PAGE
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
REEBOK INTERNATIONAL LTD.
(Name of Registrant as Specified In Its Charter)
REEBOK INTERNATIONAL LTD.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
( ) 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
<PAGE>
REEBOK INTERNATIONAL LTD.
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1994
Notice is hereby given that the Annual Meeting of
Shareholders of Reebok International Ltd. will be held at The
First National Bank of Boston, First Floor Auditorium, 100
Federal Street, Boston, Massachusetts at 10:00 a.m. local time on
Tuesday, May 3, 1994 for the following purposes:
1. To elect four Class I members of the Board of
Directors.
2. To approve an amendment to the 1987 Employee Stock
Purchase Plan to increase from 1,000,000 to 2,000,000
the number of shares of Common Stock authorized for
issuance.
3. To approve the 1994 Equity Incentive Plan.
4. To approve the Equity and Deferred Compensation Plan
for Directors.
5. To transact any other business that may properly come
before the Meeting or any adjournment thereof.
Stockholders of record at the close of business on March 10,
1994 are entitled to notice of and to vote at the Meeting and any
adjournment thereof.
If you are unable to be present in person, please sign and
date the enclosed proxy and return it promptly in the enclosed
envelope.
By Order of the Board of Directors
JOHN E. BEARD
Clerk
March 30, 1994
PAGE
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
May 3, 1994
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of
Directors of Reebok International Ltd. ("Reebok" or the
"Company") to be voted at the Annual Meeting of Shareholders to
be held on May 3, 1994 or at any adjournment thereof (the
"Meeting"). The cost of solicitation of proxies on behalf of the
Company's management will be borne by Reebok. Directors,
officers and employees of Reebok may also solicit proxies by
telephone, telegraph or personal interview. Reebok will
reimburse banks, brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in
sending proxy materials on behalf of the Company's management to
the beneficial owners of shares.
Only shareholders of record at the close of business on
March 10, 1994 are entitled to notice of and to vote at the
Meeting. There were 82,621,350 shares of the Company's common
stock, $.01 par value per share ("Common Stock"), outstanding on
that date, each of which is entitled to one vote. Under the by-
laws of the Company, a majority of the shares of Common Stock
issued and outstanding and entitled to vote will constitute a
quorum for the Meeting. If a quorum is present, the four
nominees for director who receive the greatest number of votes
properly cast (or a plurality of the votes) will be elected
directors. An affirmative majority of the vote properly cast at
the Meeting in person or by proxy is required for approval of
proposals 2, 3 and 4. Votes cast by proxy or in person at the
Annual Meeting will be counted by persons selected by the Company
to act as election inspectors for the Meeting.
The election inspectors will count shares represented by
proxies that withhold authority to vote for a nominee for
election as a director or that reflect abstentions and "broker
non-votes" (i.e., shares represented at the Meeting held by
brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote
and (ii) the broker or nominee does not have the discretionary
voting power on a particular matter) only as shares that are
present and entitled to vote on the matters for purposes of
determining the presence of a quorum, but neither proxies that
withhold authority (without naming an alternative nominee),
abstentions nor broker non-votes will be counted as votes cast at
the Annual Meeting. Such proxies therefore will have no effect
on the outcome of voting with respect to the election of
directors at the meeting, but will have the same effect as votes
cast against proposals 2, 3 and 4.
Shares represented by proxies in the form enclosed, if
properly executed and returned and not revoked, will be voted at
the Meeting. To be voted, proxies must be filed with the Clerk
prior to voting. Proxies may be revoked at any time before
exercise by filing a notice of such revocation with the Clerk.
Proxies will be voted as specified by the shareholders. Where
specific choices are not indicated, proxies will be voted FOR the
election of all of the nominees for director identified below and
FOR proposals 2, 3 and 4 and in the discretion of the named
proxies as to any other matter that may come before the meeting
or any adjournments thereof.
The Annual Report to Shareholders for Reebok's fiscal year
ended December 31, 1993 has been mailed with this Proxy
Statement. This Proxy Statement and the enclosed proxy were
mailed to shareholders on the same date as the date of the Notice
of Annual Meeting. The principal executive offices of Reebok are
located at 100 Technology Center Drive, Stoughton, Massachusetts
02072.
PAGE
<PAGE>
ELECTION OF DIRECTORS
Pursuant to the provisions of Section 50A of Chapter 156B of
the Massachusetts General Laws, the Board of Directors is divided
into three classes, having staggered terms of three years each.
Under Section 50A and the by-laws of the Company, the Board of
Directors may determine the total number of directors and the
number of directors to be elected at any Annual Meeting of
Shareholders or Special Meeting in lieu thereof. The Board of
Directors has fixed at eleven the total number of directors and
has fixed at four the number of directors to be elected at the
1994 Annual Meeting. Of the current total of eleven directors,
four Class III directors have terms expiring at the 1996 Annual
Meeting, three Class II directors have terms expiring at the 1995
Annual Meeting, and four Class I directors have terms expiring at
the 1994 Annual Meeting. The four directors whose terms expire
at the 1994 Annual Meeting have been nominated by the Board of
Directors for reelection at such meeting. Each Class I director
elected at the 1994 Annual Meeting will serve until the 1997
Annual Meeting of Shareholders or Special Meeting in lieu
thereof, and until that director's successor is elected and
qualified.
INFORMATION WITH RESPECT TO NOMINEES
Unless authority is withheld, proxies in the accompanying
form will be voted in favor of electing as Class I directors, to
hold office until the Annual Meeting of Shareholders in 1997 or
Special Meeting in lieu thereof, and until their respective
successors are elected and qualified, the four persons identified
in the table below. If the proxy is executed in such a manner as
to withhold authority to vote for one or more nominees for
director, such instructions will be followed by the persons named
as proxies.
All of the nominees for director are now Class I members of
the Board of Directors. The Company has no reason to believe
that any of the nominees will be unable to serve. In the event
that any nominee should not be available, the persons named in
the proxy will vote for the others and may vote for a substitute
for such nominee.
Listed below are the nominees for Class I director, with
information showing the business experience and current public
directorships, if any, of each, the age of each and the year each
was first elected a director of the Company.
Business Experience and Director
Name Current Directorships Age since
Jill Elikann Barad..President, Chief Operating 42 1992
Officer (since July 1992)
and a Director (since November
1991) of Mattel, Inc., a toy
company; President-Mattel USA
(from 1990 to July 1992);
President-girls and activity
toys division of Mattel, Inc.
(1989 to 1990).
John H. Duerden ....Executive Vice President of the 53 1991
Company with responsibility
for the Reebok Division's global
sales operations (since February
1994); President, International
Operations, Reebok Division
of the Company (from September
1992 to January 1994 and from
October 1988 to February 1990);
President of the Reebok Division
of the Company (February 1990 to
September 1992); Director of
Sunglass Hut International, a
retailer of sunglasses.
PAGE
<PAGE>
Business Experience and Director
Name Current Directorships Age since
Geoffrey Nunes .....Senior Vice President and 63 1986
General Counsel, Millipore
Corporation, a leader in
the field of separation
technology.
John A. Quelch .....Sebastian S. Kresge Professor 42 1985
of Marketing at the Graduate
School of Business
Administration, Harvard University;
Director of WPP Group
plc, a multi-national
marketing services company.
Class II members of the Board of Directors having terms of
office expiring at the 1995 Annual Meeting of Shareholders are as
follows:
Business Experience and Director
Name Current Directorships Age since
Paul R. Duncan .....Executive Vice President 53 1989
(since 1990) and Chief
Financial Officer (since
1985) of the Company; Senior
Vice President of the Company
(1985-1990); Director of BGS
Systems, Inc., a computer
software development company;
Director of Cabletron Systems,
Inc., a computer networking
company.
Richard G. Lesser ..President of T.J. Maxx, an 59 1988
off-price branded apparel
retailer and division of
TJX Companies, Inc.
William M. Marcus ..Executive Vice President, 56 1981
Treasurer and a Director
of American Biltrite Inc.,
a manufacturer of flooring
and tape products.
Class III members of the Board of Directors having terms of
office expiring at the 1996 Annual Meeting of Shareholders are as
follows:
Business Experience and Director
Name Current Directorships Age since
Paul B. Fireman ....Chief Executive Officer 50 1979
(since 1979) and Chairman
of the Board of Directors
of the Company; President
of the Company (from 1979 to
March 1987 and since December
1989); Director of Abiomed,
Inc., a manufacturer of
medical devices.
Daniel E. Gill .....Chairman and Chief Executive 57 1992
Officer and Director
of Bausch & Lomb, a health
care and optics company;
Director of Rochester Telephone
Corporation, a public
utility.
PAGE
<PAGE>
Business Experience and Director
Name Current Directorships Age since
Robert Meers .......Executive Vice President of 50 1993
the Company with responsi-
bility for its Specialty
Business Units (since
February 1994); President,
Reebok Division U.S.
Operations (from November
1990 to January 1994) and
Canadian Operations (January
1993 to January 1994); Senior
Vice President, Sales and
Marketing of the Company
(July 1990 to November
1990); Senior Vice
President, Sales of The
Rockport Company, Inc. (from
December 1988 to July 1990).
Bertram M. Lee, Sr. Chairman of the Board of 55 1990
BML Associates Inc., a
holding company;
Chairman and
Treasurer of Albimar
Communications Co., a
broadcast communications
company; and President
of KELLEE Communications
Group, a pay telephone
company.
During 1993, the Board of Directors held five meetings. All
of the directors attended at least 75% of the Board and relevant
committee meetings during 1993. For information on compensation
of Directors, see "Compensation of Directors"
below.
The Audit Committee, composed of Messrs. Quelch, Lee and
Marcus, held two meetings during 1993. The Audit Committee
recommends to the Board of Directors the independent public
accountants to be engaged by the Company; reviews with such
accountants and management the Company's internal accounting
procedures and controls; and reviews with such accountants the
scope and results of their audit of the consolidated financial
statements of the Company.
The Compensation and Nominating Committee (the "Compensation
Committee"), composed of Messrs. Lesser (until December 1, 1993),
Gill and Nunes and Ms. Barad, administers the Company's stock
option and compensation plans, sets compensation for the Chief
Executive Officer, reviews the compensation of the other
executive officers and provides recommendations to the Board
regarding compensation matters. The Committee also recommends
individuals to serve as directors of the Company and will
consider nominees recommended by security holders.
Recommendations by security holders should be submitted in
writing to the Committee, in care of the President of the
Company. The Compensation Committee held three meetings during
1993.
The Executive Committee, composed of Messrs. Fireman, Duncan
and Nunes, did not meet during 1993.
COMPENSATION OF DIRECTORS
During 1993, each director who was not an officer or
employee of the Company received $20,000 annually, plus $2,000
for each committee chairmanship held and $1,000 for each
directors' meeting and each committee meeting attended, plus
expenses. Effective in 1994, each director who is not an officer
or employee of the Company is entitled to receive $25,000
annually, plus $2,000 for each committee chairmanship held,
$2,000 for each directors' meeting attended and $1,000 for each
committee meeting attended, plus expenses.
PAGE
<PAGE>
Directors who are not officers or employees of the Company
may elect to defer all or a portion of their fees pursuant to the
Company's Deferred Cash Compensation Plan for Directors (the
"Cash Deferral Plan"). Interest is credited quarterly on the
deferred compensation at a rate equal to the Merrill Lynch
Corporate Bond Rate then in effect. Distributions of the amount
deferred are to be made at the earlier of the date specified by
the director or the date on which the director ceases to be a
director of the Company.
Pursuant to the 1987 Stock Option Plan for Directors (the
"1987 Directors' Plan"), each Eligible Director, as defined in
the 1987 Directors' Plan, is granted an option to purchase 10,000
shares of Common Stock on the date of his or her first election.
After the initial grant each Eligible Director is granted an
option to purchase 4,000 shares of Common Stock (or a pro rata
portion based on the date of his or her election) each year on
the anniversary of stockholder approval of the 1987 Directors'
Plan. The exercise price of all options granted under the 1987
Directors' Plan is the fair market value of Common Stock on the
date of grant, and such options become exercisable for one-third
of the shares covered thereby on each of the first through third
anniversaries of the date of grant. Of the current directors,
Messrs. Fireman, Duncan, Duerden and Meers are not Eligible
Directors.
It is proposed that the Cash Deferral Plan and the 1987
Directors' Plan be replaced by a new plan which will combine the
features of both existing plans, add a new feature permitting
directors to invest their deferred compensation in the Company's
Common Stock and change the formula for director stock option
grants. See "Approval of Equity and Deferred Compensation Plan
for Directors" below.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information with
respect to the shares of Common Stock owned on March 10, 1994 by
persons owning of record or, to the knowledge of the Company,
beneficially 5% or more of the outstanding shares of Common
Stock. It also shows ownership by each director and nominee for
director, by each executive officer named in the Summary
Compensation Table below and by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Common Stock
Beneficially Percent
Name Owned <1> Of Class <2>
<S> <C> <C>
Paul B. Fireman <3><6>............ 7,688,156 9.03%
Phyllis Fireman <4>............... 6,067,002 7.13%
Jill E. Barad <6>................. 4,999 *
John H. Duerden <6>............... 123,750 *
Paul R. Duncan <6>................ 187,389 *
Daniel E. Gill <6>................ 8,999 *
Bertram M. Lee, Sr. <6>........... 15,999 *
Richard G. Lesser <6><7>.......... 30,005 *
William M. Marcus <5><6>.......... 623,686 *
Robert Meers <6>.................. 47,201 *
Geoffrey Nunes <6>................ 31,199 *
John A. Quelch <6>................ 27,533 *
Kenneth I. Watchmaker ............ 814 *
Directors and executive officers
as a group (15 persons) <6> <8>. 8,946,056 10.51%
PAGE
<PAGE>
* Less than 1%.
<1> Except as otherwise noted, all persons and entities have
sole voting and investment power over their shares. All
amounts shown in this column include shares obtainable upon
exercise of stock options exercisable within 60 days of the
date of this table.
<2> Computed on the basis of 85,138,471 shares: 82,621,350
shares outstanding and 2,517,121 shares subject to options
exercisable within 60 days of the date of this table.
<3> Excludes 6,067,002 shares, as to which Mr. Fireman disclaims
beneficial ownership, that are beneficially owned by
Phyllis Fireman, his wife.
<4> Excludes 7,688,156 shares, as to which Mrs. Fireman
disclaims beneficial ownership, that are beneficially owned
by Paul Fireman, her husband.
<5> Excludes 99,261 shares held by Mr. Marcus' wife and child,
as to which he disclaims beneficial ownership.
<6> Includes for the following persons, the shares set forth
below, which shares are subject to stock options exercisable
within 60 days of the date of this table: Paul B. Fireman,
1,500,000 shares; Jill E. Barad, 3,999 shares; John H.
Duerden, 123,750 shares; Paul R. Duncan, 173,750 shares;
Daniel E. Gill, 7,999 shares; Bertram M. Lee, Sr., 15,999
shares; Richard G. Lesser, 22,999 shares; William M. Marcus,
7,999 shares; Robert Meers 45,000 shares; Geoffrey Nunes,
29,999 shares; John A. Quelch, 27,333 shares and all
directors and executive officers as a group, 2,080,577
shares.
<7> Excludes 3,576 shares held by Mr. Lesser's wife and child,
as to which he disclaims beneficial ownership.
<8> Excludes the 6,067,002 shares described in note (3) above,
the 99,261 shares described in note (5) above and the 3,576
shares described in note (7) above. Excludes 3,600 shares
held by an executive officer as custodian for his children
under the Uniform Gifts to Minors Act. Includes shares
subject to options held by directors and executive officers
that are exercisable within 60 days of the date of this
table (see note (6) above).
</TABLE>
The address of Mr. and Mrs. Fireman is c/o Reebok
International Ltd., 100 Technology Center Drive, Stoughton,
Massachusetts 02072.
PAGE
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation
paid or accrued by the Company for services rendered during the
years ended December 1991, 1992 and 1993 for the Chief Executive
Officer and each of the Company's four other most highly
compensated executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Other
Annual
Name and Compen-
Principal Position Year Salary ($) Bonus ($) sation*($)
<S> <C> <C> <C> <C>
Paul B. Fireman 1993 $1,000,012 $ 650,000 None
President and Chief 1992 1,019,243 585,000 None
Executive Officer 1991 1,000,000 1,000,000 --
John H. Duerden 1993 500,000 415,500 $118,017<2>
Executive Vice 1992 509,616 323,000 4,986<11>
President <1> 1991 463,173 500,000 --
Paul R. Duncan 1993 500,000 357,500 None
Executive Vice 1992 506,766 325,000 None
President and Chief 1991 351,250 351,827 --
Financial Officer
Robert Meers 1993 370,673 91,406 None
Executive Vice 1992 356,250 113,750 None
President<1> 1991 304,807 162,500 --
Kenneth I. Watchmaker 1993 312,404 102,375 None
Executive Vice 1992 147,693 112,500 None
President<1> 1991 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
Awards
All
Restricted Other
Name and Stock Compen-
Principal Position Year Awards ($) Options (#) sation*($)
<S> <C> <C> <C> <C>
Paul B. Fireman 1993 None None $230,813 <3><4><5>
President and Chief 1992 None None 93,089 <3><4>
Executive Officer 1991 None None --
John H. Duerden 1993 None 25,000 93,442 <5><6>
Executive Vice 1992 None None 49,635 <6>
President <1> 1991 None None --
Paul R. Duncan 1993 None<10> 25,000 76,885 <5><7>
Executive Vice 1992 None None 38,017 <7>
President and Chief 1991 None None --
Financial Officer
Robert Meers 1993 None 25,000 42,863 <5><8>
Executive Vice 1992 None None 25,854 <8>
President<1> 1991 None 75,000 --
Kenneth I. Watchmaker 1993 None 25,000 13,950 <5><9>
Executive Vice 1992 None 100,000 400,000 <9>
President<1> 1991 -- -- --
_________________
* In accordance with the transition rules for compensation
disclosure, no amounts have been reported in the "Other
Annual Compensation" and "All Other Compensation" columns
for 1991.
<1> The principal positions indicated for Messrs. Duerden, Meers
and Watchmaker were assumed by them in February 1994.
During 1993, Mr. Duerden was Senior Vice President of the
Company and President of International Operations for the
Reebok Division; Mr. Meers was Senior Vice President of the
Company and President of U.S. and Canadian Operations for
the Reebok Division and Mr. Watchmaker was Vice President of
the Company and Executive Vice President, Operations and
Finance, for the Reebok Division.
<2> Includes $19,314 for the use of a Company car by Mr.
Duerden, and $98,703 representing reimbursement for expenses
associated with a relocation from the U.S. to the U.K.
<3> Includes contributions by the Company on behalf of Mr.
Fireman as follows: for 1993, $15,940 to the Company's
Savings and Profit Sharing Retirement Plan (the "Profit
Sharing/Savings Plan") and $189,478 in credits allocated to
Mr. Fireman's account under the Excess Benefits Plan; for
1992, $15,475 to the Company's Profit Sharing/Savings Plan
and $57,234 in credits allocated to Mr. Fireman's account
under the Excess Benefits Plan. Mr. Fireman is 100% vested
in these contributions and allocations.
PAGE
<PAGE>
<4> Includes $25,395 for 1993 and $20,380 for 1992 reflecting
the current dollar value of the benefit to Mr. Fireman of
the portion of the premium paid by the Company in such years
with respect to a split-dollar insurance agreement (see
"Employee Agreements" below for a description of such
agreement). The benefit for 1993 was determined by
calculating the time value of money (using the applicable
short term federal funds rate) of the premium paid by the
Company in 1993 ($966,861.62) for the period from September
25, 1993 (the date on which the premium was paid) until May
30, 1994 (which is the earliest date, as of March 30, 1994,
on which the Company could terminate the agreement and
request a refund of the premium paid). The benefit for
1992, as reported in the Company's Proxy Statement dated
March 30, 1993 (the "1993 Proxy Statement"), was determined
by calculating the time value of money (using the applicable
short term federal funds rate) of the premium paid in 1992
($717,145.72) for the period from September 15, 1992 (the
date on which the premium was paid) until May 30, 1993
(which was the earliest date (as of the date of the 1993
Proxy Statement) on which the Company could terminate the
agreement and request a refund of the premium paid).
<5> The amount allocated by the Company in 1993 under the Excess
Benefits Plan reflects annual allocations for both 1992 and
1993. The 1992 allocation was made in early 1993 in
accordance with the Company's usual practice. The 1993
allocation was made earlier than usual at the end of 1993,
rather than in the first quarter of 1994.
<6> Includes contributions by the Company on behalf of Mr.
Duerden as follows: for 1993, $15,940 to the Company's
Profit Sharing/Savings Plan, $68,396 in credits allocated to
Mr. Duerden's account under the Excess Benefits Plan and
$9,106 for life insurance; for 1992, $15,475 to the Profit
Sharing/Savings Plan, $27,048 in credits allocated to Mr.
Duerden's account under the Excess Benefits Plan and $7,112
for life insurance. Mr. Duerden is 80% vested in the
contributions and allocations to the Profit Sharing/Savings
Plan and the Excess Benefits Plan.
<7> Includes contributions by the Company on behalf of Mr.
Duncan as follows: for 1993, $15,940 to the Company's
Profit Sharing/Savings Plan and $60,945 in credits allocated
to Mr. Duncan's account under the Excess Benefits Plan; for
1992, $15,475 to the Profit Sharing/Savings Plan and $22,542
in credits allocated to Mr. Duncan's account under the
Excess Benefits Plan. Mr. Duncan is 100% vested in these
contributions and allocations.
<8> Includes contributions by the Company on behalf of Mr. Meers
as follows: for 1993, $15,940 to the Company's Profit
Sharing/Savings Plan and $26,923 in credits allocated to Mr.
Meers' account under the Excess Benefits Plan; for 1992,
$15,475 to the Profit Sharing/Savings Plan and $10,379 in
credits allocated to Mr. Meers' account under the Excess
Benefits Plan. Mr. Meers is 100% vested in these
contributions and allocations.
<9> Includes contributions by the Company on behalf of Mr.
Watchmaker as follows: for 1993, $4,497 to the Company's
Profit Sharing/Savings Plan and $9,453 in credits allocated
to Mr. Watchmaker's account under the Excess Benefits Plan;
for 1992, $400,000 in credits to his supplemental retirement
plan (see "Employee Agreements" below). Mr. Watchmaker is
0% vested in the contributions and allocations to the Profit
Sharing/Savings Plan and is 20% vested in the credits
allocated to the Excess Benefits Plan and to his
supplemental retirement plan.
<10> As of December 31, 1993, Mr. Duncan held 3,000 shares of
restricted Common Stock granted to him on January 10, 1989
under the 1987 Stock Bonus Plan. The fair market value of
such shares on December 31, 1993 was $90,000.
<11> Reflects compensation attributable to Mr. Duerden as a
result of an interest free loan received by him. See
"Transactions with Management and Affiliates" below.
</TABLE>
PAGE
<PAGE>
The following table sets forth information concerning
individual grants of stock options made during 1993 to the Chief
Executive Officer and each of the four other most highly
compensated executive officers:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1993
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term <2>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted in 1993 Price ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Paul B.
Fireman None --- --- --- --- ---
John H.
Duerden 25,000<1> 1.56% $28.875 12/15/03 $453,875 $1,150,375
Paul R.
Duncan 25,000<1> 1.56% 28.875 12/15/03 453,875 1,150,375
Robert
Meers 25,000<1> 1.56% 28.875 12/15/03 453,875 1,150,375
Kenneth I.
Watchmaker 25,000<1> 1.56% 28.875 12/15/03 453,875 1,150,375
_____________
<1> 10,000 shares become exercisable on December 15, 1995, and
5,000 shares become exercisable on each of December 15, 1996,
December 15, 1997 and December 15, 1998. Options will also become
exercisable upon the death or permanent disability of the
optionee or in the event of a merger, consolidation, sale of
substantially all the Company's assets or other transaction or
series of transactions which result in a change of control of the
Company's Common Stock. In addition, under the Company's
existing severance policy, if an optionee is terminated without
cause, all or a portion of the optionee's outstanding stock
options which would have vested within the severance period
will be accelerated and thus immediately exercisable, depending
on the length of time between the date of termination of
employment and the vesting date of the option. Options
expire ten years after the date of grant.
<2> The assumed annual rates of stock price appreciation of 5%
and 10% per annum are established by the Securities and Exchange
Commission ("SEC") and are not to be construed as a forecast of
future appreciation. The actual realized value of such options
will depend on the market value of the Common Stock on the date
of exercise; no gain will be realized by the optionees unless
there is an increase in the stock price from the price on
the date of grant.
</TABLE>
PAGE
<PAGE>
The following table sets forth aggregated option exercises
in 1993 and option values as of December 1993 for the Chief
Executive Officer and each of the four other most highly
compensated executive officers:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1993
AND OPTION VALUES AS OF DECEMBER 31, 1993
Value of
Number of Unexercised
Unexercised In-the-Money
Number of Options Options
Securities at 12/31/93 (#) at 12/31/93 ($)
Underlying
Options/SARs Exercisable/ Exercisable/
Name Exercised (#) Value Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Paul B. Fireman None 0 1,500,000/ $18,675,000/
1,000,000 11,630,000
John H. Duerden None 0 123,750/ 1,779,556/
115,000 1,380,225
Paul R. Duncan None 0 173,750/ 2,361,938/
115,000 1,380,225
Robert Meers None 0 45,000/ 601,350/
135,000 757,900
Kenneth I. Watchmaker None 0 0/ 0/
125,000 118,125
</TABLE>
EMPLOYEE AGREEMENTS
Mr. Fireman has a Stock Option Agreement with the Company
pursuant to which he received in 1990 a one-time grant of options
to purchase 2.5 million shares of the Company's Common Stock at
exercise prices ranging from $17.32 to $18.37 per share, which
become exercisable in stages over a five-year period ending July
24, 1995. Options to purchase 1,500,000 shares are currently
exercisable pursuant to this grant. The options will remain
exercisable until July 24, 2000, as long as (i) Mr. Fireman
remains available to serve the Company as an employee, director
or consultant, and (ii) Mr. Fireman does not compete with the
Company in any manner.
The Company entered into a split-dollar insurance agreement
as of September 25, 1991 with a trust established by Paul
Fireman, pursuant to which the Company and that trust will share
in the premium costs of a whole life insurance policy that pays a
death benefit of not less than $50 million upon the death of Paul
Fireman, age 50, or Phyllis Fireman, age 49, (whichever occurs
later). The Company is obligated, for a period of six years, to
pay that portion of each annual policy premium that, in general
terms, equals the annual increase in the cash value of the
policy. The Company may cause the agreement to be terminated and
the policy to be surrendered at any time upon 60 days prior
notice. Upon surrender of the policy or payment of the death
benefit thereunder, the Company is entitled to repayment of an
amount equal to the cumulative premiums previously paid by the
Company, with all remaining payments to be made to the Fireman
trust. See footnote (4) to the "Summary Compensation Table"
above for further information on premium payments made by the
Company under this policy.
The Company has an employment agreement with Mr. Duerden,
which was effective December 19, 1991 and which automatically
continues thereafter for continuously renewing three-year periods
until December 31, 2000, unless otherwise terminated or renewed
by mutual agreement. Under the terms of the agreement,
PAGE
<PAGE>
Mr. Duerden received an initial base salary of $500,000, subject
to review annually, and is entitled to receive an annual bonus
based on achievement of financial and management performance
goals.
Mr. Duerden's agreement includes a pension program which,
subject to certain vesting provisions, provides a pension for the
balance of his life equal to two-thirds of his average base
salary (his base salary appears under "Salary" in the "Summary
Compensation Table" above) over the final three years of his
employment (reduced by amounts receivable by him from certain
other pensions, profit sharing accounts and Social Security) and
to begin on the later of his last date of employment or
attainment of age 60. Mr. Duerden's entitlement to this pension
program will vest in increments of 1/12 for each full year of
employment from October 1, 1988. He currently has five years of
service with the Company and is 42% vested.
The following table shows the estimated annual benefits
payable upon retirement to Mr. Duerden assuming the various years
of service and salary classifications set forth in the table and
no reduction by amounts receivable by him from certain other
pension accounts:
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
5 9 12
Remuneration
<S> <C> <C> <C>
$490,929 $137,460 $245,464 $327,286
525,000 147,000 262,000 350,000
555,000 155,400 277,500 370,000
585,000 163,800 292,500 390,000
615,000 172,200 307,500 410,000
</TABLE>
If Mr. Duerden's employment is terminated by the Company
other than for cause, he would be entitled to receive his base
salary for the remainder of the term of the agreement and any
annual incentive compensation (pro-rated) for the year in which
the termination occurs. In addition, any stock options
exercisable within one year of his last date of employment would
become immediately exercisable. If Mr. Duerden's employment is
voluntarily terminated or terminated for cause, he will be
entitled to receive his base salary only through his termination
date. In addition, upon voluntary termination: if he leaves no
earlier than the public announcement of year-end audited
consolidated results for the prior fiscal year, he will receive
monthly payments of 1/2 his monthly base salary for consulting
services until the end of the fiscal year in which his employment
is terminated, and if he leaves no earlier than May 1 of the
fiscal year in which his employment is terminated, he also would
be entitled to any stock options which become exercisable during
such fiscal year.
The Company has an employment agreement with Mr. Watchmaker
which provided for an initial base salary of $300,000, subject to
review annually, and an annual bonus based on achievement of
financial and management performance goals. The agreement also
provided for a grant as of July 1, 1992 of options to purchase
100,000 shares of Common Stock at option prices ranging from
$28.19 to $29.90 per share and for the establishment of a
supplemental retirement plan for his benefit into which the
Company was required to credit $400,000 effective as of July 1,
1992. The terms of such supplemental retirement plan are
identical to the Reebok International Ltd. Excess Benefits Plan,
except that (i) if Mr. Watchmaker's employment is terminated by
the Company without cause, or if his employment ceases after a
Change in Control under the
PAGE
<PAGE>
terms of his Change of Control Agreement with the Company (as
described below) the funds credited to his supplemental
retirement plan will become vested immediately upon his
termination, and (ii) if Paul Fireman ceases to be actively
involved in the Company's business any time prior to December 31,
1994 and Mr. Watchmaker thereafter voluntarily terminates his
employment prior to December 31, 1994, the funds credited to the
plan will become vested immediately upon his termination. Mr.
Watchmaker's benefits under this supplemental retirement plan are
reduced if he returns to Ernst & Young and becomes eligible for a
retirement plan there. Mr. Watchmaker also has an agreement
which provides that if Mr. Fireman ceases to be actively involved
in the Company's business before the end of 1994 and, Mr.
Watchmaker then leaves the Company before the end of 1994, Mr.
Watchmaker will receive aggregate severance benefits at least
equal to two years of his then current base salary.
The Company has change of control agreements with Mr.
Duncan, Mr. Duerden and Mr. Watchmaker providing for certain
compensation and benefits in the event of the termination of
their employment with the Company following a "change in control"
of the Company (as defined in the respective agreements). In the
agreements with Mr. Duerden and Mr. Watchmaker, a "change in
control" does not include one which is initiated by Company
management, while in the agreement with Mr. Duncan it does. In
each agreement, if the executive's employment with the Company
were to terminate within 12 months following a change in control
either on an involuntary basis (other than as a result of death,
total disability, retirement, commission of a felony or
conviction of a crime involving moral turpitude) or, in the
agreements with Mr. Duerden and Mr. Watchmaker, in the event of a
voluntary termination following a downgrading of title,
responsibilities or compensation, and in the agreement with Mr.
Duncan in the event of any voluntary termination, then the
Company will pay to the executive a lump-sum cash payment equal
to four times the aggregate of his then current annual base
salary and his cash bonus for the most recent calendar year ended
before the change in control. In addition, all of the
executive's outstanding stock options, restricted shares and
other incentive rights and interests will become immediately and
fully vested and exercisable. The executive's dependents will
also continue to participate fully at the expense of the Company
in all accident and health plans provided by the Company
immediately prior to the change in control, or receive
substantially equivalent coverage, for the year following his
termination. In addition, the agreements provide that the
executive will be reimbursed by the Company for any legal fees
incurred by him as a result of the termination of his employment.
Receipt by the executive of the foregoing benefits is subject to
his willingness to remain in the employ of the Company or its
successor for at least six months after the change in control to
assist in the transition. Mr. Duncan, Mr. Duerden and Mr.
Watchmaker are also required not to leave voluntarily the employ
of the Company in the event that any person or entity initiates a
change in control until such time as the effort terminates or the
change in control is completed. Mr. Duerden must choose either
the benefits of this agreement or the employment agreement
mentioned above, in the event both are applicable.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following
report:
The Committee currently consists of Geoffrey Nunes,
Chairman, Daniel E. Gill and Jill Elikann Barad. Its
responsibilities include setting the compensation level for the
Chief Executive Officer and reviewing compensation levels for all
other executive officers of the Company. The Committee also
functions as the Stock Option Committee, and in that capacity
grants all stock options to executive officers.
Reebok's Chief Executive Officer, Paul Fireman, had a base
salary in 1993 of $1,000,000 and was eligible for a bonus for
1993 with a target of 100% of base salary. Mr. Fireman's salary
and bonus target were established in 1990 and have not been
changed since that time.
PAGE
<PAGE>
Mr. Fireman's bonus award for 1993 was dependent on
corporate performance relative to a Company profit target that
was reviewed with the Board of Directors. For 1993 the Committee
made a subjective decision to award Mr. Fireman a bonus of
$650,000 (65% of target bonus). In deciding on the appropriate
bonus level, the Committee considered that the Company had a
successful year from a sales and profits perspective (though not
sufficient for payment of the full target bonus), and in the
Committee's opinion positioned itself well for future growth in
sales and earnings. Specifically, the Committee believed that
the Company made significant progress in 1993 to achieve expanded
visibility through new sports affiliations with events and
athletes, to upgrade consumer perceptions of the REEBOK brand, to
position itself to address consumer demands for casual and
outdoor footwear products, and to improve shareholder value by
selling its Ellesse and Boston Whaler subsidiaries while
improving sales and profits for its other units (Rockport and
AVIA). The Committee also noted that Mr. Fireman's overall
performance since the Company went public in July 1985, as
reflected in the second stock performance graph on page 15 below
(which was included to show the Company's stock performance
during the entire period of Mr. Fireman's stewardship), continues
to reflect an outstanding return to shareholders over this
period.
As noted above, the Committee does not set the compensation
levels for executive officers other than the Chief Executive
Officer, but the Committee does review the compensation for such
executive officers on an annual basis in order to assess whether
such compensation is appropriate. In considering compensation
levels for 1993, the Committee met with management and reviewed
base salaries and bonus target levels for the executive officer
group in comparison to benchmark survey positions reported in the
following published surveys: TPF&C Executive Data Bank;
Executive Compensation Services Management Report; Mercer's
Financial, Accounting and Legal Survey. The Company's base
salaries and annual bonus target levels were compared to both the
median and third quartile levels reflected in the surveys; based
on this information and Committee members' personal knowledge and
experience, the Committee determined that base salaries paid to
the Company's executive officers for 1993 and annual bonus target
levels (which ranged from 35% to 100% of base salary for
individual executive officers) were neither unduly low nor unduly
high. In making its judgement, the Committee took into account
the level of experience of the Company's executive officers and
the salary history for such executive officers. Actual bonus
awards for 1993 had not been reviewed by the Committee as of the
date of preparation of this report.
The Company has used stock options for executive officers to
provide long-term performance-related incentives that link
rewards directly to shareholder gains over a multi-year period.
In determining the size of the proposed grants for 1993, the
Committee reviewed an analysis of prospective gains in value over
a period of 5 years at assumed stock appreciation rates of 10%
and 15%, and made a subjective determination that the anticipated
gains were reasonable taking into consideration options
previously granted to such executive officers. The grants to
executive officers were leveled so that all Executive Vice
Presidents in the cash compensation table received options for
the same number of shares. No options were granted to Mr.
Fireman in 1993 due to a prior large grant in 1990 that was
intended to be a one-time grant for a period of at least 5 years.
In adopting and administering executive compensation plans
and arrangements, the Committee will consider whether the
deductibility of such compensation will be limited under Section
162(m) of the Internal Revenue Code and, in appropriate cases,
will strive to structure such compensation so that any such
limitation will not apply.
Geoffrey Nunes, Chairman
Jill E. Barad
Daniel E. Gill
PAGE
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates a five year comparison of
cumulative total returns for the Company's Common Stock, the
Standard & Poor's 500 Stock Index, and the Standard & Poor's
Shoes and Textile Apparel Manufacturers Indices* from December
31, 1988 to December 31, 1993. The graph assumes an investment
of $100 on December 31, 1988 in each of the Company's Common
Stock and the stocks comprising the Standard & Poor's 500 Stock
Index and the Standard & Poor's Shoes and Textile Apparel
Manufacturers Indices. Each of the indices assumes that all
dividends were reinvested.
<TABLE>
<CAPTION>
Base December Indexed Returns
($) (Dollars)
Company/Index
Name 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Reebok
International
Ltd. 100 158.11 97.91 285.08 295.61 263.56
S&P 500 Index 100 131.69 127.60 166.47 179.16 197.21
S&P Shoes 100 155.57 158.24 326.09 351.85 247.44
S&P Textiles 100 131.75 114.60 183.79 195.64 147.92
</TABLE>
* The Standard & Poor's Shoes and Textile Apparel Manufacturers
Indices were selected in order to compare the Company's
performance with companies in each of the two primary lines of
business in which the Company is engaged. The indices do not,
however, include all of the Company's competitors, nor all
product categories and lines of business in which the Company is
engaged.
PAGE
<PAGE>
The following graph demonstrates a comparison of cumulative
total returns for the Company's Common Stock, the Standard &
Poor's 500 Stock Index, and the Standard & Poor's Shoes and
Textile Apparel Manufacturers Indices from July 26, 1985, the
date of the Company's initial public offering, through December
31, 1993, and was prepared in the same manner as the five year
performance graph. This graph is included to show the Company's
historical stock performance for the entire period since the
Company's stock first became publicly traded.
<TABLE>
<CAPTION>
Base December Indexed Returns
(Dollars)
Company/ ($)
Index Name 7-26-85 1985 1986 1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Reebok
International
Ltd. 100 139.14 348.43 320.61 377.96 597.60 370.08 1077.50 1117.30 996.17
S&P 500 Index 100 112.05 132.91 139.79 163.01 214.66 208.00 271.37 292.04 321.48
S&P Shoes 100 112.27 121.99 114.82 182.58 284.03 288.90 595.37 642.39 451.76
S&P Textiles 100 120.88 173.32 139.73 158.19 208.41 181.28 290.74 309.49 234.00
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Nominating Committee of
the Company during 1993 were Richard G. Lesser (until December 1,
1993), Jill E. Barad, Daniel E. Gill and Geoffrey Nunes. Mr.
Lesser served as Treasurer of the Company from September 19, 1979
until March 5, 1981.
TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
Mr. Duerden received a mortgage loan from the Company in
1990 (without stated interest until March 1992, and with 10%
interst after such date) for the purchase of a residence in
connection with his relocation from England to the United States.
In March 1992, a portion of the loan was repaid and the remaining
$100,000 began to bear interest at an annual rate of 10%. The
largest aggregate principal amount of the loan outstanding since
January 1, 1993 was $110,000. The loan was repaid in full with
interest on March 9, 1993.
Roberto Muller, an Executive Vice President of the Company,
received a loan on July 22, 1993 in the amount of $350,000 which
bears interest at the rate of 6% per annum. The largest
aggregate principal amount
PAGE
<PAGE>
of the loan outstanding since January 1, 1993 was $350,000 plus
accrued interest, which amount is currently outstanding.
In connection with his relocation from California to
Massachusetts, the Company leases a house to Angel Martinez, an
Executive Vice President of the Company, for a period expiring
October 31, 1995. Mr. Martinez is not required to pay rent to
the Company while he continues to bear the carrying costs of his
California residence and remains employed by the Company. The
fair market value of the monthly rent for such residence is
believed to be approximately $5,000. Mr. Martinez has an option
to purchase the residence during the term of the lease for a
price equal to the amount paid by the Company for the residence,
including certain renovations, plus the depreciated value of
certain furnishings purchased for the residence by the Company
and closing costs paid by the Company in connection with the
purchase of the residence. If Mr. Martinez sells his California
residence or is no longer employed by the Company, the option to
purchase and the lease will automatically terminate.
Steve Fireman, the brother of Paul Fireman, is employed by
the Company as a senior executive with responsibility for BOKS
casual footwear. George Meers, the brother of Robert Meers, is
employed by the Company as the Manager of Team Sales for U.S.
Operations. Steve Fireman and George Meers receive compensation
and benefits equivalent to that of other employees of the Company
holding similar positions and Steve Fireman's compensation is
reviewed annually by the Compensation Committee.
APPROVAL OF AMENDMENT TO 1987 EMPLOYEE STOCK PURCHASE PLAN
On December 15, 1993, the Compensation Committee and the
Board of Directors unanimously approved an amendment to the 1987
Employee Stock Purchase Plan (the "Purchase Plan"), subject to
shareholder approval, to increase the number of shares available
for grants of options thereunder from 1,000,000 to 2,000,000
shares.
The Purchase Plan affords eligible employees of the Company
an opportunity to acquire shares of Common Stock of the Company
at a discount from market price. The Plan authorizes the grant
of options to each employee of the Company, or a participating
subsidiary of the Company, having at least six months of
continuous service on the date of grant if such employee elects
to participate. However, any employee who immediately after the
grant of an option is determined under the provisions of the Code
to own 5% or more of the Common Stock would not be eligible to
participate. There are approximately 2,000 employees who are
eligible to participate in the Purchase Plan as of March 10,
1994, at which time the market value of a share of Common Stock
was $32.75.
The Purchase Plan is administered by the Compensation
Committee. Options are granted twice yearly, on January 1 and
July 1, and are exercisable effective on the succeeding June 30
or December 31. The exercise price for options granted under the
Purchase Plan is the lower of 85% of the fair market value of the
Common Stock at the time of grant or 85% of that value at the
time of exercise. Options are exercisable through accumulation
of payroll deductions of not less than 2% nor more than 10% of
the employee's compensation as defined in the Plan for the number
of whole shares determined by dividing the balance in the
employee's withholding account on the last day of the option
period by the purchase price per share for the Common Stock
determined under the Plan. The number of shares each employee is
entitled to purchase is subject to proportionate reduction if the
number of shares then being offered under the Purchase Plan is
over-subscribed. No employee may be granted an option under the
Purchase Plan which would permit him or her
PAGE
<PAGE>
to purchase shares of Common Stock under the Plan (and any
similar plans of the Company or any subsidiary) at a rate which
exceeds $12,500 in fair market value of Common Stock for each
period during which the option would be outstanding.
An employee may cancel his or her option at any time prior
to exercise, and upon such cancellation, payments made will be
returned to the employee. Each employee's rights in an option
will be exercisable during his or her lifetime only by the
employee and may not be sold, pledged, assigned, or otherwise
transferred. The employee may elect to have the amount credited
to his or her withholding account at the time of his or her death
applied to the exercise of his or her option for the benefit of
named beneficiaries.
The Purchase Plan is intended to be an "employee stock
purchase plan" as defined in Section 423 of the Internal Revenue
Code of 1986, as amended ("Code"). As a general matter, an
employee will not realize any taxable income upon purchase of
such shares. If shares acquired under the Purchase Plan are
disposed of more than two years from the date of grant of the
option, or in the event of the death of the employee (whenever
occurring) while the employee owns the shares, ordinary
compensation income will result equal to the lesser of (i) the
excess of the fair market value of the shares at the time of
disposition or death over the purchase price, or (ii) 15 percent
of the shares' fair market value at the time the option was
granted. Any additional gain will be long-term capital gain. If
shares acquired under the Purchase Plan are disposed of less than
two years after the date of grant of the option, the employee
will generally realize ordinary compensation income equal to the
excess of the fair market value of the shares at time of purchase
over the purchase price, with any additional gain constituting
long-term or short-term capital gain depending on the employee's
holding period for such shares. The Company will not be entitled
to any tax deduction in connection with the grant or exercise of
options under the Purchase Plan unless an employee disposes of
shares acquired under the Purchase Plan within the two-year
period described above, in which case the Company will be
entitled to a tax deduction in an amount equal to the amount of
ordinary income realized by the employee at the time of such
disposition.
The following table sets forth the number of shares
purchased in 1993 under the Purchase Plan and the exercise price
paid therefor by the Chief Executive Officer, each of the four
other most highly compensated executive officers, all current
executive officers as a group, and all employees as a group:
<TABLE>
<CAPTION>
BENEFITS UNDER 1987 EMPLOYEE STOCK PURCHASE PLAN IN 1993
Number of Average
Name and Position Shares Purchased Exercise Price
<S> <C> <C>
Paul B. Fireman None --
President and Chief
Executive Officer
John H. Duerden None --
Executive Vice
President
Paul R. Duncan 814 $23.58
Executive Vice
President and
Chief Financial
Officer
Robert Meers 814 23.58
Executive Vice
President
Kenneth I. Watchmaker 814 23.58
Executive Vice
President
All current 3,251 23.57
executive officers
as a group (8 persons)
All employees as 148,140 23.59
a group (approximately
950 persons)
</TABLE>
PAGE
<PAGE>
As of March 10, 1994, there were 98,204 shares available for
future grants of options under the Purchase Plan. Unless the
number of shares reserved for issuance pursuant to options
granted under the Purchase Plan is increased, there will not be
sufficient shares reserved for issuance under the Purchase Plan
to permit the continued granting of options to employees of the
Company and its subsidiaries under the Plan. The Board of
Directors recommends voting in favor of increasing the number of
shares available under the Plan because the Plan offers an
opportunity for a large number of employees to participate in the
Company's success through ownership of Company stock that can be
purchased at a discount, thereby providing a valuable employee
benefit and aligning employee interests with shareholder
benefits.
An affirmative vote of a majority of the shares present, in
person or by proxy, and entitled to vote at the Annual Meeting is
required to approve the amendment to the 1987 Employee Stock
Purchase Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDER VOTE FOR PROPOSAL 2.
APPROVAL OF THE 1994 EQUITY INCENTIVE PLAN
On December 15, 1993, the Compensation Committee and the
Board of Directors unanimously voted to adopt the 1994 Equity
Incentive Plan (the "Equity Plan"), which provides for the
issuance of stock options, stock appreciation rights, restricted
stock and deferred stock to employees of the Company or its
subsidiaries and other persons or entities (excluding non-
employee directors of the Company) and to recommend approval of
the Equity Plan to shareholders.
The purpose of the Equity Plan is to advance the interests
of the Company and its subsidiaries by enhancing the Company's
ability to (i) attract and retain employees and other persons or
entities who are in a position to make significant contributions
to the success of the Company and its subsidiaries; (ii) reward
such persons or entities for such contributions; and (iii)
encourage such persons or entities to take into account the long-
term interest of the Company through ownership of, or an interest
in, shares of the Company's Common Stock. If approved, the
Equity Plan will replace three of the Company's existing equity
plans (the 1985 Stock Option Plan, the 1986 Stock Option Plan for
Selected Individuals and the 1987 Stock Bonus Plan) and will
provide ease of administration and a flexible and streamlined
process for awarding equity-based compensation.
The Equity Plan is administered by the Compensation
Committee, the members of which are all outside independent
directors who are not eligible to participate in the Plan.
Subject to the terms of the Equity Plan, the Compensation
Committee has the authority to select recipients of awards,
determine the size and type of awards to be made and determine
the terms and conditions on which awards are made. Under the
Equity Plan, the Committee will be authorized to make awards in
any calendar year of up to 250,000 shares of Common Stock to any
participant other than the Chief Executive Officer and/or
President of the Company and up to 500,000 shares of Common Stock
to the Chief Executive Officer and/or the President of the
Company. The maximum amount of compensation other than Common
Stock that may be awarded in any calendar year to any participant
under the Equity Plan is $2,000,000.
The following is a brief description of certain other
material features of the Equity Plan, the full text of which
appears as Exhibit A to this proxy statement.
TERM OF PLAN, SHARES TO BE ISSUED AND EFFECT ON EXISTING EQUITY
PLANS
The Equity Plan will become effective on the date of its
approval by shareholders and awards may be made under the Plan
until ten years after the effective date, when the Equity Plan
will terminate. The
PAGE
<PAGE>
maximum number of shares of Common Stock that may be issued under
the Equity Plan is 5 million, of which no more than 1 million
shares of Common Stock may be issued pursuant to the exercise of
stock options that qualify as "incentive stock options" under the
provisions of Section 422A of the Code. Upon approval by
shareholders of the Equity Plan, the Company's 1985 Stock Option
Plan, 1986 Stock Option Plan for Selected Individuals and 1987
Stock Bonus Plan will automatically be terminated and replaced
and superseded by the Equity Plan. However, options or other
awards previously granted under such plans will continue to
remain outstanding under the terms thereof. An aggregate of
approximately 2.24 million shares of Common Stock remain
authorized for issuance under these three existing plans.
Consequently, approval of the Equity Plan will result in a net
increase of approximately 2.76 million in the number of shares of
Common Stock authorized for issuance for equity incentive
purposes (excluding the Purchase Plan discussed above).
ELIGIBILITY
Awards may be made under the Equity Plan to employees of the
Company and its subsidiaries and other persons or entities
(excluding non-employee directors of the Company) who, in the
opinion of the Compensation Committee, are in a position to make
a significant contribution to the success of the Company or its
subsidiaries.
TERMS AND CONDITIONS OF AWARDS
Options. The Equity Plan provides for the grant of options
to purchase shares of Reebok Common Stock which are intended to
qualify as "incentive stock options" under the Code, as well as
"non-qualified" options which are not intended to so qualify.
The exercise price of any stock option granted under the
Equity Plan may not be less than the fair market value of Reebok
Common Stock on the date of the grant except in the case of
grants to participants who are not executive officers of the
Company and in certain limited circumstances involving amendments
to outstanding options and options granted in acquisitions or
other extraordinary transactions. In the case of "incentive
stock options," the exercise price may not be less than 110% of
such fair market value with respect to any such option granted to
a participant who owns 10% or more of the outstanding Common
Stock. As of March 10, 1994, the market value of a share of
Reebok Common Stock was $32.75. The period within which each
such option may be exercised cannot exceed ten years from the
date of grant. Options are exercisable in full or in
installments as provided by the terms of each option as
determined by the Compensation Committee. Payment of the
exercise price of any option must be made in full at the time of
exercise. Such payment must be in cash or in such other form as
the Compensation Committee may approve.
Stock Appreciation Rights. The Equity Plan permits the
issuance of stock appreciation rights ("SARs"), which are rights
entitling the recipient to receive payment, in cash and/or stock,
based on the appreciation in value of the Company's Common Stock.
Generally, an SAR entitles the recipient to receive, for each
share for which it is exercised, the amount by which the fair
market value of a share of Common Stock on the date of exercise
exceeds the fair market value of a share on the date the SAR was
granted. However, the Compensation Committee may also grant SARs
which provide that the amount a recipient is entitled to receive
will be adjusted upward or downward under the terms established
by the Compensation Committee to take into account the
performance of the Company's Common Stock in comparison with the
performance of other stocks or any index or indices of other
stocks.
SARs may be granted in tandem with, or independently of,
stock options granted under the Equity Plan. If an SAR is
granted in tandem with a stock option, it will be exercisable
only at such times, and to the
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extent, that the related stock option is exercisable. An SAR
granted independently of stock options will be exercisable at
such times and on such conditions as the Compensation Committee
may specify.
Restricted Stock. The Equity Plan permits the grant of
awards of restricted stock which entitle the recipient to acquire
shares of Reebok Common Stock, subject to certain restrictions or
conditions, for no cash consideration or for such consideration
as the Compensation Committee may determine. Generally, awards
of restricted stock are subject to restrictions on transfer and
subject to forfeiture unless specified conditions are met, such
as continuous service with the Company, achievement of business
objectives and/or achievement of individual, unit or Company
goals.
Deferred Stock. The Equity Plan also permits the grant of
awards of deferred stock, which entitle the recipient to receive
shares of Reebok Common Stock to be delivered in the future.
Delivery of such shares of deferred stock will take place at such
time or times, and on such conditions, as the Compensation
Committee may determine.
General Provisions Applicable to All Awards. No awards made
under the Equity Plan may be assigned, pledged or transferred by
a recipient other than by will or by the laws of descent and
distribution.
The Compensation Committee is required to make appropriate
adjustments to outstanding awards to reflect stock dividends,
stock splits and similar events. In the event of a merger,
consolidation, any sale of substantially all of the Company's
assets or other transaction or series of related transactions as
a result of which a single person or several persons acting in
concert own a majority of the Company's Common Stock (except for
certain transactions that do not involve a change in the holders
of a majority of the outstanding shares of Common Stock and the
ownership of more than half of the outstanding shares of Common
Stock by a single person), all outstanding options and SARs will
become exercisable and each outstanding restricted stock and
deferred stock award will become free of all restrictions and
conditions or, in lieu thereof, the Compensation Committee in its
discretion may, by the vote of a majority of the members thereof
who are Continuing Directors (as defined in the Equity Plan),
provide for replacement awards.
The Compensation Committee may at any time discontinue
granting awards under the Equity Plan. The Compensation
Committee may amend or terminate the Equity Plan, provided that
no such action will be made without the approval of the
shareholders of the Company, if such approval is required by
Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Examples of actions which would require
approval by shareholders include an increase in the maximum
number of shares of Reebok Common Stock which can be issued under
the Equity Plan, or other material amendments to the terms on
which awards can be granted under the Equity Plan.
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The following table sets forth awards made in 1993, subject
to shareholder approval, under the Equity Plan to the executive
officers listed in the Compensation Table, to all executive
officers as a group and to all employees as a group.
<TABLE>
<CAPTION>
AWARDS UNDER THE 1994 EQUITY INCENTIVE PLAN IN 1993
Number of Shares Number of Shares
Name and Underlying Stock Exercise Price of of Restricted
Position Option Grants Stock Options Stock Granted
<S> <C> <C> <C>
Paul B. Fireman 0 -- 0
Chairman, President
and Chief Executive Officer
John H. Duerden 25,000 $28.875 0
Executive Vice President
Paul R. Duncan 25,000 28.875 0
Executive Vice President
and Chief Financial Officer
Robert Meers 25,000 28.875 0
Executive Vice President
Kenneth I. Watchmaker 25,000 28.875 0
Executive Vice President
All current executive 135,000 28.875 32,000
officers as a group (8 persons)
All employees as a group 814,600 28.875 102,400
(308 persons)
</TABLE>
FEDERAL TAX EFFECTS WITH RESPECT TO OPTIONS
Incentive Options. No taxable income is realized by the
optionee upon the grant or exercise of an incentive stock option
under the Equity Plan. If the optionee does not dispose of the
shares issued pursuant to the exercise of an incentive stock
option within two years from the date of grant or within one year
after the transfer of such shares to the optionee, then (a) upon
sale of such shares, any amount realized in excess of the option
price (the amount paid for the shares) will be taxed to the
optionee as a long-term capital gain and any loss sustained will
be a long-term capital loss and (b) no deduction will be allowed
to the Company for federal income tax purposes. The exercise of
incentive stock options may result in alternative minimum tax
liability for the optionee.
If shares of Common Stock acquired upon the exercise of an
incentive stock option are disposed of prior to the expiration of
the two-year and one-year holding periods described above (a
"disqualifying disposition") generally (a) the optionee will
realize ordinary income in the year of disposition in an amount
equal to the excess (if any) of the fair market value of the
shares at exercise (or, if less, the amount realized on a sale of
such shares) over the option price thereof, and (b) the Company
will be entitled to deduct such amount, subject to applicable
withholding requirements. Any further gain realized will be
taxed as short-term or long-term capital gain and will not result
in any deduction by the Company. Special rules apply where all
or a portion of the exercise price of the incentive stock option
is paid by tendering shares of Common Stock. A disqualifying
disposition in the year of exercise will eliminate the
alternative minimum tax effect of the incentive stock option.
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Non-qualified Options. With respect to non-qualified
options under the Equity Plan, no income is realized by the
optionee at the time the option is granted. Generally, (a) at
exercise, ordinary income is realized by the optionee in an
amount equal to the difference between the option price and the
fair market value of the shares on the date of exercise, and the
Company receives a tax deduction for the same amount, subject to
applicable withholding requirements, and (b) at disposition,
appreciation or depreciation after the date of exercise is
treated as either short-term or long-term capital gain or loss
depending on how long the shares have been held.
Under Section 162(m) of the Code which was adopted in 1993,
the Company would be unable in certain circumstances to claim a
deduction upon the exercise of options granted to its top five
executive officers under the Equity Plan unless shareholder
approval of such Plan is obtained. See below under the heading
"Shareholder Approval of Equity Plan" for further discussion of
this issue.
SHAREHOLDER APPROVAL OF EQUITY PLAN
An affirmative vote of a majority of the shares present, in
person or by proxy, and entitled to vote at the Annual Meeting is
required to approve the Equity Plan. The Board of Directors
recommends voting in favor of the Equity Plan because it provides
a flexible and easily administered means by which the Company may
grant equity-based compensation to its employees and others who
can make a significant contribution to the Company. Moreover,
the Equity Plan will replace three existing stock option and
stock bonus plans under which the number of shares available for
issuance is close to being depleted. Consequently, if the Equity
Plan is not adopted, there may not be sufficient shares reserved
for issuance under these existing plans to permit continued
granting of stock options and stock bonus awards.
Approval of the Equity Plan is also necessary under a new
tax law passed in 1993 which limits to $1 million the deduction
which public corporations may claim for compensation paid to any
of its top five executive officers except in certain limited
circumstances. One such exception is for compensation based
solely on the attainment of certain performance criteria, if such
criteria are approved by an independent compensation committee
and by shareholders. Stock options and stock appreciation rights
qualify for this performance exception as long as the
compensation committee and shareholders approve the plan under
which such awards are made. Restricted stock and deferred stock
awards will qualify for the exception if the plan under which the
awards are made and the performance criteria applicable to such
awards are approved by the compensation committee and
shareholders. Accordingly, in order to insure that compensation
issued under the Equity Plan will continue to be deductible by
the Company, shareholder approval of the Plan is required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 3.
APPROVAL OF THE EQUITY AND DEFERRED
COMPENSATION PLAN FOR DIRECTORS
On December 15, 1993, the Compensation Committee and the
Board of Directors unanimously approved an Equity and Deferred
Compensation Plan for Directors (the "Directors' Plan"), subject
to shareholder approval. The full text of the Directors Plan
appears as Exhibit B to this proxy statement.
The Directors' Plan is administered by the Compensation
Committee. The plan provides for the issuance of stock options
to directors and provides a means by which directors may defer
all or a portion of their directors fees. The Directors' Plan is
intended to replace the existing 1987 Stock Option Plan for
Directors,
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<PAGE>
under which stock options are currently granted to directors, and
the existing Cash Deferral Plan for Directors pursuant to which
directors can defer their director compensation and invest such
compensation at a prescribed interest rate. The Directors' Plan
will combine the features of these two existing plans, will add a
new feature permitting directors to defer their director
compensation into Reebok Common Stock, thus encouraging director
equity ownership, and will change the formula for granting stock
options to directors. Upon approval of the Directors' Plan, both
the Company's existing 1987 Directors' Plan and its Cash Deferral
Plan for Directors will automatically terminate and be replaced
by the Directors' Plan, although options previously granted under
the existing 1987 Directors' Plan will remain outstanding in
accordance with their terms and cash deferrals under the Cash
Deferral Plan will be transferred to the new Directors' Plan.
A total of 300,000 shares have been reserved for issuance
under the Directors' Plan to be delivered upon the exercise of
options granted under the Plan or for distribution to directors
deferring their compensation into Reebok Common Stock.
Stock Option Portion of the Plan. Under the stock option
portion of the Directors' Plan, each newly elected Eligible
Director (as defined below) who is elected to office after the
date of shareholder approval of this Proposal 4 will be awarded
an option on the date of such election to purchase shares of
Reebok Common Stock having an aggregate market value on such date
equal to six times the average cash compensation received by all
directors in the immediately prior calendar year. The average
cash compensation for all directors for 1993 was $27,143.
Accordingly, in 1994 any newly elected director would be entitled
to an option to purchase shares of Reebok Common Stock having an
aggregate market value of $162,858. Assuming a market price of
Reebok Common Stock of $32.75 (based on the closing price on
March 10, 1994), the newly elected director would receive an
option to purchase 4,973 shares. In comparison, under the
existing 1987 Stock Option Plan for Directors, a newly elected
director is entitled to an initial grant of an option to purchase
10,000 shares.
On April 28 of each year, starting with April 28, 1995, each
Eligible Director will be granted an option to purchase shares of
Reebok Common Stock having a fair market value on the date of
such grant equal to three times the average annual cash
compensation received by all directors in the immediately prior
calendar year (or a pro rata portion based on the date of his or
her election). Based on the expected annual compensation for all
directors for 1994, Eligible Directors would be entitled in 1995
to a grant of options to purchase shares having an aggregate
market value on the grant date of $113,142. Assuming a market
price of $32.75, each Eligible Director would receive an option
to purchase 3,454 shares of Common Stock. In comparison, under
the existing 1987 Stock Option Plan for Directors, each Eligible
Director is entitled to an annual grant of options to purchase
4,000 shares of Common Stock.
An Eligible Director is any director who (1) is not an
employee of the Company and (2) is not a five percent shareholder
of the Company or a person in control of such shareholder. Of
the current directors, Mr. Fireman, Mr. Duncan, Mr. Meers and Mr.
Duerden would not be Eligible Directors.
The exercise price for all options granted under the
Directors' Plan will be the fair market value of Reebok Common
Stock on the date of the grant. On March 10, 1994, the market
value of a share of Reebok Common Stock was $32.75. Options will
be exercisable for one-third of the shares covered thereby on
each of the first through third anniversaries of the grant.
All options expire ten years after the date of grant. If a
director's service with the Company terminates for any reason
other than death, all options held by that person that are not
then exercisable terminate. Options that are exercisable at the
time of termination will remain exercisable for a period of three
months.
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In the case of a director's death, all options held shall become
immediately exercisable and may be exercised by such director's
estate or assignee for a period of three years thereafter.
All options granted under the Directors' Plan will be
nonqualified options for federal tax purposes. The excess of the
fair market value of the shares subject to the option on the date
of exercise over the exercise price is treated as taxable
compensation to the person exercising the option in the year of
such exercise. The Company generally will be entitled to a
corresponding tax deduction.
Deferred Compensation Portion of the Plan. The deferred
compensation portion of the Directors' Plan permits directors to
defer all or a portion of their director compensation and to then
invest such compensation at the Merrill Lynch Corporate Bond Rate
or in Reebok Common Stock. Compensation deferred into Reebok
Common Stock is converted into stock based on the price of the
stock on the first day of the calendar quarter following the
quarter in which the fees were deferred. Dividends paid on the
Reebok Common Stock are also credited to the director's deferred
compensation account.
Directors who elect to defer their compensation will receive
a distribution of their deferred compensation in either a lump
sum or in annual installments (at the director's election) on a
date specified by the director or on the date on which the
director is no longer a member of the Reebok Board of Directors,
whichever occurs first. If the Deferred Compensation is invested
at the corporate bond rate, the distribution will be in cash in
an amount equal to the deferred compensation plus interest
accrued. If the compensation is deferred into Reebok Common
Stock, the distribution will be in the form of shares of Reebok
Common Stock.
General Provisions of the Plan. The Directors' Plan may be
amended or terminated by the Compensation Committee provided that
no such action may be taken without shareholder approval if such
approval is required under Section 16 of the Exchange Act.
Immediately prior to the consummation of any merger or
consolidation involving the Company, any sale of substantially
all of the Company's assets or other transaction or related
transactions as a result of which a single person or several
persons acting in concert own a majority of the Company's Common
Stock (except for certain transactions that do not involve a
change in the holders of a majority of the outstanding Common
Stock and the ownership of a majority of the outstanding shares
of Common Stock by a single person), all outstanding options will
become immediately exercisable, any outstanding balance in a
director's Cash Deferral Account will be paid out in cash in a
lump sum and any outstanding balance in a director's Deferred
Stock Account will be distributed in shares of Common Stock. In
addition, in the event that any person or group commences a
tender offer for shares of the Company's Common Stock within the
scope of the tender offer rules under the Exchange Act, all
outstanding options will become immediately exercisable, any
balance in a director's Cash Deferral Account will be paid in
cash in a lump sum and any balance in a director's Deferred Stock
Account will be distributed in shares of Common Stock prior to
the commencement of such tender offer.
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The following table sets forth the awards which would have
been made in 1993 to each director who is eligible to participate
in the Plan and to all directors who are not executive officers
as a group under the Directors' Plan, if such Plan had been in
effect.
<TABLE>
<CAPTION>
AWARDS WHICH WOULD HAVE BEEN MADE
UNDER THE DIRECTORS' PLAN IN 1993
IF SUCH PLAN HAD BEEN IN EFFECT
Number of Shares
Name of Underlying Stock Exercise Price
Director Options Granted of Stock Options
<S> <C> <C>
Jill E. Barad 1,200 $36.00
Daniel E. Gill 1,800 $36.00
Bertram M. Lee, Sr. 2,400 $36.00
Richard G. Lesser 2,400 $36.00
William M. Marcus 2,400 $36.00
Geoffrey Nunes 2,400 $36.00
John A. Quelch 2,400 $36.00
All Directors who 15,000 $36.00
are not executive
officers as a group
(7 persons)
</TABLE>
In comparison, under the existing 1987 Directors' Plan,
Eligible Directors received in 1993 options to purchase 4,000
shares of Common Stock.
The Directors' Plan will combine the features of the 1987
Stock Option Plan for Directors and the Cash Deferral Plan for
Directors, thus providing ease of administration and simplicity.
It will also give directors the opportunity to defer their
compensation into Reebok Common Stock, thereby encouraging
director equity ownership. Finally, the proposed Directors' Plan
will change the formula for grants of stock options to directors
from a fixed grant to a method based on the amount of cash
compensation received by directors and on the market price of
Reebok Common Stock. This will provide a mechanism to adjust
automatically the number of options granted each year to reflect
changes in the Company's stock price and changes in director cash
compensation.
An affirmative vote of a majority of the shares present, in
person or by proxy, and entitled to vote at the Annual Meeting is
required to approve the Equity and Deferred Compensation Plan for
Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 4.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors to file
initial reports of ownership and reports of changes in ownership
with the SEC and the New York Stock Exchange. Executive officers
and directors are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on a review of the copies of
such forms furnished to the Company and written representations
from the Company's executive officers and directors, all required
Section 16(a) filings were made except that one report, covering
a gift of 1200 shares by John B. Douglas III to his children, was
filed late.
PAGE
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AUDIT MATTERS
Ernst & Young has been selected to audit the consolidated
financial statements of the Company for the year ended December
31, 1994, and to report the results of their audit to the Audit
Committee of the Board of Directors.
A representative of Ernst & Young is expected to be present
at the Annual Meeting and will be afforded the opportunity to
make a statement if he desires to do so and to respond to
appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
Proposals of shareholders submitted for consideration at the
Annual Meeting of Shareholders in 1995 must be received by the
Company no later than November 30, 1994.
OTHER BUSINESS
The Board of Directors knows of no business that will come
before the meeting for action except as described in the
accompanying Notice of Meeting. However, as to any such
business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
FORM 10-K
A COPY OF REEBOK'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE
BY
WRITING TO: OFFICE OF INVESTOR RELATIONS, REEBOK INTERNATIONAL
LTD., 100 TECHNOLOGY CENTER DRIVE, STOUGHTON, MASSACHUSETTS
02072.
March 30, 1994
PAGE
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EXHIBIT A
REEBOK INTERNATIONAL LTD.
1994 EQUITY INCENTIVE PLAN
1. PURPOSE
The purpose of this 1994 Equity Incentive Plan (the
"Plan") is to advance the interests of Reebok International Ltd.
(the "Company") and its subsidiaries by enhancing the ability of
the Company to (i) attract and retain employees and other persons
or entities who are in a position to make significant
contributions to the success of the Company and its subsidiaries;
(ii) reward such persons for such contributions; and (iii)
encourage such persons to take into account the long-term
interest of the Company through ownership of shares ("Shares") of
the Company's common stock ("Stock").
The Plan is intended to accomplish these goals by enabling
the Company to grant awards ("Awards") in the form of Options,
Stock Appreciation Rights, Restricted Stock or Deferred Stock,
all as more fully described below.
2. ADMINISTRATION
The Plan will be administered by the Compensation and
Nominating Committee (the "Committee") of the Board of Directors
of the Company (the "Board") which will be constituted to permit
the Plan to comply with Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor rule and to comply with the requirements for a
compensation committee composed of outside directors under
Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). The Committee will determine the recipients of
Awards, the times at which Awards will be made and the size and
type or types of Awards to be made to each recipient and will set
forth in such Awards the terms, conditions and limitations
applicable to it. Awards may be made singly, in combination or
in tandem. The Committee will have full and exclusive power to
interpret the Plan, to adopt rules, regulations and guidelines
relating to the Plan, to grant waivers of Plan restrictions and
to make all of the determinations necessary for its
administration. Such determinations and actions of the
Committee, and all other determinations and actions of the
Committee made or taken under authority granted by any provision
of the Plan, will be conclusive and binding on all parties.
Nothing in this paragraph shall be construed as limiting the
power of the Committee or the Board to make adjustments under
Section 12 or to amend or terminate the Plan under Section 17.
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it
is approved by the stockholders of the Company. Grants of Awards
under the Plan may be made prior to that date, subject to such
approval of the Plan.
The Plan will terminate ten years after the effective date
of the Plan, subject to earlier termination of the Plan by the
Board pursuant to Section 17. No Award may be granted under the
Plan after the termination date of the Plan, but Awards
previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12 below,
(i) the maximum aggregate number of Shares of Stock that may be
delivered for all purposes under the Plan shall be 5,000,000 and
(ii) the maximum number
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of Shares of Stock awarded to any Participant (as defined in
Section 5 below) in any calendar year under the Plan shall be (x)
250,000 Shares of Stock in the case of all Participants other
than the Chief Executive Officer and/or President of the Company
and (y) 500,000 Shares of Stock in the case of the Chief
Executive Officer and/or President of the Company. The maximum
aggregate number of Shares of Stock which may be issued under the
Plan pursuant to the exercise of ISOs (as defined in Section 7
below) shall be 1,000,000. The maximum amount of compensation
(other than Stock) that may be awarded to any Participant in any
calendar year under the Plan shall be $2,000,000.
If any Award requiring exercise by the Participant for
delivery of Stock is canceled or terminates without having been
exercised in full, or if any Award payable in Stock or cash is
satisfied in cash rather than Stock, the number of Shares of
Stock as to which such Award was not exercised or for which cash
was substituted will be available for future grants of Stock
except that Stock subject to an Option canceled upon the exercise
of an SAR shall not again be available for Awards under the Plan
unless, and to the extent that, the SAR is settled in cash.
Likewise, if any Award payable in Stock or cash is satisfied in
Stock rather than cash, the amount of cash for which such Stock
was substituted will be available for future Awards of cash
compensation. Shares of Stock tendered by a Participant or
withheld by the Company to pay the exercise price of an Option or
to satisfy the tax withholding obligations of the exercise or
vesting of an Award shall be available again for Awards under the
Plan, but only to Participants who are not subject to Section 16
of the Exchange Act. Shares of Restricted Stock forfeited to the
Company in accordance with the Plan and the terms of the
particular Award shall be available again for Awards under the
Plan unless the Participant has received the benefits of
ownership (within the applicable interpretation under Rule 16b-3
under the Exchange Act), in which case such Shares may only be
available for Awards to Participants who are not subject to
Section 16 of the Exchange Act.
Stock delivered under the Plan may be either authorized but
unissued Stock or previously issued Stock acquired by the Company
and held in treasury. No fractional Shares of Stock will be
delivered under the Plan and the Committee shall determine the
manner in which fractional share value will be treated.
5. ELIGIBILITY AND PARTICIPATION
Those eligible to receive Awards under the Plan
("Participants") will be persons in the employ of the Company or
any of its subsidiaries ("Employees") and other persons or
entities who, in the opinion of the Committee, are in a position
to make a significant contribution to the success of the Company
or its subsidiaries, except that non-Employee directors of the
Company or a subsidiary of the Company are not eligible to
participate in this Plan. A "subsidiary" for purposes of the
Plan will be a corporation in which the Company owns, directly or
indirectly, stock possessing 50% or more of the total combined
voting power of all classes of stock.
6. DELEGATION OF AUTHORITY
The Committee may delegate to senior officers of the
Company who are also directors of the Company (including, without
limitation, the Chief Executive Officer and/or President) its
duties under the Plan subject to such conditions and limitations
as the Committee may prescribe, except that only the Committee
may designate and make grants to Participants (i) who are subject
to Section 16 of the Exchange Act or any successor statute,
including, without limitation, decisions on timing, amount and
pricing of Awards, or (ii) whose compensation is covered by
Section 162(m) of the Code.
7. OPTIONS
a. Nature of Options. An Option is an Award
entitling the Participant to purchase a specified number of
Shares at a specified exercise price. Both "incentive stock
options," as defined in Section 422 of the Code
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(referred to herein as an "ISO") and non-incentive stock options
may be granted under the Plan. ISOs may be awarded only to
Employees.
b. Exercise Price. The exercise price of each Option
shall be determined by the Committee, but in the case of an ISO
shall not be less than 100% (110% in the case of an ISO granted
to a ten-percent shareholder) of the Fair Market Value of a Share
at the time the ISO is granted; nor shall the exercise price of
any other Option be less than 100% of the Fair Market Value of a
Share at the time the Option is granted except that (i) Options
may be granted to Participants who are not executive officers of
the Company at less than Fair Market Value, (ii) in connection
with an amendment of an Option which, in the opinion of the
Committee, is or may be treated for tax or Section 16 purposes as
a new grant of the Option, the exercise price of such amended
Option may be equal to the exercise price of the original Option
even if such exercise price is less than Fair Market Value, and
(iii) in connection with an acquisition, consolidation, merger or
other extraordinary transaction, Options may be granted at less
than Fair Market Value in order to replace existing Options at
comparable value; provided, that, in no case shall the exercise
price of an Option be less, in the case of an original issue of
authorized Stock, than the par value of a Share. For purposes of
this Plan, "Fair Market Value" shall mean, except as provided
below, the closing price of a Share as reported on the New York
Stock Exchange on the date of the grant (based on The Wall Street
Journal report of composite transactions) or, if the New York
Stock Exchange is closed on the date of grant, the next preceding
date on which it is open or, if the Shares are no longer listed
on such Exchange, such term shall have the same meaning as it
does in the case of ISOs. In the case of ISOs, the term "Fair
Market Value" shall have the same meaning as it does in the
provisions of the Code and the regulations thereunder applicable
to ISOs. For purposes of this Plan, "ten-percent shareholder"
shall mean any Employee who at the time of grant owns directly,
or is deemed to own by reason of the attribution rules set forth
in Section 424(d) of the Code, Stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or of any of its subsidiaries.
c. Duration of Options. In no case shall an Option
be exercisable more than ten years (five years, in the case of an
ISO granted to a "ten-percent shareholder" as defined in (b)
above) from the date the Option was granted.
d. Exercise of Options and Conditions. Options
granted under any single Award will become exercisable at such
time or times, and on and subject to such conditions, as the
Committee may specify. The Committee may at any time and from
time to time accelerate the time at which all or any part of the
Option may be exercised.
e. Payment for and Delivery of Stock. Full payment
for Shares purchased will be made at the time of the exercise of
the Option, in whole or in part. Payment of the purchase price
will be made in cash or in such other form as the Committee may
approve, including, without limitation, delivery of Shares of
Stock.
8. STOCK APPRECIATION RIGHTS
a. Nature of Stock Appreciation Rights. A Stock
Appreciation Right (an "SAR") is an Award entitling the recipient
to receive payment, in cash and/or Stock, determined in whole or
in part by reference to appreciation in the value of a Share. In
general, an SAR entitles the recipient to receive, with respect
to each Share as to which the SAR is exercised, the excess of the
Fair Market Value of a Share on the date of exercise over the
Fair Market Value of a Share on the date the SAR was granted.
However, the Committee may provide at the time of grant that the
amount the recipient is entitled to receive will be adjusted
upward or downward under rules established by the Committee to
take into account the performance of the Shares in comparison
with the performance of other stocks or an index or indices of
other stocks.
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b. Grant of SARs. SARs may be granted in tandem
with, or independently of, Options granted under the Plan. An
SAR granted in tandem with an Option which is not an ISO may be
granted either at or after the time the Option is granted. An
SAR granted in tandem with an ISO may be granted only at the time
the Option is granted.
c. Exercise of SARs. An SAR not granted in tandem
with an Option will become exercisable at such time or times, and
on such conditions, as the Committee may specify. An SAR granted
in tandem with an Option will be exercisable only at such times,
and to the extent, that the related Option is exercisable. An
SAR granted in tandem with an ISO may be exercised only when the
market price of the Shares subject to the Option exceeds the
exercise price of such Option. The Committee may at any time and
from time to time accelerate the time at which all or part of the
SAR may be exercised.
9. RESTRICTED STOCK.
A Restricted Stock Award entitles the recipient to
acquire Shares, subject to certain restrictions or conditions,
for no cash consideration, if permitted by applicable law, or for
such other consideration as determined by the Committee. The
Award may be subject to such restrictions, conditions and
forfeiture provisions as the Committee may determine, including,
but not limited to, restrictions on transfer; continuous service
with the Company; achievement of business objectives; and
individual, unit and Company performance. Subject to such
restrictions, conditions and forfeiture provisions as may be
established by the Committee, any Participant receiving an Award
will have all the rights of a stockholder of the Company with
respect to Shares of Restricted Stock, including the right to
vote the Shares and the right to receive any dividends thereon.
10. DEFERRED STOCK
A Deferred Stock Award entitles the recipient to
receive Shares to be delivered in the future. Delivery of the
Shares will take place at such time or times, and on such
conditions, as the Committee may specify. The Committee may at
any time accelerate the time at which delivery of all or any part
of the Shares will take place. At the time any Deferred Stock
Award is granted, the Committee may provide that the Participant
will receive an instrument evidencing the Participant's right to
future delivery of Deferred Stock.
11. TRANSFERS
No Award (other than an Award in the form of an
outright transfer of cash or Stock) may be assigned, pledged or
transferred other than by will or by the laws of descent and
distribution and during a Participant's lifetime will be
exercisable only by the Participant or, in the event of a
Participant's incapacity, his or her guardian or legal
representative.
12. ADJUSTMENTS
a. In the event of a stock dividend, stock split or
combination of Shares, recapitalization or other change in the
Company's capitalization, or other distribution to common
stockholders other than normal cash dividends, after the
effective date of the Plan, the Committee will make any
appropriate adjustments to the maximum number of Shares that may
be delivered under the Plan and to any Participant under Section
4 above.
b. In any event referred to in paragraph (a), the
Committee will also make any appropriate adjustments to the
number and kind of Shares of Stock or securities subject to
Awards then outstanding or subsequently granted, any exercise
prices relating to Awards and any other provision of Awards
affected by such change.
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The Committee may also make such adjustments to take into account
material changes in law or in accounting practices or principles,
mergers, consolidations, acquisitions, dispositions or similar
corporate transactions, or any other event, if it is determined
by the Committee that adjustments are appropriate to avoid
distortion in the operation of the Plan.
13. RIGHTS AS A STOCKHOLDER
Except as specifically provided by the Plan, the
receipt of an Award will not give a Participant rights as a
stockholder; the Participant will obtain such rights, subject to
any limitations imposed by the Plan or the instrument evidencing
the Award, upon actual receipt of Shares. However, the Committee
may, on such conditions as it deems appropriate, provide that a
Participant will receive a benefit in lieu of cash dividends that
would have been payable on any or all Shares subject to the
Participant's Award had such Shares been outstanding.
14. CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any Shares
pursuant to the Plan or to remove any restrictions or legends
from Shares previously delivered under the Plan until, (a) in the
opinion of the Company's counsel, all applicable federal and
state laws and regulations have been complied with, (b) if the
outstanding Shares are at the time listed on any stock exchange,
until the Shares to be delivered have been listed or authorized
to be listed on such exchange upon official notice of notice of
issuance, and (c) until all other legal matters in connection
with the issuance and delivery of such Shares have been approved
by the Company's counsel. If the sale of Shares has not been
registered under the Securities Act of 1933, as amended, the
Company may require, as a condition to exercise of the Award,
such representations and agreements as counsel for the Company
may consider appropriate to avoid violation of such Act and may
require that the certificates evidencing such Shares bear an
appropriate legend restricting transfer.
If an Award is exercised by the Participant's legal
representative, the Company will be under no obligation to
deliver Shares pursuant to such exercise until the Company is
satisfied as to the authority of such representative.
15. TAX WITHHOLDING
The Company will have the right to deduct from any cash
payment under the Plan taxes that are required to be withheld and
further to condition the obligation to deliver or vest Shares
under this Plan upon the Participant's paying the Company such
amount as it may request to satisfy any liability for applicable
withholding taxes. The Committee may in its discretion permit
Participants to satisfy all or part of their withholding
liability by delivery of Shares with a Fair Market Value equal to
such liability or by having the Company withhold from Stock
delivered upon exercise of an Award, Shares whose Fair Market
Value is equal to such liability.
16. MERGERS; ETC.
In the event of any merger or consolidation involving
the Company, any sale of substantially all of the Company's
assets or any other transaction or series of related transactions
as a result of which a single person or several persons acting in
concert own a majority of the Company's then outstanding Stock
(such merger, consolidation, sale or other transaction being
hereinafter referred to as a "Transaction"), all outstanding
Options and SARs shall become immediately exercisable and each
outstanding share of Restricted Stock and each outstanding
Deferred Stock Award shall immediately become free of all
restrictions and conditions.
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Upon consummation of the Transaction, all outstanding Options and
SARs shall terminate and cease to be exercisable. There shall be
excluded from the foregoing any Transaction as a result of which
(a) the holders of Stock prior to the Transaction retain or
acquire securities constituting a majority of the outstanding
voting common stock of the acquiring or surviving corporation or
other entity and (b) no single person owns more than half of the
outstanding voting common stock of the acquiring or surviving
corporation or other entity. For purposes of this Section,
voting common stock of the acquiring or surviving corporation or
other entity that is issuable upon conversion of convertible
securities or upon exercise of warrants or options shall be
considered outstanding, and all securities that vote in the
election of directors (other than solely as the result of a
default in the making of any dividend or other payment) shall be
deemed to constitute that number of shares of voting common stock
which is equivalent to the number of such votes that may be cast
by the holders of such securities.
In lieu of the foregoing, if there is an acquiring or
surviving corporation or entity, the Committee may, by vote of a
majority of the members of the Committee who are Continuing
Directors (as defined below), arrange to have such acquiring or
surviving corporation or entity or an Affiliate (as defined
below) thereof grant to Participants holding outstanding Awards
replacement Awards which, in the case of ISOs, satisfy, in the
determination of the Committee, the requirements of Section
425(e) of the Code.
The term "Continuing Director" shall mean any director of
the Company who (i) is not an Acquiring Person or an Affiliate of
an Acquiring Person and (ii) either was (A) a member of the Board
of Directors of the Company on the date hereof or (B) nominated
for his or her initial term of office by a majority of the
Continuing Directors in office at the time of such nomination.
The term "Acquiring Person" shall mean, with respect to any
Transaction, each Person who is a party to or a participant in
such Transaction or who, as a result of such Transaction, would
(together with other Persons acting in concert) own a majority of
the Company's outstanding Common Stock; provided, however, that
none of the Company, any wholly-owned subsidiary of the Company,
any employee benefit plan of the Company or any trustee in
respect thereof acting in such capacity shall, for purposes of
this Section, be deemed an "Acquiring Person". The term
"Affiliate", with respect to any Person, shall mean any other
Person who is, or would be deemed to be, an "affiliate" or an
"associate" of such Person within the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as
amended. The term "Person" shall mean a corporation,
association, partnership, joint venture, trust, organization,
business, individual or government or any governmental agency or
political subdivision thereof.
17. AMENDMENTS AND TERMINATION
The Committee will have the authority to make such
amendments to any terms and conditions applicable to outstanding
Awards as are consistent with this Plan provided that, except for
adjustments under Section 12 hereof, no such action will modify
such Award in a manner adverse to the Participant without the
Participant's consent except as such modification is provided for
or contemplated in the terms of the Award.
The Board may amend, suspend or terminate the Plan except
that no such action may be taken, without shareholder approval,
which would effectuate any change for which shareholder approval
is required pursuant to Section 16 of the Exchange Act.
18. PRIOR PLANS
This Plan is intended to replace the Reebok
International Ltd. 1985 Stock Option Plan, the Reebok
International Ltd. 1986 Stock Option Plan for Selected
Individuals and the Reebok International 1987 Stock
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Bonus Plan (collectively the "Prior Plans"), which Prior Plans
shall automatically be terminated and replaced and superseded by
this Plan on the date on which this Plan becomes effective.
19. MISCELLANEOUS
This Plan shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
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EXHIBIT B
REEBOK INTERNATIONAL LTD.
EQUITY AND DEFERRED COMPENSATION
PLAN FOR DIRECTORS
1. PURPOSE
The purpose of this Equity and Deferred Compensation
Plan for Directors (the "Plan") is to advance the interests of
Reebok International Ltd. (the "Company") by enhancing the
ability of the Company to attract and retain directors who are in
a position to make significant contributions to the success of
the Company and to reward directors for such contributions (a)
through ownership of shares of the Company's common stock (the
"Stock") and (b) by providing a means whereby directors may defer
all or a portion of their directors fees.
2. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") of the Board of Directors (the "Board") of the
Company, which will be constituted to permit the Plan to comply
with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Committee shall have
authority, not inconsistent with the express provisions of the
Plan, (a) to issue options in accordance with the Plan to such
directors as are eligible to receive options; (b) to prescribe
the form or forms of instruments evidencing options and any other
instruments required under the Plan and to change such forms from
time to time; (c) to prescribe the forms and procedures in
connection with any election or designation with respect to the
deferral of directors fees; (d) to adopt, amend and rescind rules
and regulations for the administration of the Plan; and (e) to
interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the
Plan. Subject to Section 11 and to the extent such actions are
consistent with the exemptions provided under Rule 16b-3
promulgated under the Exchange Act, the Committee shall also have
the authority, both generally and in particular instances, to
waive compliance by a director with any obligation to be
performed by him or her under the Plan and to waive any
condition, restriction or provision imposed under the Plan. Such
determinations and actions of the Committee, and all other
determinations and actions of the Committee made or taken under
authority granted by any provision of the Plan, will be
conclusive and binding on all parties. Nothing in this paragraph
shall be construed as limiting the power of the Committee or the
Board to make adjustments under Section 5(c) or to amend or
terminate the Plan under Section 11.
3. DELEGATION OF AUTHORITY
The Committee may delegate to designated senior
officers of the Company its duties under the Plan subject to such
conditions and limitations as the Committee may prescribe. The
Chief Financial Officer of the Company, as the designee of the
Committee, shall act as the administrator (the "Administrator")
of the deferred compensation provisions of the Plan and shall
have authority to prescribe forms and procedures in connection
with any election to defer compensation made under the Plan.
4. EFFECTIVE DATE OF PLAN
The Plan shall become effective on the date on which
the Plan is approved by the shareholders of the Company.
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5. SHARES SUBJECT TO THE PLAN
a. Number of Shares. Subject to adjustment as
provided in Section 5(c), the aggregate number of shares of Stock
that may be delivered upon the exercise of options granted under
the Plan and may be credited to the Deferred Stock Accounts (as
defined in Section 8(b)) of directors under the Plan shall be
300,000. If any option granted under the Plan terminates without
having been exercised in full, the number of shares of Stock as
to which such option was not exercised shall be available for
future grants within the limits set forth in this Section 5(a).
b. Shares to be Delivered. Shares delivered under
the Plan shall be authorized but unissued Stock or, if the Board
so decides in its sole discretion, previously issued Stock
acquired by the Company and held in treasury. No fractional
shares of Stock shall be delivered under the Plan.
c. Changes in Stock. In the event of a stock
dividend, stock split or combination of shares, recapitalization
or other change in the Company's capital stock, or other
distribution to common stockholders other than normal cash
dividends, after the effective date of the Plan, the maximum
number of shares that may be delivered under the Plan, the number
and kind of shares of Stock of the Company credited to the
Deferred Stock Accounts of directors or subject to options then
outstanding or subsequently granted under the Plan, the exercise
price of options granted under the Plan, and other relevant
provisions shall be appropriately adjusted by the Committee,
whose determination shall be binding on all persons.
6. ELIGIBILITY
Directors eligible to participate in the Plan
("Eligible Directors") shall be any director who (i) is not an
officer or employee of the Company and (ii) is not a holder of
more than 5% of the outstanding shares of Stock of the Company or
a person who is in control of such holder.
7. TERMS AND CONDITIONS OF OPTIONS
a. Number of Options. Commencing on the Effective
Date of this Plan, each Eligible Director, upon his or her first
election to the Board, shall be awarded options covering shares
of Stock with a fair market value on the date of such election
equal to six times the average annual cash compensation received
by all Directors for the immediately prior calendar year.
On April 28 of each year, commencing with April 28, 1995,
each Eligible Director shall be awarded for each year of service
options covering shares of Stock with a fair market value on the
date of such grant equal to three times the average annual cash
compensation received by all Directors for the immediately prior
calendar year. If less than one full year elapses between an
initial grant and an annual grant, the Eligible Director shall
receive options covering shares of Stock for each quarter (or
portion thereof) of service with a fair market value on the date
of grant equal to one-fourth of the average annual cash
compensation received by all Directors for the immediately prior
calendar year.
For purposes of this Section 7(a), "fair market value" shall
mean the closing price of the Stock as reported on the New York
Stock Exchange on the date of election or grant, as the case may
be (based on The Wall Street Journal report of composite
transactions) or, if the New York Stock Exchange is closed on the
date of election or grant, the next preceding date on which it is
open or, if the Stock is no longer listed on such Exchange, it
shall have the same meaning as it does in the provisions of the
Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder applicable to incentive options.
b. Exercise Price. The exercise price of each option
shall be 100% of the fair market value per share of the Stock at
the time the option is granted. For this purpose, "fair market
value" shall mean the closing price
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of the Stock as reported on the New York Stock Exchange on the
date of the grant (based on The Wall Street Journal report of
composite transactions) or, if the New York Stock Exchange is
closed on the date of grant, the next preceding date on which it
is open or, if the Stock is no longer listed on such Exchange, it
shall have the same meaning as it does in the provisions of the
Code and the regulations thereunder applicable to incentive
options.
c. Duration of Options. The latest date on which an
option may be exercised shall be the date which is ten years from
the date the option was granted.
d. Exercise of Options.
(1) Each option shall become exercisable to the
extent of thirty-three and one-third percent (33 1/3%) of the
shares covered thereby on each of the first, second and third
anniversaries of the date of the grant.
(2) Any exercise of an option shall be in
writing, signed by the proper person and delivered or mailed to
the Company, accompanied by (a) the option certificate and any
other documents required by the Committee and (b) payment in full
for the number of shares for which the option is exercised, as
provided in paragraph (e) below.
(3) If an option is exercised by the executor or
administrator of a deceased director, or by the person or persons
to whom the option has been transferred by the director's will or
the applicable laws of descent and distribution, the Company
shall be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of
the person or persons exercising the option.
(4) The Company shall have the right to settle
any option, and to terminate the rights of the holder thereof, by
paying to the option holder in cash the difference between the
fair market value of the Stock at the time of settlement and the
purchase price.
e. Payment for Stock. Stock purchased under the Plan
shall be paid for as follows: (i) in cash or by certified check,
bank draft or money order payable to the order of the Company,
(ii) through the delivery of shares of Stock having a fair market
value on the last business day preceding the date of exercise
equal to the purchase price; (iii) by a combination of cash and
Stock as provided in clauses (i) and (ii) above; or (iv) by
delivery of a properly executed notice with an undertaking by a
broker to deliver promptly to the Company the amount of sale
proceeds to pay the exercise price.
An option holder shall not have the rights of a shareholder
with regard to awards under the Plan except as to Stock actually
received by him or her under the Plan.
f. Nontransferability of Options. No option may be
transferred other than by will or by the laws of descent and
distribution, and during a director's lifetime an option may be
exercised only by him or her.
g. Death. Upon the death of any Eligible Director
granted options under this Plan, all options not then exercisable
shall terminate. All options held by the director that are
exercisable immediately prior to death may be exercised by his or
her executor or administrator, or by the person or persons to
whom the option is transferred by will or the applicable laws of
descent and distribution, at any time within the three-year
period ending with the third anniversary of the director's death
(subject, however, to the limitations of Section 6(c) regarding
the maximum exercise period for such option).
h. Other Termination of Status of Director. If a
director's service with the Company terminates for any reason
other than death, all options held by the director that are not
then exercisable shall terminate.
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Options that are exercisable on the date of termination shall
continue to be exercisable for a period of three months (subject,
however, to the limitations of Section 6(c) regarding the maximum
exercise period for such options). After completion of that
three-month period, such options shall terminate to the extent
not previously exercised, expired or terminated.
8. TERMS AND CONDITIONS OF DEFERRAL OF COMPENSATION
a. Deferral of Fees. Any Eligible Director may elect
to defer in either cash or Stock all or a portion of the annual
retainer and meeting fees ("Fees") payable by the Company for his
or her services as a director for any calendar year by delivering
a deferral election to the Administrator not later than (i)
December 31 of the year immediately preceding the year to which
the deferral election relates, or (ii) with respect to a
Director's first year or partial year of service as a director,
thirty days following the date on which such Director first
became a director. The election form shall specify the amount or
portion of the Fees to be deferred; whether and to what extent
such Fees are to be deferred in cash or in Stock; the manner of
payment with respect to such deferred amounts; and if such Fees
are deferred in cash, the date on which the deferred amounts
shall be paid in a lump sum or in which installment payments
shall commence or if such Fees are deferred in Stock, the date on
which such Stock shall be distributed. Such election shall
remain in force for such calendar year and for each year
thereafter until changed or revoked by the director by written
notice to the Administrator not later than December 31
immediately preceding the year to which such change or revocation
relates. A deferral election may not be changed or revoked after
the beginning of the year to which it relates.
b. Accounts; Interest and Dividend Credits.
(1) On the first day of each calendar quarter
(the "Credit Date"), an Eligible Director who elects to defer his
or her Fees shall receive a credit to his or her deferred
compensation accounts (the "Deferred Compensation Accounts")
under the Plan as hereinafter provided. Any portion of a
participant's Fees which are deferred in cash shall be credited
to the participant's Cash Deferral Account. The amount of the
credit shall equal the amount of Fees deferred in cash by the
participant during the immediately preceding calendar quarter.
Any portion of a participant's Fees which are deferred in Stock
shall be credited to the participant's Deferred Stock Account.
The amount of the credit to such Deferred Stock Account shall be
the number of shares of Stock (rounded to the nearest one
hundredth of a share) determined by dividing the amount of the
participant's Fees deferred in Stock during the immediately
preceding quarter by the closing price of a share of Stock of the
Company as reported on the New York Stock Exchange on the Credit
Date (based on The Wall Street Journal report of composite
transactions) or, if the New York Stock Exchange is closed on the
Credit Date, the next preceding date on which it is open.
(2) On the first day of each calendar quarter, an
amount shall be credited to each participant's Cash Deferral
Account equal to the Interest Rate (as hereinafter defined) on
the balance credited to the Cash Deferral Account during the
immediately preceding calendar quarter. Interest shall accrue on
the balance of each participant's Cash Deferral Account
commencing with the date the first payment is credited thereto
and ending with the final payment therefrom. For this purpose,
"Interest Rate" shall mean, with respect to any calendar quarter,
the Merrill Lynch Corporate Bond Rate then in effect.
(3) Each time a dividend is paid on the Stock, a
participant who has a positive balance in his or her Deferred
Stock Account shall receive a credit to such Account. The amount
of the dividend credit shall be the number of shares of Stock
(rounded to the nearest one-hundredth of a share) determined by
multiplying the dividend amount per share by the number of shares
credited to the participant's Deferred Stock Account
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as of the record date for the dividend and dividing the product
by the closing price per share of Stock reported on the New York
Stock Exchange on the dividend payment date (based on The Wall
Street Journal report of composite transactions) or, if the New
York Stock Exchange is closed on the dividend payment date, the
next preceding date on which it is open.
c. Payment. The balance of a director's Deferred
Compensation Accounts shall be paid to the director (or, in the
event of death, to his or her designated beneficiary or estate)
as follows: (1) in the case of a Cash Deferral Account such
balance shall be paid, at the director's option, either (i) in a
single lump sum as soon as practicable following the earlier of
(x) the date on which the director ceases to serve as a director
of the Company or (y) the date specified by the director as the
distribution date (such earlier date shall be referred to as the
"Distribution Date"), or (ii) in annual installments over a
period, to be specified by the director, not to exceed ten years
commencing as soon as practicable after the Distribution Date,
and (2) in the case of a Deferred Stock Account, such balance
shall be distributed in Stock on the Distribution Date. If a
directors's Cash Deferral Account is paid in installments, the
amount of each installment shall be (1) the balance of the Cash
Deferral Account on the Distribution Date divided by the number
of installments plus (2) interest credits. Upon the death of a
director, the Administrator may elect to pay any remaining
benefits in a single lump sum.
d. Designation of Beneficiary. Each director may
designate in writing a beneficiary to receive such portion, if
any, of the director's Deferred Compensation Accounts as remains
unpaid at the director's death. In the absence of a valid
beneficiary designation, that portion, if any, of an Account
remaining unpaid at the director's death shall be paid to his or
her estate.
e. Nature of Promise. The Company shall not be
required to segregate or earmark any funds or Stock in respect of
its obligations under Section 8 of the Plan. No director nor any
other person shall have any rights to any assets of the Company
by reason of amounts deferred or benefits accrued under this
Plan, other than as a general unsecured creditor of the Company.
f. No Assignment. Rights to benefits under this
Section 8 of the Plan may not be assigned, pledged or otherwise
alienated, other than in accordance with the beneficiary
designation provisions of Section 8(d) above.
9. CONDITIONS ON DELIVERY OF STOCK
The Company shall not be obligated to deliver any
shares of Stock pursuant to options granted under the Plan or in
connection with the distribution of Stock from a director's
Deferred Stock Account (a) until, in the opinion of the Company's
counsel, all applicable federal and state laws and regulations
have been complied with, and (b) if the outstanding Stock is at
the time listed on any stock exchange, until the shares to be
delivered have been listed or authorized to be listed on such
exchange upon official notice of issuance, and (c) until all
other legal matters in connection with the issuance and delivery
of such shares have been approved by the Company's counsel. If
the sale of Stock has not been registered under the Securities
Act of 1933, as amended, the Company may require, as a condition
to exercise of the option or to the distribution of a director's
Deferred Stock Account, such representations or agreements as
counsel for the Company may consider appropriate to avoid
violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting
transfer.
10. MERGERS; ETC.
In the event of any merger or consolidation involving
the Company, any sale of substantially all of the Company's
assets or any other transaction or series of related transactions
as a result of which a single person
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or several persons acting in concert own a majority of the
Company's then outstanding Stock (such merger, consolidation,
sale or other transaction being hereinafter referred to as a
"Transaction"), (i) all outstanding options shall become
exercisable prior to the consummation of such Transaction and the
Committee shall take all necessary actions to ensure that such
options remain exercisable for a period of at least 20 days prior
to the consummation and (ii) any outstanding balance in a
director's Cash Deferral Account shall be paid in a lump sum and
any outstanding balance in a director's Deferred Stock Account
shall be distributed in Stock prior to the consummation of such
Transaction. Upon consummation of the Transaction, all
outstanding options shall terminate and cease to be exercisable.
There shall be excluded from the foregoing any Transaction as a
result of which (a) the holders of Stock prior to the Transaction
retain or acquire securities constituting a majority of the
outstanding voting common stock of the acquiring or surviving
corporation or other entity and (b) no single person owns more
than half of the outstanding voting common stock of the acquiring
or surviving corporation or other entity. For purposes of this
Section, voting common stock of the acquiring or surviving
corporation or other entity that is issuable upon conversion of
convertible securities or upon exercise of warrants or options
shall be considered outstanding, and all securities that vote in
the election of directors (other than solely as the result of a
default in the making of any dividend or other payment) shall be
deemed to constitute that number of shares of voting common stock
which is equivalent to the number of such votes that may be cast
by the holders of such securities.
Notwithstanding the foregoing, in the event that any person
or group of persons commences a tender offer for shares of the
Stock within the scope of Regulation 14D under the Exchange Act
(a "Tender Offer"), all outstanding options shall become
immediately exercisable. Any shares of Stock received upon this
accelerated exercise that are not purchased pursuant to the offer
(whether by failure of the offer or otherwise) shall be subject
to repurchase at the exercise price by the Company, at its
option, upon termination of the optionee's service as director,
in accordance with the vesting schedule that corresponds to the
schedule of exercisability for the option under which the shares
of Stock were acquired. In addition, in the event of a Tender
Offer, any outstanding balance in a director's Cash Deferral
Account shall be paid in a lump sum and any outstanding balance
in a director's Deferred Stock Account shall be distributed in
Stock prior to the commencement of such Tender Offer.
11. AMENDMENTS AND TERMINATION
The Committee may at any time discontinue granting
options under the Plan. The Committee may at any time or times
amend or terminate the Plan, provided that (except to the extent
expressly required or permitted herein above), (a) no such
amendment shall, without the approval of the shareholders of the
Company, effectuate any other change for which shareholder
approval is required under Section 16 of the Exchange Act, and
(b) no such amendment shall adversely affect the rights of any
director (without his or her consent) under any option previously
granted or reduce the then existing balance of any director's
Cash Deferral or Deferred Stock Account. In the event of
termination of the Plan, the Board of Directors may elect to
satisfy all obligations under Section 8 of the Plan by
distributing remaining Deferred Compensation Account balances in
immediate lump sum payments in cash, in Stock or in such other
manner as it may determine.
12. PRIOR PLANS
This Plan is intended to replace the Reebok
International Ltd. Deferred Cash Compensation Plan for Directors
and the Reebok International Ltd. 1987 Stock Option Plan for
Directors (collectively the "Prior Plans"), which Prior Plans
shall automatically be terminated and replaced and superseded by
this Plan on the date on which this Plan becomes effective.
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13. MISCELLANEOUS
This Plan shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
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P R O X Y
ANNUAL MEETING OF REEBOK INTERNATIONAL LTD.
May 3, 1994
The undersigned hereby constitutes and appoints PAUL R.
DUNCAN and JOHN B. DOUGLAS III, or either of them with power of
substitution to each, proxies to vote and act at the Annual
Meeting of Shareholders to be held at The First National Bank of
Boston, First Floor Auditorium, 100 Federal Street, Boston,
Massachusetts on May 3, 1994 at 10:00 a.m., and at any
adjournments thereof, upon and with respect to the number of
shares of Common Stock of the Company as to which the undersigned
may be entitled to vote or act. The undersigned instructs such
proxies, or their substitutes, to vote in such manner as they may
determine on any matters which may come before the meeting, all
as indicated in the accompanying Notice of Meeting and Proxy
Statement, receipt of which is acknowledged, and to vote on the
following as specified by the undersigned. All proxies
heretofore given by the undersigned in respect of said meeting
are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Unless otherwise specified in the boxes provided on the reverse
side hereof, this proxy will be voted IN FAVOR of all nominees
for director and FOR Proposals 2, 3 and 4 and in the discretion
of the named proxies as to any other matter that may come before
the meeting or any adjournments thereof.
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
SEE REVERSE SIDE
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(X) Please mark
votes as in
this example.
PLEASE DO NOT FOLD THIS PROXY
1. Election of Class I Directors
The undersigned hereby GRANTS authority to elect
as Class I directors the following nominees:
Nominees: Jill Elikann Barad, John H. Duerden,
Geoffrey Nunes, and John A. Quelch
FOR WITHHELD
( ) ( )
( ) __________________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To approve an amendment to the ( ) ( ) ( )
1987 Employee Stock Purchase
Plan to increase the number of
shares authorized for issuance to
2,000,000.
3. To approve the 1994 Equity ( ) ( ) ( )
Incentive Plan.
4. To approve the Equity and ( ) ( ) ( )
Deferred Compensation Plan for
Directors.
MARK HERE ( )
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign exactly as your name(s) appear hereon. When
signing as attorney, executor, administrator, trustee, or
guardian, please sign your full title as such. Each joint
owner should sign.
Signature: _______________________________ Date _________________
Signature: _______________________________ Date _________________
PAGE
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