 1993. From 1981 to March 1993, Ms.
Hayes Adame was a senior vice president and general merchandise manager at Saks
Fifth Avenue. She is also a member of the board of International Flavors &
Fragrances, Inc.
Mr. Bush joined the Company in August 1995 as Executive Vice President and
Chief Operating Officer. From 1991 to 1995, Mr. Bush was the Senior Vice
President, Marketing and Strategic Planning for Ross Stores, Inc., a California
based retailer. Prior to assuming his position at Ross Stores, Mr. Bush was a
Senior Consultant with Bain & Company, Inc., a strategic consulting firm which
he joined in 1985.
Mr. G. Grinberg founded the Company in 1961 and, since then, has served
as the Company's Chairman and Chief Executive Officer.
Mr. E. Grinberg joined the Company in June 1980 and served as the Company's
Vice President of Marketing from February 1985 until July 1986, at which time he
was elected to the position of Senior Vice President of Marketing. In 1988, Mr.
E. Grinberg was elected to the Board of Directors of the Company, and in June
1990, he was elected President and Chief Operating Officer. Mr. E. Grinberg also
serves on the board of directors of the American Watch Association and the
Jewelers' Security Alliance.
5
<PAGE>
Mr. Oresman has served on the Board of Directors of the Company since
1981. He was Executive Vice President and General Counsel of Paramount
Communications, Inc., a publishing and entertainment company, from December 1983
until his retirement in March 1994. Prior to December 1983, Mr. Oresman was
engaged in the practice of law as a partner of Simpson Thacher & Bartlett where
he is now Of Counsel.
Mr. Silverstein has served on the Board of Directors of the Company since
1975. He has been engaged in the practice of law at Silverstein & Mullens,
Washington, D.C., for 38 years. Mr. Silverstein also serves as Vice President
and Director of Tax Management, Inc., a wholly owned subsidiary of BNA, Inc.,
and a director of Chevy Chase Federal Savings Bank. He is a former Vice Chairman
and currently honorary trustee of the John F. Kennedy Center for the Performing
Arts, Past President of the Alliance Francaise of Washington, a director of the
National Symphony Orchestra Association and a trustee of the White House
Historical Association.
INFORMATION REGARDING THE BOARD OF DIRECTORS
AND ITS COMMITTEES; DIRECTOR COMPENSATION
Messrs. G. Grinberg and E. Grinberg serve on the Executive Committee of
the Board of Directors. The Executive Committee of the Board of Directors has,
in the intervals between meetings of the Board of Directors, all the authority
of the Board of Directors except for those matters that the New York Business
Corporation Law reserves to the full Board of Directors. The Executive Committee
held no meetings during fiscal 1996.
Ms. Hayes Adame and Messrs. Oresman and Silverstein serve on the
Compensation Committee of the Board of Directors. The Compensation Committee of
the Board of Directors reviews remuneration levels for executive officers of the
Company, reviews significant employee benefits programs and establishes and
administers executive compensation programs, including bonus plans, stock option
and other equity-based programs, deferred compensation plans and any other cash
or stock incentive programs. The Compensation Committee is comprised solely of
independent directors. The Compensation Committee held one meeting in fiscal
1996 and acted on two occasions by unanimous consent in lieu of meeting.
Ms. Hayes Adame and Messrs. Oresman and Silverstein serve on the Audit
Committee of the Board of Directors. The Audit Committee of the Board of
Directors recommends to the Board of Directors the independent public
accountants to be selected to audit the Company's annual financial statements
and approves any special assignments given to such accountants. The Audit
Committee also reviews the planned scope of the annual audit and the independent
accountants' letter of comments and management's responses thereto, any
significant accounting changes made or contemplated and the effectiveness and
efficiency of the Company's internal accounting staff. In addition, the Audit
Committee meets periodically with the Company's Internal Audit staff with
respect to internal control issues generally. The Audit Committee is comprised
solely of independent directors. The Audit Committee held three meetings in the
fiscal year ended January 31, 1996.
The Board of Directors held five meetings during fiscal year 1996 and each
director attended all such meetings of the Board of Directors and all the
meetings held by all committees of the Board on which such director served.
No executive officer of the Company receives any additional compensation
for serving as a member of the Board of Directors or any of its committees.
Directors who are not executive officers of the Company receive a fee of $3,000
for each Board meeting attended and $1,000 for each committee meeting attended.
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities ( the "10% Stockholders"), to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
and the NASDAQ National Market. Officers, directors and 10% Stockholders of the
Company are required by law to furnish the Company with copies of all Section
16(a) forms so filed. Based solely on review of copies of such forms received or
written representations that no other reports were required, the Company
believes that, during the last fiscal year, its officers, directors and 10%
Stockholders complied with all filing requirements under Section 16(a)
applicable to them with respect to their beneficial ownership of Capital Stock.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1995, the Company hired Mr. Michael Bush as Executive Vice
President and Chief Operating Officer. Pursuant to its offer of employment, the
Company made a $150,000 interest free loan to Mr. Bush which, under the terms of
a promissory note, is payable on or before August 29, 1997. So long as Mr. Bush
remains at all times an employee of the Company, however, the unpaid principal
amount of the note will be automatically reduced by $75,000 on August 28 ,1996
and by an amount equal to the then remaining outstanding balance on August 28,
1997. In the event his employment with the Company should, for any reason,
terminate prior to August 29, 1997, then the entire unpaid balance then
outstanding will become automatically payable as of the date of such
termination.
In fiscal 1996, the Company entered into an agreement with a trust which
owns an insurance policy issued on the lives of the Company's Chairman and Chief
Executive Officer and his spouse. The insurance policy provides for a death
benefit of $27 million. The trustees of the trust are the three children of the
Chairman and his spouse, namely, Efraim Grinberg, Alexander Grinberg, and Miriam
Grinberg-Phalen. Under the agreement, the trust has assigned the insurance
policy to the Company as collateral to secure repayment by the trust of interest
free loans to be made annually by the Company to the trust in amounts sufficient
for the trust to pay the premiums on the insurance policy (approximately
$740,000 per annum). Under the agreement, the trust will repay the loans from
the death benefit proceeds of the policy. At January 31, 1996 the Company had
loaned the trust approximately $199,000 under this agreement.
EXECUTIVE OFFICERS
For detailed information concerning Michael Bush, Gedalio Grinberg and
Efraim Grinberg, see the listing for each under the heading "Election of
Directors" above. The names of the other executive officers of the Company (and
their respective ages as of the filing date of this report) are set forth below
together with the positions held by each during the past five years.
NAME AGE POSITION
---- --- --------
Kenneth J. Adams 38 Senior Vice President and
Chief Financial Officer
Timothy F. Michno 39 Secretary and General Counsel
John Pistner 38 Senior Vice President - Sales
Howard Regenbogen 66 Treasurer and Assistant
Secretary
Mr. Adams, who served as Corporate Controller since coming to the Company
in December 1992, was elected Senior Vice President and Chief Financial Officer
on April 14, 1995. Before joining the Company, Mr. Adams worked for twelve years
at Price Waterhouse LLP where he progressed to the position of Senior Manager,
serving clients in the international and middle market arenas.
Mr. Michno joined the Company in April 1992 and since then has served as
its Secretary and General Counsel. He has been engaged in the practice of law
for the past 13 years, immediately prior to joining the Company and since 1986
as an associate at the New York firm of Chadbourne & Parke. From 1988 to 1991 he
served as a resident outside counsel to American Brands, Inc., a consumer
products company.
Mr. Pistner has served as the Company's Senior Vice President - Sales
since 1990. Mr. Pistner joined the Company in 1981 and previously served as
Senior Vice President of Sales for the Movado brand and as a salesman and
regional manager for the Concord brand.
Mr. Regenbogen joined the Company in 1972 as its Controller and has served
as Treasurer of the Company since 1987. From September 1994 until April 14, 1995
Mr. Regenbogen served, in addition, as the Company's Chief Financial Officer.
7
<PAGE>
ITEM 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP to be the
Company's independent accountants for the year ending January 31, 1997, subject
to ratification of such appointment by the Company's shareholders. Price
Waterhouse LLP has served as the Company's independent accountants since fiscal
year 1977. Representatives of Price Waterhouse LLP are expected to be present at
the Annual Meeting of shareholders. Such representatives will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR SUCH RATIFICATION.
PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN
THEIR PROXIES A CONTRARY CHOICE.
ITEM 3 - PROPOSED 1996 STOCK INCENTIVE PLAN
At the Annual Meeting, shareholders will be asked to consider and, if
deemed advisable, to approve the Company's 1996 Stock Incentive Plan (the "1996
Plan") for certain officers, directors and key employees of the Company and its
affiliates. The 1996 Plan is intended to amend and restate the 1993 Employee
Stock Option Plan (the "1993 Plan"), which permitted only the award of options.
The aggregate number of shares of the Company's common stock (the "Shares")
available for issuance under the 1993 Plan is 500,000 Shares. Through March
1996, options for the purchase of a total of 462,000 Shares had been granted
under the 1993 Plan.
SUMMARY OF THE 1996 PLAN
- - ------------------------
The purpose of the 1996 Plan is to provide for certain officers,
directors, and key employees ("Participants") of the Company and certain of its
affiliates an incentive to maintain and enhance the performance and
profitability of the Company.
Under the 1996 Plan an additional 300,000 Shares would be available to be
granted as incentive awards ("Awards") for a total of 800,000 Shares authorized
for grants (subject to adjustment to avoid dilution). During the period in which
the Plan is effective, the maximum number of Shares available for grants to any
one Participant is 250,000.
Awards may be options ("Options"), which may be ISOs or Non ISOs; stock
appreciation rights granted in tandem with Options or designated portions
thereof, or as independent Awards; or other Awards ("Other Share-Based Awards")
that are valued in whole or in part by reference to, or are otherwise based on,
the fair market value of Shares. SARs or Other Share-Based Awards may be paid in
Shares, cash or a combination thereof.
The 1996 Plan will be administered by the Compensation Committee (the
"Committee") of the Board. The Committee currently consists of three and will at
all times consist of two or more "outside directors" as defined in Section 162
(m) of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder. To the extent necessary to comply with the
rules promulgated under Section 16 of the Exchange Act, each member of the
Committee shall be a "disinterested person" within the meaning of the Exchange
Act. The Committee has the authority (i) to exercise all of the powers granted
to it under the 1996 Plan, (ii) to construe, interpret and implement the 1996
Plan and any Award Agreements executed pursuant to the 1996 Plan, (iii) to
prescribe, amend and rescind rules relating to the 1996 Plan, ( iv) to make any
determination necessary or advisable in administering the 1996 Plan and (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
1996 Plan.
The per share exercise price of an Option may not be less than the fair
market value of a Share on the date the Option is granted and Options cannot be
exercised more than ten years from the date of grant. Subject to the provisions
of the 1996 Plan, an Option or designated portion thereof may be exercised by
payment of the exercise price in cash through the delivery of Shares with an
aggregate fair market value on the date of exercise equal to the exercise price;
with the consent of the Committee, through the withholding of Shares issuable
upon exercise with an aggregate fair market value on the date of exercise equal
to the exercise price; or through the delivery of irrevocable instructions to a
broker to deliver promptly to the Company or its designee an amount equal to the
exercise price or by any combination of the above methods of payment.
8
<PAGE>
The Committee may grant a stock appreciation right in conjunction with an
Option or designated portion thereof at the time the related Option is granted
or at any time prior to the exercise or cancellation of the related Option. For
purposes of determining the number of Shares available for grants, such a stock
appreciation right shall not be deemed an independent Award. The exercise price
per Share of a stock appreciation right may not be less than fair market value
of a Share on the date the stock appreciation right is granted or, in the case
of a stock appreciation right granted in conjunction with an Option or
designated portion thereof, the exercise price per Share of the related Option.
Upon the exercise of a stock appreciation right, the Participant shall be
entitled to receive with respect to each Share to which such stock appreciation
right related an amount in cash and/or Shares, as the case may be, equal to the
excess of (i) the fair market value of a Share on the date of exercise over (ii)
the exercise price of the stock appreciation right.
The Committee may grant, in its sole discretion, other Awards of Shares
and Other Share-Based Awards. Certain of such Other Share-Based Awards
("Performance Based Awards") may be granted in a manner that is deductible by an
affiliate of the Company under Section 162 (m) of the Code and may be based upon
stock price, market share, sales, earnings per share, return on equity or costs.
Each Award will be non-transferable during the lifetime of the Participant
provided that in the event Section 16 of the Exchange Act ceases to require
Awards to be non-transferable, the Committee may amend the 1996 Plan to provide
for such transfers.
The Board of Directors may suspend, amend or terminate the 1996 Plan, in
whole or in part. No amendment may be made without the approval of the
shareholders, however, if such approval is required by the rules under the
Exchange Act, or by any regulatory authorities or stock exchanges. Furthermore,
no amendment, suspension or termination of the 1996 Plan may, without the
consent of a grantee, impair any of the rights or obligations under any Award
previously granted to such Participant under the 1996 Plan.
Awards under the 1996 Plan are authorized by the Committee in its sole
discretion. For this reason, it is not possible to determine the benefits or
amounts that will be received by any particular employees or group of employees
in the future. No options were granted under the 1993 Plan to any of the named
executive officers for the fiscal year ended January 31, 1996. During fiscal
1996 an aggregate of 100,000 stock options were granted under the 1993 Plan to
all executive officers as a group and an aggregate of 7,000 stock options were
granted to all employees, other than executive officers, as a group.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
- - ---------------------------------------------
With respect to the United States federal income tax consequences of the
1996 Plan, the Company has been advised as follows:
ISOs. Under present law, a Participant will not realize taxable income
----
upon either the grant or the exercise of an ISO, and the Participant's employer
will not receive an income tax deduction at either such time. If the participant
does not dispose of Shares acquired upon exercise of the ISO within either (i)
two years after the date of the grant of the ISO or (ii) one year after the date
of exercise, a subsequent sale of Shares will be taxed as long-term capital gain
or loss. If the Participant, within either of the above periods, disposes of
Shares acquired upon exercise of the ISO, the Participant will generally realize
as ordinary income an amount equal to the lesser of (i) the gain realized by the
Participant on such disposition or (ii) the excess of the fair market value of
the Shares on the date of the exercise over the exercise price. In such event,
the Participant's employer generally would be entitled to an income tax
deduction equal to the amount recognized as ordinary income by the Participant.
Any gain in excess of such amount realized by the Participant as ordinary income
would be taxed as short-term or long-term capital gain (depending on the holding
period). The difference between the exercise price and the fair market value of
the Shares at the time of ISO is exercised will be an adjustment in computing
alternative minimum taxable income for the purpose of the alternative minimum
tax imposed by Section 55 on the Code.
9
<PAGE>
Non-ISOs. Under present law, a Participant will not realize taxable income
--------
upon the grant of a Non-ISO and the Participant's employer will not receive an
income tax deduction at such time. Upon exercise of a Non-ISO, the Participant
will generally realize ordinary income in an amount equal to the excess of the
fair market value of the Shares on the date of exercise over the exercise price.
Upon a subsequent sale of the Shares, the Participant will recognize short-term
or long-term capital gain depending upon his or her holding period for the
Shares. The Participant's employer is generally allowed an income tax deduction
equal to the amount recognized as ordinary income by the Participant.
Stock Appreciation Rights. Amounts received by the Participant upon the
-------------------------
exercise of stock appreciation rights are taxed at ordinary rates when received.
The Participant's employer is generally allowed an income tax deduction equal to
the amount recognized as ordinary income by the Participant.
Other Share-Based Awards. Amounts received by the Participant upon the
------------------------
grant of Other Share-Based Awards are ordinarily taxed at ordinary rates when
received. However, if such Awards consist of property subject to restrictions,
the amounts generally will not be taxed until the restrictions lapse or until
the Participant makes an election under Section 83 (b) of the Code. Subject to
Section 162 (m) of the Code, the Participant's employer is general allowed an
income tax deduction, equal to the amount recognized as ordinary income by the
Participant, at the time such amount is taxed.
Compliance with Section 162 (m). The 1996 Plan should allow certain ISOs,
-------------------------------
Non-ISOs, stock appreciation rights and Performance-Based Awards granted under
the 1996 Plan to be treated as qualified performance-based compensation under
Section 162 (m) of the Code. The Committee may, however, from time to time award
compensation that is not deductible under Section 162 (m) of the Code.
SHAREHOLDER APPROVAL
- - --------------------
Approval of the 1996 Plan requires the affirmative vote of the holders of
a majority in voting power of the outstanding shares of the Company's Capital
Stock present, or represented by proxy, and entitled to vote at the Annual
Meeting.
THE BOARD OF DIRECTORS HAS APPROVED THE 1996 PLAN AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE 1996 PLAN. THE PERSONS NAMED IN THE
ENCLOSED PROXY ACCORDINGLY INTEND TO VOTE AT THE ANNUAL MEETING FOR THE APPROVAL
OF THE 1996 PLAN UNLESS OTHERWISE DIRECTED BY THE SHAREHOLDER APPOINTING THEM.
10
<PAGE>
ITEM 4 - APPROVAL OF DEFERRED COMPENSATION PLAN FOR EXECUTIVES
At the Annual Meeting, shareholders will be asked to consider, and if
deemed advisable, to approve adoption of the Company's Amended and Restated
Deferred Compensation Plan for Executives (the "Deferred Compensation Plan").
Executives of the Company who are designated by the Company will be eligible to
participate in the Deferred Compensation Plan.
SUMMARY OF THE DEFERRED COMPENSATION PLAN
- - -----------------------------------------
Under the Deferred Compensation Plan, each eligible employee shall deliver
a Salary Deferral Election to the Company in order for salary deferrals to
become effective. Eligible employees will be permitted to defer up to a maximum
of either five or ten percent of their base salary, in each case as determined
by the Company.
The Company shall establish for each participant a separate bookkeeping
account and credit to the account an amount designated in the participant's
Salary Deferral Election for each year. Such amounts shall not be made available
to the participant, except as described below, and shall reduce the
participant's compensation. Amounts credited to participants shall be subject to
the rights of the general creditors of the Company.
Participants shall cease to contribute after they cease to be employed by
the Company. The Salary Deferral Election and any changes thereto must be
submitted before the beginning of the calendar year during which the amount to
be deferred will be earned; provided, however, that in the year in which the
Deferred Compensation Plan is first adopted or an employee is first eligible to
participate, Salary Deferral Elections may be filed within thirty days of the
date on which an employee is first eligible to participate with respect to
compensation earned during the remainder of the calendar year.
A participant who is subject to Section 16 of the Exchange Act may file a
Salary Deferral Election in the form of an irrevocable election to participate
in the Deferred Compensation Plan, which election will take effect six months
after it is filed.
The Company shall also credit to the account of each participant a
matching contribution in an amount equal to one hundred percent of the salary
deferrals contributed by the participant up to the maximum permitted deferral.
Twenty percent of the matching contributions for a participant shall be
made in the form of rights to Common Stock of the Company representing the
number of shares (including fractional shares) of Common Stock that the matching
contribution could purchase based upon the value of the Common Stock either at
the end of the month immediately preceding the month in which the matching
contribution is made or as of the date the participant's deferral is actually
invested by the plan administrator in the participant designated investment
fund(s). Rights to Common Stock may not be granted in any year in an amount in
excess of 1% of the total number of shares of Common Stock outstanding on the
preceding December 31.
Dividends declared on Common Stock shall be credited to the account of
each participant based on the dividends that would have been paid if the Common
Stock rights credited to the participant consisted instead of issued and
outstanding Common Stock.
When a participant or a participant's beneficiary is entitled to a
distribution with respect to his or her rights to Common Stock, the Company
shall issue to the participant or beneficiary the number of shares of Common
Stock equal to the number of full shares then credited in such participant's
account. The Company shall pay the credited dividend amounts and any fractional
shares in cash.
The Company reserves the right to make discretionary contributions to
participants' accounts in such amounts and in such manner as may be determined
by the Company.
11
<PAGE>
A participant's deferred salary and earnings thereon are immediately
vested. Company matching contributions or discretionary contributions vest at
the rate of 20% per year as long as the participant remains an employee of the
Company. A participant who attains the age of 65 or whose employment terminates
due to death or disability shall be fully vested in all amounts in such
participant's account. A participant whose employment terminates for other
reasons shall forfeit unvested amounts.
A participant may direct the investment of amounts in the account (other
than rights to Common Stock) among investment funds which will be made
available.
Distributions from the Deferred Compensation Plan shall commence in the
January following termination of the participant's employment. Benefits,
including shares of Common Stock, will be paid in ten annual installments unless
the Company determines to pay the benefits in a lump sum.
SHAREHOLDER APPROVAL
- - --------------------
Approval of the Deferred Compensation Plan requires the affirmative vote of the
holders of a majority in voting power of the outstanding shares of the Company's
Capital Stock present, or represented by proxy, and entitled to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS HAS APPROVED THE DEFERRED COMPENSATION PLAN AND
RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE DEFERRED COMPENSATION
PLAN. THE PERSONS NAMED IN THE ENCLOSED PROXY ACCORDINGLY INTEND TO VOTE AT THE
ANNUAL MEETING FOR THE APPROVAL OF THE DEFERRED COMPENSATION PLAN UNLESS
OTHERWISE DIRECTED BY THE SHAREHOLDER APPOINTING THEM.
12
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation
awarded to, earned by or paid to the Chief Executive Officer and each of the
four other most highly compensated executive officers of the Company
(collectively, the "named executive officers") during fiscal 1996, 1995, and
1994 (each fiscal year ending January 31) for services rendered in all
capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards
--------------------------------------------
Restricted Securities
Stock Underlying All Other
Name and Salary Award(s) Options Compensation
Principal Position Year ($) Bonus ($) ($) (2) (#) ($)
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gedalio Grinberg 1996 650,000 150,000 11,775.76 0 217,746(3)
Chairman and 1995 550,000 100,000 0 0 109,264
Chief Executive 1994 500,000 135,000 0 0 54,814
Officer
Efraim Grinberg 1996 400,000 125,000 8,000 0 38,924(4)
President 1995 310,000 75,000 0 0 6,924
1994 285,000 100,000 0 40,000 899
Kenneth J. Adams 1996 136,539 40,000 57.69 0 1,155(5)
Senior Vice 1995 107,500 36,813 0 0 924
President and 1994 90,000 0 0 7,500 579
Chief Financial
Officer
John Pistner 1996 300,000 200,000 2,750 0 17,364(6)
Senior Vice 1995 275,000 135,000 0 0 11,804
President-Sales 1994 250,000 106,000 0 20,000 11,779
Timothy F. Michno 1996 150,000 12,500 390 0 2,454(7)
Secretary and 1995 143,962 10,000 0 0 427
General Counsel 1994 130,069 25,000 0 7,500 9
</TABLE>
(1) The columns designated by the Commission for the reporting of Other Annual
Compensation and Long Term Incentive Plan Payouts have been omitted as no
such compensation of a type required to be reported under such columns was
awarded to, earned by or paid to any of the named executive officers during
the period covered by the table.
(2) At January 31, 1996 the aggregate number of share units of restricted stock
held by each of the named executive officers and the aggregate value
thereof (based on the closing price of the Company's Common Stock as of
January 31, 1996) were as follows. All of the share units vest 20% at the
end of each calendar year beginning in the calendar year in which awarded.
All of the following share unit amounts were awarded in calendar year 1995
except as otherwise indicated: Mr. G. Grinberg: 707.28 share units (26.3 of
which were awarded in January 1996), $ 13,173.09; Mr. E. Grinberg: 490.37
share units (50.55 of which were awarded in January, 1996), $ 9,133.14 ;
Mr. Adams: 3.04 share units (all awarded in January, 1996), $ 57.62; Mr.
Pistner: 176.93 share units, $3295.32; and Mr. Michno: 22.87 share units,
$425.95.
(3) Includes $89,719 in total annual premiums paid in respect of certain life
insurance policies, and one travel accident policy purchased for Mr. G.
Grinberg by the Company. Under his arrangement with the Company, Mr. G.
Grinberg is entitled to the cash surrender value under these life
insurance policies and his beneficiary is entitled to the applicable death
benefit without, in either event, reimbursement to the Company of any
premiums paid by the Company under those policies. Also includes a $924
matching contribution made by the Company in respect of fiscal 1996 for the
account of Mr. G. Grinberg pursuant to the Company's Employee Savings and
Investment Plan ("401(k) Plan"). Also includes a matching cash contribution
of $ 49,103 made by the Company for fiscal 1996 to Mr. G. Grinberg's
account pursuant to the Company's Deferred Compensation Plan for Executives
("Deferred Compensation Plan"). Also includes $78,000 accrued by the
Company in respect of a Death and Disability Benefit Plan agreement with
Mr. G. Grinberg. See "Contract with Chief Executive Officer" below.
13
<PAGE>
(4) Includes a matching contribution of $924 made by the Company for fiscal
1996 to Mr. E. Grinberg's account pursuant to the Company's 401(k) Plan and
a matching contribution of $ 32,000 for fiscal 1996 to his account under
the Deferred Compensation Plan. Also includes $6,000 in premiums paid in
respect of one term life policy purchased for Mr. E. Grinberg by the
Company.
(5) Includes a matching contribution of $924 made by the Company for fiscal
1996 to Mr. Adams' account pursuant to the Company's 401(k) Plan and a
matching contribution of $ 231 for fiscal 1996 to his account under the
Deferred Compensation Plan.
(6) Includes a matching contribution of $924 made by the Company for fiscal
1996 to Mr. Pistner's account pursuant to the Company's 401(k) Plan and a
matching contribution of $ 11,000 for fiscal 1996 to his account under the
Deferred Compensation Plan. Also includes $5,440 in premiums paid in
respect of one universal life policy purchased for Mr. Pistner by the
Company. Under his arrangement with the Company, Mr. Pistner is entitled to
the cash surrender value under the policy and his beneficiary is entitled
to the applicable death benefit without, in either event, reimbursement to
the Company of any premiums paid by the Company
(7) Includes a matching contribution of $894 made by the Company for fiscal
1996 to Mr. Michno's account pursuant to the Company's 401(k) Plan and a
matching contribution of $ 1,560 for fiscal 1996 to his account under the
Deferred Compensation Plan.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying
Unexercised Value of
Options at Unexercised
Shares Fiscal In-the-Money
Acquired on Value Year-End Options
Name Exercise (#) Realized ($) Exercisable/ at Fiscal
Unexercisable Year-End ($)
Exercisable/
Unexercisable
G. Grinberg......... 0 0 0 0
E. Grinberg......... 0 0 16,000/24,000 74,000/111,000
K. Adams........... 0 0 3,000/4,500 13,875/20,812.50
J. Pistner.........8,000 42,000 0 /12,000 0/55,500
T. Michno..........3,000 15,750 0/4,500 0/20,812.50
No additional options were granted to any of the named executive officers in
fiscal 1996.
CONTRACT WITH CHIEF EXECUTIVE OFFICER
Under a Death and Disability Benefit Plan Agreement with Mr. G. Grinberg
dated September 23, 1994, in the event of Mr. Grinberg's death or disability
while employed by the Company, the Company will pay to his spouse, if she is
then living, an annual benefit equal to $300,000 (increased each year beginning
October 1, 1995 by an amount equal to two percent of the benefit that would have
been payable in the prior year). Benefits are payable for the lesser of 10 years
or the life of Mr. Grinberg's spouse, and are payable only from the general
assets of the Company. Neither Mr. Grinberg nor his spouse may assign the
Agreement or any of the benefits payable thereunder and none of the benefits are
payable to the estates or any of the heirs of Mr. Grinberg or his spouse.
The Agreement provides that it automatically terminates in the event of
the termination of Mr. Grinberg's employment with the Company for any reason
other than his death or disability and further provides that it is not to be
considered a contract of employment. For purposes of the Agreement "disability"
mean the inability of Mr. Grinberg to perform the duties pertaining to his job
because of accident, sickness or other illness as determined by a majority of
disinterested directors.
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was at all times during fiscal year
1996 comprised entirely of directors who at no time were executive officers or
employees of the Company. The Compensation Committee for fiscal year 1996
consisted of Margaret Hayes Adame, Donald Oresman,, and Leonard L. Silverstein.
Mr. Silverstein is a partner at the law firm of Silverstein & Mullens, which
firm rendered legal services to the Company during fiscal 1996.
COMPENSATION COMMITTEE REPORT
GENERAL
The Compensation Committee of the Board of Directors (the "Committee") is
composed of the three non-employee members of the Board and was established in
September 1993 in anticipation of the Company's public offering which took place
the following month. The Committee is responsible for reviewing and approving
the Company's compensation policies affecting senior management, reviewing
significant employee benefit programs and reviewing and administering the
Company's 1993 Employee Stock Option Plan.
COMPENSATION POLICIES AND COMPONENTS OF COMPENSATION
The compensation policies, which the Company has established, and which
applied in fiscal 1996, are designed to attract, retain, motivate and
appropriately reward an exceptional group of highly qualified individuals who
are expected to contribute to the Company's continued success. There are three
primary components of executive compensation: salary, cash bonuses and stock
options. The Committee reviews each component of executive compensation on an
annual basis.
Base salary levels for members of the Company's senior management team are
reviewed by the Committee in light of the Committee's assessment of the
responsibilities relative to the position under consideration as well as each
individual's background, training and experience. Annual increases in base
salary levels, if warranted, are reviewed with reference to the executive
officer's performance and the performance of the Company as a whole. Executive
performance is evaluated by the Committee by reference to certain factors,
particularly the extent to which specific individual and departmental goals and
objectives are met. Corporate performance is measured by the Committee by
reference to the Company's financial results generally as well as its
achievement of specific strategic goals.
Cash bonuses, the second key component of executive compensation, are
intended to incentives senior management in the short term to achieve certain
operating results which are generally determined at the beginning of the fiscal
year and, typically, tied to net income results. By thus placing a significant
percentage of each executive officer's compensation at risk, this approach
creates a direct incentive for executive officers to achieve desired performance
goals. Certain mid-level managers are also eligible to receive bonuses which,
just as for senior management, are used as an additional, incentive-based
element of compensation dependent on corporate performance and individual merit.
Equity participation is the third key element of the Company's executive
compensation program. Stock options granted to date under the Company's 1993
Employee Stock Option Plan (the "Option Plan") have been awarded on the basis of
the position held by the grantee, contributions already made by the person
meriting recognition and, more importantly, the Company's expectations of the
contribution the person will make over the long term to the Company's growth.
All options granted under the Option Plan have an exercise price equal to the
market value of the stock on the date of grant, and vest cumulatively in five
annual installments of 20% and expire ten years from the date of grant. Option
grants thus are designed to retain executive officers and key employees and to
enhance shareholder value by aligning the financial interests of each grantee
with the interests of the Company's shareholders over the long term.
15
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR FISCAL 1996
The compensation paid to the Company's Chief Executive Office ("CEO") in fiscal
1996 consisted primarily of salary and bonus.
The CEO's salary for fiscal 1996 was approved by the Committee on the basis of
its evaluation of the CEO's performance for the year and the overall performance
of the Company both financially and operationally. The primary performance
measures used by the Committee in making its determination were the achievement
of certain strategic objectives by the Company under the leadership of the CEO,
continued growth in net sales and increases in operating income and gross
margins.
The bonus paid to the CEO for fiscal 1996 was approved by the Committee based,
in part, upon its assessment of the CEO's individual performance, particularly
in continuing to develop and implement strategies designed to expand and
strengthen the Company's brand portfolio. The Committee believes that a
substantial portion of the CEO's bonus should be tied to the performance of the
Company. Therefore, the CEO's bonus for fiscal 1996 was approved primarily on
the basis of the Company's attainment of certain performance targets,
specifically the achievement of earnings per share and net sales results, that
were determined by the Committee at the beginning of the fiscal year.
POLICY REGARDING DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to the CEO and the four other most highly
compensated executive officers of the Company. No policy determination by the
Compensation Committee regarding this matter has yet been made.
COMPENSATION COMMITTEE
Margaret Hayes Adame
Donald Oresman
Leonard L. Silverstein
16
<PAGE>
PERFORMANCE GRAPH
The performance graph set forth below compares the cumulative total
shareholder return of the Company's Common Stock since the date of the Company's
public offering (i.e., September 30, 1993), through the fiscal year ended
January 31, 1996 with that of the Broad Market (CRSP Total Return Index for the
NASDAQ Stock Market) and a peer group index comprised of the following five
companies: Forschner Group Inc., Fossil Inc., Jan Bell Marketing Inc., Jostens
Inc. and Tiffany & Co. The returns of each company in the peer group index have
been weighted according to the respective issuer's stock market capitalization.
The graph assumes an initial investment of $100 on September 30, 1993, and the
reinvestment of dividends (where applicable).
FISCAL 1996 COMPARATIVE TOTAL RETURNS
MOVADO GROUP, INC.
STOCK MARKET AND INDUSTRY PEER GROUP
(PERFORMANCE RESULTS FROM 9/30/93 THROUGH 1/31/96)
$150
141.7
$140
134.7
$130
$120
118.4
$110
$100
$90
$80
1/31/94 01/31/95 01/31/96
<TABLE><CAPTION>
Legend
Symbol CRSP Total Returns Index for: 09/30/93 01/31/94 01/31/95 01/31/96
- - ------ ----------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
MOVADO GROUP, INC. 100.0 99.1 104.2 134.7
Nasdaq Stock Market (US Companies) 100.0 105.1 100.2 141.7
Self-Determined Peer Group 100.0 92.2 90.6 118.4
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 09/30/93.
17
<PAGE> DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholders' proposals intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company no later than March 1,
1997 for inclusion in the Company's proxy statement and form of proxy relating
to that meeting.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the Annual Meeting other than
that referred to herein. If any other business should come before the Annual
Meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies received and not theretofore revoked in accordance
with their best judgment.
Upon the written request of any record holder or beneficial owner of
Common Stock or Class A Common Stock entitled to vote at the Annual Meeting, the
Company, without charge, will provide a copy of its Annual Report on Form 10-K
for the year ended January 31, 1996, as filed with the Securities and Exchange
Commission. Requests should be directed to Howard Regenbogen, Treasurer, Movado
Group, Inc., 125 Chubb Avenue, Lyndhurst, New Jersey 07071.
BY ORDER OF THE BOARD OF DIRECTORS
Timothy F. Michno
Secretary and General Counsel
Lyndhurst, New Jersey
May 20, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED TO DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
18
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MOVADO GROUP, INC.
The undersigned hereby appoints Timothy F. Michno and Howard
Regenbogen proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of Movado Group, Inc. standing in the
name of the undersigned with all powers which the undersigned would possess if
present at the Annual Meeting of Shareholders of the Company to be held June 14,
1996 or any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN PLEASE MARK
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. YOUR VOTES AS [X]
IF NO DIRECTION IS MADE, THIS PROXY INDICATED IN
WILL BE VOTED FOR PROPOSALS 1,2,3 AND 4. THIS EXAMPLE
<TABLE><CAPTION>
<S> <C> <C>
NOMINEES: GEDALIO GRINBERG, EFRAIM GRINBERG, MARGARET HAYES ADAME, MICHAEL
BUSH, DONALD ORESMAN AND LEONARD L. SILVERSTEIN
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES WITHHOLD
LISTED TO THE RIGHT AUTHORITY
(EXCEPT AS MARKED TO VOTE FOR ALL NOMINEES INSTRUCTION: (TO WITHHOLD AUTHORITY
TO THE CONTRARY) LISTED TO THE RIGHT TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
[ ] [ ]
-------------------------------------------
2. RATIFICATION OF PRICE 3. PROPOSAL TO APPROVE THE 4. PROPOSAL TO APPROVE THE
WATERHOUSE AS THE INDEPENDENT 1996 STOCK INCENTIVE PLAN WHICH CORPORATION'S DEFERRED
CERTIFIED PUBLIC ACCOUNTANTS AMENDS THE CORPORATION'S 1993 COMPENSATION PLAN FOR
OF THE CORPORATION. EMPLOYEE STOCK OPTION PLAN. EXECUTIVES
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD 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.
DATE:_________________________________, 1996
--------------------------------------------
(SIGNATURE)
-------------------------------------------
(SIGNATURE IF HELD JOINTLY)
PLEASE SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
