SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted
by Rule 14(a)-6(e)(2)
(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),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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[logo]
REEBOK INTERNATIONAL LTD.
100 Technology Center Drive
Stoughton, Massachusetts 02072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 7, 1996
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 7, 1996 for the following purposes:
1. To elect three Class III members of the Board of
Directors.
2. To approve the Executive Performance Incentive Plan.
3. 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 12,
1996 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 29, 1996
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
May 7, 1996
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 7, 1996 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 12, 1996 are entitled to notice of and to vote at the
Meeting. There were 74,674,065 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 three
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 votes properly cast at
the Meeting in person or by proxy is required for approval of
proposal 2. 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 or proposal 2.
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,
FOR proposal 2 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, 1995 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.
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
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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 twelve the total number of directors and
has fixed at three the number of directors to be elected at the
1996 Annual Meeting. Of the current directors, four Class I
directors have terms expiring at the 1997 Annual Meeting, four
Class II directors have terms expiring at the 1998 Annual
Meeting, and four Class III directors have terms expiring at the
1996 Annual Meeting. Three of the four directors whose terms
expire at the 1996 Annual Meeting have been nominated by the
Board of Directors for reelection at such Meeting. Mr. Gill is
not standing for reelection. Each Class III director elected at
the 1996 Annual Meeting will serve until the 1999 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 III directors,
to hold office until the Annual Meeting of Shareholders in 1999
or Special Meeting in lieu thereof, and until their respective
successors are elected and qualified, the three 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 III 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 III 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
____ _______________________ ___ ________
Paul B. Fireman Chief Executive Officer 52 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.
Robert Meers Executive Vice President of 52 1993
the Company (since February
1994) and President and Chief
Executive Officer of the Reebok
Division (since October 1995);
President of the Company's
Specialty Business Group
(February 1994 to October 1995);
President, Reebok Division U.S.
Operations (from November 1990
to January 1994) and Canadian
Operations (January 1993 to
January 1994).
Bertram M. Lee, Sr. Chairman of the Board of 57 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.
Daniel E. Gill, age 59, who has been a director of the Company
since 1992 and who presently serves as a Class III member of the Board
of Directors, is not standing for reelection.
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Class II members of the Board of Directors having terms of office
expiring at the 1998 Annual Meeting of Shareholders are as follows:
Business Experience and Director
Name Current Directorships Age Since
____ _______________________ ___ ________
Paul R. Duncan Executive Vice President 55 1989
of the Company (since 1990)
and President of the Company's
Specialty Business Group
(since October 1995); Chief
Operating Officer, Reebok
Division (from June 1995
to October 1995); Chief
Financial Officer of the
Company (from 1985 to
June 1995); Director of BGS
Systems, Inc., a computer
software development company;
Director of Cabletron Systems,
Inc., a computer networking
company.
William F. Glavin President, Babson College; 63 1994
Director of INCO Ltd., a
producer of primary metals,
alloys and engineered products;
Director of The Caldor
Corporation, a discount retailer;
and Director of John Hancock
Mutual Funds, Inc., a mutual fund
company.
Richard G. Lesser Executive Vice President 61 1988
and Chief Operating Officer
of TJX Companies, Inc., an
off-price apparel and home
furnishings retailer.
William M. Marcus Executive Vice President, 58 1981
Treasurer and Director of
American Biltrite Inc., a
manufacturer of flooring and
tape products; Director of
Congoleum Corp., a vinyl and
tile flooring company.
Class I members of the Board of Directors having terms of
office expiring at the 1997 Annual Meeting of Shareholders are as
follows:
Business Experience and Director
Name Current Directorships Age Since
____ _______________________ ___ ________
Jill Elikann Barad President, Chief Operating 44 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);
Director of BankAmerica
Corporation, a bank holding
company; Director of Microsoft
Corporation, a software company
for personal computers.
Mannie L. Jackson Chairman, Chief Executive 56 1996
Officer and majority owner
of Harlem Globetrotters
International, Inc., a sports
and entertainment entity;
Retired Senior Vice President-
Corporate Marketing and
Administration of Honeywell,
Inc., a manufacturer of
control systems, and prior to
that, served in various
executive capacities for
Honeywell since 1968;
Director of Ashland Inc.,
a vertically integrated
petroleum and chemical company;
Director of Jostens Inc., a
manufacturer and distributor
of recognition awards; Director
of The Stanley Works, a
commercial, consumer and
specialty tools company.
Geoffrey Nunes Senior Vice President and 65 1986
General Counsel, Millipore
Corporation, a leader in the
field of separation technology.
3
<PAGE>
Business Experience and Director
Name Current Directorships Age Since
____ _______________________ ___ ________
John A. Quelch Sebastian S. Kresge Professor 44 1985
of Marketing at the Graduate
School of Business Administration,
Harvard University; Director
of WPP Group plc, a multi-
national marketing services
company; Director of U.S. Office
Products Company, an office
equipment distribution company.
During 1995, the Board of Directors held five meetings. All
of the directors, except Ms. Barad, attended at least 75% of the
Board and relevant committee meetings during 1995. Ms. Barad
attended 71% of such meetings. For information on compensation of
Directors, see "Compensation of Directors" below.
The Audit Committee, composed of Messrs. Lesser, Lee, Marcus
and Quelch, held three meetings during 1995. 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 Committee, composed of Ms. Barad and
Messrs. Glavin and Nunes, 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 Compensation Committee held two meetings during
1995.
The Board Affairs Committee, composed of Messrs. Glavin,
Lesser and Nunes, held one meeting during 1995. This Committee
is responsible for considering Board governance issues. 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 Board Affairs Committee, in care of the
President of the Company.
The Executive Committee, composed of Messrs. Fireman, Duncan
and Nunes, did not meet during 1995.
COMPENSATION OF DIRECTORS
During 1995, each director who was not an officer or
employee of the Company received $25,000 annually, plus $2,000
for each committee chairmanship held and $2,000 for each
directors' meeting and $1,000 for each committee meeting
attended, plus expenses.
The Company's Equity and Deferred Compensation Plan for
Directors (the "Directors' 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 director fees.
The deferred compensation portion of the Directors' Plan
permits directors who are not employees of the Company to defer
all or a portion of their director compensation and to then
invest such compensation in Reebok Common Stock or in cash which
earns interest at the Merrill Lynch Corporate Bond Rate.
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
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<PAGE>
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.
Under the stock option portion of the Directors' Plan, each
newly elected Eligible Director (as defined below) who is elected
to office is granted 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. An Eligible Director is any director who is not
an officer or employee of the Company and is not a holder of more
than 5% of the outstanding shares of the Company's Common Stock
or a person who is in control of such holder. After the initial
grant, on April 28 of each year, each Eligible Director is
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). The exercise
price for all options granted under the Directors' Plan is the
fair market value of Reebok Common Stock on the date of the
grant. Options become exercisable for one-third of the shares
covered thereby on each of the first through third anniversaries
of the grant. On April 28, 1995, Ms. Barad and Messrs. Gill,
Lee, Lesser, Marcus, Nunes, and Quelch were granted an option to
purchase 3,621 shares and Mr. Glavin was granted a pro-rated
option to purchase 905 shares of Reebok Common Stock pursuant to
the Directors' Plan. Upon his election to the Board of Directors
on February 15, 1996, Mr. Jackson was granted an option to
purchase 7,978 shares.
Of the current directors, Messrs. Fireman, Duncan and Meers
are not Eligible Directors under the Directors' Plan.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information with
respect to the shares of Common Stock owned on March 12, 1996 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.
Common Stock
Beneficially Percent
Name Owned(1) Of Class(2)
____ ____________ ___________
Paul B. Fireman (3)(9)............... 7,668,156 9.74%
Phyllis Fireman (4).................. 5,047,002 6.41%
Jill E. Barad (5)(9)................. 18,979 *
Paul R. Duncan (9)................... 195,155 *
Daniel E. Gill (5)(9)................ 21,017 *
William F. Glavin (5)................ 4,458 *
Mannie L. Jackson ................... 1,000 *
Bertram M. Lee, Sr. (5)(9)........... 11,909 *
Richard G. Lesser (6)(9)............. 37,879 *
William M. Marcus (7)(9)............. 618,560 *
Angel Martinez (9) .................. 53,877 *
Robert Meers (9)..................... 112,467 *
Geoffrey Nunes (9)................... 39,073 *
John A. Quelch (5)(9)................ 31,865 *
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Common Stock
Beneficially Percent
Name Owned(1) Of Class(2)
____ ____________ ___________
Kenneth Watchmaker (9)............... 72,330 *
Directors and executive officers
as a group (15 persons) (8)(9)..... 8,953,805 11.37%
* 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 78,746,722 shares: 74,674,065
shares outstanding and 4,072,657 shares subject to options
exercisable within 60 days of the date of this table.
(3) Excludes 5,047,002 shares, as to which Mr. Fireman disclaims
beneficial ownership, that are beneficially owned by Phyllis
Fireman, his wife.
(4) Excludes 7,668,156 shares, as to which Mrs. Fireman
disclaims beneficial ownership, that are beneficially owned
by Paul Fireman, her husband.
(5) Includes for the following persons, the shares set forth
below, which represent shares deferred pursuant to the
Directors' Plan: Jill E. Barad, 2,106 shares; Daniel E.
Gill, 2,144 shares; William F. Glavin 1,420 shares; Bertram
M. Lee, Sr., 1,136 shares; John A. Quelch, 458 shares.
(6) Excludes 3,576 shares held by Mr. Lesser's wife and child,
as to which he disclaims beneficial ownership.
(7) Excludes 29,969 shares held by Mr. Marcus' wife, as to which
he disclaims beneficial ownership.
(8) Excludes the 5,047,002 shares described in note (3) above,
the 3,576 shares described in note (6) above and the 29,969
shares described in note (7) above. Excludes 4,400 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 (9) below).
(9) 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,
2,500,000 shares; Jill E. Barad, 15,873 shares; Paul R.
Duncan, 180,000 shares; Daniel E. Gill, 17,873 shares;
William F. Glavin, 1,788 shares; Bertram M. Lee, Sr., 10,773
shares; Richard G. Lesser, 30,873 shares; William M. Marcus,
17,873 shares; Angel Martinez, 53,750 shares; Robert Meers,
108,750 shares; Geoffrey Nunes, 37,873 shares; John A.
Quelch, 31,207 shares; Kenneth Watchmaker, 70,000 shares;
and all directors and executive officers as a group,
3,140,633 shares.
The address of Mr. and Mrs. Fireman is c/o Reebok
International Ltd., 100 Technology Center Drive, Stoughton,
Massachusetts 02072.
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<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 1993, 1994 and 1995 for the Chief Executive Officer and each of
the Company's four other most highly compensated executive officers:
SUMMARY COMPENSATION TABLE
Annual Compensation
___________________________________
Other
Annual
Name and Compen-
Principal Position Year Salary ($) Bonus ($) sation($)
__________________ ____ __________ __________ _________
Paul B. Fireman 1995 $1,000,000 None ---
Chairman, President 1994 1,000,012 $1,000,000 ---
and Chief Executive 1993 1,000,012 650,000 ---
Officer
Paul R. Duncan 1995 600,028 120,000 ---
Executive Vice President; 1994 582,716 525,000 ---
President, Specialty 1993 500,000 357,500 ---
Business Group
Robert Meers 1995 591,325 None ---
Executive Vice President; 1994 437,019 135,000 ---
President and CEO, 1993 370,673 91,406 ---
Reebok Division
Angel Martinez 1995 400,010 60,000 62,000(5)
Executive Vice President; 1994 393,214 120,000 71,768(5)
President and CEO, 1993 312,404 92,137 104,343(5)
The Rockport Company
Kenneth Watchmaker 1995 400,000 60,000 ---
Executive Vice President 1994 385,289 120,000 ---
and Chief Financial 1993 312,404 102,375 ---
Officer
(TABLE CONTINUED)
SUMMARY COMPENSATION TABLE (CONTINUED)
Long Term Compensation
Awards
_______________________
All
Restricted Other
Name and Stock Compen-
Principal Position Year Awards($) Options(#) sation($)
__________________ ____ __________ __________ ________
Paul B. Fireman 1995 None 87,300 $ 96,645 (1)(2)
Chairman, President 1994 None None 68,786 (1)(2)
and Chief Executive 1993 None None 230,813 (1)(2)
Officer
Paul R. Duncan 1995 None 40,000 51,631 (3)
Executive Vice President; 1994 None None 16,412 (3)
President, Specialty 1993 None 25,000 76,885 (3)
Business Group
Robert Meers 1995 None 140,000 31,041 (4)
Executive Vice President; 1994 None None 16,412 (4)
President and CEO, 1993 None 25,000 42,863 (4)
Reebok Division
Angel Martinez 1995 $21,483(6) 25,000 28,889 (7)
Executive Vice President; 1994 None None 16,412 (7)
President and CEO, 1993 None 50,000 35,989 (7)
The Rockport Company
Kenneth Watchmaker 1995 $21,483(6) 25,000 29,003 (8)
Executive Vice President; 1994 None None 16,412 (8)
and Chief Financial 1993 None 25,000 13,950 (8)
Officer
__________________
(1) Includes contributions by the Company on behalf of Mr.
Fireman as follows: for 1995, $12,120 to the Company's
Savings and Profit Sharing Retirement Plan (the "Profit
Sharing/Savings Plan") and $42,500 in credits allocated to
Mr. Fireman's account under the Company's Excess Benefits
Plan; for 1994, $16,412 to the Company's Profit
Sharing/Savings Plan; for 1993, $15,940 to the Profit
Sharing/Savings Plan and $189,478 in credits allocated to
Mr. Fireman's account under the Company's Excess Benefits
Plan. Mr. Fireman is 100% vested in these contributions and
allocations.
(2) Includes $42,025 for 1995, reflecting the present value of
the economic benefit to Mr. Fireman of the portion of the
premium paid by the Company during 1995 ($1,106,742) with
respect to the split-dollar life insurance agreement (see
"Employee Agreements" below for a description of such
agreement), based on the time period between the date on
which the premium was paid by the Company and May 28, 1996
which, as of March 29, 1996 is the earliest date on which
the Company could terminate the agreement and receive a
refund, without interest, of the premium it paid. Includes
$52,374 for 1994 and $25,395 for 1993, as reported in the
Company's 1995 and 1994 Proxy Statements, respectively,
reflecting the present value of the economic benefit to Mr.
Fireman of the premium paid during 1994 and 1993 ($1,107,115
and $966,862, respectively) with respect to the same
agreement, calculated on the same basis.
(3) Includes contributions by the Company on behalf of Mr.
Duncan as follows: for 1995, $12,120 to the Profit
Sharing/Savings Plan and $39,511 in credits allocated to Mr.
Duncan's account under the Excess Benefits Plan; for 1994,
$16,412 to the Profit Sharing/Savings Plan; for 1993,
$15,940 to the Profit Sharing/Savings Plan and $60,945 in
credits allocated to Mr. Duncan's account under the Excess
Benefits Plan. Mr. Duncan is 100% vested in these
contributions and allocations.
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(4) Includes contributions by the Company on behalf of Mr. Meers
as follows: for 1995, $12,120 to the Profit Sharing/Savings
Plan and $18,921 in credits allocated to Mr. Meers' account
under the Excess Benefits Plan; for 1994, $16,412 to the
Profit Sharing/Savings Plan; for 1993, $15,940 to the Profit
Sharing/Savings Plan and $26,923 in credits allocated to
Mr. Meers' account under the Excess Benefits Plan. Mr.
Meers is 100% vested in these contributions and allocations.
(5) Includes for 1995, $50,000, for 1994, $60,000 and for 1993,
$60,000 representing compensation attributable to Mr.
Martinez as a result of a rent-free lease of a residence to
him by the Company (see "Transactions with Management and
Affiliates" below). Also includes for 1995, $12,000 for car
allowance; for 1994, $11,768 for car allowance and for 1993,
$35,343 reimbursement for expenses in connection with his
relocation from California to Massachusetts and $9,000 for
car allowance.
(6) Certain of the Company's executive officers were required to
defer twenty-five percent (25%) of their 1995 bonus award
and to invest it into restricted shares of Reebok Common
Stock. Fifty percent (50%) of such shares vest on each of
January 1, 1997 and January 1, 1998. Any unvested portion
of such shares will be forfeited if the executive officer
leaves the Company prior to such vesting dates. In
connection with this arrangement, Mr. Martinez and Mr.
Watchmaker were each issued 744 shares of restricted shares
of Reebok Common Stock on March 15, 1996 in lieu of $20,000
of their bonus earned for 1995. The number of shares of
restricted stock issued to them was determined by dividing
$20,000 by the average of the closing price of Reebok Common
Stock for the first twenty trading days of 1996 ($26.875).
Mr. Martinez and Mr. Watchmaker are entitled to receive
dividends declared by the Company on these restricted
shares.
(7) Includes contributions by the Company on behalf of Mr.
Martinez as follows: for 1995, $12,120 to the Profit
Sharing/Savings Plan and $16,769 in credits allocated to Mr.
Martinez's account under the Excess Benefits Plan; for 1994,
$16,412 to the Profit Sharing/Savings Plan; for 1993,
$15,940 to the Profit Sharing/Savings Plan and $20,049 in
credits allocated to Mr. Martinez's account under the Excess
Benefits Plan. Mr. Martinez is 100% vested in these
contributions and allocations.
(8) Includes contributions by the Company on behalf of Mr.
Watchmaker as follows: for 1995, $12,120 to the Profit
Sharing/Savings Plan and $16,883 in credits allocated to Mr.
Watchmaker's account under the Excess Benefits Plan; for
1994, $16,412 to the Profit Sharing/Savings Plan; for 1993,
$4,497 to the Profit Sharing/Savings Plan and $9,453 in
credits allocated to Mr. Watchmaker's account under the
Excess Benefits Plan. Mr. Watchmaker is 40% vested in these
contributions and allocations.
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The following table sets forth information concerning
individual grants of stock options and freestanding SARs made
during 1995 to the Chief Executive Officer and each of the four
other most highly compensated executive officers:
Option/SAR Grants in 1995
_______________________________________________
Individual Grants
% of
Number of Total
Securities Options/
Underlying SARs Exercise
Options/ Granted to or Base
SARs Employees Price Expiration
Name Granted (#) in 1995 ($/Sh) Date
____ ___________ __________ ________ __________
Paul B. Fireman 87,300 (2) 6.41% $34.375 10/18/05
Paul R. Duncan 40,000 (2) 2.94% 35.375 3/7/05
Angel Martinez 25,000 (2) 1.84% 35.375 3/7/05
Robert Meers 40,000 (2) 2.94% 35.375 3/7/05
100,000 (2) 7.34% 34.375 10/18/05
Kenneth Watchmaker 25,000 (2) 1.84% 35.375 3/7/05
(TABLE CONTINUED)
Option/SAR Grants in 1995 (Continued)
_____________________________
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
for Option Term (1)
Name 5% 10%
____ __________ __________
Paul B. Fireman $1,886,989 $4,782,730
Paul R. Duncan 889,800 2,255,000
Angel Martinez 556,125 1,409,375
Robert Meers 889,800 2,255,000
2,161,500 5,478,500
Kenneth Watchmaker 556,125 1,409,375
_______________
(1) 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
(2) Forty percent (40%) of the shares granted to Mr. Fireman and
Mr. Meers (with respect to the 100,000 shares under the
option granted to Mr. Meers on 10/18/95) become exercisable
on October 18, 1997 and 20% of the shares become exercisable
on each of October 18, 1998, 1999 and 2000. Forty percent
(40%) of the shares granted to Mr. Duncan, Mr. Martinez, Mr.
Meers (with respect to the 40,000 shares under the option
granted to Mr. Meers on 3/7/95) and Mr. Watchmaker become
exercisable on March 7, 1997 and 20% of the shares become
exercisable on each of March 7, 1998, 1999 and 2000.
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 of the
Company's assets or other transaction or series of
transactions which result in a change of control of the
Company's Common Stock. Options expire ten years after the
date of grant.
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The following table sets forth aggregated option exercises
in 1995 and option values as of December 31, 1995 for the Chief
Executive Officer and each of the four other most highly
compensated executive officers:
AGGREGATED OPTION/SAR EXERCISES IN 1995
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1995
Number of
Securities
Underlying
Unexercised
Options/SARs
at 12/31/95 (#)
Shares
Acquired Value Exercisable/
Name on Exercise (#) Realized ($) Unexercisable
____ _______________ ____________ _____________
Paul B. Fireman None 0 2,500,000/
87,300
Paul R. Duncan None 0 180,000/
55,000
Angel Martinez 15,000 $341,362 53,750/
58,750
Robert Meers None 0 108,750/
211,250
Kenneth Watchmaker None 0 70,000/
80,000
(TABLE CONTINUED)
AGGREGATED OPTION/SAR EXERCISES IN 1995
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1995
(CONTINUED)
Value of
Unexercised
In-the-Money
Options/SARs
at 12/31/95($)
Exercisable/
Name Unexercisable
____ _____________
Paul B. Fireman $25,930,000/
0
Paul R. Duncan 1,776,400/
0
Angel Martinez 563,775/
0
Robert Meers 996,594/
63,281
Kenneth Watchmaker 2,400/
0
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Board of Directors, on February 15, 1996, adopted a
Supplemental Executive Retirement Plan ("SERP") for certain key
executive officers, including all of those who are named in the
Summary Compensation Table above. The SERP provides that a
participant, upon attaining age 60, will receive an annual
retirement benefit equal to (a) twenty-five percent (25%) of his
or her average total compensation for the three calendar years
out of the five consecutive calendar years ending within the year
in which the participant retires ("Final Average Compensation"),
in which he or she had the highest total compensation, multiplied
by (b) the number of years of such executive's service with the
Company (not to exceed 15) divided by 15. The SERP also provides
for reduced benefits for participants who retire after age 55,
but before age 60, and have completed at least five full years of
continuous service with the Company, or who retire before age 55,
and have completed at least ten full years of continuous service.
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The following table sets forth estimated annual benefits
payable under the SERP upon a participant's retirement, assuming
attainment of age 60 while in the employment of the Company, for
the following compensation levels and years of service:
Years of Service
________________________________
5 10 15
_______ ________ ________
Final Average
Compensation
_____________
$ 450,000 $ 37,500 $ 75,000 $112,500
550,000 41,667 83,333 125,000
750,000 62,500 125,000 187,500
1,000,000 83,333 166,667 250,000
1,250,000 104,167 208,333 312,500
1,500,000 125,000 250,000 375,000
1,750,000 145,833 291,667 437,500
2,000,000 166,667 333,333 500,000
2,250,000 187,500 375,000 562,500
The compensation covered by the SERP for any calendar year is the
participant's base compensation and annual incentive bonus earned
for such year (plus any amount that would have been paid to the
participant but for a salary reduction agreement in effect during
such year pursuant to Sections 125 or 401(k) of the Internal
Revenue Code of 1986, as amended). The benefit payment under the
SERP is not subject to any deductions for Social Security
benefits or other offset amounts. Years of service credited
under the SERP for the executive officers named in the Summary
Compensation Table above are as follows: Paul B. Fireman, 16
years, Paul R. Duncan, 10 years, Robert Meers, 11 years, Angel
Martinez, 14 years, and Kenneth Watchmaker, 3 years.
EMPLOYEE AGREEMENTS
Mr. Fireman has a Stock Option Agreement with the Company
pursuant to which he received in 1990 a 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
became exercisable in stages over a five-year period ending July
24, 1995. Options to purchase 2.5 million 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 52 or Phyllis Fireman, age 51 (whichever occurs
later). The Company pays 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 (2) 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. Watchmaker
which established a supplemental retirement plan for his benefit
into which the Company has credited $400,000. The terms of such
supplemental retirement plan are identical to the Reebok
International Ltd. Excess Benefits Plan, except that
11
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if Mr. Watchmaker's employment is terminated by the Company
without cause, or if his employment ceases after a change of
control under the 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. 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.
The Company has change of control agreements with Mr.
Duncan, Mr. Martinez 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. Martinez 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. Martinez 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. Martinez 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.
The above description is only a summary of the agreements
which the Company has with its various executive officers and is
qualified in its entirety by the actual agreements, copies of
which have been filed as Exhibits to the Company's Annual Reports
on Form 10-K.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following
report:
The Committee currently consists of Jill E. Barad, Chair,
Geoffrey Nunes, and William F. Glavin. Its responsibilities
include setting the compensation level for the Chief Executive
Officer and reviewing compensation levels for all other executive
officers of the Company. Compensation for these individuals is
established by the Chief Executive Officer. 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 1995 of $1,000,000 and was eligible for a bonus for
1995 with a target of up to 100% of his base salary. Mr.
Fireman's salary and bonus target were established in 1990 and
have not been changed since that time. The Committee decided to
award no bonus to Mr. Fireman for 1995 because the Company fell
short of its sales and earnings objectives for the year.
During 1995, as part of a review of Mr. Fireman's total
compensation program, the Committee reviewed comparative
compensation data from a group of other companies in the shoe and
apparel industries and
12
<PAGE>
leading consumer products companies assembled by an outside
compensation consulting firm (this data was also reviewed in
connection with evaluating the compensation of the other
executive officers of the Company, as described below). The
Committee decided to continue Mr. Fireman's base salary at
$1,000,000 per year and to establish Mr. Fireman's target bonus
at 100% of his base salary. The Committee believes that this
base salary and target bonus place Mr. Fireman's compensation at
approximately the 75th percentile of similarly situated chief
executive officers, based on the survey data. An option grant
was also made to Mr. Fireman that was targeted at the 75th
percentile level.
The Committee reviews the compensation for all executive
officers other than the Chief Executive Officer on an annual
basis. As part of such review, the Committee met in March 1995
with an outside compensation consulting firm and reviewed
comparative compensation data from a group of fourteen other
companies in the shoe and apparel industries and leading consumer
products companies. While several of these companies are
included in the Standard and Poor's Shoes and Textiles Apparel
Manufacturers Indices used as peer group indices in the
comparison of five year cumulative total return graph included in
this Proxy Statement, the Compensation Committee believes that
the Company's most direct competitors for executive talent are
not confined to the companies that would be included in a peer
group established to compare shareholder returns. Thus, the
companies surveyed for compensation purposes were not the same as
those included in the peer group indices. Target total
compensation levels for Reebok executive officers were generally
in the 75th percentile of the compensation for the companies
surveyed and the Committee determined that this was appropriate
given the complexity, volatility and risks/rewards associated
with Reebok's business and the fact that Reebok's financial
performance over the prior 5 years, in comparison to the
performance of these companies, was at or above the 75th
percentile.
At the March 1995 meeting, the Committee also reviewed and
adopted an executive bonus plan for 1995. The plan had a
corporate portion under which a majority of the bonus would be
paid to executives if a target level of earnings per share was
met. The Committee established the target level for 1995 at a
level which would result in a 100% payout of this portion of the
bonus if the Company's financial performance was at a 75th
percentile level based on the 5 year historical growth of the
companies surveyed in connection with the comparative
compensation data reviewed by the Committee (as described above).
The plan also provided that a portion of the total target bonus
would be based on the individual performance of the particular
executive or, in the case of an executive responsible for a
separate business unit, the performance of that business unit.
The Committee made a subjective judgment that the portion of the
target bonus that was based on individual or business unit
performance was appropriate to provide an annual incentive for
achievement of individual and business unit objectives. It was
also determined that 25% of any bonus awarded to certain
executives would be invested in Reebok common stock and deferred
for up to two years.
In February 1996, the Committee again met and reviewed the
actual bonus awards for the executive officers under the bonus
plan. Based on the Company's financial performance for 1995, no
bonuses were awarded to executive officers for 1995 under the
portion of the plan based on the Company's financial performance.
Certain of the executive officers were paid bonuses based on
individual objectives (though at levels well below total target
annual incentive levels). The Committee made a subjective
judgment that these bonus awards were appropriate.
The Committee also grants stock options to executive
officers to provide long-term performance related incentives that
link rewards directly to shareholder gains over a multi-year
period. Under the Company's current program, the stock options
vest over a five year period, 40% of which vest two years after
the grant and 20% each year thereafter. The stock options
awarded to executive officers have an exercise price equal to the
fair market value of the Company's Common Stock on the date of
grant. At its March 1995 meeting, the Committee reviewed the
Company's stock option program for 1995 and the Committee
approved stock option grants to all executive officers other than
Mr. Fireman at such time. In determining the size of the 1995
grants
13
<PAGE>
to executive officers, the Committee reviewed survey information
provided by the outside compensation consulting firm regarding
executive pay levels and long term incentive compensation and
made grants to the named executive officers based on the Black-
Scholes value of options appropriate to compensate such officers
at a target 75th percentile total compensation level as described
above.
The Committee also met in October 1995 and adjusted Mr.
Meers' salary and target annual incentive level to reflect his
new responsibilities as President and Chief Executive Officer of
the Reebok Division. In connection with its review, the
Committee reviewed comparative compensation data from a number of
published compensation consulting firm surveys and determined
that this increase would result in Mr. Meers having a target
total compensation level in approximately the 75th percentile in
comparison to other executives in similar positions. In
addition, Mr. Meers received an additional option grant, the size
of which was determined subjectively at a level appropriate to
provide adequate long term incentives and rewards to Mr. Meers in
his new position.
In adopting and administering executive compensation plans
and arrangements, the Committee considers 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. The Committee adopted an Executive
Performance Incentive Plan at its February 1996 meeting which
provides for the award of cash bonuses to executives and is
designed to comply with Section 162(m). If adopted by the
shareholders at the 1996 Annual Meeting, the plan will take
effect in 1996.
Jill Elikann Barad, Chair
William F. Glavin
Geoffrey Nunes
14
<PAGE>
PERFORMANCE GRAPHS
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, 1990 to December 31, 1995. The graph assumes an investment
of $100 on December 31, 1990 in each of the Company's Common
Stock and the stocks comprising the Standard & Poor's 500 Stock
Index and the Standard & Poor's Shoes and Textile Apparel
Manufacturers Indices. Each of the indices assumes that all
dividends were reinvested.
Base December Indexed Returns
($) (Dollars)
Company/Index Dec. Dec. Dec. Dec. Dec. Dec.
Name 1990 1991 1992 1993 1994 1995
Reebok
International
Ltd. 100 291.16 301.91 269.18 357.51 258.04
S&P 500 Index 100 130.47 140.41 154.56 156.60 215.45
S&P Shoes 100 206.08 222.36 156.37 212.20 287.72
S&P Textiles 100 160.38 170.72 129.08 126.42 141.98
* 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.
15
<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, 1995, 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.
December Indexed Returns
(Dollars)
Company/ Base
Index ($)
Name 7-26
1985 1985 1986 1987 1988 1989 1990
Reebok
Interna-
tional
Ltd. 100 139.14 348.43 320.60 377.96 597.60 370.08
S&P 500
Index 100 112.05 132.91 139.80 163.02 214.67 208.00
S&P Shoes 100 112.27 121.99 114.82 182.58 284.03 288.90
S&P
Textiles 100 120.88 173.32 139.73 158.19 208.41 181.28
December Indexed Returns (Continued)
(Dollars)
Company/
Index
Name
1991 1992 1993 1994 1995
Reebok
Interna-
tional
Ltd. 1077.51 1117.30 996.17 1323.07 954.93
S&P 500
Index 271.38 292.05 321.49 325.74 448.14
S&P Shoes 595.38 642.40 451.73 613.01 831.16
S&P
Textiles 290.74 309.48 234.00 229.18 257.39
TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
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 on
the earlier of the date he sells his California residence or
October 31, 1996. At the expiration of the lease, Mr. Martinez
has indicated that he will purchase the property from the Company
for a price equal to the amount paid by the Company for the
house, including certain renovations, plus the depreciated value
of certain furnishings purchased for the house by the Company and
closing costs paid by the Company in connection with the purchase
of the house. Initially, Mr. Martinez was not required to pay
rent to the Company while bearing the carrying costs of his
California residence. Beginning November 1, 1995, Mr. Martinez
became liable for rent at a rate of $5,000 per month which is
required to be paid by him in full on the expiration date of the
lease, except that, if he sells his California residence prior to
May 31, 1996, and purchases the house from the Company at that
time, the Company will forgive the rent payments which would then
otherwise be due. If Mr. Martinez is no longer employed by the
Company, the lease will automatically terminate.
16
<PAGE>
Steve Fireman, the brother of Paul Fireman, was employed by
the Company during 1995 in a corporate staff position. He
received compensation and benefits equivalent to that of other
employees of the Company holding similar positions and his
compensation was reviewed by the Compensation Committee. Steve
Fireman resigned his position with the Company as of October 1,
1995.
APPROVAL OF EXECUTIVE PERFORMANCE INCENTIVE PLAN
On February 15, 1996 the Compensation Committee and the
Board of Directors unanimously approved, subject to approval by
shareholders at the 1996 Annual Meeting, the Reebok International
Ltd. Executive Performance Incentive Plan (the "Incentive Plan")
which provides for the awarding of bonuses to certain executive
officers or other key employees of the Company and its
subsidiaries subject to the attainment of certain performance
criteria.
In 1993, the Internal Revenue Code was amended by adding
Section 162(m) which limits to $1 million the federal income tax
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 one or more performance
criteria which are established by an independent compensation
committee and approved by shareholders. The Incentive Plan is
intended to comply with this exclusion for performance-based
compensation and is being submitted to shareholders for approval
in order to preserve the deductibility of compensation paid under
the Incentive Plan.
The following is a brief description of certain material
features of the Incentive Plan. This summary is qualified in its
entirety by reference to the terms of the Incentive Plan, a copy
of which appears as Exhibit A to this Proxy Statement.
TERM
Subject to approval by shareholders, the Incentive Plan will
be effective as of January 1, 1996 and will continue until
December 31, 2000 unless reapproved by the Company's shareholders
or unless amended or terminated.
PARTICIPANTS
Participants in the Incentive Plan will be those corporate
officers and other key employees of the Company and its
subsidiaries who are selected annually to participate in the Plan
by the Compensation Committee. It is anticipated that the
participants selected by the Compensation Committee will be those
officers and other key employees whose compensation may be
subject to the deductibility limits of Section 162(m) of the Code
and will include annually less than twenty individuals. In
February 1996, the Compensation Committee designated Paul B.
Fireman, Paul R. Duncan, Kenneth Watchmaker, Robert Meers, Angel
Martinez and John B. Douglas III as participants in the Incentive
Plan for 1996.
ADMINISTRATION
The Incentive Plan will be administered by the Compensation
Committee, which will have authority to prescribe rules relating
to the Plan. The decisions of the Compensation Committee with
respect to the Incentive Plan will be final and conclusive.
PERFORMANCE CRITERIA
Within 90 days after the beginning of each fiscal year of
the Company, the Compensation Committee will establish for each
participant an objective performance goal or goals based on one
or more of the following
17
<PAGE>
performance criteria: net income (before or after taxes);
operating income; revenue; advance orders or bookings; expenses;
return on sales; gross or net margin; cash flow; earnings per
share; return on assets; return on equity; total shareholder
return; market share; inventory turnover; and stock price. In
establishing such performance goals, the Compensation Committee
may apply the performance criteria as a measure of the
performance of any, all or any combination of the Company, any
subsidiary, any division, group or other unit of the Company or a
subsidiary, or any product category or categories. The
Compensation Committee will also determine the amounts of the
target awards that will be paid if the performance goal or goals
are met and the method by which such amounts will be calculated.
In addition, at the Committee's option, it may determine that all
or any part of the award will be paid in shares of Reebok Common
Stock having an equivalent value to the amount of the award to be
paid in stock, which shares will be subject to such restrictions
as the Compensation Committee may determine. In any case, the
maximum award that may be paid to any participant under the
Incentive Plan for any year is the lesser of 300% of such
participant's base salary in effect during such year or $3
million.
DETERMINATION OF AWARD
At the end of each fiscal year, the Compensation Committee
will determine and certify for each participant if the
performance goal or goals have been met and the amount of the
award, if any, to be paid. Awards will be paid to participants
in cash and/or stock, as applicable, following such determination
and within 90 days after the end of such fiscal year. In order
to reflect additional considerations relating to performance, the
Compensation Committee may, in its discretion, reduce or
eliminate any calculated award to be paid to a participant, but
may not increase such award.
AMENDMENT AND TERMINATION
The Incentive Plan may be amended or terminated by the
Compensation Committee at any time except that if any such
amendment would require shareholder approval to maintain the
qualification of awards under the Incentive Plan as performance-
based compensation under Section 162(m) of the Code, shareholder
approval will be required.
1996 AWARDS
The Compensation Committee plans to establish performance
goals and target awards under the Incentive Plan for 1996 for the
following corporate officers: Paul B. Fireman, Paul R. Duncan,
Robert Meers, Kenneth Watchmaker, Angel Martinez and John B.
Douglas III. The actual awards to be paid under the Incentive
Plan (or that would have been payable under the Plan for 1995,
had the Plan then been in effect) cannot be determined at this
time since the awards are dependent on the Company's financial
performance for 1996.
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 Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 2.
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
18
<PAGE>
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.
AUDIT MATTERS
Ernst & Young LLP has been selected to audit the
consolidated financial statements of the Company for the year
ended December 31, 1996, and to report the results of their audit
to the Audit Committee of the Board of Directors.
A representative of Ernst & Young LLP 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 1997 must be received by the
Company no later than November 29, 1996.
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 29, 1996
19
<PAGE>
EXHIBIT A
REEBOK INTERNATIONAL LTD.
EXECUTIVE PERFORMANCE INCENTIVE PLAN
1. Purpose
The purpose of the Reebok International Ltd. Executive
Performance Incentive Plan (the "Plan") is to provide an
incentive for corporate officers and other key employees who are
in a position to contribute materially to the success of the
Company and its Subsidiaries and to recognize and reward those
officers and employees who make such contributions.
2. Definitions
The following terms will have the following meaning for
purposes of the Plan:
(a) "Award" means a cash and/or stock bonus paid in
accordance with Section 4.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Compensation Committee of the
Board.
(e) "Company" means Reebok International Ltd.
(f) "Participant" means a corporate officer or other key
employee of the Company or a Subsidiary selected by the Committee
to participate in the Plan.
(g) "Performance Criteria" means the following measures of
performance:
- net income (before or after taxes);
- operating income;
- revenue;
- advance orders or bookings;
- expenses;
- return on sales;
- gross or net margin;
- cash flow;
- earnings per share;
- return on assets;
- return on equity;
- total shareholder return;
- market share;
- inventory turnover; and
- stock price.
A Performance Criterion may be applied by the Committee as a
measure of the performance of any, all, or any combination
of the following: the Company, a Subsidiary, a division,
group or
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other unit of the Company or a Subsidiary, or a particular
product category or categories of the Company or a
Subsidiary.
(h) "Performance Goal(s)" means the goal or goals
established for a Participant by the Committee in accordance with
Section 4(a).
(i) "Subsidiary" means any corporation in which the
Company, directly or indirectly, controls 50 percent or more of
the total combined voting power of all classes of stock.
(j) "Target Award" means the amount of the target award
established for each Participant by the Committee in accordance
with Section 4(a).
3. Term
The Plan shall be effective as of January 1, 1996, subject
to shareholder approval, and shall continue until December 31,
2000 unless reapproved by the Company's shareholders or unless
amended or terminated pursuant to Section 9 hereof.
4. Awards
(a) Within 90 days after the beginning of each fiscal year
of the Company (a "year"), the Committee will select Participants
for the year and establish in writing (i) objective Performance
Goal or Goals for each Participant for that year based on one or
more of the Performance Criteria, (ii) the specific Award amounts
that will be paid to each Participant if the Performance Goal or
Goals are achieved (the "Target Award") and (iii) the method by
which such amounts will be calculated. At the Committee's
option, the Committee may determine that all or any part of any
Award may be paid in shares of Common Stock of the Company having
an equivalent value to the amount of the Award to be paid in
stock, which shares shall be subject to such restrictions as the
Committee may determine. If the Committee determines that any
part of the Award shall be paid in stock, it shall also determine
the basis on which the Award will be converted into stock.
(b) The maximum Award that may be paid to any Participant
under the Plan for any year will be the lesser of 300% of such
Participant's annual base salary in effect during such year or $3
million.
(c) The Committee may reduce or eliminate, but may not
increase, any Award calculated under the methodology established
in accordance with paragraph (a) in order to reflect additional
considerations relating to performance.
(d) As soon as practicable following each year while the
Plan is in effect, the Committee shall determine and certify, for
each Participant, the extent to which the Performance Goal or
Goals have been met and the amount of the Award, if any, to be
made. Awards will be paid to the Participants in cash and/or
stock, as applicable, following such certification by the
Committee and no later than ninety (90) days following the close
of the year with respect to which the Awards are made.
(e) The Company shall withhold from any Award made
hereunder any amount required to be withheld for taxes.
5. Termination of Employment
A Participant shall have no right to an Award under the Plan
for any year in which the Participant is not actively employed by
the Company or its Subsidiaries on December 31 of such year. In
establishing Target Awards, the Committee may also provide that
in the event a Participant is not employed by the Company or its
Subsidiaries on the date on which the Award is paid, Participants
may forfeit his or her right to the Award paid under the Plan.
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6. Administration
The Plan will be administered by the Committee. The
Committee will have the authority to interpret the Plan, to
prescribe rules relating to the Plan and to make all
determinations necessary or advisable in administering the Plan.
Decisions of the Committee with respect to the Plan will be final
and conclusive.
7. Unfunded Plan
Awards under the Plan will be paid from the general assets
of the Company, and the rights of Participants under the Plan
will be only those of general unsecured creditors of the Company.
8. Code Section 162(m)
It is the intent of the Company that all Awards under the
Plan qualify as performance-based compensation for purposes of
Code Section 162(m)(4)(C) so that the Company's tax deduction for
such Awards is not disallowed in whole or in part under Code
Section 162(m). The Plan is to be applied and interpreted
accordingly.
9. Amendment or Termination of the Plan
The Committee may from time to time suspend, revise, amend
or terminate the Plan; PROVIDED, that any such amendment or
revision which requires approval of the Company's shareholders in
order to maintain the qualification of Awards as performance-
based compensation pursuant to Code Section 162(m)(4)(C) shall
not be made without such approval.
10. Applicable Law
The Plan will be governed by the laws of The Commonwealth of
Massachusetts.
11. No Rights to Employment
Nothing contained in the Plan shall give any person the
right to be retained in the employment of the Company or any of
its Subsidiaries. The Company reserves the right to terminate
any Participant at any time for any reason notwithstanding the
existence of the Plan.
12. No Assignment
Except as otherwise required by applicable law, any
interest, benefit, payment, claim or right of any Participant
under the Plan shall not be sold, transferred, assigned, pledged,
encumbered or hypothecated by any Participant and shall not be
subject in any manner to any claims of any creditor of any
Participant or beneficiary, and any attempt to take any such
action shall be null and void. During the lifetime of any
Participant, payment of an Award shall only be made to such
Participant. Notwithstanding the foregoing, the Committee may
establish such procedures as it deems necessary for a Participant
to designate a beneficiary to whom any amounts would be payable
in the event of any Participant's death.
13. Stockholder Approval
This Plan shall be subject to approval by a vote of the
stockholders of the Company at the 1996 Annual Meeting, and such
stockholder approval shall be a condition to the right of any
Participant to receive any benefits hereunder.
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PROXY
ANNUAL MEETING OF REEBOK INTERNATIONAL LTD.
May 7, 1996
The undersigned hereby constitutes and appoints PAUL R.
DUNCAN, KENNETH WATCHMAKER and JOHN B. DOUGLAS III, or any one 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 7, 1996 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 proposal 2 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
<PAGE>
[X] Please mark
votes as in
this example.
PLEASE DO NOT FOLD THIS PROXY
1. Election of Class III Directors
The undersigned hereby GRANTS authority to elect
as Class III directors the following nominees:
Nominees: Paul B. Fireman, Robert Meers, Bertram M. Lee, Sr.
FOR WITHHELD
[ ] [ ]
[ ] __________________________________________
For all nominees except as noted above
2. To approve the Executive Performance Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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>
