<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 'ss'240.14a-11(c) or 'ss'240.14a-12
SWISS ARMY BRANDS , INC.
-------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction apples: N/A
(3) Per unit or other underlying value of transactions 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.
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
<PAGE>
<PAGE>
[ ] 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 filling by
registration statement number, of the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
N/A
(2) Form, Schedule or Registration Statement No.:
N/A
(3) Filing Party:
N/A
(3) Date Filed:
N/A
<PAGE>
<PAGE>
Swiss Army Brands, Inc.
ONE RESEARCH DRIVE
SHELTON, CONNECTICUT 06484
April 14, 1998
Dear Fellow Shareholder:
You are cordially invited to attend your Company's 1998 Annual Meeting of
Shareholders to be held at the Swiss Army Brands, Inc. Distribution Center, 65
Trap Falls Road, Shelton, Connecticut at 10:30 a.m. (local time) on Thursday,
May 14, 1998. We hope you will be able to attend and participate.
The Notice of Annual Meeting and Proxy Statement which follow fully describe the
formal business to be transacted at the annual meeting, which includes the
election of directors of the Company. Accordingly, we urge you to review the
accompanying materials carefully. Directors and officers of the Company will be
present to host the annual meeting and to respond to any questions from our
shareholders.
We would like to express our sincere appreciation to the following board members
who have decided not to stand for re-election this year: Mr. M. Leo Hart, Mr.
James W. Kennedy, and Ms. Lindsay Marx. We are very grateful to these members
for their many contributions and will miss their participation on the Board.
Your interest in Swiss Army Brands, Inc. as demonstrated by the representation
of your shares at our annual meeting is a great source of strength for our
company. Your vote is very important to us and, accordingly, we ask that you
sign, date and return the enclosed proxy as soon as conveniently possible
whether or not you plan to attend. This will ensure that your shares will be
represented at the meeting, and it will not limit your right to revoke your
proxy in the manner described in the accompanying Proxy Statement or to attend
the annual meeting and vote personally should you so choose.
The directors, officers and employees of Swiss Army Brands, Inc. look forward to
seeing you at the meeting.
Sincerely,
Peter W. Gilson J. Merrick Taggart
Chairman of the Executive Committee President
<PAGE>
<PAGE>
Swiss Army Brands, Inc.
ONE RESEARCH DRIVE
SHELTON, CONNECTICUT 06484
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 14, 1998
---------------
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of Swiss
Army Brands, Inc. (the "Company") will be held on May 14, 1998 at 10:30 a.m.
(local time) at the Company's Distribution Center, 65 Trap Falls Road, Shelton,
Connecticut 06484 for the following purposes:
(1) To elect thirteen members of the Board of Directors to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified;
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed March 30, 1998 as the record date for the
determination of the stockholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only stockholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1997 is enclosed herewith.
By Order of the Board of Directors.
THOMAS M. LUPINSKI, as Secretary
Dated: Shelton, Connecticut
April 14, 1998
YOUR VOTE IS IMPORTANT
TO ENSURE A QUORUM, PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU AT THE MEETING UPON
REQUEST TO THE SECRETARY OF THE MEETING.
<PAGE>
<PAGE>
S W I S S A R M Y B R A N D S , I N C .
One Research Drive
Shelton, Connecticut 06484
P R O X Y S T A T E M E N T
This Proxy Statement and accompanying form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors of Swiss
Army Brands, Inc., a Delaware corporation (the "Company"), for use at the
Company's Annual Meeting of Shareholders to be held on May 14, 1998, at 10:30
a.m. (local time) at the Company's Distribution Center at 65 Trap Falls Road,
Shelton, Connecticut, or any adjournment thereof (the "Meeting"). Copies of this
Proxy Statement, the attached Notice of Annual Meeting of Shareholders, and the
enclosed form of proxy were first mailed to the Company's shareholders on or
about April 14, 1998.
A proxy in the accompanying form which is properly executed, duly returned
to the Board of Directors and not revoked, will be voted in accordance with the
instructions contained in the proxy. If no instructions are given with respect
to any matter specified in the Notice of Annual Meeting to be acted upon at the
Meeting, the proxy will vote the shares represented thereby FOR the nominees for
Directors set forth below, and in accordance with his best judgment on any other
matters which may properly come before the Meeting. The Board of Directors
currently knows of no other business that will be presented for consideration at
the Meeting. Each shareholder who has executed a proxy and returned it to the
Board of Directors may revoke the proxy by notice in writing to the Secretary of
the Company, or by attending the Meeting in person and requesting the return of
the proxy, in either case at any time prior to the voting of the proxy. Presence
at the Meeting does not itself revoke the proxy. The cost of the solicitation of
proxies will be paid by the Company. In addition to the solicitation of proxies
by the use of the mails, management and regularly engaged employees of the
Company may, without additional compensation therefor, solicit proxies on behalf
of the Company by personal interviews, telephone, telegraph or other means, as
appropriate. The Company may also engage a proxy soliciting firm to solicit
proxies, although the Company has no current plans to do so. The Company will,
upon request, reimburse brokers and others who are only record holders of the
Company's Common Stock, for their reasonable expenses in forwarding proxy
material to, and obtaining voting instructions from, the beneficial owners of
such stock.
The close of business on March 30, 1998, has been fixed as the record date
(the "Record Date") for determining the shareholders entitled to notice of and
to vote at the Meeting. As of the Record Date, there were 8,217,860 shares of
Common Stock issued and outstanding and entitled to vote.
Each share of Common Stock entitles the holder thereof to one vote. A
majority of the shares of Common Stock issued and outstanding constitutes a
quorum. Abstentions and broker non-votes are counted as present in determining
whether the quorum requirement is satisfied. The affirmative vote of holders of
a plurality of the shares of Common Stock present in person or represented by
proxy at the Meeting will be necessary for the election of Directors. Thus,
abstentions and broker non-votes will not be included in the vote total in the
election of Directors and will have no effect on the outcome of the vote. A
broker non-vote occurs when a nominee holding shares for a beneficial owner does
not vote on a proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Common Stock on March 30, 1998, by each person or group known by the
Company to own beneficially 5% or more of the outstanding Common Stock. Except
as otherwise noted, each person listed below has sole voting and investment
power with respect to the shares listed next to his or its name.
<TABLE>
<CAPTION>
Number of
Name of Beneficial Owner Shares Percent owned(1)
- ------------------------ ------ ----------------
<S> <C> <C>
Louis Marx, Jr
667 Madison Avenue
New York, NY 10021 3,099,222(2) 35.6%
Brae Group, Inc.
15710 John F. Kennedy Blvd
Houston, TX 77032 3,075,200(3) 35.3%
Victorinox A.G
CH-6438
Ibach-Schwyz
Switzerland 1,999,500 24.3%
David L. Babson & Co., Inc.
One Memorial Drive
Cambridge, MA 02142 535,500(4) 6.5%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, CA 90401 477,924(5) 5.8%
</TABLE>
(1) Based on 8,217,860 shares of Common Stock outstanding, not including
614,108 shares held as Treasury Stock. Treated as outstanding for the purposes
of computing percentage ownership of each holder are shares issuable to such
holder upon exercise of options and warrants.
(2) Consists of 19,730 shares held directly by Mr. Marx, 4,292 shares held
by a trust for the benefit of Mr. Marx, 2,575,200 shares held by Brae Group,
Inc., which corporation Mr. Marx may be deemed to control, and 500,000 shares
issuable upon the exercise of a stock option held by Brae Group, Inc.
(3) Includes 500,000 shares issuable upon the exercise of a stock option
held by Brae Group, Inc.
(4) According to a Schedule 13G dated January 20, 1998, consists of shares
which David L. Babson & Co., Inc. beneficially owns by virtue of serving as
investment advisor.
(5) According to a Schedule 13G dated February 9, 1998, consists of shares
as to which Dimensional Fund Advisors, Inc. shares power of disposition by
virtue of serving as investment advisor to its clients.
-2-
<PAGE>
<PAGE>
The following table sets forth certain information concerning the
beneficial ownership of Common Stock on March 30, 1998, by each Director, each
officer named in the Summary Compensation Table herein and by all Directors and
officers of the Company as a group.
<TABLE>
<CAPTION>
Number of
Name Shares Percent of Class(1)
---- ---------- -----------------
<S> <C> <C>
J. Merrick Taggart 95,000(2) 1.1%
Stanley G. Mortimer III 1,010 *
Harry R. Thompson 37,500(3) *
Leslie H. Green 32,500(4) *
Jerald J. Rinder 5,000(5) *
Michael J. Belleveau 26,250(6) *
A. Clinton Allen 35,000(7) *
Clarke H. Bailey -0- *
Thomas A. Barron 85,000(8) 1.0%
Vincent D. Farrell, Jr. 35,000(9) *
Herbert M. Friedman 15,868(10) *
Peter W. Gilson 122,500(11) 1.5%
M. Leo Hart 101,000(12) 1.2%
James W. Kennedy 101,010(13) 1.2%
Keith R. Lively 1,000 *
Lindsay Marx 25,000(14) *
Louis Marx, Jr. 3,099,222(15) 35.6%
Stanley R. Rawn, Jr. 142,711(16) 1.7%
Eric M. Reynolds 26,000(17) *
John Spencer 1,000 *
John V. Tunney -0- *
All officers and directors 4,106,133(18) 42.7%
as a group (25 persons)
*Less than 1% of the Class.
</TABLE>
(1) Based on 8,217,860 shares of Common Stock outstanding, not including
614,108 shares held as Treasury Stock. Treated as outstanding for the purpose of
computing the percentage ownership of each director and of all directors and
officers as a group are shares issuable to such individuals upon exercise of
options.
(2) Includes 72,000 shares of Common Stock issuable upon exercise of
warrants held by Mr. Taggart and 20,000 shares of Common Stock issuable upon
exercise of Options held by Mr. Taggart.
(3) Consists of 37,500 shares of Common Stock issuable upon exercise of
Options held by Mr. Thompson.
(4) Consists of 32,500 shares of Common Stock issuable upon exercise of
Options held by Ms. Green.
(5) Consists of 5,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Rinder.
(6) Consists of 26,250 shares of Common Stock issuable upon exercise of
Options held by Mr. Belleveau.
(7) Consists of 35,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Allen.
(8) Includes 50,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Barron.
(9) Consists of 35,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Farrell. Excludes shares beneficially owned by Spears,
Benzak, Salomon & Farrell, Inc. ("Spears, Benzak") a general partnership in
which Mr. Farrell has a 22% interest.
-3-<PAGE>
<PAGE>
(10) Includes 12,500 shares of Common Stock issuable upon exercise of
Options held by Mr. Friedman.
(11) Includes 121,500 shares of Common Stock issuable upon exercise of
Options held by Mr. Gilson.
(12) Includes 100,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Hart.
(13) Includes 100,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Kennedy.
(14) Consists of 25,000 shares of Common Stock issuable upon exercise of
Options held by Ms. Marx.
(15) Consists of 19,730 shares of Common Stock held directly by Mr. Marx,
4,292 shares held by a trust for the benefit of Mr. Marx, 2,575,200 shares held
by Brae Group, Inc., which corporation Mr. Marx may be deemed to control, and
500,000 shares issuable upon exercise of options held by Brae Group, Inc.
(16) Includes 100,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Rawn.
(17) Includes 25,000 shares of Common Stock issuable upon exercise of
Options held by Mr. Reynolds.
(18) Includes 1,320,250 shares of Common Stock issuable to directors and
officers upon exercise of Options and 72,000 shares of Common Stock issuable
upon exercise of warrants.
-4-
<PAGE>
<PAGE>
PROPOSAL NO. 1
---------------
ELECTION OF DIRECTORS
At the meeting, thirteen Directors of the Company are to be elected by the
stockholders, to hold office until the next Annual Meeting of Stockholders of
the Company to be held in 1999, and until their successors shall have been duly
elected and qualified.
The nominees of the Board of Directors for election as Directors are Mr. A.
Clinton Allen, Mr. Clarke H. Bailey, Mr. Thomas A. Barron, Mr. Vincent D.
Farrell, Jr., Herbert M. Friedman, Esq., Mr. Peter W. Gilson, Mr. Keith R.
Lively, Mr. Louis Marx, Jr., Mr. Stanley R. Rawn, Jr., Mr. Eric M. Reynolds, Dr.
John Spencer, Mr. J. Merrick Taggart and Mr. John V. Tunney. All of the nominees
are Directors elected at the 1997 Annual Meeting of Stockholders. If, for any
reason not presently known, any of said nominees is not available for election,
it is intended that the Proxies will be voted for such substitute nominees as
the Board of Directors may designate unless the Board of Directors reduces the
number of directors. The Directors are to be elected by a vote of the holders of
a plurality of the shares of Common Stock entitled to vote and present in person
or represented by proxy at the meeting.
The following table sets forth the names and ages of each Director, each
nominee for Director, and each of the executive officers of the Company, the
period during which each person has served as a Director or officer of the
Company, and the positions and offices with the Company held by each such
person.
<TABLE>
<CAPTION>
Director
and/or
Name Age Position(s) Officer Since
---- --- ----------- -------------
<S> <C> <C> <C>
J. Merrick Taggart 47 President(1) 1995
Peter W. Gilson 58 Chairman of the Executive
Committee and Director(2) 1994
Louis Marx, Jr. 66 Chairman of the Management
Committee and Director(3) 1990
Stanley R. Rawn, Jr. 70 Senior Managing Director
and Director(4) 1990
Harry R. Thompson 68 Managing Director 1994
Thomas M. Lupinski 45 Senior Vice President, Chief
Financial Officer, Secretary
and Treasurer 1986
Michael J. Belleveau 41 Vice President and General Manager -
Swiss Army Brands Division 1994
David J. Parcells 39 Vice President - Operations 1992
Jerald J. Rinder 51 Vice President and
General Manager -
Victorinox Division 1996
Robert L. Topazio 49 Vice President and General Manager -
R.H. Forschner Division 1996
Douglas M. Rumbough 41 Vice President and
General Manager - Corporate
Markets Division 1992
A. Clinton Allen 54 Director(5) 1993
Clarke H. Bailey 43 Director(6) 1997
Thomas A. Barron 46 Director 1983
Vincent D. Farrell, Jr. 51 Director(7) 1992
Herbert M. Friedman 66 Director(8) 1981
M. Leo Hart 49 Director(9) 1991
James W. Kennedy 47 Director(10) 1981
Keith R. Lively 46 Director(11) 1994
</TABLE>
-5-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Director
and/or
Name Age Position(s) Officer Since
---- --- ----------- -------------
<S> <C> <C> <C>
Lindsay Marx 32 Director 1994
Eric M. Reynolds 45 Director 1994
John Spencer 68 Director(12) 1990
John V. Tunney 63 Director(13) 1992
</TABLE>
1. Mr. Taggart is a member of the Company's Executive Committee, Management
Committee and Foreign Exchange Committee.
2. Mr. Gilson is Chairman of the Company's Executive Committee and a member of
the Nominating Committee.
3. Mr. Marx is Chairman of the Company's Management Committee and Nominating
Committee and a member of the Company's Executive Committee and Foreign
Exchange Committee.
4. Mr. Rawn is a member of the Company's Executive Committee, Management
Committee and Nominating Committee.
5. Mr. Allen is Chairman of the Company's Stock Option and Compensation
Committee and a member of the Executive Committee.
6. Mr. Bailey is a member of the Company's Executive Committee.
7. Mr. Farrell is Chairman of the Company's Audit Committee and a member of
the Executive Committee and Foreign Exchange Committee.
8. Mr. Friedman is a member of the Company's Executive Committee, Audit
Committee and Nominating Committee.
9. Mr. Hart is a member of the Company's Nominating Committee.
10. Mr. Kennedy is a member of the Company's Foreign Exchange Committee.
11. Mr. Lively is a member of the Company's Stock Option and Compensation
Committee.
12. Mr. Spencer is a member of the Company's Audit Committee and Stock Option
and Compensation Committee.
13. Mr. Tunney is a member of the Company's Stock Option and Compensation
Committee.
-6-
<PAGE>
<PAGE>
BIOGRAPHICAL INFORMATION
J. Merrick Taggart, President and a Director of the Company, was elected
President on December 13, 1995. From 1993 to November 1995 Mr. Taggart was
President of Duofold, Inc, a sports apparel company, and Pringle of Scotland
U.S.A., an apparel company. From 1990 to November 1992 Mr. Taggart was President
of O'Brien International, a manufacturer and marketer of water sports equipment.
Prior to that Mr. Taggart was Senior Vice President of Product Development for
the Timberland Company, a footwear and apparel company.
Peter W. Gilson, Chairman of the Executive Committee and a Director of the
Company, also served as President and Chief Executive Officer of Physician
Support Systems, Inc., a company specializing in the management of physicians'
health care practices, from 1991 through January 1998. From 1989 to the present,
Mr. Gilson has also served as President and Chief Executive Officer of the
Warrington Group, Inc., a manufacturer of safety products which was previously a
division of The Timberland Company. From 1987 to 1988, Mr. Gilson served as
Chief Operating Officer of The Timberland Company, a manufacturer of footwear
and outdoor clothing. From 1978 to 1986, he served as President of the Gortex
Fabrics Division of W.L. Gore Associates. Mr. Gilson is also a director of SWWT,
Inc. ("SWWT"), a holding company formerly in the business of manufacturing and
marketing portable water filtration systems and Glenayre Technologies, Inc.
("Glenayre Technologies"), a paging and messaging infra-structure technology
firm.
Louis Marx, Jr., Chairman of the Management Committee and a Director of the
Company, has been associated with the Company for over 20 years and has played
the key role in helping to guide its affairs during that entire period. Through
discussions with the Chief Executive Officer of Victorinox Cutlery Company
("Victorinox"), the Company's principal supplier, he and Mr. Rawn were
responsible for the Company obtaining exclusive U.S. distribution rights for
Victorinox products and later, together with Mr. Rawn and Mr. Kennedy,
negotiated the expansion of the Company's distribution rights to include Canada,
Bermuda and the Caribbean and also obtained for the Company exclusive
distribution rights to the Victorinox Watch. In a prior year he and Mr. Rawn
played an important part in negotiating, on behalf of the Company, the
settlement of potentially expensive litigation, and more recently, Mr. Marx has
played an active role in the Company's investment policy and, together with the
Company's advisors, has successfully managed the Company's currency hedging
program. Mr. Marx is a director and member of the Compensation Committee of
Cyrk, Inc. ("Cyrk"), a distributor of products for promotional programs and
custom-designed sports apparel and accessories. Mr. Marx has been a venture
capital investor for more than thirty years. Mr. Marx, together with his close
business associates, have been founders or substantial investors in such
companies as Pan Ocean Oil Corporation, Donaldson, Lufkin & Jenrette, Bridger
Petroleum Corporation Ltd., Questor Corporation, Environmental Testing and
Certification Corporation, Garnet Resources Corporation, The Prospect Group,
Inc. and Noel Group, Inc. ("Noel"), a publicly held company which prior to its
adoption in 1996 of a Plan of Complete Liquidation and Dissolution, conducted
its principal operations through small and medium sized operating companies in
which it holds controlling interests. Mr. Marx served as a director of The
Prospect Group, Inc., a company which, prior to its adoption in 1990 of a Plan
of Complete Liquidation and Dissolution, conducted its major operations through
subsidiaries acquired in leveraged buyout transactions ("Prospect"), from
February 1986, and as Chairman of Prospect's Asset Committee from October 1988,
until January 1990. Mr. Marx serves as a trustee of the New York University
Medical Center and Middlebury College and as Chairman of the Madison Avenue Fund
for Children. Mr. Marx is also Co-Chairman and a director of Hudson River
Capital LLC, a private equity firm specializing in middle market acquisitions,
recapitalizations and expansion capital investments ("Hudson River"), and a
Co-Chairman, director and consultant of Victory Ventures LLC, a private equity
firm specializing in small market venture capital investments ("Victory
Ventures"). He is President and a director of Victorinox-Swiss Army Knife
Foundation, a non-profit corporation formed by the Company for charitable
purposes including the improvement of the welfare of underprivileged children.
Mr. Marx is the father of Lindsay Marx, a Director of the Company.
Stanley R. Rawn, Jr., Senior Managing Director and a Director of the
Company, actively participates with Messrs. Marx, Taggart and Kennedy in
furthering the relationship between the Company and Victorinox as well as in
coordinating management strategies. He has also played an important part in
obtaining and expanding the Company's exclusive distribution rights covering
Victorinox products. Mr. Rawn was Chairman and Chief Executive Officer and a
director of Adobe Resources Corporation, an oil and gas exploration and
production company from November, 1985 until the merger of that company in May,
1992. Mr. Rawn is also the Chief Executive Officer and a director of Noel; a
director of Hudson River, Victory Ventures, Staffing Resources, Inc., a
temporary help corporation, and Victorinox - Swiss Army Knife Foundation; and a
Trustee of the California Institute of Technology.
-7-
<PAGE>
<PAGE>
Harry R. Thompson, Managing Director of the Company was appointed Managing
Director in December 1994. From 1987 to 1995, Mr. Thompson was president of The
Strategy Group, a business and marketing consulting firm. Mr. Thompson had
previously served as a director of the Company from June 1987 to June 1991, and
as Chairman of the Company's Board of Directors from January 1990 to October
1990 and served in senior executive capacities with the Interpublic Group of
Companies, Inc., a leading marketing and communications organization.
Thomas M. Lupinski, Senior Vice President, Chief Financial Officer,
Secretary and Treasurer of the Company, has been Vice President of the Company
for more than five years. Prior to joining the Company, Mr. Lupinski was Finance
Manager for The Revlon Health Care Group from 1982 to 1986 and was with Arthur
Andersen & Co., from 1976 through 1982.
David J. Parcells, Vice President - Operations, joined the Company in
December 1992. Mr. Parcells was employed by Arthur Andersen & Co. as a Senior
Manager - Audit and Business Advisory Practice from 1989 through 1992 and as an
Audit Manager from 1986 to 1989.
Michael J. Belleveau, Vice President and General Manager - Swiss Army
Brands Division, was elected to the office of Vice President in June 1994. Mr.
Belleveau has served the Company in various positions since 1991. Prior to that
Mr. Belleveau was a regional sales manager for Cartier, Inc., a manufacturer and
marketer of watches and luxury goods.
Jerald J. Rinder, Vice President and General Manager - Victorinox Division,
was elected to the office of Vice President in February, 1996. From 1994 through
1995 Mr. Rinder was Executive Vice President of Pringle of Scotland USA, an
apparel company. From 1993 to 1994 Mr. Rinder was Vice President -
Sales/Marketing of Walkover Shoe Co. and from 1991 through 1993 was Vice
President - Sales of Stride Rite Corp.
Robert L. Topazio, Vice President and General Manager - R.H. Forschner
Division, was elected to the office of Vice President in February, 1996. Mr.
Topazio has served the Company in various positions since September, 1992. From
1991 to 1993 Mr. Topazio was Vice President of Cuisine de France, Ltd., a
marketer of consumer cutlery which was purchased by the Company in 1992. Prior
to that Mr. Topazio was National Sales Manager for J.A. Henckels.
Douglas M. Rumbough, Vice President and General Manager - Corporate Markets
Division, was elected to the office of Vice President in June 1992. Mr. Rumbough
has served the Company in various positions since 1981.
A. Clinton Allen, a Director of the Company, is Chairman of A. C. Allen &
Co., a Massachusetts based consulting firm. Mr. Allen also serves as Vice
Chairman and a director of Psychemedics Corporation, a company that provides
testing services for the detection of abused substances through an analysis of
hair samples, and of Dewolfe Companies, Inc., a real estate company, and as a
director of SWWT, and Response U.S.A., a company in the home alarm business.
Clarke H. Bailey was elected a director of the Company in January 1997. He
served as Chief Executive Officer and a director of Glenayre Technologies from
December 1990 until March 1994 and as its Vice Chairman of the Board from
November 1992 to July 1996. In March 1994, Mr. Bailey was named Chairman of the
Executive Committee of the Board of Glenayre Technologies, and he relinquished
the title of Chief Executive Officer. Since February 1995, Mr. Bailey has served
as Co-Chairman of the Board and a director of Hudson River. He is also currently
Chairman of the Executive Committee and a director of Connectivity Technologies,
Inc., an acquisition company with interests in the wire and cable industry, and
a director of Iron Mountain Incorporated. He served as Chairman, Chief Executive
Officer and a director of Arcus Group Inc., the leading national provider of
secure off-site computer data storage and related disaster recovery services as
well as information technology staffing solutions, from February 1995 to January
1998.
Thomas A. Barron, a Director of the Company, is an author and has been
Chairman of Evergreen Management Corp., a private investment firm since January,
1990. From November, 1983 through November 1989, Mr. Barron was President and
Chief Operating Officer and a director of Prospect. From 1988 through January,
1990, Mr. Barron served as Chairman of the Board of the Company. Mr. Barron also
serves as a director and Chairman of the Board of SWWT. Mr. Barron has served as
a Trustee of Princeton University.
-8-
<PAGE>
<PAGE>
Herbert M. Friedman, a Director of the Company, is a partner in the law
firm of Zimet, Haines, Friedman & Kaplan, where he has been a member since 1967.
Zimet, Haines, Friedman & Kaplan acts as counsel to the Company. Mr. Friedman is
also a director of Noel, Prospect, Hudson River, Victory Ventures, Connectivity
Technologies and Victorinox - Swiss Army Knife Foundation.
Vincent D. Farrell, Jr., a Director of the Company, has been a Managing
Director of the investment management firm of Spears, Benzak since 1982. Mr.
Farrell is also a director of HealthPlan Services Corporation, a provider of
marketing and administrative services for health and benefit programs.
M. Leo Hart, a Director of the Company, is President and Chief Executive
Officer of Brae Group, Inc., a privately held acquisition company. Until
December 13, 1995, Mr. Hart was Co-Chairman of the Board and Chief Executive
Officer of the Company, which capacity he had served in since February 1994.
Previously, he was Executive Vice President and a Director. Mr. Hart joined the
Company in October 1991. Prior to this, Mr. Hart spent the previous 15 years in
senior sales and marketing positions in the hospitality industry, serving as
Senior Vice President of Marketing for The Ritz-Carlton Hotel Company from 1987
to 1991 and before that as Vice President -Sales and Marketing for Fairmont
Hotels from 1983 to 1987. Until 1991, he was the North American Chairperson of
Leading Hotels of the World, a hotel marketing association. Prior to his career
in sales, Mr. Hart played professional football with the NFL's Atlanta Falcons
and Buffalo Bills. Mr. Hart is also a director of Victory Ventures and a
director of Victorinox - Swiss Army Knife Foundation.
James W. Kennedy, a Director of the Company, is President of Lahinch Group,
Inc., a start-up company engaged in the garment imprinting and apparel business.
Until December 13, 1995, Mr. Kennedy was Co-Chairman of the Board and Chief
Executive Officer of the Company, which capacity he had served in since February
1994. Previously, he was President of the Company, a position he had held since
1988. Prior to 1988, Mr. Kennedy was Senior Vice President of the Company and
had served in various sales and marketing positions with the Company since 1975.
Mr. Kennedy has served on committees for the Specialty Advertising Association
International, the National Restaurant Association, the American Meat Institute,
the Sporting Goods Manufacturers Association and the American Association of
Exporters and Importers.
Keith R. Lively, a Director of the Company, is Chairman of the Board and
Chief Executive Officer of Authentic Specialty Foods, Inc., a manufacturer and
marketer of specialty foods, a position he has held since August 1997. Prior to
that Mr. Lively was a private investor and, from January 1995 through December,
1995, was a consultant to the Company. From 1988 through September 1994, Mr.
Lively was the President, Chief Executive Officer and a Director of The Famous
Amos Chocolate Chip Cookie Corporation. From September 1992 through September
1994, Mr. Lively was also Senior Vice President, a member of the Executive
Committee and a Director of President Baking Company, which purchased The Famous
Amos Chocolate Cookie Corporation in September 1992. Mr. Lively also serves as a
director of SWWT.
Lindsay Marx, a Director of the Company is a private investor. From
November 1992 to January 1994, she was a production assistant at Iron Mountain
Productions, a dramatic production company. Ms. Marx was an assistant to the
director at the Paper Mill Playhouse in 1992 and, from September 1989 to March
1992, an artistic assistant at The Body Politic, also a dramatic production
company. Ms. Marx graduated from Middlebury College in 1987. Ms. Marx is the
daughter of Louis Marx, Jr.
Eric M. Reynolds, a Director of the Company, is a private investor and was
President, Chief Executive Officer and a director of SWWT, from January, 1993 to
February 5, 1998. Previously, from 1987 through 1990, Mr. Reynolds served as a
marketing consultant to various companies including W.L. Gore & Associates and
Marmot Mountain Works, Ltd., a company founded by Mr. Reynolds in 1974 that is
in the business of designing, manufacturing and marketing mountaineering,
backpacking and ski outerwear products.
John Spencer, a Director of the Company, holds the African Studies
Professorship at Middlebury College where he has served as a member of the
faculty since 1974. Mr. Spencer has also served as Dean of Middlebury College
and Chairman of its History Department. Mr. Spencer is Vice-Chairman of the
African American Institute and of the Institute of Current World Affairs, a
Trustee of the Cape of Good Hope Foundation, the University of Capetown Fund,
Inc. and Atlanta University and a director of Victorinox - Swiss Army Knife
Foundation.
-9-
<PAGE>
<PAGE>
John V. Tunney, a Director of the Company, is currently Chairman of the
Board of Cloverleaf Group, Inc., a general partner of Sun Valley Ventures, a
partnership engaged in venture capital and leveraged buyout activities and a
consultant to Trace International, Inc. an investment firm. From 1971 to 1977
Mr. Tunney served as a United States Senator from the state of California and as
a Member of the United States House of Representatives from 1965 to 1971. Mr.
Tunney is also a director of Illinois Central Corporation, Illinois Central
Railroad Company, and Foamex International, Inc., a foam manufacturer.
During the fiscal year ended December 31, 1997, the Board of Directors held
three meetings. All of the directors attended at least 75% of the total of the
meetings of the Board of Directors and the committees of which they were
members, except for Ms. Lindsay Marx.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has created the Audit Committee, Nominating
Committee and Stock Option and Compensation Committee, each of which is
described below.
Audit Committee. The Audit Committee, consisting of Messrs. Vincent D.
Farrell, Jr. (Chairman), Herbert M. Friedman and John Spencer, is charged with
the duties of recommending to the Board of Directors the appointment of
independent public accountants, reviewing the scope of the audit and auditing
fees, meeting periodically with the independent public accountants and certain
officers of the Company to insure the adequacy of internal controls and
reporting, reviewing consolidated financial statements, examining audit reports
and performing any other duties or functions deemed appropriate by the Board.
The Audit Committee held one meeting during the fiscal year ended December 31,
1997.
Nominating Committee. The Nominating Committee, consisting of Messrs. Louis
Marx, Jr. (Chairman), Herbert M. Friedman, Peter W. Gilson, M. Leo Hart and
Stanley R. Rawn, Jr., has all of the power of the Board of Directors in respect
of the nomination of directors for submission to a vote of the stockholders and
in respect of the fixing of the time, place and record date of the Annual
Meeting of Stockholders, as well as all other matters relating to the Annual
Meeting of Stockholders. The Nominating Committee did not meet during the fiscal
year ended December 31, 1997. While the Nominating Committee has no stated
procedures for the submission of nominees by the Company's stockholders, the
committee will consider such recommendations on an informal basis.
Stock Option and Compensation Committee. The Stock Option and Compensation
Committee, consisting of Messrs. A. Clinton Allen (Chairman), Keith R. Lively,
John Spencer and John V. Tunney, has all the power of the Board of Directors to
grant options and to exercise all other powers under and pursuant to the
Company's Stock Option Plans and to take all action in respect of the approval
of the compensation and bonuses paid by the Company. The Stock Option and
Compensation Committee did not meet during the fiscal year ended December 31,
1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during the year ended
December 31, 1997 all filing requirements applicable to the Company's officers,
directors, and greater than ten-percent beneficial owners were complied with.
-10-
<PAGE>
<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below sets forth individual compensation
information of the President and the five other most highly paid executive
officers of the Company for services rendered in all capacities during the
fiscal years ended December 31, 1997, 1996 and 1995.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary Bonus sation Award SARS Payouts sation
- ------------------ ---- ------ ----- ------ ----- ---- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Merrick Taggart 1997 $300,000 - - - - - $4,750(1)
President 1996 $250,000 $40,000 $50,809(2) - 40,000 - $3,353(3)
1995 $33,654 - - 100,000(4) -
Peter W. Gilson 1997 $210,000 - - - - - -
Chairman of the 1996 $200,000 - - - 20,000 - -
Executive 1995 $150,000 - - - 150,000 - -
Committee
Stanley G. 1997 $109,200 - - - - -
Mortimer III 1996 $210,000 $17,500 - - 10,000 - $255,029(6)
Executive Vice 1995 $210,000 $5,000 - - 25,000 - $8,515(7)
President(5) $8,584(8)
Harry R. Thompson 1997 $210,000 - - - - - $2,410(9)
Managing Director 1996 $200,000 $20,000 - - 25,000 - $2,392(10)
1995 $200,000 $15,000 - - 25,000 - $2,195(11)
Leslie H. Green 1997 $185,000 - - - - - $281,444(13)
Vice President(12) 1996 $175,000 $17,500 - - 10,000 - $3,845(14)
1995 $175,000 $10,000 - - 10,000 - $3,796(15)
Jerald J. Rinder 1997 $170,000 $15,000 $103,737(17) - - - $2,779(18)
Vice President(16) 1996 $153,546 $25,000 $44,797(19) - 10,000 - -
Michael J. Belleveau 1997 $160,000 - - - - - $3,145(20)
Vice President 1996 $150,000 $17,500 - - 10,000 - $2,740(21)
1995 $120,000 $18,000 - - 10,000 - $2,440(22)
</TABLE>
(1) Consists of $4,750 contributed by the Company to Mr. Taggart's account
under the Company's 401K savings plan.
(2) Includes relocation benefits of $45,109.
-11-
<PAGE>
<PAGE>
(3) Consists of $3,353 contributed by the Company to Mr. Taggart's account
under the Company's 401K savings plan.
(4) Consists of warrants to purchase Common Stock.
(5) Mr. Mortimer resigned from the office of Executive Vice President on
May 23, 1997.
(6) Consists of a $250,000 payment in 1997 related to Mr. Mortimer's
resignation, $2,215 contributed by the Company to Mr. Mortimer's account under
the Company's 401K savings plan and $2,814 in benefit to Mr. Mortimer of
insurance premiums paid by the Company with respect to split dollar life
insurance for the benefit of Mr. Mortimer.
(7) Consists of $2,423 contributed by the Company to Mr. Mortimer's account
under the Company's 401K savings plan and $6,092 in benefit to Mr. Mortimer of
insurance premiums paid by the Company with respect to split dollar life
insurance for the benefit of Mr. Mortimer.
(8) Consists of $4,300 contributed by the Company to Mr. Mortimer's account
under the Company's 401K savings plan and $4,284 in benefit to Mr. Mortimer of
insurance premiums paid by the Company with respect to split dollar life
insurance for the benefit of Mr. Mortimer.
(9) Consists of $2,410 contributed by the Company to Mr. Thompson's account
under the Company's 401K savings plan.
(10) Consists of $2,410 contributed by the Company to Mr. Thompson's
account under the Company's 401K savings plan.
(11) Consists of $2,195 contributed by the Company to Mr. Thompson's
account under the Company's 401K savings plan.
(12) Ms. Green resigned from the office of Vice President on December
12,1997.
(13) Consists of a $278,250 payment made in January 1998 related to Ms.
Green's resignation and $3,194 contributed by the Company to Ms. Green's account
under the Company's 401K savings plan.
(14) Consists of $3,845 contributed by the Company to Ms. Green's account
under the Company's 401K savings plan.
(15) Consists of $3,796 contributed by the Company to Ms. Green's account
under the Company's 401K savings plan.
(16) Mr. Rinder joined the Company on January 11, 1996.
(17) Includes relocation benefits of $102,297.
(18) Consists of $2,779 contributed by the Company to Mr. Rinder's account
under the Company's 401K savings plan.
(19) Includes relocation benefits of $40,693.
(20) Consists of $3,145 contributed by the Company to Mr. Belleveau's
account under the Company's 401K savings plan.
(21) Consists of $2,740 contributed by the Company to Mr. Belleveau's
account under the Company's 401K savings plan.
(22) Consists of $2,440 contributed by the Company to Mr. Belleveau's
account under the Company's 401K savings plan.
-12-
<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, for each of the executive officers named in
the Summary Compensation Table information regarding individual grants of
options made in the last fiscal year, and their potential realizable values.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- ----------------------------------------------------------------------- ------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options Granted Exercise or
Options To Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- ------- ---------------------------------------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
J. Merrick Taggart N/A N/A N/A N/A N/A N/A
Peter W. Gilson N/A N/A N/A N/A N/A N/A
Stanley G. Mortimer III N/A N/A N/A N/A N/A N/A
Harry R. Thompson N/A N/A N/A N/A N/A N/A
Leslie H. Green N/A N/A N/A N/A N/A N/A
Jerald J. Rinder N/A N/A N/A N/A N/A N/A
Michael J. Belleveau N/A N/A N/A N/A N/A N/A
</TABLE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth option exercise activity in the last
fiscal year and fiscal year-end option values with respect to each of the
executive officers named in the summary Compensation Table.
<TABLE>
<CAPTION>
Aggregated Options Exercises in Last Fiscal year, and FY -End Option/SAR Value
- -------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End # FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
----- --------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
J. Merrick Taggart - - 92,000/45,000 -/-
Peter W. Gilson - - 121,500/47,500 -/-
Stanley G. Mortimer III - - 46,250/- -/-
Harry R. Thompson 750 $5,531 39,500/18,750 40,219/-
Leslie Green - - 32,500/- -/-
Jerald J. Rinder - - 5,000/5,000 -/-
Michael J. Belleveau - - 23,750/7,500 -/-
</TABLE>
-13-
<PAGE>
<PAGE>
COMPENSATION OF DIRECTORS
The Company compensates those of its directors who were not employees of
the Company in the amount of $10,000 annually plus $1,000 for attendance at each
meeting of the Board of Directors. The Chairmen of the Audit Committee and the
Stock Option and Compensation Committee of the Board of Directors are each paid
an additional annual fee of $10,000 in recognition of the additional
responsibilities and time commitments associated with such positions.
In addition, the Company has purchased split dollar life insurance policies
in respect of each of Messrs. Louis Marx, Jr. and Stanley R. Rawn, Jr. See
"Certain Transactions".
EMPLOYMENT AGREEMENT AND SEVERANCE ARRANGEMENTS
The Company entered into a Severance Agreement dated as of July 1, 1997
with Mr. Stanley G. Mortimer III, who was, until May 23, 1997, a Director and
Executive Vice President of the Company. The agreement provides that in
connection with Mr. Mortimer's resignation from those positions he would be
provided certain severance benefits including a one time payment of $250,000.
The Company entered into a Severance Agreement dated as of December 12,
1997 with Ms. Leslie H. Green, who was, until that date, a Vice President of the
Company. The agreement provides that in connection with Ms. Green's resignation
from that position she would be provided certain severance benefits including a
one time severance payment of $278,250 which was paid in January 1998. Ms. Green
is also to receive certain other specified benefits through June 30, 1999.
PENSION PLAN
Each employee of the Company at least twenty years of age, becomes eligible
to participate in the Company's Pension Trust (the "Pension Trust") after
completing two Years of Credited Service (as defined in the Pension Trust).
Monthly benefits at Normal Retirement Age, age sixty-five, are computed as
follows: Average Monthly Compensation (as defined below) multiplied by 0.65%
plus Average Monthly Compensation in excess of Social Security Covered
Compensation (as defined below) multiplied by 0.65%, such sum multiplied by
Years of Credited Service, not to exceed 35 years. Accrued benefits under the
prior formula used by the Company's Pension Trust are grandfathered as of
December 31, 1993 for Non-Highly Compensated Employees and as of December 31,
1988 for Highly Compensated Employees.
"Average Monthly Compensation" is defined as one-twelfth of the highest
five consecutive years of total compensation. Social Security Covered
Compensation is defined as the average of the Taxable Wage Base over the 35-year
period ending with the year of the Social Security Normal Retirement (ages 65 -
67, depending on year of birth).
Participants will receive reduced benefits on a life annuity basis with
continuation of benefits to their spouses after death unless an optional form of
benefit is selected. Pre-retirement death benefit coverage is also provided. A
participant is 100% vested in his accrued benefits, as defined in the Pension
Trust, upon such accrual. The Years of Credited Service as of December 31, 1997
of each of the individuals named in the Cash Compensation table herein are as
follows:
<TABLE>
<S> <C>
J. Merrick Taggart....................... 2 years
Peter W. Gilson.......................... 2 years
Stanley G. Mortimer III.................. 12 years
Harry R. Thompson........................ 2 years
Leslie H. Green.......................... 7 years
Jerald J. Rinder......................... 2 years
Michael J. Belleveau..................... 6 years
</TABLE>
-14-
<PAGE>
<PAGE>
The following table shows annual pension benefits under the Pension Trust
assuming retirement at age sixty-five in 1997, payable as a life annuity, in
various remuneration and years of employment classifications. Note that the
maximum allowable compensation for years beginning in 1994 is $150,000, so
remuneration in excess of that amount is not shown. Some grandfathering of
benefits earned at higher compensation levels is provided.
PENSION BENEFITS FOR 1997 RETIREES AT AGE 65
<TABLE>
<CAPTION>
Years of Service
- -------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
50,000 $ 6,715 $ 8,953 $11,192 $13,430 $15,668
75,000 11,590 15,453 19,317 23,180 27,043
100,000 16,465 21,953 27,442 32,930 38,418
125,000 21,340 28,453 35,567 42,680 49,793
150,000 26,215 34,953 43,692 52,430 61,168
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions regarding compensation of the Company's executives are generally
made by the Stock Option and Compensation Committee (the "Compensation
Committee") of the Company's Board of Directors. The Compensation Committee is
comprised of Messrs. A. Clinton Allen, Keith R. Lively, John V. Tunney and John
Spencer. Each member of the Compensation Committee is a non-employee director.
Pursuant to rules adopted by the Securities and Exchange Commission ("SEC")
designed to enhance disclosure of companies' policies regarding executive
compensation, set forth below is a report submitted by the members of the
Compensation Committee addressing the Company's compensation policies for 1997
as they affected the Company's executive officers generally and, in particular,
as they affected J. Merrick Taggart, President of the Company.
COMPENSATION POLICIES REGARDING EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are intended
to provide competitive levels of compensation in order to attract and retain
qualified executives, to recognize individual contributions to the successful
achievement of the Company's business objectives, and to align managements' and
shareholders' interests in the enhancement of shareholder value over the long
term. Compensation paid to the Company's executive officers for 1997 consisted
primarily of base annual salary. With one exception, annual bonuses were not
awarded in 1997. In addition, through the grant to the Company's executive
officers of options to purchase shares of the Company's Common Stock, the
Compensation Committee has utilized the Company's 1993 Stock Option Plan (the
"1993 Stock Option Plan") and the Company's 1994 Stock Option Plan (the "1994
Stock Option Plan"), and the Company's 1996 Stock Option Plan (the "1996 Stock
Option Plan," and together with the 1993 Stock Option Plan and the 1994 Stock
Option Plan, the "Option Plans") to provide long-term incentives to executive
officers by enabling them to share in the future growth of the Company's
business. The Company has also established a 401(k) Plan and a Pension Plan to
assist it in retaining qualified executives.
The Compensation Committee believes that the Company's executive officers
should be compensated comparably with executive officers of other publicly held
companies engaged in the business of importing, distributing, developing,
selling and marketing consumer and professional products. The Compensation
Committee also believes that the Company competes with such organizations for
qualified executives and is therefore required to adopt competitive salary
structures. In setting compensation, the Committee considers on an informal
basis compensation paid by other corporations in businesses similar to the
Company, as well as the individual contributions to the Company which each of
the executives has made and could be expected to make in the future and such
other factors as the compensation committee may deem relevant at the time of
making such determinations.
-15-
<PAGE>
<PAGE>
Base salaries for the Company's executive officers are determined by the
Compensation Committee on an annual basis. In setting such base salaries, the
Compensation Committee considered the factors set forth in the preceding
paragraph. In the case of certain executives, the Committee considered and
approved the purchase of split dollar life insurance as compensation to such
executives in lieu of the cash compensation the Committee might otherwise have
awarded to such executives.
The Compensation Committee believes that stock-based performance
compensation arrangements are beneficial in aligning managements' and
shareholders' interests in the enhancement of shareholder value over the
long-term. Thus, the Committee has utilized the Company's Stock Option Plans as
an element in the Company's compensation packages for its executive officers.
Options granted to executive officers pursuant to the Stock Option Plans have
had exercise prices equal to the market price of the Company's Common Stock on
the date the options were granted, typically vest over a three-year period, and,
with limited exceptions, are exercisable only during an executive officer's
tenure with the Company and for a specified period thereafter. Thus, amounts
which may be realized by an executive officer upon exercise of options result
directly from appreciation in the Company's stock price during the particular
executive officer's tenure with the Company.
The Company's 401(k) Plan is a broad-based employee benefit plan in which
the executive officers are permitted to participate on the same terms as
non-executive employees who meet applicable eligibility criteria, subject to any
legal limitations on the amounts that may be contributed or the benefits that
may be payable under the plan. The Company matches the contributions of
participating employees, including executive officers, up to a certain level
determined by the Board of Directors. Benefits under the 401(k) Plan are not
tied to Company performance.
1997 COMPENSATION OF CHIEF EXECUTIVE OFFICER
The SEC regulations require the Compensation Committee to disclose the
Committee's bases for compensation reported for Mr. Taggart in 1997 and to
discuss the relationship between such compensation and the Company's performance
during the last fiscal year.
The Compensation Committee's decisions with respect to 1997 compensation
paid to Mr. Taggart were based on the factors discussed above applicable to all
of the Company's executive officers. The subjective factors considered in
determining 1997 annual compensation for Mr. Taggart included his overall
leadership of the Company, his continuing role in reorganizing the structure
of the Company and his contribution to product development during 1997.
SUBMITTED BY THE STOCK OPTION AND COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS:
A. Clinton Allen Keith R. Lively John Spencer John V. Tunney
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1997, the Compensation Committee was comprised of A. Clinton Allen,
Keith R. Lively, John V. Tunney and John Spencer. None of these individuals is
an officer or employee of the Company or any of its subsidiaries.
-16-
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return over a
five-year period of the Company's Common Stock to that of the Russell 2000, a
broad market index, and the following companies; A.T. Cross Company, Bell Sports
Corporation, Ellett Brothers, Inc., Fossil, Inc., Gargoyles, Inc., Johnson
Worldwide Associates, Inc., Jostens, Inc., K2, Inc., Movado Group, Inc., Oakley,
Inc., Rawlings Sporting Goods, Swank, Inc., Tag Heuer International, The
Timberland Company and Variflex, Inc., which the Company believes constitute a
reasonable peer group by virtue of the fact that the primary business of each is
the marketing and distributing of consumer products. The Company changed its
peer group in fiscal 1997 in order to present information that the company
believes provides a more meaningful comparison due to the nature and composition
of the businesses included in the peer group. In 1996, the peer group used by
the Company was comprised of the following companies: A.T. Cross Company, Bell
Industries, Inc, Fossil, Inc, Johnson Worldwide Associates, Inc., Jostens, Inc.,
K2, Inc., Moore Handley, Inc., Movado Group, Inc. and The Timberland Company.
For purpose or comparison, the following chart includes both the 1996 peer group
("Peer Group-Old") and the 1997 peer group ("Peer Group-New").
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
SWISS ARMY BRANDS, INC., RUSSELL 2000 INDEX, PEER GROUP-OLD AND PEER GROUP-NEW
(PERFORMANCE RESULTS THROUGH 12/31/97)
Assumes $100 invested at the close of trading 12/92 in Swiss Army Brands, Inc.
common stock, Russell 2000 Index, Peer Group-Old, and Peer Group-New.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
SWISS ARMY BRANDS 100.00 122.00 100.00 99.00 106.00 81.00
RUSSELL 2000 INDEX 100.00 118.91 116.55 149.70 174.30 213.00
PEER GROUP-OLD 100.00 112.67 92.85 111.17 120.00 143.49
PEER GROUP-NEW 100.00 125.19 101.42 108.63 98.66 98.73
</TABLE>
*Cumulative total return assumes reinvestment of dividends.
CERTAIN TRANSACTIONS
Messrs. Louis Marx, Jr., Chairman of the Company's Management Committee,
and a Director of the Company, and Stanley R. Rawn Jr., Senior Managing Director
and a Director of the Company, devoted considerable time and attention to the
affairs of the Company during 1997. During 1997 Messrs. Marx and Rawn were
principally compensated through split dollar insurance on their lives, a method
which allows the Company to
-17-
<PAGE>
<PAGE>
recover, without interest, all premiums paid on the death of the insured and
which has substantially lower earnings impact over the years than would similar
amounts paid as cash compensation. Specifically, the Company has purchased split
dollar life insurance payable on the death of Mr. Marx, some of which is payable
on the later to die of Mr. Marx and his wife, and split dollar life insurance
payable on the death of Mr. Rawn. Under these arrangements the Company will pay
approximately $3,70O,OOO over the course of the next 16 years as premiums under
the policies for Mr. Marx and approximately $2,70O,OOO over the course of the
next 12 years under the policy for Mr. Rawn (in each case including amounts paid
in the first fiscal quarter of 1998), and will be reimbursed, without interest,
for all of the premiums that it has paid upon the death of the respective
insured. The actual premiums to be paid may be higher than estimated depending
upon the performance of the insurance company's investments and other factors.
Pursuant to the terms of life insurance agreements entered into with each of
Messrs. Marx and Rawn, the Company shall continue to be obligated to pay these
premiums during the insured's employment with the Company and in the event of
the termination of such employment for any reason, unless the insured willfully
and materially breaches the terms of a consulting agreement between him and the
Company and such breach continues for 30 days after written notice. Under the
terms of such consulting agreements, each of Messrs. Marx and Rawn is to be
engaged as a consultant immediately following the termination of his employment
with the Company and, in such event, shall receive such compensation as shall be
fair under the circumstances. Mr. Marx has been so engaged as a consultant to
the Company since February 15, 1995, the date on which he ceased to serve as
Chairman of the Company's Executive Committee. The consulting agreements may be
terminated by the Company upon thirty days notice. In 1997, the Company paid an
aggregate of $552,664 in premiums on the policies pertaining to Mr. Marx and
$315,150 in premiums on the policy pertaining to Mr. Rawn. There will be an
insignificant earnings impact in 1998 of the policies on Messrs. Marx's and
Rawn's lives, and an increasingly positive impact on earnings in the later
years.
In July 1994, the Company entered into a Services Agreement with Brae
Group, Inc. ("Brae") which beneficially owns 35.3% of the outstanding Common
Stock and in which Louis Marx, Jr., a Director of the Company, has a controlling
interest, and in which Victorinox Cutlery Company ("Victorinox"), a key supplier
and beneficial owner of approximately 24.3% of the outstanding Common Stock, has
a non-controlling stock interest. Mr. M. Leo Hart, a Director of the Company, is
Chief Executive Officer of Brae. Under the Services Agreement, Brae is to
provide various services to the Company for a period of four years relating to
maintaining, enhancing and expanding the Company's relationship with Victorinox.
In exchange for these services, Brae received an option to purchase 50O,OOO
shares of the Company's Common Stock at the then current market price of $10.75
per share. The option is fully vested and can be exercised for ten years from
the date of the Services Agreement.
Lahinch Group, Inc., of which Mr. James W. Kennedy, a Director of the
Company, is president, director and a significant stockholder, and of which Mr.
Louis Marx, Jr. and Victorinox Cutlery Company are investors, purchased from the
Company products for resale to the golf oriented channel of trade in 1997 in the
amount of $172,670.
In 1997, the Company paid $555,000 for legal services rendered by the law
firm of Zimet, Haines, Friedman & Kaplan, of which Mr. Herbert M. Friedman, a
Director of the Company, is a partner.
Victorinox Cutlery Company owns approximately 24.3% of the outstanding
Common Stock and is the supplier to the Company of Swiss Army Knives,
professional cutlery products and Victorinox Watches. During the year ended
December 31, 1997, the Company purchased Victorinox products in aggregate amount
of approximately $31,00O,OOO.
SWISS ARMY BRANDS, INC. CHARITABLE INSURANCE PROGRAM
The Company recognizes its responsibility to the communities in which its
products are sold and the importance of charitable organizations to the country
at large. The Company is also aware of the benefits to commercial good will
resulting from the proper discharge of its responsibilities. In order to further
these objectives, the Company instituted its Charitable Insurance Program. This
program allows the Company to provide the maximum assistance to numerous
charities by utilizing tax provisions intended to encourage such activities, and
to eventually recover, without interest, all amounts expended.
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Under the Company's Charitable Insurance Program (the "Program"), adopted
by the Company's Board of Directors in 1993, the Company will utilize insurance
on the lives of each of its directors and other designated persons (the "Insured
Directors") to fulfill charitable pledges to the Victorinox-Swiss Army Knife
Foundation (the "Foundation") and to charities recommended by the Insured
Directors. The Company previously purchased life insurance on one of the
Company's then Co-Chairmen and designated the Foundation as a beneficiary of a
portion of the proceeds, subject to the Company's right to revoke such
designation.
The Program enables the Company to make a meaningful commitment to the
Victorinox-Swiss Army Knife Foundation, as well as a broad range of charities
benefiting our communities. The Company anticipates that it will be able to make
substantial contributions in the future to these charities at a minimal cost to
the Company.
The Victorinox-Swiss Army Knife Foundation is a tax-exempt private
foundation, funded primarily by contributions from the Company and Victorinox.
It was organized in December, 1992 for general charitable purposes, including
the improvement of the welfare of underprivileged children (and others) through
the encouragement of organized athletic activities, including those sports in
which an underprivileged child would not ordinarily participate. Louis Marx,
Jr., a director of the Company, is President and a director of the Foundation.
Stanley R. Rawn, Jr., Senior Managing Director and a director of the Company,
and Herbert M. Friedman, M. Leo Hart and John Spencer, directors of the Company,
are directors of the Foundation.
The Company is the owner and beneficiary of the policies, with the right to
borrow against them, and will receive the proceeds upon the death of each
Insured. The proceeds will not be legally segregated from the Company's general
funds and will remain subject to claims of the Company's creditors. Upon the
death of an Insured Director, the Company will retain a share of the insurance
proceeds equal to the cumulative premiums paid by the Company for the policy on
that Insured Director's life. One half of the remaining amount will be used to
fulfill a pledge to the Foundation and the other half will be used to fulfill
pledges to tax-exempt charities recommended by Insured Directors and approved by
the Board.
Generally, the Company will be bound to continue to pay all premiums on the
policy for the life of the Insured or, in the case of Mr. Marx, as long as he is
an officer or Board member or agrees to serve as a consultant to the Company.
Generally, there will be a small, negative impact on earnings in 1998, and
an increasingly positive impact on earnings after 1998 as the cash surrender
value of the insurance increases.
If a director were to leave the Company prior to the time when the cash
surrender value of the policy exceeds the aggregate premiums, and the Company
received no further substantial benefit from his or her services, the obligation
to pay future premiums would result in a charge to earnings at the time he or
she left. The charge to earnings for 1997 with respect to directors who left the
Company in 1997 was insignificant.
The Company would not be entitled to a tax deduction, nor would the Company
realize income for regular income tax purposes, at the time the policy is
obtained nor as premiums are paid. Upon the death of the director (when the
policy matures and the insurance proceeds are paid) the Company would not
realize income for "regular" income tax purposes, but the Company might be
subject to alternative minimum tax ("AMT") on a portion of the receipts from the
policy. Upon the making of the cash contribution following the death of the
insured director, the Company would be entitled to a deduction. Since the
Company is entitled to claim as charitable deductions only 10% of its taxable
income in any year, the extent of the utilization of this deduction would depend
upon income. These deductions may be carried forward for a period of five years.
AUDITORS
The Board of Directors has selected Arthur Andersen LLP, Certified Public
Accountants, as independent public accountants to audit the books and records of
the Company at the close of the fiscal year ending December 31, 1998. A
representative of Arthur Andersen LLP, is expected to be present at the Annual
Meeting, and will have an opportunity to make a statement if he or she desires
to do so, and to respond to appropriate questions.
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STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next Annual Meeting
of Stockholders, to be held in 1999, must be received by the Company at One
Research Drive, Shelton, Connecticut 06484 by December 16, 1998 to be included
in the proxy statement and form of proxy relating to that meeting.
OTHER INFORMATION
The solicitation of Proxies in the accompanying form will be made at the
Company's expense, primarily by mail and through brokerage and banking firms
holding shares in their own names for customers.
A COPY OF FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY
ANY SHAREHOLDER OF THE COMPANY ON WRITTEN REQUEST TO THE OFFICE OF THE
SECRETARY, SWISS ARMY BRANDS, INC., P.O. BOX 874, SHELTON, CONNECTICUT
06484-0874.
The Board of Directors is aware of no other matters that are to be
presented to stockholders for formal action at the meeting. If, however, any
other matters properly come before the meeting or any adjournment thereof, it is
the intention of the persons named in the enclosed form of proxy to vote such
proxies in accordance with their judgment on such matters.
By Order of the Board of Directors.
THOMAS M. LUPINSKI, as Secretary
Dated: Shelton, Connecticut
April 14, 1998
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APPENDIX 1
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE SWISS ARMY BRANDS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS - MAY 14, 1998
The undersigned hereby appoints PETER W. GILSON, J. MERRICK TAGGART and
THOMAS M. LUPINSKI, and each of them, with power of substitution to each, as the
proxies and attorneys of the undersigned to vote all shares of Common Stock
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Stockholders of Swiss Army Brands, Inc. (the "Company") to be
held at 65 Trap Falls Road, Shelton, Connecticut, at 10:30 a.m. (local time) on
May 14, 1998 and any adjournment thereof, for the following purposes:
(1) To elect thirteen members of the Board of Directors to serve until the
next annual meeting of stockholders and until their successors are duly elected
and qualified; and
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
1. Election of Directors: FOR WITH- FOR ALL
HOLD EXCEPT
[ ] [ ] [ ]
For all nominees
(except as marked to the contrary below)
NOMINEES: A. CLINTON ALLEN, CLARKE H. BAILEY, THOMAS A. BARRON, VINCENT D.
FARRELL, JR., HERBERT M. FRIEDMAN, PETER W. GILSON, KEITH R. LIVELY, LOUIS
MARX, JR., STANLEY R. RAWN, JR., ERIC M. REYNOLDS, JOHN SPENCER, J. MERRICK
TAGGART, JOHN V. TUNNEY
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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If no direction is made, this proxy will be voted FOR proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSAL 1.
Please mark, date and sign as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signer is a corporation, please sign
the full corporate name, by duly authorized officer. If shares are held jointly
each stockholder named should sign.
Please be sure to sign and date Date
this Proxy in the box below.
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Stockholder sign above Co-holder (if any) sign above
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
SWISS ARMY BRANDS, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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