<PAGE> 1
================================================================================
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
R. G. Barry Corporation Logo
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD N.W.
PICKERINGTON, OHIO 43147
March 27, 1998
Dear Fellow Shareholders:
You are cordially invited to attend the 1998 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 13, 1998, 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. The Board of Directors has nominated three directors, each for a term
to expire at the 2001 Annual Meeting. The Board of Directors recommends that you
vote FOR the nominees.
On behalf of the Board of Directors and management, I cordially invite you
to attend the Annual Meeting. 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,
Gordon Zacks signature
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
(614) 864-6400
Pickerington, Ohio
March 27, 1998
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 13, 1998, 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 transact such other business as may properly come before the Annual
Meeting and any adjournment(s) thereof.
Shareholders of record at the close of business on March 16, 1998, will be
entitled to receive notice of, and to vote at, the Annual Meeting and any
adjournment(s) 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,
Gordon Zacks signature
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 March 27, 1998, 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 13, 1998, or at any
adjournment(s) 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 $4,500
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 January 3, 1998 (the "1997 fiscal year") is enclosed herewith.
VOTING AT ANNUAL MEETING
Only shareholders of the Company of record at the close of business on
March 16, 1998, are entitled to receive notice of, and to vote at, the Annual
Meeting and any adjournment(s) thereof. At the close of business on March 16,
1998, 9,593,488 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.
Common shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Withhold Authority" or they are not marked at all. Broker/dealers who
hold their customers' common shares in street name may, under the applicable
rules of the exchange and other self-regulatory organizations of which the
broker/dealers are members, sign and submit proxies for such common shares and
may vote such common shares on routine matters, which, under such rules,
typically include the election of directors, but broker/dealers may not vote
such common shares on other matters, which typically include amendments to the
articles of incorporation of a corporation and the
<PAGE> 5
approval of certain compensation plans, without specific instructions from the
customer who owns such common shares. Proxies signed and submitted by
broker/dealers which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such proxies count toward
the establishment of a quorum.
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 16,
1998 (unless otherwise indicated):
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
---------------------------------------------------------------------------------
SOLE VOTING SOLE SHARED
AND SOLE VOTING INVESTMENT VOTING AND SHARED PERCENT
NAME AND ADDRESS INVESTMENT POWER POWER INVESTMENT INVESTMENT OF
OF BENEFICIAL OWNER POWER ONLY ONLY POWER POWER ONLY TOTAL CLASS(1)
- ------------------- ----------- ----------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Schneider Capital 395,650(2) -- 874,400(2) -- -- 1,270,050(2) 13.2%
Management Corp.
460 E. Swedesford Road
Suite 1080
Wayne, PA 19087
Gordon Zacks 427,582(3) 447,126(4) -- -- -- 874,708 9.0%
13405 Yarmouth Road N.W.
Pickerington, OH 43147
Dimensional Fund Advisors Inc. 326,382(5) -- 200,935(5) -- -- 527,317(5) 5.5%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Florence Zacks Melton 31,551 -- 447,126(4) -- -- 478,677 5.0%
1000 Urlin Avenue
Columbus, OH 43212
</TABLE>
- ---------------
(1) The percent of class is based upon the sum of 9,593,488 common shares
outstanding on March 16, 1998, 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 options exercisable within 60 days of March 16, 1998.
(2) Based on information contained in filings with the Securities and Exchange
Commission (the "SEC") (the latest of which is dated February 4, 1998),
Schneider Capital Management Corp., a registered investment adviser
("Schneider"), is deemed to have beneficial ownership of 1,270,050 common
shares as of December 31, 1997. Schneider has sole voting and investment
power with respect to 395,650 of those common shares and sole investment
power only with respect to 874,400 of those common shares.
(3) Includes 137,930 common shares deposited in the Zacks-Streim Voting Trust,
as amended (the "Voting Trust"), by Mr. Zacks of which he is the beneficial
owner (see Note (4) below), 112,223 common shares held of record by Mr.
Zacks, and 177,429 common shares as to which Mr. Zacks has the right to
acquire beneficial ownership upon the exercise of options exercisable within
60 days of March 16, 1998. Excludes 14,967 common shares held of record and
owned beneficially by the spouse of Mr. Zacks as to which Mr. Zacks has no
voting or investment power and disclaims beneficial ownership.
(4) Gordon Zacks is the voting trustee of the Voting Trust and exercises sole
voting power as to the 585,056 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 (3), Mr. Zacks is the beneficial owner of 137,930 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
447,126 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 447,126 common
shares.
2
<PAGE> 6
Mr. Zacks is a remainder beneficiary of the trust created by that will. The
Voting Trust will continue in existence until October 29, 2005, unless
extended or terminated in accordance with its terms.
(5) Based on information contained in filings with the SEC (the latest of which
is dated February 9, 1998), Dimensional Fund Advisors Inc., a registered
investment adviser ("Dimensional"), is deemed to have beneficial ownership
of 527,317 common shares as of December 31, 1997, 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
178,235 common shares which are owned by the Fund and 22,700 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 current executive officers and directors of the Company as a group as
of March 16, 1998:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
----------------------------------------------
COMMON SHARES WHICH
COMMON CAN BE ACQUIRED UPON
SHARES EXERCISE OF OPTIONS PERCENT
PRESENTLY EXERCISABLE WITHIN OF
NAME HELD 60 DAYS TOTAL CLASS(2)
---- --------- -------------------- --------- --------
<S> <C> <C> <C> <C>
Gordon Zacks(3)....................... 697,279(4) 177,429 874,708 9.0%
Leopold Abraham II.................... 6,666 6,250 12,916 (5)
Philip G. Barach...................... 8,331 6,250 14,581 (5)
Richard L. Burrell(3)................. 36,478(6) 59,110 95,588 1.0%
Christian Galvis(3)................... 70,396(7) 82,775 153,171 1.6%
William Giovanello.................... 666 6,250 6,916 (5)
Harvey M. Krueger..................... 22,221 6,250 28,471 (5)
Charles E. Ostrander(3)............... 65,960(8) 26,666 92,626 1.0%
Edward M. Stan........................ 36,557(9) 6,250 42,807 (5)
Daniel D. Viren(3).................... 0 23,416 23,416 (5)
All current directors and executive
officers
as a group (numbering 11)........... 952,730 416,284 1,369,014 13.7%
</TABLE>
- ---------------
(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 (3) and (4) thereto.
(5) Represents ownership of less than 1% of the outstanding common shares of the
Company.
(6) Includes 7,728 common shares held jointly by Mr. Burrell and his spouse.
(7) Excludes 572 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.
(8) Includes 2,118 common shares held jointly by Mr. Ostrander and his spouse,
and 6,000 common shares held by Mr. Ostrander as custodian for each of his
two minor daughters.
(9) Includes 2,220 common shares held jointly by Mr. Stan and his spouse.
Excludes 2,887 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.
3
<PAGE> 7
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on a review of the copies of the
reports furnished to the Company and written representations that no other
reports were required during the 1997 fiscal year, all filing requirements
applicable to officers, directors and beneficial owners of more than 10% of the
outstanding common shares of the Company under Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), were complied with;
except that Mr. Stan, a director of the Company, filed late one report covering
two transactions and Mr. Galvis, a director and executive officer of the
Company, filed late one report covering one transaction.
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 had the same principal occupation for more than five years.
<TABLE>
<CAPTION>
DIRECTOR OF
POSITION(S) HELD THE COMPANY NOMINEE
WITH THE COMPANY AND CONTINUOUSLY FOR TERM
NOMINEE AGE PRINCIPAL OCCUPATION(S) SINCE EXPIRING IN
------- --- ----------------------- ------------ -----------
<S> <C> <C> <C> <C>
Edward M. Stan.............. 73 President, Chesta Co., Inc., Reynoldsburg, 1971 2001
Ohio, importing; Secretary, Treasurer and
50% owner of Jani King, Columbus, Ohio,
janitorial services
Richard L. Burrell.......... 65 Senior Vice President -- Finance, Treasurer 1984 2001
and Secretary of the Company
Philip G. Barach............ 67 Private Investor(1) 1991 2001
</TABLE>
- ---------------
(1) Mr. Barach is also a director of Union Central Life Insurance Company,
Bernard Chaus, Inc., Glimcher Realty, REIT and SYMS Corp.
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(s) 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.
Article SIXTH of the Company's Articles of Incorporation provides that
shareholder nominations for election to the Company's Board of Directors must be
made in writing and must be delivered or mailed to the Secretary of the Company
and received by him not less than 30 days nor more than 60 days prior to any
meeting of shareholders called for the election of directors; provided, however,
that if less than 35 days' notice of the meeting is given to the shareholders,
such nomination must be mailed or delivered to the Secretary not later than the
close of business on the seventh day following the day on which the notice of
the meeting was mailed. Such notification must contain the following information
as to each proposed nominee who is not an incumbent director: (a) the name, age,
business address and, if known, the residence address of each proposed nominee;
(b) the principal occupation or employment of each proposed nominee; (c) the
total number of
4
<PAGE> 8
common shares that are beneficially owned by each proposed nominee and by the
nominating shareholder; and (d) any other information concerning each proposed
nominee that must be disclosed of nominees in proxy solicitations pursuant to
the SEC proxy rules. Each nomination must be accompanied by the written consent
of the proposed nominee to serve as a director. Nominations which the chairman
of the Annual Meeting determines are not made in accordance with the foregoing
procedure will be disregarded.
The following table gives certain information concerning the current
directors whose terms will continue after the Annual Meeting. Unless otherwise
indicated, each person has had the same 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............. 65 Chairman of the Board, Chief Executive 1959 1999
Officer and President of the Company
Christian Galvis......... 56 Executive Vice President -- Operations 1992 1999
and, since January 1998, Co-President
and Co-Chief Operating Officer of the
Barry Comfort Group, of the Company
Charles E. Ostrander..... 49 Executive Vice President -- Sales & 1992 1999
Marketing and, since January 1998,
Co-President and Co-Chief Operating
Officer of the Barry Comfort Group, of
the Company
Harvey M. Krueger........ 68 Vice Chairman, Lehman Brothers, Inc., 1980 2000
New York, New York, investment
bankers(1)
William Giovanello....... 78 President of Retail Requisites, 1985 2000
Columbus, Ohio, retail consultants
Leopold Abraham II....... 70 Chairman and Chief Executive Officer of 1993 2000
Associated Merchandising Corporation,
a retail merchandising and sourcing
company, from 1977 until his
retirement in 1993(2)
</TABLE>
- ---------------
(1) Lehman Brothers, Inc. has provided services to the Company during the
Company's 1998 fiscal year. Mr. Krueger is also a director of Automatic Data
Processing, Inc., IVAX Corporation, Bernard Chaus, Inc. and Electric Fuels
Corporation and serves on the Club Mediterrane International Advisory Board.
(2) Mr. Abraham is also a director of Liz Claiborne (until May 12, 1998), Galey
& Lord, Inc. and SIGNET Group plc and a Trustee of the Smith Barney Shearson
Income Funds and the Smith Barney Shearson Equity Funds.
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 six meetings during
the Company's 1997 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 auditors and to recommend to the Board of Directors a firm to serve
as the Company's independent auditors. The Audit Committee met three times
during the 1997 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 options
granted under the Company's stock option plans (where permitted) and its stock
purchase plan and to approve the compensation of the Company's executive
officers. The Compensation Committee met three times during the 1997 fiscal
year.
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 the executive officers.
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.
BASE SALARIES
The base salaries of the Company's executive officers and subsequent
adjustments to such base salaries are determined relative to the following
factors: (1) the criticality to the Company of the executive officer's job
function; (2) the individual's performance in his or her position; (3) the
individual's potential to make a significant contribution to the Company in the
future; and (4) a comparison of industry pay practices. The Committee believes
that all of these factors are important and the relevance of each factor varies
from individual to individual. The Committee has not assigned any specific
weight to any of these factors in the evaluation of an executive officer's base
salary.
An executive officer's individual performance is measured against goals and
objectives that have been previously discussed with the executive officer.
Consideration is given to the individual's contribution to the management team
and the individual's overall value and contribution to the Company. The
Committee relies on the Company's Chairman and Chief Executive Officer to make
recommendations to the Committee regarding the appropriate base salaries of the
executive officers other than the Chairman. Before making his base salary
recommendations to the Committee, the Company's Chairman obtains survey
information from one or more executive compensation consulting firms to
determine competitive compensation levels in each of the Company's senior
management positions. The Company has generally sought to provide base salary
that is competitive to the 75% to 90% for small to medium-sized consumer product
companies. This comparative data may not include the compensation paid by all of
the companies that are included in the "Apparel Industry" index which is used
for comparative purposes in the shareholder return graph (see "PERFORMANCE
GRAPH"). The Committee believes that it is critically important for the Company
to remain competitive in its management salaries in order to attract and retain
the small group of senior managers who are key to the Company's success.
6
<PAGE> 10
ANNUAL PROFIT-SHARING INCENTIVE BONUS PROGRAM
Since 1989, the Company has provided to its executive officers and other
members of management an annual profit-sharing 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 during the first quarter 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 100% 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 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. For 1997, participants in the Incentive
Program received bonuses equal to 51% of their respective maximum award
opportunities under the Program for 1997.
MR. ZACKS' 1997 COMPENSATION
Mr. Zacks and the Company entered into a four-year Employment Agreement
(the "Employment Agreement") in 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 is
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.
The Committee can increase Mr. Zacks' base salary above the minimum level
established by the Employment Agreement to reflect corporate performance. Mr.
Zacks' base salary was increased to $490,000 in 1997, to reflect the Company's
excellent 1996 performance. The Committee will evaluate Mr. Zacks' base salary
on an annual basis and will determine whether an increase is warranted based on
the Committee's consideration of a number of subjective and objective criteria,
including the Company's financial results, positive changes in the Company's
competitive position, the success of the Company's strategic planning,
achievements in the areas of customer satisfaction and product innovation and
overall leadership. The Committee feels that all of these factors are
significant and, therefore, no specific weight has been assigned to these
factors in the evaluation of Mr. Zacks' base salary. Because the Employment
Agreement requires that the Company pay to Mr. Zacks a minimum annual base
salary, the Committee does not have the ability to reduce the base salary below
such minimum to reflect the Company's performance. However, the minimum base
salary in the Employment Agreement was established by the Committee based upon
advice from a nationally recognized executive compensation consulting firm that
the base salary provided for in the Employment Agreement was consistent with
base salaries paid to executive officers of comparable companies. This
comparative data was compiled and provided by the Company's executive
compensation consulting firm and may or may not have included the companies
included in the Performance Graph.
Mr. Zacks' target award opportunity for 1997 was 75% of his base salary,
which was established by the Committee in March of 1997. Mr. Zacks' target award
opportunity under the Incentive Program for 1997 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
7
<PAGE> 11
comparable companies. Based upon the Company's 1997 fiscal year results as
compared to 1997 target profit goals established by the Committee and the Board
in early 1997, all employees participating in the Incentive Program, including
Mr. Zacks, received 51% of his or her target award opportunity. In other words,
Mr. Zacks' 1997 bonus was tied directly to the profitability of the Company in
1997.
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.
All stock options are granted with exercise prices at least equal to the market
value of the Company's common shares on the dates of grant. If there is no
appreciation in the market value of the Company's common shares, the options are
valueless. The Committee grants options based on its subjective determination of
the relative current and future contribution that each prospective optionee has
or may make to the long-term welfare of the Company. The OPTION GRANTS IN LAST
FISCAL YEAR table shows the options granted to each of the named executive
officers during the 1997 fiscal year based upon such subjective determination.
Each of such options was granted at 100% of the fair market value of the
Company's common shares on the date of grant (other than the incentive stock
option covering 16,873 common shares granted to Mr. Zacks which was granted at
110% of fair market value).
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162(m) no longer permits the Company to
deduct certain non-performance-based compensation in excess of $1,000,000 per
taxable year paid to the Chief Executive Officer and the other four most highly
compensated executives required to be named in the Proxy Statement ("Covered
Employees"). The Company may continue to deduct compensation paid to its Covered
Employees in excess of $1,000,000 if the payment of such compensation qualifies
for an exception, including an exception for certain performance-based
compensation.
The Committee believes that Section 162(m) should not cause the Company to
be denied a deduction for 1997 compensation paid to the Covered Employees. The
Committee will continue to work to structure components of its executive
compensation package to achieve maximum deductibility under Section 162(m) while
at the same time considering the goals of its executive compensation philosophy.
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, Chairman Harvey M. Krueger
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Harvey M. Krueger, who is Vice Chairman of Lehman Brothers, Inc., is a
member of the Compensation Committee of the Company's Board of Directors. Lehman
Brothers, Inc., an investment banking firm, has provided services to the Company
during the Company's 1998 fiscal year.
8
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the last three fiscal years, cash
compensation paid by the Company to, as well as certain other compensation paid
or earned for those years by, 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. All dollar amounts are rounded down to the
nearest whole dollar.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- -----------------------
AWARDS PAYOUTS
---------- ----------
SECURITIES
BASE UNDERLYING LTIP ALL
NAME AND FISCAL SALARY OTHER ANNUAL OPTIONS/ PAYOUTS OTHER
PRINCIPAL POSITION YEAR ($) BONUS($) COMPENSATION($) SARS(#) ($) COMPENSATION
------------------ ------ ------ -------- --------------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gordon Zacks: 1997 $490,000 $187,425 $48,743(1)(2)(3) 50,000 $ 0 $6,996(4)
Chairman of the Board, 1996 $468,000 $351,000 $46,498(1)(3)(5) 18,750(6) $ 0 $4,693
Chief Executive Officer 1995 $450,000 $ 0 $41,953(1)(3)(7) 0 $ 0 $1,456
and President
Charles E. Ostrander: 1997 $258,000 $ 78,948 $13,782(1)(2) 25,000 $ 0 $3,685(4)
Executive Vice President -- 1996 $245,000 $147,000 $13,782(1)(5) 12,499(6) $ 0 $2,869
Sales & Marketing and 1995 $235,000 $ 0 $13,782(1)(7) 0 $11,620 $ 0
Co-President and Co-Chief
Operating Officer of
Barry Comfort Group
Christian Galvis: 1997 $230,000 $ 70,380 $12,389(1)(2) 25,000 $ 0 $3,305(4)
Executive Vice President -- 1996 $200,000 $120,000 $10,427(1)(5) 12,499(6) $ 0 $2,494
Operations and Co-President 1995 $190,000 $ 0 $ 8,022(1)(7) 0 $ 0 $ 613
and Co-Chief Operating Officer
of Barry Comfort Group
Richard L. Burrell: 1997 $166,000 $ 50,796 $22,342(1)(2) 15,000 $ 0 $2,037(4)
Senior Vice 1996 $158,000 $ 94,800 $18,925(1)(5) 12,500(6) $ 0 $ 123
President -- Finance, 1995 $151,500 $ 0 $19,143(1)(7) 0 $ 8,300 $ 507
Treasurer and Secretary
Daniel D. Viren: 1997 $158,000 $ 36,261 $12,684(1)(2) 15,000 $ 0 $2,256(4)
Senior Vice President -- 1996 $151,000 $ 67,950 $12,689(1)(5) 9,375(6) $ 0 $1,885
Administration 1995 $141,539 $ 0 $12,321(1)(7) 0 $ 0 $ 469
</TABLE>
- ---------------
(1) "Other Annual Compensation" for each of 1997, 1996 and 1995 includes premium
payments in the amounts of $19,088, $4,182, $6,165, $9,544 and $4,537 on
behalf of Messrs. Zacks, Ostrander, Galvis, Burrell and Viren, respectively,
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.
(2) "Other Annual Compensation" for 1997 also includes the amounts of $19,275,
$9,600, $6,224, $12,798 and $8,147, reflecting either the amount of income
deemed, under applicable federal income tax regulations, to have been
received, as a result 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.
(3) "Other Annual Compensation" for Mr. Zacks includes: (a) payments of $4,991,
$4,252, and $4,061 made during 1997, 1996, and 1995, 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
$2,989, $2,546, and $2,432 made during 1997, 1996, and 1995, 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 1997, 1996 and 1995.
(4) Includes contributions to the R. G. Barry Corporation Deferred Compensation
Plan (the "Deferred Compensation Plan") on behalf of the named executive
officers to match 1997 deferred contributions
9
<PAGE> 13
(included under "Salary") made by them under the Deferred Compensation Plan
and interest deemed to have been earned with respect to each executive
officer's account under the Deferred Compensation Plan.
(5) "Other Annual Compensation" for 1996 also includes the amounts of $18,212,
$9,600, $4,311, $9,382 and $8,153, 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.
(6) Reflects adjustments for 5-for-4 share split on June 3, 1996.
(7) "Other Annual Compensation" for 1995 also includes the amounts of $13,972,
$9,600, $4,262, $9,600 and $7,785, reflecting either the amount of income
deemed, under applicable federal income tax regulations, to have been
received, as a result of each of their personal use of cars provided by the
Company, by, or the car allowance provided to, Messrs. Zacks, Ostrander,
Galvis, Burrell and Viren, respectively.
GRANTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning individual grants of
options made under the R. G. Barry Corporation 1997 Incentive Stock Plan (the
"1997 Plan") and the R. G. Barry Corporation 1988 Stock Option Plan (the "1988
Plan") during the 1997 fiscal year to each of the named executive officers. No
stock appreciation rights were granted during the 1997 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION --------------------------
NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH)(1) DATE 5% 10%
---- ------------- ------------------ -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gordon Zacks...................... 16,873(2) 9.2% $12.10 5/15/02 $ 56,400 $124,700
33,127(3) 18.2% $11.00 5/15/07 $229,200 $580,800
Charles E. Ostrander.............. 15,000(2) 8.2% $11.00 5/15/07 $103,800 $263,000
10,000(3) 5.5% $11.00 5/15/07 $ 69,200 $175,300
Christian Galvis.................. 15,000(2) 8.2% $11.00 5/15/07 $103,800 $263,000
10,000(3) 5.5% $11.00 5/15/07 $ 69,200 $175,300
Richard L. Burrell................ 13,521(2) 7.4% $11.00 5/15/07 $ 93,500 $237,100
1,479(3) 0.8% $11.00 5/15/07 $ 10,200 $ 25,900
Daniel D. Viren................... 14,307(2) 7.8% $11.00 5/15/07 $ 99,000 $250,800
693(3) 0.4% $11.00 5/15/07 $ 4,800 $ 12,200
</TABLE>
- ---------------
(1) 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
hundred dollars.
(2) These incentive stock options were granted under the 1997 Plan (except those
granted to Mr. Viren, which were granted under the 1988 Plan) on May 16,
1997, and become exercisable as follows: (a) for Mr. Zacks, as to 12,500
common shares on the first anniversary of the grant date, as to 8,608 common
shares on the second anniversary of the grant date, as to 8,609 common
shares on the third anniversary of the grant date and as to 3,410 common
shares on the fourth anniversary of the grant date; (b) for each of Messrs.
Ostrander and Galvis, as to 5,000 common shares on each of the third, fourth
and fifth anniversaries of the grant date; (c) for Mr. Burrell, as to 1,613
of the common shares on the first anniversary of the grant date, as to 2,908
on the second anniversary of the grant date and as to 3,000 common shares on
each of the third, fourth and fifth anniversaries of the grant date; and (d)
for Mr. Viren, as to 2,307 common shares on the first anniversary of the
grant date and as to 3,000 common shares on each of the second, third,
fourth and fifth anniversaries of the grant date; provided, however,
10
<PAGE> 14
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.
(3) These non-qualified stock options were granted under the 1997 Plan (except
those granted to Mr. Viren, which were granted under the 1988 Plan) on May
16, 1997, and become exercisable as follows: (a) for Mr. Zacks, as to 3,892
common shares on the second anniversary of the grant date, as to 3,891
common shares on the third anniversary of the grant date and as to 9,090
common shares on the fourth anniversary of the grant date; (b) for Messrs.
Ostrander and Galvis, as to 5,000 common shares on each of the first and
second anniversaries of the grant date; (c) for Mr. Burrell, as to 1,387
common shares on the first anniversary of the grant date and as to 92 common
shares on the second anniversary of the grant date; and (d) for Mr. Viren,
as to 693 common shares on the first anniversary of the grant date;
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 1997 fiscal year by each of the named executive officers
and unexercised options and stock appreciation rights held as of the end of the
1997 fiscal year by each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
SECURITIES OPTIONS/SARS AT SARS AT FY-END
UNDERLYING FY-END(#)(1) ($)(2)(3)
OPTIONS ------------------------------ ---------------------------
NAME EXERCISED(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE(4) EXERCISABLE UNEXERCISABLE
---- ------------ ----------------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gordon Zacks.......... 0 -- 135,241 89,063 $656,900 $ 83,100
Charles E.
Ostrander........... 56,951 $344,194 2,500 62,776 $ 0 $126,600
Christian Galvis...... 55,000 $533,500 58,609 62,776 $291,800 $126,600
Richard L. Burrell.... 0 -- 44,721 38,334 $285,400 $ 71,600
Daniel D. Viren....... 11,111 $ 87,971 19,653 35,833 $ 77,700 $ 71,600
</TABLE>
- ---------------
(1) Reflects adjustments for 4-for-3 share split on June 1, 1994, for 4-for-3
share split on September 1, 1995, and for 5-for-4 share split on June 3,
1996.
(2) Rounded to nearest hundred dollars.
(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 January 2, 1998 ($11.50)
less the exercise price of in-the-money options and stock appreciation
rights at the end of the 1997 fiscal year.
(4) 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.
PENSION PLANS
The Company's Pension Plan (the "Plan") provides for the payment of monthly
benefits to salaried employees at "normal retirement date" (age 65) based upon
48% (45% prior to January 1, 1996) 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
11
<PAGE> 15
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:
PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO WERE PARTICIPANTS
IN THE SUPPLEMENTAL PLAN ON DECEMBER 31, 1988)
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS
FINAL 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
525,000 315,000 315,000 315,000 315,000 315,000
575,000 345,000 345,000 345,000 345,000 345,000
625,000 375,000 375,000 375,000 375,000 375,000
675,000 405,000 405,000 405,000 405,000 405,000
</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:
12
<PAGE> 16
PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO BECAME PARTICIPANTS
IN THE SUPPLEMENTAL PLAN AFTER DECEMBER 31, 1988)
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS
FINAL 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
525,000 131,250 196,875 262,500 315,000 315,000
575,000 143,750 215,625 287,500 345,000 345,000
625,000 156,250 234,375 312,500 375,000 375,000
675,000 168,750 253,125 337,500 405,000 405,000
</TABLE>
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 1997 fiscal year was $524,718, $240,139, $192,932, $176,789 and $143,838
for Messrs. Zacks, Ostrander, Galvis, Burrell and Viren, respectively. Messrs.
Zacks, Ostrander, Galvis, Burrell and Viren have approximately 42, 11, 7, 31 and
9 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 (a "Non-Employee
Director") receives $12,000 annually for services rendered to the Company as a
director. In addition, Messrs. Giovanello and Krueger receive $5,000 annually
for serving as Chairman of the Compensation and Audit Committees, respectively.
In addition, each Non-Employee Director receives $1,000 for each regular meeting
and $500 for each telephonic meeting of the Company's Board of Directors
attended. All members of a committee of the Board, other than the chairman of
such committee, receive a fee of $500 for each attended meeting that occurs on
the same day as a Board meeting. All members of a committee of the Board,
including the chairman of such committee, receive (a) a fee of $1,000 for
attending a committee meeting that does not occur on the same day as a Board
meeting and (b) a fee of $500 for participating in a telephonic meeting of the
committee. Directors who are also employees of the Company receive no separate
compensation for serving as directors.
Each Non-Employee Director has been granted a non-qualified stock option
(an "NQSO") to purchase 6,250 common shares of the Company pursuant to the R. G.
Barry Corporation Stock Option Plan for Non-Employee Directors. Any person who
becomes a Non-Employee Director in the future will automatically be granted an
NQSO to purchase 6,250 common shares effective on the third business day
following the date on which he is appointed or elected to the Board of
Directors. The exercise price of each NQSO granted to a Non-Employee Director is
equal to the fair market value of the common shares on the date of grant. NQSO's
13
<PAGE> 17
granted to Non-Employee Directors have terms of five years and become
exercisable six months after the grant date.
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 1997, the Company accrued royalty payments (which were paid
in 1998) aggregating $96,630 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 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 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'
14
<PAGE> 18
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.
Charles E. Ostrander, the Executive Vice President-Sales & Marketing and a
Co-President and Co-Chief Operating Officer of the Barry Comfort Group of the
Company, and the Company entered into an Executive Employment Agreement,
effective as of January 4, 1998 (the "Ostrander Employment Agreement"), which
provides for the employment of Mr. Ostrander by the Company as a Co-President of
its Barry Comfort Group and as a senior executive officer of the Company for a
term of five years. Mr. Ostrander is entitled to receive a minimum annual salary
of $258,000, subject to increases that from time to time may be granted by the
Board of Directors. In addition to his annual salary, Mr. Ostrander 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. Ostrander's employment is terminated by the Company
without "cause" (as defined in the Ostrander Employment Agreement) or by Mr.
Ostrander for "good reason" (as defined in the Ostrander 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.
Ostrander by the Company for services rendered during the 12-month period
immediately preceding the date of termination. The Ostrander Employment
Agreement also provides for the continuation of Mr. Ostrander's salary for a
period of time following a permanent and total disability.
Christian Galvis, the Executive Vice President -- Operations and a
Co-President and Co-Chief Operating Officer of the Barry Comfort Group of the
Company, and the Company entered into an Executive Employment Agreement,
effective as of January 4, 1998 (the "Galvis Employment Agreement"), which
provides for the employment of Mr. Galvis by the Company as a Co-President of
its Barry Comfort Group and as a senior executive officer of the Company for a
term of five years. Mr. Galvis is entitled to receive a minimum annual salary of
$258,000, 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.
Messrs. Ostrander and Galvis have each also entered into a Restricted Stock
Agreement, effective as of January 4, 1998, with the Company (the "Stock
Agreement"), which provides for the issuance of an aggregate of 10,000 common
shares of the Company to the named executive officer over a period of up to
eight fiscal years of the Company. The named executive officer will be entitled
to receive 1,250 common shares on the last business day of each fiscal year of
the Company, beginning with the 1998 fiscal year so long as he is employed by
the Company on such date, until the earlier of the following events occurs: (a)
the named executive officer has received or has become entitled to receive all
of the common shares covered by the Stock Agreement or (b) the named executive
officer's right to receive common shares has terminated under the terms of the
Stock Agreement. In addition, each named executive officer will receive an
additional 1,250 common shares in respect of any fiscal year of the Company in
which the Company achieves 120% of the "target profit goal" established by the
Company's Board of Directors for that fiscal year in a manner consistent with
past practices. If the named executive officer's employment with the Company
terminates for any reason (other than within two years following a "change in
control" (as defined in the Stock Agreement)), the named executive officer will
forfeit the right to receive any additional common shares following such
termination of employment other than those previously earned under the terms of
the Stock Agreement. If the named executive officer's employment is terminated
by the Company without "cause" (as defined in the
15
<PAGE> 19
Stock Agreement) or by the named executive officer for "good reason" (as defined
in the Stock Agreement) within two years following a "change in control," he
will be entitled to be issued all of the common shares subject to the Stock
Agreement which have not previously been issued.
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, effective as of
January 4, 1998, with the Company (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 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.
16
<PAGE> 20
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 New York Stock Exchange and an index for Media
General Industry Group 57 -- Textiles/Apparel ("Apparel Industry"), for the
five-year period ended January 3, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURNS OF R. G. BARRY CORPORATION
COMMON SHARES, NYSE MARKET INDEX AND
APPAREL INDUSTRY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NYSE APPAREL RGBARRY
(FISCAL YEAR COVERED) MARKET INDEX INDUSTRY CORPORATION
<S> <C> <C> <C>
1992 $ 100.00 $ 100.00 $ 100.00
1993 113.54 96.82 206.78
1994 111.33 89.00 201.13
1995 144.36 112.86 470.05
1996 173.90 130.45 338.98
1997 228.78 138.59 350.28
</TABLE>
Assumes $100 invested on 1/3/93 and dividends reinvested; fiscal year ends on
1/3/98, last trade 1/2/98.
INDEPENDENT AUDITORS
The Company engaged KPMG Peat Marwick LLP as its independent auditors to
audit its consolidated financial statements for the 1997 fiscal year. KPMG Peat
Marwick LLP, together with its predecessor Peat, Marwick, Mitchell & Co., has
served as independent auditors for the Company since 1966. The Company's Audit
Committee will make its selection of the Company's independent auditors for the
1998 fiscal year at its next meeting, which will be held after the Annual
Meeting.
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.
17
<PAGE> 21
SHAREHOLDER PROPOSALS FOR
1999 ANNUAL MEETING
Any qualified shareholder who desires to present a proposal for
consideration at the 1999 Annual Meeting of Shareholders must submit the
proposal in writing to the Company. If the proposal is received by the Company
on or before November 27, 1998, 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 1997 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 1998 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(s) 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,
Gordon Zacks Signature
Gordon Zacks,
Chairman of the Board, President
and Chief Executive Officer
March 27, 1998
18
<PAGE> 22
R. G. BARRY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 13, 1998
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 13, 1998, at the Company's executive
offices, 13405 Yarmouth Road, N.W., Pickerington, Ohio, at 2:30 P.M., local
time, and any adjournment(s) thereof, and to vote all of the common shares which
the undersigned is entitled to vote at such Annual Meeting or at any
adjournment(s) thereof:
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. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR
ANY ADJOURNMENT(S) 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. The undersigned acknowledges receipt of the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement for the May 13, 1998 meeting
and Annual Report to Shareholders for the fiscal year ended January 3, 1998.
R. G. BARRY CORPORATION
P.O. BOX 11152
NEW YORK, NY 10203-0152
(Continued, and to be executed and dated on other side.)
<PAGE> 23
1. ELECTION OF DIRECTORS
/ / FOR all nominees / / WITHHOLD AUTHORITY / / *EXCEPTIONS
listed below to vote for all
nominees listed
below
NOMINEES: Edward M. Stan Richard L. Burrell Philip G. Barach
*(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT(S) THEREOF.
Address Change / /
Mark Here
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 or other entity, please sign
in entity name by authorized person.
(Please note any change of address on
this proxy.)
Dated:____________, 1998 _________________________________
Signature of Shareholder(s)
_________________________________
Signature of Shareholder(s)
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Votes must be indicated (X) in Black or Blue ink. /X/
