<PAGE> 1
================================================================================
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 / /
<TABLE>
Check the appropriate box:
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
R. G. BARRY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:__________________________
(2) Aggregate number of securities to which transaction applies:_____________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):_______________________________
(4) Proposed maximum aggregate value of transaction:_________________________________________
(5) Total fee paid:__________________________________________________________________________
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:__________________________________________________________________
(2) Form, Schedule or Registration Statement No.:____________________________________________
(3) Filing Party:____________________________________________________________________________
(4) Date Filed:______________________________________________________________________________
</TABLE>
================================================================================
<PAGE> 2
[R. G. BARRY CORPORATION LOGO]
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD, N.W.
PICKERINGTON, OHIO 43147
April 5, 1995
DEAR FELLOW SHAREHOLDERS:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders
(the "Annual Meeting") of R. G. Barry Corporation (the "Company"), which will be
held at 2:30 p.m., local time, on Wednesday, May 10, 1995, at the Company's
executive offices located at 13405 Yarmouth Road, N.W., Pickerington, Ohio
43147.
The formal Notice of Annual Meeting of Shareholders and Proxy Statement are
enclosed. This year you are being asked to elect three directors, to approve an
amendment to the Company's Articles of Incorporation to increase the authorized
number of common shares of the Company from 7,500,000 to 15,000,000 common
shares and to ratify the selection of accountants.
Your Board of Directors believes that these proposals are in the best
interest of the Company and all its shareholders and recommends that you vote
"FOR" each proposal. The proposals and the reasons for our recommendation are
set forth in the accompanying Proxy Statement, which you are asked to read at
your earliest convenience.
Whether or not you plan to attend the Annual Meeting and regardless of the
number of common shares of the Company you own, it is important that your common
shares be represented and voted at the Annual Meeting. Accordingly, after
reading the enclosed Proxy Statement, please complete, sign and date the
enclosed proxy card and mail it promptly in the reply envelope provided for your
convenience.
Thank you for your continued support.
Very truly yours,
/s/ Gordon Zacks
Gordon Zacks
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
[R. G. BARRY CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD, N.W.
PICKERINGTON, OHIO 43147
Pickerington, Ohio
April 5, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of R. G. Barry Corporation (the "Company") will be held at the
executive offices of the Company at 13405 Yarmouth Road, N.W., Pickerington,
Ohio 43147, on Wednesday, May 10, 1995, at 2:30 p.m., local time, for the
following purposes:
1. To elect three directors to serve for terms of three years each.
2. To consider and vote upon a proposal to adopt an amendment to Paragraph
I of Article FOURTH of the Company's Articles of Incorporation which
would increase the authorized number of common shares, $1.00 par value,
of the Company from 7,500,000 to 15,000,000 common shares.
3. To consider and vote upon a proposal to ratify the selection of KPMG
Peat Marwick LLP as independent public accountants for the Company for
1995.
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 15, 1995, will be
entitled to receive notice of and to vote at the Annual Meeting and any
adjournment or adjournments thereof.
You are cordially invited to attend the Annual Meeting. The vote of each
shareholder is important, whatever the number of common shares held. Whether or
not you plan to attend the Annual Meeting, please sign, date and return your
proxy promptly in the enclosed envelope. Should you attend the Annual Meeting,
you may revoke your proxy and vote in person. Attendance at the Annual Meeting
will not, in and of itself, constitute revocation of a proxy.
By Order of the Board of Directors,
/s/ Gordon Zacks
Gordon Zacks
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 4
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD, N.W.
PICKERINGTON, OHIO 43147
(614) 864-6400
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are being mailed to
shareholders of R. G. Barry Corporation, an Ohio corporation (the "Company"), on
or about April 5, 1995, in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting of Shareholders
of the Company (the "Annual Meeting") on Wednesday, May 10, 1995, or at any
adjournment or adjournments thereof. The Annual Meeting will be held at 2:30
p.m., local time, at the Company's executive offices at 13405 Yarmouth Road,
N.W., Pickerington, Ohio. The facility is located east of Columbus, Ohio,
immediately south of the intersection of Interstate 70 and State Route 256.
A proxy for use at the Annual Meeting accompanies this Proxy Statement and
is solicited by the Board of Directors of the Company. A shareholder of the
Company may use his proxy if he is unable to attend the Annual Meeting in person
or wishes to have his common shares of the Company voted by proxy even if he
does attend the Annual Meeting. Without affecting any vote previously taken, any
shareholder executing a proxy may revoke it at any time before it is voted by
filing with the Secretary of the Company, at the address of the Company set
forth on the cover page of this Proxy Statement, written notice of such
revocation; by executing a later-dated proxy which is received by the Company
prior to the Annual Meeting; or by attending the Annual Meeting and giving
notice of such revocation in person. Attendance at the Annual Meeting will not,
in and of itself, constitute revocation of a proxy.
The Company will bear the costs of preparing and mailing this Proxy
Statement, the accompanying proxy and any other related materials and all other
costs incurred in connection with the solicitation of proxies on behalf of the
Board of Directors. The Company has engaged D. F. King & Co., Inc. to assist in
the solicitation of proxies from shareholders at a fee of not more than $4,000
plus reimbursement of reasonable out-of-pocket expenses. In addition, proxies
may be solicited, for no additional compensation, by officers, directors or
employees of the Company by further mailing, by telephone or by personal
contact. The Company will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries, who are record holders of common shares of the Company
not beneficially owned by them, for forwarding such materials to and obtaining
proxies from the beneficial owners of such common shares.
The Annual Report to the Shareholders of the Company for the fiscal year
ended December 31, 1994 (the "1994 fiscal year") is enclosed herewith.
VOTING AT ANNUAL MEETING
Only shareholders of the Company of record at the close of business on
March 15, 1995, are entitled to receive notice of and to vote at the Annual
Meeting and any adjournment or adjournments thereof. At the close of business on
March 15, 1995, 5,544,847 common shares were outstanding and entitled to vote.
Each common share of the Company entitles the holder thereof to one vote on each
matter to be submitted to shareholders at the Annual Meeting. A quorum for the
Annual Meeting is a majority of the outstanding common shares.
Under the rules of the Securities and Exchange Commission (the "SEC"),
boxes are provided on the form of proxy for shareholders to mark if they wish
either to abstain on a proposal presented for shareholder approval or to
withhold authority to vote for one or more nominees for election as a director
of the Company. Common shares as to which the authority to vote is withheld will
be counted for quorum purposes but will not be counted toward the election of
directors. Abstentions are counted as present for quorum purposes; however, the
effect of an abstention on the proposals to adopt the proposed amendment to
Paragraph I of the Article
<PAGE> 5
FOURTH of the Company's Articles of Incorporation and to ratify the selection of
KPMG Peat Marwick LLP is the same as a "no" vote.
The election of directors and the proposal to ratify the selection of KPMG
Peat Marwick LLP are considered "discretionary" items upon which brokerage firms
may vote in their discretion on behalf of their clients if such clients have not
furnished voting instructions by the tenth day before the Annual Meeting.
However, the proposal to adopt the proposed amendment to Paragraph I of Article
FOURTH of the Company's Articles of Incorporation is "non-discretionary," and
brokers who have received no instructions from their clients do not have
discretion to vote on this item. Such "broker non-votes" will not be considered
as votes entitled to be cast in determining the outcome of the proposal to adopt
the proposed amendment to Paragraph I of Article FOURTH of the Company's
Articles of Incorporation.
SHARE OWNERSHIP
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners of more than five
percent (5%) of the outstanding common shares of the Company as of March 15,
1995 (unless otherwise indicated):
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------------------
SOLE VOTING
AND SOLE SOLE PERCENT
NAME AND ADDRESS INVESTMENT VOTING INVESTMENT OF
OF BENEFICIAL OWNER POWER POWER ONLY POWER ONLY TOTAL CLASS(1)
- ------------------------------ ----------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Gordon Zacks 289,545(2) 325,273(3)(4) -- 614,818 11.0%
140 N. Parkview Ave.
Columbus, OH 43209
Florence Zacks Melton 22,130 -- 268,276(3) 290,406 5.2%
1000 Urlin Avenue
Columbus, OH 43212
Dimensional Fund 194,032(5) -- 130,132(5) 324,164(5) 5.8%
Advisors Inc.
1299 Ocean Avenue
Suite 650
Santa Monica, CA 90401
<FN>
- ---------------
(1) The percent of class is based upon the sum of 5,544,847 common shares
outstanding on March 15, 1995 and the number of common shares, if any, as to
which the named person has the right to acquire beneficial ownership upon
the exercise of stock options exercisable within 60 days of March 15, 1995.
(2) Includes 82,758 common shares deposited in the Zacks Voting Trust (the
"Voting Trust") by Mr. Zacks of which he is the beneficial owner (see Note
(3) below), 178,454 common shares held of record by Mr. Zacks, and 28,333
common shares as to which Mr. Zacks has the right to acquire beneficial
ownership upon the exercise of stock options exercisable within 60 days of
March 15, 1995. Excludes 8,981 common shares held of record and owned
beneficially by the spouse of Mr. Zacks as to which Mr. Zacks disclaims
beneficial ownership.
(3) Gordon Zacks is the voting trustee of the Voting Trust and exercises sole
voting power as to the 351,034 common shares deposited in the Voting Trust.
The beneficial owners of common shares deposited in the Voting Trust retain
investment power with respect to such common shares (subject to certain
limitations on the right to remove common shares from the Voting Trust). As
indicated in Note (2), Mr. Zacks is the beneficial owner of 82,758 of the
common shares deposited in the Voting Trust. The number of common shares
shown for Mr. Zacks under the heading "Sole Voting Power Only" includes
268,276 common shares deposited in the Voting Trust by Mr. Zacks' mother,
Florence Zacks Melton, as Trustee under a trust established by the will of
Aaron Zacks, deceased. The number of common shares shown for Mrs. Melton
under the heading "Sole Investment Power Only" includes these 268,276 common
shares. Mr. Zacks is a remainder beneficiary of the trust created by that
will. The Voting Trust (which was
</TABLE>
2
<PAGE> 6
originally adopted as the "Zacks-Streim Voting Trust" on October 29, 1974)
provides that its term may extend as long as 21 years.
(4) Includes 56,997 common shares held for Mr. Zacks' account by the trustee for
the R. G. Barry Corporation Employee Stock Ownership Plan. Mr. Zacks has
voting power with respect to these common shares.
(5) Based on information contained in filings with the SEC (the latest of which
is dated January 30, 1995), Dimensional Fund Advisors Inc., a registered
investment adviser ("Dimensional"), is deemed to have beneficial ownership
of 324,164 common shares as of December 31, 1994, all of which common shares
are held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company (the "Fund"), or in series of The DFA Investment
Trust Company, a Delaware business trust (the "Trust"), or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such common
shares. Those filings with the SEC also indicate that persons who are
officers of Dimensional also serve as officers of the Fund and the Trust. In
their capacities as officers of the Fund and the Trust, these persons vote
116,266 of such common shares which are owned by the Fund and 13,866 of such
common shares which are owned by the Trust.
The following table sets forth certain information with respect to the
Company's common shares beneficially owned by each of the directors, including
those persons nominated for re-election as directors, of the Company, by each of
the executive officers of the Company named in the Summary Compensation Table
and by all executive officers and directors of the Company as a group as of
March 15, 1995:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
----------------------------------------------------
COMMON SHARES WHICH
CAN BE ACQUIRED UPON
COMMON THE EXERCISE OF
SHARES OPTIONS PERCENT
PRESENTLY EXERCISABLE WITHIN OF
NAME HELD 60 DAYS TOTAL CLASS(2)
- ------------------------------------------- --------- -------------------- ------- -------
<S> <C> <C> <C> <C>
Gordon Zacks (3)........................... 586,485(4) 28,333 614,818 11.0%
Leopold Abraham II......................... 2,660 0 2,660 (5)
Philip G. Barach........................... 48,333 0 48,333 (5)
Richard L. Burrell (3)..................... 28,860 14,665 43,525 (5)
Christian Galvis (3)....................... 8,698(6) 33,332 42,030 (5)
William Giovanello......................... 400 0 400 (5)
Harvey M. Krueger.......................... 13,333 0 13,333 (5)
Charles E. Ostrander (3)................... 9,756 53,365 63,121 1.1%
Edward M. Stan............................. 22,844(7) 0 22,844 (5)
Daniel D. Viren (3)........................ 9,363 6,666 16,029 (5)
All directors and executive officers as a
group
(numbering 11)........................... 732,972 140,360 873,332 15.4%
<FN>
- ---------------
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to all of the common shares reflected in the
table.
(2) See Note (1) to preceding table.
(3) Executive officer of the Company named in the Summary Compensation Table.
(4) See preceding table and Notes (2) through (4) thereto.
(5) Represents ownership of less than 1% of the outstanding common shares of the
Company.
(6) Excludes 344 common shares held of record and owned beneficially by Mr.
Galvis' spouse as to which he exercises no voting or investment power and
disclaims beneficial ownership.
(7) Excludes 2,000 common shares held of record and owned beneficially by Mr.
Stan's spouse as to which he exercises no voting or investment power and
disclaims beneficial ownership.
</TABLE>
3
<PAGE> 7
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY)
In accordance with Article SIXTH of the Articles of Incorporation of the
Company, three directors are to be elected at the Annual Meeting for terms of
three years each and until their respective successors are elected and
qualified. It is the intention of the persons named in the accompanying proxy to
vote the common shares represented by the proxies received pursuant to this
solicitation for the nominees named below who have been designated by the Board
of Directors, unless otherwise instructed on the proxy. Under Ohio law and the
Company's Regulations, the three nominees receiving the greatest number of votes
will be elected as directors.
The following table gives certain information concerning each nominee for
re-election as a director of the Company. Unless otherwise indicated, each
person has held his principal occupation for more than five years.
<TABLE>
<CAPTION>
DIRECTOR OF NOMINEE
POSITION(S) HELD THE COMPANY FOR TERM
WITH THE COMPANY AND CONTINUOUSLY EXPIRING
NOMINEE AGE PRINCIPAL OCCUPATION(S) SINCE IN
- --------------------- --- ----------------------------------------- ----------- ----------
<S> <C> <C> <C> <C>
Edward M. Stan....... 70 President, Edward M. Stan & Associated 1971 1995
Companies, Columbus, Ohio, marketing
consultants; President, Kinetic
Ventures, Inc., Pickerington, Ohio,
management and sales of real property,
from 1990 to 1991.
Richard L. Burrell... 62 Senior Vice President--Finance since 1984 1995
1992, Treasurer and Secretary since 1976,
and Vice President--Finance from 1976
to 1992, of the Company.
Philip G. Barach..... 64 Private Investor; Chairman of the Board 1991 1995
from 1968 to 1993, and Chief Executive
Officer and President from 1968 to
1990, of U.S. Shoe Corporation,
Cincinnati, Ohio, shoe manufacturer.(1)
<FN>
- ---------------
(1) Mr. Barach is also a director of Union Central Life Insurance Company,
Chaus, Inc. and Glimcher Realty REIT.
While it is contemplated that all nominees will stand for re-election, if
one or more of the nominees at the time of the Annual Meeting should be
unavailable or unable to serve as a candidate for re-election as a director of
the Company, the proxies reserve full discretion to vote the common shares
represented by the proxies for the re-election of the remaining nominees and for
the election of any substitute nominee or nominees designated by the Board of
Directors. The Board of Directors knows of no reason why any of the
above-mentioned persons will be unavailable or unable to serve if re-elected to
the Board.
</TABLE>
4
<PAGE> 8
The following table gives certain information concerning the current
directors whose terms will continue after the Annual Meeting. Unless otherwise
indicated, each person has held his principal occupation for more than five
years.
<TABLE>
<CAPTION>
DIRECTOR OF
POSITION(S) HELD THE COMPANY
WITH THE COMPANY AND CONTINUOUSLY TERM
NAME AGE PRINCIPAL OCCUPATION(S) SINCE EXPIRES IN
- ---------------------- --- ---------------------------------------- ----------- ----------
<S> <C> <C> <C> <C>
Gordon Zacks.......... 62 Chairman of the Board, Chief Executive 1959 1996
Officer and, since 1992, President of
the Company.
Christian Galvis...... 53 Executive Vice President--Operations 1992 1996
since 1992, and Vice
President--Operations from 1991 to
1992, of the Company; Executive Vice
President--Manufacturing of Work Wear
Corporation, Greensboro, North
Carolina, apparel manufacturers, from
1990 to 1991.
Charles E. 1992 1996
Ostrander........... 46 Executive Vice President--Sales &
Marketing since 1992, Vice
President--Sales & Marketing from 1990
to 1992, of the Company.
Harvey M. Krueger..... 65 Senior Managing Director, Lehman 1980 1997
Brothers, Inc., New York, New York,
investment bankers.(1)
William Giovanello.... 75 President of Retail Requisites, 1985 1997
Columbus, Ohio, retail consultants.
Leopold Abraham II.... 67 Chairman and Chief Executive Officer of 1993 1997
Associated Merchandising Corporation,
a retail merchandising and sourcing
company, from 1977 until his
retirement in 1993.(2)
<FN>
- ---------------
(1) Mr. Krueger is also a director of Automatic Data Processing, Inc., Club Med,
Inc., IVAX Corporation and Chaus, Inc.
(2) Mr. Abraham is also a director of Liz Claiborne and Galey & Lord, Inc. and a
Trustee of the Smith Barney Shearson Income Funds and the Smith Barney
Shearson Equity Funds.
</TABLE>
There are no family relationships among any of the directors, nominees for
re-election as directors and executive officers of the Company.
The Board of Directors of the Company held a total of eight meetings during
the Company's 1994 fiscal year. Each incumbent director attended 75% or more of
the aggregate of the total number of meetings held by the Board of Directors
during the period he served as a director and the total number of meetings held
by all committees of the Board of Directors on which he served during the period
he served.
The Company's Board of Directors has standing Audit and Compensation
Committees. There is no standing Nominating Committee or committee performing
similar functions.
The Audit Committee consists of Leopold Abraham II, Philip G. Barach,
William Giovanello, Harvey M. Krueger and Edward M. Stan. The function of the
Audit Committee is to review the adequacy of the Company's system of internal
controls, to investigate the scope and adequacy of the work of the Company's
independent public accountants and to recommend to the Board of Directors a firm
of accountants to serve as the Company's independent public accountants. The
Audit Committee met three times during the 1994 fiscal year.
5
<PAGE> 9
The Compensation Committee consists of Leopold Abraham II, Philip G.
Barach, William Giovanello and Harvey M. Krueger. The function of the
Compensation Committee is to review and supervise the operation of the Company's
compensation plans, to select those eligible employees who may participate in
each plan (where selection is required), to prescribe the terms of any stock
options granted under the Company's stock option plans and its stock purchase
plan and to approve the compensation of the Company's executive officers. The
Compensation Committee met five times during the 1994 fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Edward M. Stan, who retired as an executive officer and employee of the
Company on December 31, 1985, served as a member of the Compensation Committee
of the Company's Board of Directors during the 1994 fiscal year until February
15, 1994.
REPORT OF
THE COMPENSATION COMMITTEE
OF
R. G. BARRY CORPORATION ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised entirely of non-employee directors. Decisions on compensation of the
Company's executive officers generally are made by the Committee, although
compensation levels for executive officers other than the Chairman are
recommended to the Committee by the Chairman, who has substantially greater
knowledge of the contributions made by each such executive officer.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
In determining the compensation of the Company's executive officers, the
Committee seeks to create a compensation program that links compensation to the
Company's operational results, rewards above average corporate performance,
recognizes individual contribution and achievement and assists the Company in
attracting and retaining outstanding executive officers and other key employees.
Executive compensation is set at levels that the Committee, with the advice of
the Company's executive compensation consultants, believes to be competitive
with the compensation paid by other companies that compete with the Company for
executive officers and other key employees having the experience and abilities
that are necessary to manage the Company's business. Comparative compensation
data is obtained from the Company's executive compensation consultants and may
or may not take into account the compensation paid by all of the companies that
are included in the index for Media General Industry Group 57--Textiles/Apparel
included in the performance graph on page 15.
There are two primary components to the Company's executive compensation
program: annual cash compensation and long-term incentive compensation. Annual
cash compensation consists of base salary and an annual incentive bonus program
that is linked directly to the Company's financial performance. The long-term
incentive compensation program primarily consists of stock options.
1994 CASH COMPENSATION
The base salaries of the Company's executive officers, other than its
Chairman, were increased by the Committee at a meeting held in May, 1994. The
increases were made retroactive to January 1, 1994. Mr. Ostrander's annual base
salary was increased from $210,000 to $235,000; Mr. Galvis' annual base salary
was increased from $165,000 to $190,000; Mr. Burrell's annual base salary was
increased from $141,500 to $151,500; and Mr. Viren's annual base salary was
increased from $125,000 to $135,000. These decisions were made based upon the
recommendations of the Company's Chairman. Mr. Zacks' recommendations regarding
increases in base salary for the Company's executive officers were based on
three primary considerations: (1) the criticality to the Company of the
executive officer's job function, (2) the individual's performance in the
position; and (3) the individual's potential to make a strong contribution to
the Company. Before making his
6
<PAGE> 10
recommendations, the Company's Chairman consulted with an executive compensation
consulting firm and an executive recruiting firm to determine competitive
compensation levels in each of the Company's senior management positions. The
information provided by these firms was furnished to the Committee.
Since 1989, the Company has provided to its executive officers and other
members of management an annual incentive bonus program (the "Incentive
Program"). Annual bonus awards are based on the extent to which the Company
achieves or exceeds specified annual planned profit goals. The Board of
Directors meets at the beginning of each year to establish the Company's target
profit goal (defined as profit before such items as taxes, payments under the
Incentive Program and charitable contributions) for the year. The Committee then
determines the amount of the target award opportunity (the potential bonus) that
is payable by the Company under the Incentive Program for such year at specified
levels of attainment of the profit goal. For example, the Committee might
determine that an employee will receive 50% of his maximum award opportunity if
the Company achieves 100% of the profit goal and 75% of his maximum award
opportunity if the Company achieves 120% of the profit goal. The Committee's
recommendation with respect to bonuses payable under the Incentive Program at
specified threshold levels of profit are submitted to the full Board for final
approval.
Each participant in the Incentive Program is assigned a target award
opportunity (stated as a percentage of his base salary) that can be achieved by
such participant for the year. This percentage is based upon the participant's
position and responsibilities and the area of the Company's operations in which
the participant serves, with a greater percentage being assigned to those
participants who make a larger impact on corporate profits. The target award
opportunities for the Company's executive officers are set by the Committee; the
target award opportunities for other participants in the Incentive Program are
assigned by senior management. A participant is not entitled to receive a bonus
unless an acceptable year-end performance evaluation (as determined under the
Company's performance evaluation guidelines) has been received from the person
to whom such participant reports. Since the Company did not meet the target
profit goal established for 1994, none of the participants in the Incentive
Program received a bonus under that Program.
MR. ZACKS' 1994 COMPENSATION
Mr. Zacks and the Company entered into a four-year Employment Agreement
(the "Employment Agreement") on July 1, 1994, under which Mr. Zacks is entitled
to receive a minimum annual salary of $450,000 plus certain other benefits. The
Employment Agreement also provides that during the employment term, Mr. Zacks
will be entitled to participate in the Incentive Program at a maximum level
equal to 75% of his annual base salary, the specific level of participation to
be determined annually by the Committee. See "COMPENSATION OF EXECUTIVE OFFICERS
AND DIRECTORS--Employment Contracts and Termination of Employment and
Change-in-Control Arrangements" at page 13.
Mr. Zacks' base salary in 1994 of $450,000 reflected an increase of $50,000
from his 1993 base salary. This increase became effective July 1, 1994, the date
of the Employment Agreement. In authorizing the Employment Agreement, the
Committee determined, based upon advice from a nationally-recognized executive
compensation consulting firm, that the increased base salary provided for in the
Employment Agreement was comparable to base salary levels of chief executive
officers of comparable companies. The comparative compensation data was compiled
and provided by the executive compensation consulting firm, and may or may not
have included the companies included in the Performance Graph on page 15. The
base salary of Mr. Zacks is not intended to be tied to the Company's performance
from year to year. Because the Employment Agreement requires that the Company
pay to Mr. Zacks a minimum annual base salary, the Committee will not have the
ability to reduce the base salary below such minimum to reflect the Company's
performance. Although the Committee will have the ability to increase Mr. Zacks'
base salary above the minimum stated level to reflect corporate performance, no
decision has been made to do so nor has the Committee established any policy
with respect to the circumstances under which it would consider an increase in
Mr. Zacks' base salary.
Mr. Zacks received no bonus under the Company's Incentive Program for 1994.
Mr. Zacks' target award opportunity for 1994 had been 75% of his base salary,
which was established by the Committee in May of
7
<PAGE> 11
1994. The target profit goal of the Company for 1994, established by the
Committee and the Board in early 1994, was not achieved and, as a result, no
employee participating in the Incentive Program, including Mr. Zacks, received
his or her target award opportunity. Depending on the profitability of the
Company for 1994, Mr. Zacks could have received under the Incentive Program a
bonus for 1994 of zero or a bonus as high as 75% of his base salary. In other
words, Mr. Zacks' 1994 bonus was tied directly to the profitability of the
Company in 1994.
Mr. Zacks' target award opportunity under the Incentive Program for 1994 of
75% of his base salary was determined by the Committee based upon advice of the
Company's executive compensation consulting firm regarding the range of
performance-based compensation that is provided to chief executive officers of
comparable companies.
STOCK-BASED COMPENSATION PLANS
The Company's long-term compensation program consists primarily of options
granted under the Company's employee stock option plans. Awards of options are
designed to provide appropriate incentive to employees to continue growth in
shareholder value and to assist in the hiring and retention of key employees. In
1994, the Committee granted to 52 key employees, including the executive
officers named in the Summary Compensation Table, stock options to purchase an
aggregate of 293,446 common shares (adjusted for the 4-for-3 share split
distributed on June 22, 1994 to shareholders of record on June 1, 1994). These
options consisted of both incentive and nonqualified stock options. With the
exception of an incentive stock option granted to Mr. Zacks, all stock options
were granted with exercise prices equal to the market value of the Company's
common shares on the dates of grant. Mr. Zacks received an incentive stock
option to purchase 18,298 common shares with an exercise price equal to 110% of
the market value of the Company's common shares on the date of grant. Mr. Zacks
also received a nonqualified stock option to purchase 41,701 common shares with
an exercise price equal to the market value on the date of grant. If there is no
appreciation in the market value of the Company's common shares, the options are
valueless. The Committee granted the options based on its subjective
determination of the relative current and future contribution each prospective
optionee has or may make to the long-term welfare of the Company.
ADDITIONAL COMPENSATION PLANS
At various times in the past, the Company has adopted certain broad-based
employee benefit plans in which the Company's executive officers are permitted
to participate on the same terms as non-executive officer employees who meet
applicable eligibility criteria, subject to legal limitations on the amounts
that may be contributed or the benefits that may be payable under the plans.
Benefits under these plans are not tied to performance.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
LEOPOLD ABRAHAM II PHILIP G. BARACH
WILLIAM GIOVANELLO HARVEY M. KRUEGER
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1994,
January 1, 1994 and January 2, 1993, cash compensation paid by the Company, as
well as certain other compensation paid or earned for those
8
<PAGE> 12
years, to the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company in all capacities in which they
served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------------
AWARDS
---------------------------- PAYOUTS
ANNUAL COMPENSATION SECURITIES ---------
-------------------------------------- RESTRICTED UNDERLYING LTIP
NAME AND FISCAL SALARY OTHER ANNUAL STOCK AWARDS OPTIONS/ PAYOUTS
PRINCIPAL POSITION YEAR ($) BONUS($) COMPENSATION($) ($) SARS(#)(1) ($)
- --------------------------- ---- -------- -------- ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Gordon Zacks: 1994 $450,000 $ 0 $ 41,130(2)(4) $0(5) 59,999 $ 0
Chairman of the Board, 1993 $400,000 $103,200 $ 33,422(2)(3)(6) $0 33,333 $ 0
Chief Executive Officer 1992 $400,000 $ 0 $ 30,777(2)(3)(7) $0 0 $ 0
and President
Charles E. Ostrander: 1994 $235,000 $ 0 $ 10,162(2)(3) $0 33,332 $ 0
Executive Vice President-- 1993 $210,000 $ 43,344 $ 4,922(2)(6) $0 16,666 $ 0
Sales & Marketing 1992 $210,000 $ 49,056 $ 5,724(2)(7) $0 0 $ 0
Christian Galvis: 1994 $190,000 $ 0 $ 8,022(3) $0 33,333 $ 0
Executive Vice President-- 1993 $158,596 $ 30,960 $ 9,774(2)(6) $0 16,666 $ 0
Operations 1992 $150,000 $ 65,040 $ 11,106(2)(7) $0 0 $ 0
Richard L. Burrell: 1994 $151,500 $ 0 $ 18,393(2)(3) $0 13,333 $ 7,200
Senior Vice President-- 1993 $141,512 $ 21,904 $ 14,026(2)(6) $0 13,333 $ 7,800
Finance, Treasurer and 1992 $141,500 $ 24,791 $ 16,214(2)(7) $0 0 $ 2,880
Secretary
Daniel D. Viren: 1994 $135,000 $ 0 $ 11,124(2)(3) $0 13,333 $ 0
Senior Vice President-- 1993 $120,731 $ 17,802 $ 10,915(2)(6) $0 13,333 $ 0
Administration 1992 $113,731 $ 18,396 $ 11,166(2)(7) $0 0 $ 0
- ---------------
<FN>
(1) Reflects adjustments for 4-for-3 share split distributed on June 22, 1994 to
shareholders of record on June 1, 1994.
(2) "Other Annual Compensation" for (a) each of 1994, 1993 and 1992 includes
premium payments in the amounts of $19,088, $4,182 and $6,165 on behalf of
Messrs. Zacks, Ostrander and Galvis, respectively and (b) for 1994 and for
each of 1993 and 1992, respectively, premium payments in the amounts of
$9,543 and $9,544 on behalf of Mr. Burrell and premium payments in the
amounts of $4,536 and $4,537 on behalf of Mr. Viren, in each case to
continue life insurance policies which provide for a level of death benefits
not available under the Company's standard group life insurance program.
(3) "Other Annual Compensation" for 1994 also includes the amounts of $14,027,
$5,980, $1,857, $8,850 and $6,588 reflecting either the amount of income
deemed, under applicable federal income tax regulations, to have been
received, as a result of each of their personal use of cars provided by the
Company, by, or the car allowance provided to, Messrs. Zacks, Ostrander,
Galvis, Burrell and Viren, respectively.
(4) "Other Annual Compensation" for Mr. Zacks includes: (a) payments of $3,512,
$4,432 and $3,998 made during 1994, 1993 and 1992, respectively, to cover
Mr. Zacks' portion of the insurance premiums on a life insurance policy in
the face amount of $1,310,000 on the life of Mr. Zacks; (b) payments of
$2,103, $2,183, and $1,969 made during 1994, 1993 and 1992, respectively, to
cover Mr. Zacks' estimated tax liability with respect to such premium
payments; and (c) a travel allowance of $2,400 provided to Mr. Zacks in each
of 1994, 1993 and 1992.
(5) As of the last day of the 1994 fiscal year, Mr. Zacks held 40,000
"restricted" common shares (as adjusted for the 4-for-3 share split
distributed on June 22, 1994 to shareholders of record on June 1, 1994). On
March 1, 1995, restrictions lapsed with respect to all of these "restricted"
common shares. See "EXECUTIVE COMPENSATION -- Employment Contracts and
Termination of Employment and Change-in-Control Arrangements." On December
31, 1994, the market price of the 40,000 "restricted" common shares held by
Mr. Zacks on that date less the amount paid by Mr. Zacks for such common
shares was $445,000.
(6) "Other Annual Compensation" for 1993 includes the amounts of $5,319, $740,
$3,609, $4,482 and $6,378 reflecting the amount of income deemed, under
applicable federal income tax regulations, to have been
</TABLE>
9
<PAGE> 13
received by Messrs. Zacks, Ostrander, Galvis, Burrell and Viren,
respectively, as a result of each of their personal use of cars provided by
the Company.
(7) "Other Annual Compensation" for 1992 includes the amounts of $3,322, $1,542,
$4,941, $6,670 and $6,629 reflecting the amount of income deemed, under
applicable federal income tax regulations, to have been received by Messrs.
Zacks, Ostrander, Galvis, Burrell and Viren, respectively, as a result of
each of their personal use of cars provided by the Company.
GRANTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning individual grants of
options made under the R. G. Barry Corporation 1988 Stock Option Plan (the "1988
Plan") and the R. G. Barry Corporation 1994 Stock Option Plan (the "1994 Plan")
during the 1994 fiscal year to each of the named executive officers. No stock
appreciation rights were granted during the 1994 fiscal year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (2)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------
NAME GRANTED(#)(1) IN FISCAL YEAR PRICE($/SH)(1) DATE 5% 10%
- ------------------------------------- --------------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gordon Zacks.......... 18,298(3) 6.2% $ 15.4687 5/12/99 $ 78,198 $172,825
41,701(4) 14.2% $ 14.0625 5/12/04 $368,766 $934,611
Charles E. 30,042(5) 10.2% $ 14.0625 5/12/04 $265,664 $673,307
Ostrander........... 3,290(6) 1.1% $ 14.0625 5/12/04 $ 29,094 $ 73,736
Christian Galvis...... 27,197(5) 9.3% $ 14.0625 5/12/04 $240,506 $609,545
6,136(6) 2.1% $ 14.0625 5/12/04 $ 54,261 $137,521
Richard L. Burrell.... 13,333(5) 4.5% $ 14.0625 5/12/04 $117,905 $298,822
Daniel D. Viren....... 13,333(5) 4.5% $ 14.0625 5/12/04 $117,905 $298,822
<FN>
- ---------------
(1) Reflects adjustments for 4-for-3 share split distributed on June 22, 1994 to
shareholders of record on June 1, 1994.
(2) The amounts reflected in this table represent certain assumed rates of
appreciation only. Actual realized values, if any, on option exercises will
be dependent on the actual appreciation of the common shares of the Company
over the term of the options. These amounts have been rounded to the nearest
whole dollar.
(3) These options were granted under the 1988 Plan on May 13, 1994, and become
exercisable as follows: 4,576 common shares on each of the first and second
anniversaries of the grant date, 2,040 common shares on the third such
anniversary and 7,106 common shares on the fourth such anniversary;
provided, however, that these options becomes fully exercisable in the event
of certain defined changes-in-control of the Company or dispositions of its
assets or upon the death, disability or retirement of Mr. Zacks.
(4) These options were granted under the 1988 Plan on May 13, 1994, and become
exercisable as follows: 10,424 common shares on each of the first and second
anniversaries of the grant date, 12,960 common shares on the third such
anniversary and 7,893 common shares on the fourth such anniversary;
provided, however, that these options become fully exercisable in the event
of certain defined changes-in-control of the Company or dispositions of its
assets or upon the death, disability or retirement of Mr. Zacks.
(5) These options were granted under the 1994 Plan on May 13, 1994, and become
exercisable as follows: (a) for Mr. Ostrander, 5,844 common shares on each
of the first, second, third and fourth anniversaries of the grant date and
6,666 common shares on the fifth such anniversary; (b) for Mr. Galvis, 4,421
common shares on each of the first and second anniversaries of the grant
date, 5,844 common shares on each of the third and fourth such anniversaries
and 6,667 common shares on the fifth such anniversary; and (c) for each of
Messrs. Burrell and Viren, 20% of the common shares on each of the first,
second, third, fourth and fifth anniversaries of the grant date; provided,
however, that each of these options becomes fully
</TABLE>
10
<PAGE> 14
exercisable in the event of certain defined changes-in-control of the
Company or dispositions of its assets or upon the death, disability or
retirement of the executive officer.
(6) These options were granted under the 1994 Plan on May 13, 1994, and become
exercisable as follows: (a) for Mr. Ostrander, 822 common shares on each of
the first and fourth anniversaries of the grant date and 823 common shares
on each of the second and third such anniversaries; and (b) for Mr. Galvis,
2,245 common shares on each of the first and second anniversaries of the
grant date and 823 common shares on each of the third and fourth such
anniversaries; provided, however, that each of these options becomes fully
exercisable in the event of certain defined changes-in-control of the
Company or dispositions of its assets or upon the death, disability or
retirement of the executive officer.
OPTION AND STOCK APPRECIATION RIGHT EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to options
exercised during the 1994 fiscal year by each of the named executive officers
and unexercised stock options and stock appreciation rights held as of the end
of the 1994 fiscal year by each of the named executive officers. No stock
appreciation rights were exercised during the 1994 fiscal year by such executive
officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE REALIZED
(FAIR MARKET NUMBER OF SECURITIES
NUMBER OF VALUE UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SECURITIES AT EXERCISE OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
UNDERLYING LESS FY-END(#)(1) SARS AT FY-END($)(2)(3)
OPTIONS EXERCISE ----------------------- -----------------------
NAME EXERCISED(#)(1) PRICE)($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gordon Zacks........... 0 N/A 6,666(4) 86,666(4) $34,976 $139,919
Charles E. Ostrander... 13,300 $233,025 43,366(4)(5) 46,665(4)(6) $250,225 $ 77,081
Christian Galvis....... 0 N/A 23,333(4) 59,999(4)(6) $181,769 $185,411
Richard L. Burrell..... 24,000 $220,749 9,332(4)(5) 24,000(4)(6) $58,950 $ 61,668
Daniel D. Viren........ 21,332 $256,731 0 25,333(4)(6) $ 0 $ 70,749
<FN>
- ---------------
(1) Reflects adjustments for 4-for-3 share split distribution on June 22, 1994
to shareholders of record on June 1, 1994.
(2) Rounded to nearest whole dollar.
(3) "Value of Unexercised In-the-Money Options/SARs at FY-End" is based upon the
fair market value of the Company's common shares on December 31, 1994 less
the exercise price of in-the-money options and stock appreciation rights at
the end of the 1994 fiscal year.
(4) Includes options granted under the 1988 Plan. The 1988 Plan provides that
outstanding options that are not fully exercisable will become so in the
event of certain defined changes-in-control of the Company or dispositions
of its assets.
(5) Includes options granted under the R. G. Barry Corporation 1984 Incentive
Stock Option Plan for Key Employees. This plan provides that outstanding
options that are not fully exercisable will become so in the event of
certain defined changes-in-control of the Company or dispositions of its
assets. In addition, options granted under this plan were granted in tandem
with limited stock appreciation rights. These limited stock appreciation
rights give the holders of the corresponding options the right, in the event
of certain defined changes-in-control of the Company or dispositions of its
assets, to tender the unexercised options to the Company for a cash payment
equal to the product obtained by multiplying the number of common shares
covered by the unexercised options times the difference between the option
exercise price and the greater of (i) the highest market price for the
common shares during the preceding 60 days and (ii) the highest price paid
for the common shares by the acquiror in the change-in-control.
(6) Includes options granted under the 1994 Plan. The 1994 Plan provides that
outstanding options that are not fully exercisable will become so in the
event of certain defined changes-in-control of the Company or dispositions
of its assets.
</TABLE>
11
<PAGE> 15
PENSION PLANS
The Company's Salaried Employees' Pension Plan (the "Plan") provides for
the payment of monthly benefits at "normal retirement date" (age 65) based upon
45% of a participant's "Final Average Monthly Compensation" (subject to a
limitation imposed by law on the amount of annual compensation upon which
benefits may be based) less a designated percentage of the participant's primary
Social Security benefits. Benefits under the Plan are reduced by 1/30th for each
year of credited service less than 30 years. The Company's Supplemental
Retirement Plan (the "Supplemental Plan") provides for the payment of additional
monthly retirement benefits based upon 2 1/2% of an eligible participant's
"Final Average Monthly Compensation" reduced by 2 1/12th% of his primary Social
Security benefits with the difference multiplied by his years of credited
service up to a maximum of 24 years, and the resulting product then reduced by
his monthly pension payable under the Plan. The benefit to which any employee
who was a participant in the Supplemental Plan on December 31, 1988 is entitled
will not be less than 60% of such participant's "Final Average Monthly
Compensation", reduced by (i) his monthly pension payable under the Plan and
(ii) a designated percentage of his primary Social Security benefits.
The following table shows the estimated pension benefits payable to a
participant in the Plan and the Supplemental Plan (who was a participant in the
Supplemental Plan on December 31, 1988), at "normal retirement age" of 65, based
on compensation that is covered by the Plan and the Supplemental Plan, years of
service with the Company and payment in the form of a lifetime annuity:
<TABLE>
PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO WERE PARTICIPANTS
IN THE SUPPLEMENTAL PLAN ON DECEMBER 31, 1988)
<CAPTION>
FINAL ESTIMATED ANNUAL PENSION BENEFITS
AVERAGE BASED ON CREDITED YEARS OF SERVICE INDICATED
ANNUAL ------------------------------------------------------------
COMPENSATION 10 15 20 25 30
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
175,000 105,000 105,000 105,000 105,000 105,000
225,000 135,000 135,000 135,000 135,000 135,000
275,000 165,000 165,000 165,000 165,000 165,000
325,000 195,000 195,000 195,000 195,000 195,000
375,000 225,000 225,000 225,000 225,000 225,000
425,000 255,000 255,000 255,000 255,000 255,000
475,000 285,000 285,000 285,000 285,000 285,000
</TABLE>
Annual benefits are shown before deduction of 50% of primary Social
Security benefits.
The following table shows the estimated pension benefits payable to a
participant in the Plan and the Supplemental Plan (who became a participant in
the Supplemental Plan after December 31, 1988), at "normal retirement age" of
65, based on compensation that is covered by the Plan and the Supplemental Plan,
years of service with the Company and payment in the form of a lifetime annuity:
<TABLE>
PENSION PLANS TABLE
<CAPTION>
FINAL ESTIMATED ANNUAL PENSION BENEFITS
AVERAGE BASED ON CREDITED YEARS OF SERVICE INDICATED
ANNUAL ------------------------------------------------------------
COMPENSATION 10 15 20 25 30
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 31,250 $ 46,875 $ 62,500 $ 75,000 $ 75,000
175,000 43,750 65,625 87,500 105,000 105,000
225,000 56,250 84,375 112,500 135,000 135,000
275,000 68,750 103,125 137,500 165,000 165,000
325,000 81,250 121,875 162,500 195,000 195,000
375,000 93,750 140,625 187,500 225,000 225,000
425,000 106,250 159,375 212,500 255,000 255,000
475,000 118,750 178,125 237,500 285,000 285,000
</TABLE>
12
<PAGE> 16
Annual benefits are shown before deduction of 20.83% of primary Social
Security benefits after 10 years of service, 31.25% after 15 years of service,
41.67% after 20 years of service, 50% after 25 years of service, and 50% after
30 years of service.
A participant's "Final Average Monthly Compensation" for purposes of the
Company's pension plans is the average of the participant's compensation (salary
and commissions but excluding cash bonuses and overtime pay) during the five
consecutive calendar years of the last twenty years in which such total
compensation is highest. The "Final Average Annual Compensation" as of the end
of the 1994 fiscal year was $383,905, $200,477, $169,928, $152,529 and $115,256
for Messrs. Zacks, Ostrander, Galvis, Burrell and Viren, respectively. Messrs.
Zacks, Ostrander, Galvis, Burrell and Viren have approximately 39, 8, 4, 28 and
6 years, respectively, of credited service under the Plan and the Supplemental
Plan. Messrs. Zacks and Burrell were participants in the Supplemental Plan on
December 31, 1988, Mr. Ostrander became a participant in the Supplemental Plan
effective January 1, 1989, Mr. Viren became a participant in the Supplemental
Plan effective January 1, 1990 and Mr. Galvis became a participant in the
Supplemental Plan effective January 1, 1992.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company receives $17,000
annually for services rendered to the Company as a director except for Messrs.
Giovanello and Krueger who receive $22,000 annually for serving as directors. In
addition, each director who is not an employee of the Company receives $1,000
for each meeting of the Company's Board of Directors attended. Directors who are
also employees of the Company receive no separate compensation for serving as
directors.
OTHER COMPENSATION
In 1952, Mrs. Florence Zacks Melton transferred to the Company the
exclusive right to manufacture all slippers created and designed by her. Under
the agreement, Mrs. Melton receives 1% of the Company's gross receipts from
sales of such products. The agreement terminates five years after the death of
Mrs. Melton. During 1994, the Company accrued royalty payments (which were paid
in 1995) aggregating $90,294 pursuant to this agreement. Mrs. Melton is the
mother of Gordon Zacks.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Gordon Zacks, the Chairman of the Board, President and Chief Executive
Officer of the Company, and the Company entered into an Employment Agreement,
dated July 1, 1994 (the "Zacks Employment Agreement"), which provides for the
employment of Mr. Zacks by the Company as its Chief Executive Officer for a term
of four years, automatically renewable for additional, consecutive one-year
terms unless the Company or Mr. Zacks gives notice to the other of non-renewal.
The Company is obligated to cause Mr. Zacks to be nominated to membership on the
Board of Directors. Mr. Zacks is entitled to receive a minimum annual salary of
$450,000, subject to increases that from time to time may be granted by the
Board of Directors. In addition to his annual salary, Mr. Zacks is entitled to
participate in the Company's Incentive Program and to receive certain health and
life insurance coverages, pension and retirement benefits and other benefits and
perquisites.
If Mr. Zacks' employment is terminated by the Company without "cause" (as
defined in the Zacks Employment Agreement) or by Mr. Zacks for "good reason" (as
defined in the Zacks Employment Agreement) prior to a "change of control" (as
defined in the Zacks Employment Agreement), he will be entitled to have his base
salary continued at the rate in effect immediately prior to the date of
termination until the last day of the employment term. In addition, he and his
spouse will receive for a period ending on his 65th birthday or his earlier
death, all life, medical and dental insurance and other employee benefits to
which he and his spouse were entitled immediately prior to the date of
termination and compensation for lost benefits under the Company's retirement
plans resulting from the early termination of his employment. If Mr. Zacks'
employment is terminated by the Company without "cause" or by Mr. Zacks for
"good reason" within three years after a "change of control", Mr. Zacks will be
entitled to receive a severance payment (subject to reduction if the payment
would not be deductible by the Company for federal income tax purposes) equal to
three times his base salary at the rate in effect at the date of termination. In
addition, he and his spouse will
13
<PAGE> 17
receive for a period ending on his 70th birthday or his earlier death, all life,
medical and dental insurance benefits to which he and/or his spouse was entitled
immediately prior to the date of termination, he will receive all of his
perquisites for a period of three years after the date of termination and he
will receive compensation for benefits under the Company's retirement plans that
he would have received if he had remained in the Company's employ for the
greater of an additional 36 months or the number of months remaining in his
employment term. A "change of control" is deemed to have occurred if a third
party acquires more than 25% of the total voting power of the Company's
outstanding voting securities or as a result of, or in connection with, certain
specified business combinations or a contested election, the persons who were
directors of the Company immediately before the transaction cease to constitute
a majority of the Board of Directors of the Company or any successor to the
Company. The Zacks Employment Agreement also provides for the continuation of
Mr. Zacks' salary and benefits for a period of time following a permanent and
total disability.
Under an Agreement, dated July 30, 1984, as amended, between the Company
and Gordon Zacks (the "1984 Agreement"), the Company issued to Mr. Zacks 300,000
"restricted" common shares (the "Shares") (adjusted to 400,000 Shares as a
result of the 4-for-3 share split distributed on June 22, 1994 to shareholders
of record on June 1, 1994). On March 1, 1995, restrictions lapsed with respect
to the remaining 40,000 Shares subject to restriction. The Company was obligated
to purchase (so long as such repurchase did not violate any existing loan
agreement and was permitted by law) from Mr. Zacks, at his request, up to 50% of
the Shares with respect to which restrictions had lapsed. On March 1, 1995, Mr.
Zacks exercised his right to require the Company to purchase 20,000 of the
Shares with respect to which the final restrictions had lapsed at a price of
$12.00 per share, the closing price of the Company's common shares on March 1,
1995.
Under an Agreement dated September 27, 1989, as amended, the Company
agreed, upon the death of Mr. Zacks, to purchase from the estate of Mr. Zacks,
at the estate's election, up to $4 million of the common shares of the Company
held by Mr. Zacks at the time of his death. The common shares would be purchased
at their fair market value at the time the estate of Gordon Zacks exercises its
put right. The estate's put right would expire after the second anniversary of
the death of Mr. Zacks. The Company agreed to fund its potential obligation to
purchase such common shares by purchasing and maintaining during Mr. Zacks'
lifetime one or more policies of life insurance on the life of Mr. Zacks. In
addition, Mr. Zacks agreed that, for a period of 24 months following his death,
the Company will have a right of first refusal to purchase any common shares of
the Company owned by Mr. Zacks at his death if his estate elects to sell such
common shares. The Company would have the right to purchase such common shares
on the same terms and conditions as the estate proposes to sell such common
shares.
Christian Galvis, the Executive Vice President - Operations of the Company,
and the Company entered into an Employment Agreement, dated July 1, 1994 (the
"Galvis Employment Agreement"), which provides for the employment of Mr. Galvis
by the Company as its Executive Vice President-Operations for a term of three
years. Mr. Galvis is entitled to receive a minimum annual salary of $190,000,
subject to increases that from time to time may be granted by the Board of
Directors. In addition to his annual salary, Mr. Galvis is entitled to
participate in the Company's Incentive Program and to receive certain health and
life insurance coverages, pension and retirement benefits and other benefits and
perquisites. If Mr. Galvis' employment is terminated by the Company without
"cause" (as defined in the Galvis Employment Agreement) or by Mr. Galvis for
"good reason" (as defined in the Galvis Employment Agreement), he will be
entitled to receive a severance payment equal to the total compensation
(including bonus) paid to or accrued for the benefit of Mr. Galvis by the
Company for services rendered during the 12-month period immediately preceding
the date of termination. The Galvis Employment Agreement also provides for the
continuation of Mr. Galvis' salary for a period of time following a permanent
and total disability.
Richard L. Burrell, the Senior Vice President -- Finance, Treasurer and
Secretary of the Company, and Daniel D. Viren, the Senior Vice President --
Administration of the Company, each entered into an Agreement, dated July 1,
1994 (the "Severance Agreement"), which provides that if the named executive
officer's employment is terminated by the Company without "cause" (as defined in
the Severance Agreement) or by the named executive officer for "good reason" (as
defined in the Severance Agreement) within 36 months following a "change in
control" (as defined in the Severance Agreement), he will be entitled to receive
a severance payment equal to the greater of (1) the total compensation
(including bonus) paid to or
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<PAGE> 18
accrued for the benefit of the named executive officer by the Company for
services rendered during the calendar year ending prior to the date on which the
"change in control" occurred or (2) the total compensation (including bonus)
paid to or accrued for the benefit of the named executive officer by the Company
for services rendered during the 12-month period immediately preceding the date
of termination of employment. Prior to a "change in control", each Severance
Agreement will terminate immediately if the named executive officer's employment
with the Company is terminated for any reason. Each Severance Agreement provides
for a term of three years unless earlier terminated pursuant to its terms.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative total shareholder return on its common shares with an
index for shares listed on the American Stock Exchange and an index for Media
General Industry Group 57 -- Textiles/Apparel ("Apparel Industry"), for the
five-year period ended December 31, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN AMONG R. G. BARRY CORPORATION,
AMEX MARKET INDEX AND APPAREL INDUSTRY
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AMEX MARKET APPAREL IN- R. G. BARRY
(FISCAL YEAR COVERED) INDEX DUSTRY CORPORATION
<S> <C> <C> <C>
1989 $ 100 $ 100 $ 100
1990 84.80 89.10 31.40
1991 104.45 137.47 32.56
1992 105.88 159.51 68.61
1993 125.79 154.43 141.86
1994 111.12 141.96 137.98
</TABLE>
PROPOSED AMENDMENT OF ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED NUMBER
OF COMMON SHARES
(Item 2 on Proxy)
The Articles of Incorporation of the Company presently authorize 12,500,000
shares, of which 7,500,000 are common shares, $1.00 par value, 4,000,000 are
Class A Preferred Shares, $1.00 par value, and 1,000,000 are Class B Preferred
Shares, $1.00 par value. The Company's Board of Directors unanimously adopted a
resolution proposing and declaring it advisable that Paragraph I of Article
FOURTH of the Company's Articles of Incorporation be amended in order to
increase the authorized number of shares of the Company to 20,000,000 shares, of
which 15,000,000 will be common shares, $1.00 par value ("Common Shares"),
4,000,000 will be Class A Preferred Shares, $1.00 par value, and 1,000,000 will
be Class B Preferred Shares,
15
<PAGE> 19
$1.00 par value, and recommending to the shareholders of the Company the
approval of the proposed amendment. Thus, the only class of shares which will be
increased in authorized number will be the Common Shares. Of the Company's
presently authorized 7,500,000 Common Shares, as of December 31, 1994, 5,542,581
were outstanding, an aggregate of 811,518 were reserved for issuance under the
Company's existing stock option plans, 165,093 were reserved for issuance under
the Company's existing stock purchase plan, 266,667 were reserved for issuance
under the R. G. Barry Employee Stock Ownership Plan and 714,141 were available
for issuance. In 1988, 500,000 shares of Class B Preferred Shares were
designated "Series I Junior Participating Class B Preferred Shares" and were
reserved for issuance pursuant to a Rights Agreement, dated as of February 19,
1988 (the "Rights Agreement"), between the Company and The Huntington National
Bank, as Rights Agent.
The Board of Directors believes that it is desirable and in the best
interests of the Company and its shareholders to increase the number of Common
Shares that the Company is authorized to issue in order to ensure that the
Company will have a sufficient number of authorized Common Shares available in
the future to provide it with the desired flexibility to meet its business
needs. If this proposal is approved by the shareholders, the additional Common
Shares could be available for a variety of corporate purposes, including, for
example, the declaration and payment of share dividends to the Company's
shareholders; share splits; use in the financing of expansion or future
acquisitions; issuance pursuant to the terms of employee benefit plans; and use
in other possible future transactions of a currently undetermined nature.
If the proposed amendment is adopted, the Company would be permitted to
issue the additional authorized Common Shares without further shareholder
approval, except to the extent otherwise required by the Company's Articles of
Incorporation, by law or by any securities exchange on which the Common Shares
may be listed at the time (the Common Shares are currently listed on the
American Stock Exchange.) The authorization of additional Common Shares will
enable the Company, as the need may arise, to take timely advantage of market
conditions and the availability of favorable opportunities without the delay and
expense associated with the holding of a special meeting of its shareholders. It
is the belief of the Board of Directors that the delay necessary for shareholder
approval of a specific issuance could be to the detriment of the Company and its
shareholders. The Board of Directors does not intend to issue any Common Shares
except on terms which the Board deems to be in the best interests of the Company
and its shareholders. Existing shareholders of the Company will have no
pre-emptive rights to purchase any Common Shares issued in the future. Depending
on the terms thereof, the issuance of the Common Shares may or may not have a
dilutive effect on the Company's then-existing shareholders. Other than the
Common Shares which may be acquired pursuant to the R. G. Barry Employee Stock
Ownership Plan and the Company's existing stock option plans and stock purchase
plan, the Company presently has no plans, agreements or understandings to issue
any of the newly authorized Common Shares.
Although the Company has no such present intentions, the proposed increase
in the authorized and unissued Common Shares might be considered as having the
effect of discouraging an attempt by another person or entity, through the
acquisition of a substantial number of Common Shares, to acquire control of the
Company with a view to imposing a merger, sale of all or any part of its assets,
or a similar transaction without prior approval of the Company's Board of
Directors, since the issuance of new Common Shares, in a public or private sale,
merger or similar transaction, could be used to dilute the share ownership of a
person or entity seeking to obtain control of the Company. Furthermore, since
Article SIXTH of the Company's Articles of Incorporation requires that the
removal of a director be approved by the affirmative vote of the holders of at
least 80% of the votes entitled to be cast by the holders of all of the
outstanding voting shares of the Company, the Board could (within the limits
imposed by Ohio law) issue new Common Shares to purchasers who, together with
other shareholders of the Company, might block such an 80% vote.
The Board has no present knowledge of any present or past efforts to gain
control of the Company and has not received any indication from any party that
such party is interested in acquiring the Company. As of March 15, 1995, the
Company's executive officers and directors, together with participants in the
ESOP, held approximately 15.4% of the Company's voting power.
16
<PAGE> 20
The Company's Articles of Incorporation and Regulations contain other
provisions which could potentially make a change of control of the Company more
difficult. These provisions include: (a) the classification of the Board of
Directors of the Company into three classes of directors so that each director
serves for three years, with one class being elected each year; (b) the
elimination of cumulative voting in the election of directors; (c) the
requirement that holders of shares entitling them to exercise not less than 80%
of the voting power of the Company vote in favor of the removal of a director
from office; (d) the requirement of the affirmative vote of at least 80% of the
outstanding voting shares of the Company, in addition to any other vote required
by law or the Company's Articles of Incorporation, as a condition of certain
major corporate transactions (e.g., merger or consolidation, sale or other
disposition of all or substantially all of the Company's assets, liquidation or
dissolution of the Company) with certain holders of stock representing 10% or
more of the voting power of the Company unless a majority of the "disinterested"
directors approve the transaction or certain price criteria and procedural
requirements are satisfied; and (e) certain procedural requirements, including
provisions governing the time period for setting special shareholder meetings,
record dates and nominating directors, and specifying who may call special
shareholder meetings.
Under the Rights Agreement, each of the Company's shareholders has one and
one-third Rights for each outstanding common share held and each newly-issued
common share will have issued with it one and one-third Rights. The Rights
currently have no value, are represented by the certificates evidencing the
common shares and trade only with such common shares. The Rights may only be
separated from the common shares and exercised upon the occurrence of a person
or group ("Acquiror") acquiring or obtaining beneficial ownership of 25% or more
of the then outstanding common shares (a "Triggering Event") or the tenth
business day after the commencement or announcement of a tender or exchange
offer that would result in ownership of 30% or more of the outstanding common
shares. The Rights Agreement provides that, upon the Rights becoming
exercisable, shareholders would be entitled to purchase, at the "Exercise
Price", one tenth of one share of the Series I Junior Participating Class B
Preferred Shares (the "Preferred Shares"). Such fractional share is intended to
be the practical equivalent of one common share. In the event of a Triggering
Event, the Rights will entitle each holder (except the Acquiror or any affiliate
or associate thereof, whose Rights become null and void) to purchase Preferred
Shares of the Company having a value equal to twice the Exercise Price. In the
event the Company is acquired in a merger or other business combination or a
significant portion of its assets are sold, leased, exchanged, or otherwise
transferred to an Acquiror, shares of the Acquiror (or shares of the surviving
corporation in such acquisition, which could be the Company) may be purchased.
The Exercise Price and the number of Preferred Shares or other securities or
property issuable upon exercise of a Right are subject to adjustment upon the
occurrence of certain events including, for example, a stock dividend or split
payable in the Company's common shares or Preferred Shares. The number of Rights
may also be adjusted upon the occurrence of certain events including, for
example, a reverse stock split. The Rights expire on March 16, 1998, unless
earlier redeemed by the Company. The Rights may cause substantial dilution to a
person or group that attempts to acquire the Company and thus have an
anti-takeover effect.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF COMMON SHARES ENTITLING THEM TO
EXERCISE AT LEAST A MAJORITY OF THE VOTES ENTITLED TO BE CAST IS REQUIRED TO
ADOPT THE PROPOSED AMENDMENT TO PARAGRAPH I OF ARTICLE FOURTH OF THE COMPANY'S
ARTICLES OF INCORPORATION. If the amendment is approved, it will become
effective upon the filing of a Certificate of Amendment to the Company's
Articles of Incorporation with the Ohio Secretary of State, which is expected to
be accomplished as promptly as practicable after such approval is obtained.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE PROPOSED AMENDMENT TO PARAGRAPH I OF ARTICLE FOURTH OF
THE COMPANY'S ARTICLES OF INCORPORATION. UNLESS OTHERWISE DIRECTED, THE PERSONS
NAMED IN THE ENCLOSED PROXY WILL VOTE THE COMMON SHARES REPRESENTED BY ALL
PROXIES RECEIVED PRIOR TO THE ANNUAL MEETING, AND NOT PROPERLY REVOKED, IN FAVOR
OF THE PROPOSED AMENDMENT TO PARAGRAPH I OF ARTICLE FOURTH.
17
<PAGE> 21
RATIFICATION OF SELECTION OF ACCOUNTANTS
(Item 3 on Proxy)
The Board of Directors recommends the ratification of the selection of KPMG
Peat Marwick LLP as the independent public accountants for the Company for 1995.
That firm, together with its predecessor Peat, Marwick, Mitchell & Co., have
served as independent public accountants for the Company since 1966 and are
serving as the Company's independent public accountants for the current year.
Unless otherwise directed, the persons named in the enclosed proxy will
vote the common shares represented by all proxies received prior to the Annual
Meeting, and not revoked, in favor of the proposal to ratify the selection of
KPMG Peat Marwick LLP as the independent public accountants for the Company for
1995.
The Board of Directors expects that representatives of KPMG Peat Marwick
LLP will be present at the Annual Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS FOR
1996 ANNUAL MEETING
Any qualified shareholder who desires to present a proposal for
consideration at the 1996 Annual Meeting of Shareholders must submit the
proposal in writing to the Company. If the proposal is received by the Company
on or before December 6, 1995, and otherwise meets the requirements of
applicable state and federal law, it will be included in the proxy statement and
form of proxy of the Company relating to its 1996 Annual Meeting of
Shareholders.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action by the shareholders at the 1995 Annual
Meeting of Shareholders other than as set forth in this Proxy Statement.
However, if any other matter is properly presented at the Annual Meeting, or at
any adjournment or adjournments thereof, it is intended that the persons named
in the enclosed proxy may vote the common shares represented by such proxy on
such matters in accordance with their best judgment in light of the conditions
then prevailing.
It is important that proxies be completed and returned promptly; therefore,
shareholders who do not expect to attend the Annual Meeting in person are urged
to fill in, sign and return the enclosed proxy in the self-addressed envelope
furnished herewith.
By Order of the Board of Directors,
/s/ Gordon Zacks
Gordon Zacks,
Chairman of the Board, President
and Chief Executive Officer
April 5, 1995
18
<PAGE> 22
R. G. BARRY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of R. G. Barry Corporation (the
"Company") hereby constitutes and appoints Gordon Zacks and Richard L. Burrell,
or either of them, the Proxy or Proxies of the undersigned, with full power of
substitution, to attend the Annual Meeting of Shareholders of the Company to be
held on Wednesday, May 10, 1995, at the Company's executive offices, 13405
Yarmouth Road, N.W., Pickerington, Ohio, at 2:30 P.M., local time, and any
adjournment or adjournments thereof, and to vote all of the common shares which
the undersigned is entitled to vote at such Annual Meeting or at any adjournment
or adjournments thereof:
1. To elect three directors to serve for terms of three years each.
/ / FOR election as directors of the Company of all of the nominees listed below
(except as marked to the contrary below).*
/ / WITHHOLD AUTHORITY to vote for all of the nominees listed below.
Philip G. Barach Richard L. Burrell Edward M. Stan
*(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
2. To approve the proposed amendment to Paragraph I of Article FOURTH of the
Company's Articles of Incorporation to increase the authorized number of
common shares, $1.00 par value, of the Company from 7,500,000 to 15,000,000
common shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of KPMG Peat Marwick LLP as independent public
accountants for the Company for 1995.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting or any adjournment or
adjournments thereof.
(Continued, and to be executed and dated on the reverse side.)
(Continued from other side.)
WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO CHOICE IS
INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY AND
FOR PROPOSAL NOS. 2 AND 3. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF OR IF A NOMINEE FOR
ELECTION AS A DIRECTOR NAMED IN THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE
NOMINEE(S) AS THE DIRECTORS MAY RECOMMEND.
All proxies previously given or executed
by the undersigned are hereby revoked.
Dated ____________________, 1995
The undersigned acknowledges receipt of the
accompanying Notice of Annual Meeting of ________________________________
Shareholders and Proxy Statement for the May Signature of Shareholder(s)
10, 1995 meeting and Annual Report to
Shareholders for the fiscal year ended ________________________________
December 31, 1994. Signature of Shareholder(s)
Please sign exactly as your name
appears hereon. When common
shares are registered in two
names, both shareholders should
sign. When signing as attorney,
executor, administrator,
guardian or trustee, please give
full title as such. If
shareholder is a corporation,
please sign in full corporate
name by President or other
authorized officer. If
shareholder is a partnership,
please sign in partnership name
by authorized person. (Please
note any change of address on
this proxy.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF R. G. BARRY
CORPORATION.
PLEASE FILL IN, SIGN, DATE AND RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.
Proxy Card
