<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
REEBOK INTERNATIONAL LTD.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
REEBOK INTERNATIONAL LOGO
REEBOK INTERNATIONAL LTD.
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2000
Notice is hereby given that the Annual Meeting of Shareholders of Reebok
International Ltd. will be held at the offices of Fleet National Bank (formerly
known as "BankBoston, N.A.", Long Lane Conference Room, Second Floor, 100
Federal Street, Boston, Massachusetts at 10:00 a.m. local time on Tuesday, May
2, 2000 for the following purposes:
1. To elect two Class I members of the Board of Directors.
2. To consider a shareholder proposal requesting that the Board of
Directors take action to declassify the Board of Directors.
3. To consider a shareholder proposal requesting that the Board of
Directors not adopt a shareholder rights agreement unless the Board has
first obtained an affirmative vote of the shareholders.
4. 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 8, 2000 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
DAVID A. PACE
Clerk
April 3, 2000
<PAGE> 3
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2000
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 Tuesday, May 2, 2000 or at any adjournment
thereof (the "Meeting"). This Proxy Statement and the enclosed proxy were first
sent to shareholders of Reebok on April 3, 2000. The cost of solicitation of
proxies on behalf of Reebok's management will be borne by Reebok. Directors,
officers and employees of Reebok may also solicit proxies by telephone,
telegraph, electronic mail 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 Reebok's
management to the beneficial owners of shares.
Only shareholders of record at the close of business on March 8, 2000 (the
"Record Date") are entitled to notice of and to vote at the Meeting. There were
56,269,870 shares of the Company's common stock, $.01 par value per share
("Common Stock"), outstanding on the Record Date, each of which is entitled to
one vote. Under the bylaws 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, each nominee for director who receives a
plurality of the votes properly cast will be elected a director. An affirmative
majority of the votes properly cast at the Meeting in person or by proxy is
required for the approval of proposals 2 and 3. Votes cast by proxy or in person
at the Meeting will be counted by persons selected by the Company to act as
election inspectors for the Meeting (the "Election Inspectors").
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 new proxies that withhold
authority to vote for any nominee (without naming an alternative nominee) and to
vote for or against proposal 2 and proposal 3, new abstentions and new broker
non-votes will not be counted as votes cast at the Meeting. Such proxies
therefore will not be a factor for the election of directors or whether proposal
2 or proposal 3 is approved at the Meeting.
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 each nominee for director
identified below, AGAINST proposal 2, AGAINST proposal 3 and in the discretion
of the named proxies as to any other matter that may come before the Meeting or
any adjournments of the Meeting.
Reebok's Annual Report on Form 10-K for fiscal year ended December 31, 1999
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 current principal executive offices of Reebok are located at
100 Technology Center Drive, Stoughton, Massachusetts 02072. The principal
executive offices of Reebok are planned to be relocated in June 2000 at 1895
J.W. Foster Boulevard, Canton, Massachusetts 02021.
1
<PAGE> 4
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
bylaws 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. Of the current directors, two
Class I directors have terms expiring at the Meeting, three Class II directors
have terms expiring at the 2001 Annual Meeting and two Class III directors have
terms expiring at the 2002 Annual Meeting. The two directors whose terms expire
at the Meeting have been nominated by the Board of Directors for reelection at
such Meeting. Each Class I director elected at the Meeting will serve until the
2003 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 Mannie L. Jackson and Geoffrey Nunes as Class I
directors, to hold office until the Annual Meeting of Shareholders in 2003 or
Special Meeting in lieu thereof, and until their respective successors are
elected and qualified. 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.
Both 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 other 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.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND SINCE
CURRENT DIRECTORSHIPS AGE DIRECTOR
NAME ----------------------- --- --------
<S> <C> <C> <C>
Mannie L. Jackson............. Chairman, Chief Executive Officer and majority owner 60 1996
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, Inc. beginning in 1968;
Director of Ashland Inc., a vertically integrated
petroleum and chemical company; Director of Jostens
Inc., a manufacturer and distributor of recognition
awards; and Director of The Stanley Works, a
commercial, consumer and specialty tools company.
Geoffrey Nunes................ Retired Senior Vice President and General Counsel, 69 1986
Millipore Corporation, a leader in the field of
separation technology.
</TABLE>
2
<PAGE> 5
Class II members of the Board of Directors, whose terms of office expire at
the 2001 Annual Meeting of Shareholders, are as follows:
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND DIRECTOR
NAME CURRENT DIRECTORSHIPS AGE SINCE
---- ----------------------- --- --------
<S> <C> <C> <C>
Paul R. Duncan................ Executive Vice President of the Company (from 1990 59 1989
until December 31, 1998; and since February 1, 2000),
with various executive responsibilities including
President of the Company's Specialty Business Group
(from October 1995 to November 1996); Chief Financial
Officer of the Company (from 1985 to June 1995);
Director of Cabletron Systems, Inc., a computer
networking company.
William F. Glavin............. President Emeritus, Babson College; Director of INCO 67 1994
Ltd., a producer of primary metals, alloys and
engineered products; Director of John Hancock Mutual
Funds, Inc., a mutual fund company; andDirector of
OmegaTech Inc., a food ingredient company.
Richard G. Lesser............. Executive Vice President and Director of TJX 65 1988
Companies, Inc. ("TJX"), an off-price apparel and
home furnishings retailer, and Chief Operating
Officer of TJX from November 1994 to February 2000;
President, The Marmaxx Group, a division of TJX that
operates T.J. Maxx and Marshalls (since February
1996); Director of A.C. Moore Arts & Crafts, Inc., an
operator of arts and crafts stores; and Director of
Dollar Tree Stores, Inc., a national chain of variety
stores selling merchandise at one dollar.
</TABLE>
Class III members of the Board of Directors, whose terms of office expire
at the 2002 Annual Meeting of Shareholders, are as follows:
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND DIRECTOR
NAME CURRENT DIRECTORSHIPS AGE SINCE
---- ----------------------- --- --------
<S> <C> <C> <C>
Paul B. Fireman............... Chief Executive Officer and Chairman of the Board of 56 1979
Directors of the Company; President of the Company
(from 1979 to March 1987 and since December 1989);
and Director of Abiomed, Inc., a manufacturer of
medical devices.
Thomas M. Ryan................ Chairman and Chief Executive Officer (since May 1998) 47 1998
and Director (since 1996) of CVS Corporation ("CVS"),
a company in the chain drug store industry; President
and Chief Executive Officer of CVS Pharmacy, Inc.
(since 1994); Chief Operating Officer of CVS (from
October 1996 to May 1998); and Director of
FleetBoston Financial Corp. (formerly, Fleet
Financial Group, Inc.), a financial services company.
</TABLE>
3
<PAGE> 6
During 1999, the Board of Directors held six meetings. All of the directors
who were on the Board at the end of 1999 attended at least 75% of the Board and
relevant committee meetings during 1999. M. Katherine Dwyer and Carl J.
Yankowski resigned from the Board as of July 28, 1999 and December 2, 1999,
respectively. For information on compensation of Directors, see "Compensation of
Directors" below.
The Audit Committee, composed of Mr. Lesser, Ms. Dwyer (through July 28,
1999) and Mr. Nunes, held three meetings during 1999. 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 Mr. Nunes, Mr. Glavin, Ms. Dwyer
(through July 28, 1999) and Mr. Ryan, held five meetings during 1999. The
Compensation Committee 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 Board Affairs Committee, composed of Messrs. Glavin, Jackson, Lesser,
Nunes and Ryan, held two meetings during 1999. 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
shareholders. Recommendations by shareholders 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 but took action by written consent once during 1999. The Executive
Committee may take certain action permitted by law and the bylaws in the
intervals between meetings of the full Board.
COMPENSATION OF DIRECTORS
During 1999, 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. As part of a policy adopted by the Board of
Directors in 1998 that requires each director to own Reebok's Common Stock with
a market value of at least four times the amount of the annual retainer within
five years of the director's first election to the Board, a minimum of forty
percent of the annual retainer was paid in Reebok's Common Stock.
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 invest such deferred compensation in Reebok's Common Stock
or in cash which earns interest at the Merrill Lynch Corporate Bond Rate (the
"Bond Rate"). Compensation deferred into 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
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) beginning on a date specified by the director or on
the date on which the director is no longer a member of the Board of Directors,
whichever occurs first. If the deferred compensation is invested at the Bond
Rate, the distribution will be in cash in an
4
<PAGE> 7
amount equal to the deferred compensation plus interest accrued. If the
compensation is deferred into Common Stock, the distribution will be in the form
of shares of Common Stock.
Under the stock option portion of the Directors' Plan, each newly elected
(or re-elected) Eligible Director (as defined below) is granted an option on the
date of such election (or re-election) to purchase shares of 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 "Election Year Grant"). On April 28 of each year after the initial grant,
each Eligible Director is granted an option to purchase shares of 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 Common Stock on the date of the grant. The
Directors' Plan was amended in 1999 to (i) provide that options will become
exercisable at such times as the Compensation Committee may specify; (ii)
provide for the grant of options to any Eligible Director by the Compensation
Committee in its discretion; and (iii) provide for the limited transfer of
options.
On April 28, 1999, all Eligible Directors were granted an option equal to
an Election Year Grant, even those Eligible Directors for whom 1999 was not an
election year. The options granted under the Directors' Plan in 2000 and 2001
will be adjusted pro rata for these 1999 grants so that the nominees and the
directors whose terms will expire at the Meeting will receive one-third of the
Election Year Grant in 2000 and directors whose terms will expire at the Annual
Meeting of Shareholders in 2001 will receive two-thirds of the Election Year
Grant in 2001. On April 28, 1999, each of Messrs. Glavin, Jackson, Lesser,
Nunes, Duncan and Ryan was granted an option to purchase 14,910 shares of Common
Stock, and an option to purchase 7,455 shares of Common Stock; and Ms. Dwyer was
granted options to purchase 7,455 shares of Common Stock, which was canceled
upon her resignation.
An "Eligible Director" is any director who is not an officer or employee of
the Company and is not a holder of more than five percent (5%) of the
outstanding shares of the Company's Common Stock or a person who is in control
of such holder. In 1999 all the directors were Eligible Directors except for Mr.
Fireman. In 2000 all the directors will be Eligible Directors except for Mr.
Fireman and Mr. Duncan, who retired from the Company on December 31, 1998 but
returned to employment with the Company in February 2000.
BENEFICIAL OWNERSHIP OF SHARES
The following table shows certain information about the shares of Common
Stock owned as of the Record Date by persons owning of record or, to the
knowledge of the Company, beneficially five percent (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)(8)....................................... 9,227,076 15.01%
Phyllis Fireman(4).......................................... 5,047,002 8.21%
Paul R. Duncan(8)........................................... 414,251 *
William F. Glavin(5)(8)..................................... 46,114 *
Mannie L. Jackson(5)(8)..................................... 44,558 *
Richard G. Lesser(5)(6)(8).................................. 77,240 *
Angel Martinez(8)........................................... 85,000 *
Geoffrey Nunes(5)(8)........................................ 69,157 *
Thomas M. Ryan(5)(8)........................................ 32,607 *
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS(2)
---- ------------ -----------
<S> <C> <C>
Kenneth I. Watchmaker(8).................................... 92,082 *
Carl J. Yankowski(9)........................................ 0 *
David A. Perdue(8).......................................... 10,092 *
James R. Jones, III(8)...................................... 21,115 *
Directors and executive officers as a group (14
persons)(7)(8)............................................ 10,132,505 16.48%
First Pacific Advisors, Inc.(10)............................ 3,830,100 6.23%
Brandes Investment Partners, L.P.(11)....................... 4,214,456 6.86%
</TABLE>
- ---------------
* 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 61,470,494 shares: 56,269,870 shares outstanding
as of the Record Date and 5,200,624 shares subject to options exercisable
within 60 days of the Record Date.
(3) Excludes 3,547,002 shares that are beneficially owned by Phyllis Fireman,
Paul Fireman's wife. Mr. Fireman disclaims beneficial ownership of these
shares. Mr. Fireman's address is c/o Reebok International Ltd., 100
Technology Center Drive, Stoughton, Massachusetts 02072.
(4) Excludes 7,727,076 shares that are beneficially owned by Paul Fireman,
Phyllis Fireman's husband. Mrs. Fireman disclaims beneficial ownership of
these shares. Mrs. Fireman's address is c/o Reebok International Ltd., 100
Technology Center Drive, Stoughton, Massachusetts 02072.
(5) Includes for the following persons, the following shares, which represent
shares deferred pursuant to the Directors' Plan: William F. Glavin 8,675
shares; Mannie L. Jackson, 7,371 shares; Richard G. Lesser, 21,547 shares;
Geoffrey Nunes, 13,464 shares; Thomas M. Ryan, 4,210 shares; and Paul R.
Duncan, 18,465 shares.
(6) Excludes 3,576 shares held by Mr. Lesser's wife and child. Mr. Lesser
disclaims beneficial ownership of these shares.
(7) Excludes the 3,547,002 shares described in note (3) above and the 3,576
shares described in note (6). 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 (8) below).
(8) Includes for the following persons, the following shares which are subject
to stock options exercisable within 60 days of the date of this table: Paul
B. Fireman, 2,588,920 shares; Paul R. Duncan, 395,786 shares; William F.
Glavin, 37,439 shares; Mannie L. Jackson, 37,187 shares; Richard G. Lesser,
55,693 shares; Angel Martinez, 85,000 shares; Geoffrey Nunes, 55,693
shares; David A. Perdue, 5,400 shares; Thomas M. Ryan, 28,397 shares;
Kenneth I. Watchmaker, 85,250 shares; James R. Jones, III, 18,750 shares;
and all directors and executive officers as a group, 3,403,795 shares.
(9) Mr. Yankowski's employment with the Company ended in December 1999.
(10) Information based on an amendment to Schedule 13G dated February 11, 2000
filed with the Securities and Exchange Commission (the "SEC") by First
Pacific Advisors, Inc., an investment adviser, which reported the
beneficial ownership of 3,830,100 shares, of which it has shared voting
power with respect to 1,250,300 shares and shared dispositive power with
respect to 3,830,100 shares. The address of First Pacific Advisors, Inc. is
11400 West Olympic Boulevard, Suite 1200, Los Angeles, CA 90064.
(11) Information based on an amendment to Schedule 13G dated January 31, 2000
filed with the SEC by Brandes Investment Partners L.P., Brandes Investment
Partners, Inc., Brandes Holdings, L.P., Charles
6
<PAGE> 9
H. Brandes, Glenn R. Carlson, Jeffrey A. Busby (collectively, the "Brandes
Holders") as a group, which reported the beneficial ownership of 4,214,456
shares, of which the group has shared voting power and shared dispositive
power with respect to all shares. The address of the Brandes Holders is
12750 High Bluff Drive, San Diego, CA 92130.
EXECUTIVE COMPENSATION
The following table shows the aggregate compensation paid or accrued by the
Company for services rendered during the years ended December 1997, 1998 and
1999 (when applicable) for (i) the Chief Executive Officer; (ii) each of the
four other most highly compensated executive officers; and (iii) Carl J.
Yankowski who would have been one of the four other most highly compensated
executive officers had he been an executive officer at the end of 1999 (those
falling within either clause (i), (ii) or (iii) shall be referred to herein as
the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION --------------------------
------------------------------------ AWARDS
OTHER --------------------------
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING ALL OTHER
YEAR SALARY($) BONUS($)(1) SATION($) AWARDS($) OPTIONS(#)(2) COMPENSATION($)
---- ---------- ----------- --------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul B. Fireman................. 1999 $1,000,012 None -- None 500,000(3) $ 81,539(4)
Chairman, President and 1998 1,000,012 None -- None None 56,275(4)(5)
Chief Executive Officer 1997 1,038,474 $562,500 -- None 111,150 54,112(4)(5)
Angel Martinez.................. 1999 550,004 150,000 -- None 100,000 45,779(6)
Executive Vice President 1998 488,481 None -- None 240,000(7) 38,434(6)
and Chief Marketing Officer 1997 467,328 325,078 -- None None 29,001(6)
Kenneth I. Watchmaker........... 1999 542,308 457,542 -- None 101,000(8) 44,062(9)
Executive Vice President, 1998 499,980 250,000 -- None 240,000(7) 30,480(9)
Chief Financial Officer 1997 509,600 281,250 -- None None 29,769(9)
and Treasurer
David A. Perdue(10)............. 1999 350,012 215,250 -- None None 274,291(11)
Executive Vice President, 1998 134,620 101,493 -- None 48,600(7) 34,685(11)
Global Operating Units
James R. Jones, III............. 1999 316,928 184,667 -- None 35,000 14,039(12)
Senior Vice President and
Chief 1998 296,916 90,000 -- None 27,000(7) --
Human Resources Officer 1997 191,540 25,000 -- None 63,000 --
Carl J. Yankowski(10)........... 1999 787,687 None -- None 250,000(15) 2,788,796(13)(14)
Former Executive 1998 215,383 None -- None 500,000(15) 12,425(14)
Vice President and Chief
Executive Officer of the
Reebok Division
</TABLE>
- ---------------
(1) Includes amounts deferred by the individual pursuant to the Company's
Savings and Profit Sharing Retirement Plans and the Reebok Executive
Deferred Compensation Plan.
(2) Unless otherwise indicated, these options were granted under the 1994
Equity Incentive Plan. These options have a four- year vesting schedule
under which twenty-five percent (25%) of the shares granted became
exercisable on the first four anniversaries of the date of the grant. The
options will also become exercisable upon the death or permanent disability
of the optionee and may become exercisable upon certain circumstances in
the event of a merger, consolidation, sale of substantially all of the
Company's assets or other transaction or series of transactions that result
in a change of control of the Company's Common Stock.
7
<PAGE> 10
(3) An option to purchase 499,000 shares was granted to Mr. Fireman by the
Company on April 19, 1999 under the Company's 1994 Equity Incentive Plan,
pursuant to an Agreement, dated April 19, 1999, between the Company and Mr.
Fireman, as described below in "Employee Agreements." In connection with
this grant, an option for 500,000 which had an identical exercise price but
which expired on July 24, 2000 and which was granted under Mr. Fireman's
Stock Option Agreement was canceled. See the section entitled "Employee
Agreements" for more information on this option. An option to purchase
1,000 shares was granted to Mr. Fireman by the Compensation Committee in
consideration of consenting to an amendment to the Company's SERP (as
defined below) pursuant to a Consent dated as of April 19, 1999, as further
described below in "Employee Agreements".
(4) Includes contributions by the Company on behalf of Mr. Fireman as follows:
for 1999, $13,000 to the Company's Savings and Profit Sharing Retirement
Plan (the "Profit and Sharing/Savings Plan") and $68,539 in credits
allocated to Mr. Fireman's account under the Company's Excess Benefits
Plan; for 1998, $13,000 to the Profit Sharing/Savings Plan and $42,615 in
credits allocated to Mr. Fireman's account under the Company's Excess
Benefits Plan; and for 1997, $12,250 to the Profit Sharing/Savings Plan and
$41,095 in credits allocated to Mr. Fireman's account under the Excess
Benefits Plan; Mr. Fireman is 100% vested in these contributions and
allocations.
(5) Includes $660 for 1998, reflecting the present value of the economic
benefit to Mr. Fireman of the portion of the premium paid by the Company
during 1998 ($19,245) 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 26, 1998 which, as of March 26, 1998, is
the earliest date on which the Company could terminate the agreement and
receive a refund, without interest, of the premium it paid. Under a
split-dollar life insurance agreement, the Company was obligated to pay the
premium for the split-dollar policy for only six years, ending in 1996,
and, therefore, the Company paid only the premium on a related "key man"
policy of which the Company is a beneficiary, resulting in the substantial
reduction in the total premium payment. Includes $767 for 1997, as reported
in the Company's 1998 Proxy Statement, reflecting the present value of the
economic benefit to Mr. Fireman of the premium paid during 1997, which was
$19,245, with respect to the same agreement, calculated on the same basis.
In 1999, the Company restructured the related key man policy and applied
its cash value to the full premium of the restructured policy resulting in
no premium payment obligations in 1999 or thereafter.
(6) Includes contributions by the Company on behalf of Mr. Martinez as follows:
for 1999, $13,000 to the Profit Sharing/Savings Plan and $32,779 in credits
allocated to Mr. Martinez's account under the Excess Benefits Plan; for
1998, $13,000 to the Profit Sharing/Savings Plan and $25,434 in credits
allocated to Mr. Martinez's account under the Excess Benefits Plan; and for
1997, $12,250 to the Profit Sharing/Savings Plan and $16,751 in credits
allocated to Mr. Martinez's account under the Excess Benefits Plan. Mr.
Martinez is 100% vested in these contributions and allocations.
(7) These options were issued pursuant to the Company's Option Exchange and
Restructuring Program in which the executive exchanged all of his
above-market options for new options at the market price on the date of
grant, but at a ratio of four new shares for every five shares exchanged
and subject to a new four-year vesting schedule, under which twenty-five
percent of the shares granted become exercisable on each of the first four
anniversaries of the date of grant. These options will also become
exercisable upon the death or permanent disability of the optionee and may
become exercisable under certain circumstances in the event of a merger,
consolidation, sale of substantially all of the Company's assets or other
transaction or series of transactions that result in a change of control of
the Company's Common Stock.
8
<PAGE> 11
(8) An option to purchase 1,000 shares was granted to Mr. Watchmaker by the
Compensation Committee in consideration of his consent to an amendment to
the Company's SERP pursuant to a Consent dated as of April 19, 1999, as
further described below in "Employee Agreements".
(9) Includes contributions by the Company on behalf of Mr. Watchmaker as
follows: for 1999, $13,000 to the Profit Sharing/Savings Plan and $31,062
in credits allocated to Mr. Watchmaker's account under the Excess Benefits
Plan; for 1998, $13,000 to the Profit Sharing/Savings Plan and $17,480 in
credits allocated to Mr. Watchmaker's account under the Excess Benefits
Plan; and for 1997, $12,250 to the Profit Sharing/Savings Plan and $17,519
in credits allocated to Mr. Watchmaker's account under the Excess Benefits
Plan. Mr. Watchmaker is 100% vested in these contributions and allocations.
(10) Mr. Perdue and Mr. Yankowski did not join the Company until 1998.
(11) These amounts represent reimbursements of expenses incurred by Mr. Perdue
in connection with his relocation to Massachusetts.
(12) Includes contributions by the Company on behalf of Mr. Jones as follows:
$13,962 to the Profit Sharing/Savings Plan and $77 in credits allocated to
Mr. Jones's account under the Excess Benefits Plan. Mr. Jones is 40% vested
in these contributions and allocations.
(13) Includes the compensation paid to Mr. Yankowski under his Separation
Agreement (as defined below in the section entitled "Transactions with
Management and Affiliates"). This compensation includes (i) an amount equal
to $1,988,796 related to the Company's forgiveness of a loan made to Mr.
Yankowski under his 1998 Employment Agreement, and (ii) an amount equal to
$800,000, representing his annual base salary payable in one lump sum in
2000. See the section entitled "Transactions with Management and
Affiliates" for more details.
(14) Includes the dollar value of insurance premiums paid in 1999 ($14,342) and
1998 ($12,425) with respect to term life insurance for the benefit of Mr.
Yankowski.
(15) In September 1998 Mr. Yankowski was granted an option to purchase 250,000
shares under the 1994 Equity Incentive Plan and an option to purchase
250,000 shares pursuant to his Employment Agreement (as defined below in
the section entitled "Transactions with Management and Affiliates"). In
January 1999 the option that was granted, pursuant to his Employment
Agreement, was cancelled and an option to purchase 250,000 shares was
granted under the 1994 Equity Incentive Plan. In December 1999 Mr.
Yankowski's options were cancelled pursuant to his Separation Agreement.
9
<PAGE> 12
The following table shows information concerning individual grants of stock
options and freestanding SARs made during 1999 to each of the named executive
officers:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) IN 1999 ($/SH) DATE 5% 10%
---- ------------ ------------ ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul B. Fireman.................... 499,000(2) 35.47% $18.010 4/19/09 5,651,870 14,322,948
1,000(3) 18.010 4/19/09 11,326 28,703
5,663,196 14,351,651
Angel Martinez..................... 100,000(4) 7.09% 14.875 1/2/09 935,481 2,370,692
Kenneth I. Watchmaker.............. 100,000(4) 7.16% 14.875 1/2/09 935,481 2,370,692
1,000(3) 17.750 4/19/09 11,163 28,289
--------- ----------
946,644 2,398,981
David A. Perdue.................... None -- -- -- -- --
James R. Jones, III................ 35,000(4) 2.48% 14.875 1/2/09 327,418 829,742
Carl J. Yankowski.................. 250,000(5) 17.73% 17.125 1/2/09 2,692,455 6,823,210
</TABLE>
- ---------------
(1) The assumed annual rates of stock price appreciation of 5% and 10% per annum
are established by the 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) This option to purchase 499,000 shares was granted to Mr. Fireman by the
Company on April 19, 1999 under the Company's 1994 Equity Incentive Plan,
pursuant to an Agreement, dated April 19, 1999, between the Company and Mr.
Fireman, as described below in the section entitled "Employee Agreements."
In connection with this grant, an option for 500,000 options which had an
identical exercise price but which expired on July 24, 2000 and was granted
under Mr. Fireman's Stock Option Agreement was canceled. In November 1999,
Mr. Fireman forfeited options to purchase 587,300 shares.
(3) An option to purchase 1,000 shares was granted to each of Mr. Fireman and
Mr. Watchmaker by the Company in consideration of their consent to an
amendment to the Company's SERP (as defined below) pursuant to Consents
dated as of April 19, 1999, as described below in "Employee Agreements".
(4) These options were granted to Messrs. Martinez, Watchmaker, and Jones under
the 1994 Equity Incentive Plan. These options have a four-year vesting
schedule under which twenty-five percent (25%) of the shares granted became
exercisable on the first four anniversaries of the date of the grant. The
options will also become exercisable upon the death or permanent disability
of the optionee and may become exercisable upon certain circumstances in the
event of a merger, consolidation, sale of substantially all of the Company's
assets or other transaction or series of transactions that result in a
change of control of the Company's Common Stock.
(5) This option was granted under the 1994 Equity Incentive Plan, as more fully
described in footnote 15 to the "Summary Compensation Table" above. In
connection with Mr. Yankowski's departure from the Company and pursuant to
his Separation Agreement, this option was canceled.
10
<PAGE> 13
The following table sets forth aggregated option exercises in 1999 and
option values as of December 31, 1999 for each of the named executive officers:
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT 12/31/99(#) AT 12/31/99($)
ACQUIRED ------------------------- -------------------------
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------- ------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Paul B. Fireman......... None $0 2,736,530/461,920 0/0
Angel Martinez.......... None 0 60,000/280,000 0/0
Kenneth I. Watchmaker... None 0 60,000/281,000 0/0
James R. Jones, III..... None 0 10,000/65,000 0/0
David A. Perdue......... None 0 5,400/16,200 0/0
Carl J. Yankowski....... None 0 0/0 0/0
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Board of Directors, on February 15, 1996, adopted a Supplemental
Executive Retirement Plan (the "SERP") for certain key executive officers,
including Mr. Fireman, Mr. Martinez and Mr. Watchmaker. 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
with 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.
In February 1999 the SERP was amended to provide that participants who
voluntarily terminate their employment with the Company will forfeit their
eligibility and further benefits if, prior to age 65, they work on a full-time
basis (excluding service on a board of directors, government or public service
or teaching) after leaving the Company, or if at any time they perform any
services for a competitor of the Company.
11
<PAGE> 14
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:
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ------------------------------------------
COMPENSATION 5 10 15
- ------------- -------- -------- --------
<C> <S> <C> <C> <C>
$ 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
</TABLE>
The compensation covered by the SERP for any calendar year is the
participant's base compensation and annual incentive bonus earned for such year
(which are reflected in the Salary and Bonus columns of the Summary Compensation
Table), 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 who are participants in
the SERP are as follows: Paul B. Fireman, 20 years; Angel Martinez, 18 years;
and Kenneth I. Watchmaker, 7 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. Mr. Fireman and the Company entered into an Agreement, dated as of
April 19, 1999, pursuant to which an option to purchase 500,000 shares of Common
Stock at $18.01 per share was canceled and an option to purchase 499,000 shares
was issued under Reebok's 1994 Equity Incentive Plan. This effectively extended
the exercise date of this option from July 24, 2000 to July 24, 2010. In
addition, the terms of this option have been changed to allow Mr. Fireman to
transfer this option to certain family members, any trust in which certain
family members have more than a fifty percent (50%) beneficial interest, or a
foundation controlled by Mr. Fireman or certain family members. Options to
purchase 2 million shares remain exercisable pursuant to the 1990 grant. The
remaining 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 Mr. 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 Mr.
Fireman, age 56, or Phyllis Fireman, age 55 (whichever occurs later). Under the
agreement, the Company paid that portion of each annual policy premium that, in
general terms, was equal to the annual increase in the cash value of the policy.
The Company's obligation to make such premium payments terminated in 1996 upon
the payment of the sixth annual premium due under the policy. In 1999, the
Company restructured the related key man policy of which the Company is the
beneficiary and which is designed to work in conjunction with the split-dollar
insurance policy to insure the repayment to the Company of the aggregate amount
of the
12
<PAGE> 15
premiums paid by the Company. Pursuant to this restructuring, the Company
applied its cash value to the full premium of the restructured policy resulting
in no premium payment obligations in 1999 or thereafter. 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 under the policy, 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 (5) 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
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 LLP and becomes eligible for a
retirement plan there.
In connection with the February 1999 amendment to the SERP, as described
above in the section entitled "Supplemental Executive Retirement Plan", Mr.
Fireman and Mr. Watchmaker executed Consents, each dated April 19, 1999, in
which they agreed to forfeit their eligibility and further benefits under the
SERP if, prior to age 65, they work on a full-time basis (excluding service on a
board of directors, government or public service or teaching) after leaving the
Company, or if at any time they perform any services for a competitor of the
Company. In consideration of these Consents, the Company (i) granted Mr. Fireman
an option to purchase 1,000 shares of Common Stock expiring on April 19, 2009,
at an exercise price of $18.010; and (ii) granted Mr. Watchmaker an option to
purchase 1,000 shares of Common Stock, expiring on April 19, 2009, at an
exercise price of $17.750.
The Company has change of control agreements with Mr. Martinez, Mr.
Watchmaker and Mr. Jones, 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). A
"change in control" includes one which is initiated by Company management except
in the case of a leveraged buy-out or recapitalization of the Company in which
the executive participates as an equity investor. In each agreement, if the
executive's employment with the Company were to terminate (other than as a
result of the death, total disability or retirement of the executive at or after
his normal retirement date) within 24 months following a change in control and
the termination is (a) by the Company for a reason other than as a result of a
conviction of the executive for a felony or a crime involving moral turpitude or
(b) by the executive if the Company fails to maintain the executive in the
positions, with the titles, that he held immediately prior to the change of
control, following a downgrading of his responsibilities or authority or if the
Company makes certain other changes or reductions in the executive's
compensation as specified in the agreement then the Company will pay to the
executive a lump-sum cash payment equal to 300% of the aggregate of his (i)
then-current annual base salary, (ii) his target bonus for the then-current
year, or, if higher, his bonus for the most recent calendar year ended before
the change of control, (iii) the amount of his then-current annual automobile
allowance and (iv) the annual cost of life insurance then furnished to him by
the Company. In addition, all of the executive's outstanding stock options,
restricted shares and other similar incentive rights and interests will become
immediately and fully vested and exercisable. The executive will be treated for
purposes of the SERP as having three additional years of continuous service and
the Company will pay to him in a single lump-sum cash payment the present value
of his benefit under the SERP. The Company will pay to the executive, in a
single lump-sum cash payment, an amount equal to the difference, if any, between
(i) the total distribution
13
<PAGE> 16
that he receives following his termination under the Company's Profit-Sharing
and Retirement Plan and its Excess Benefits Plan and (ii) the total distribution
that he would have received under such plans had he accumulated three additional
years of service for vesting prior to termination. The executive and his
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, until the
third anniversary of his termination of employment. In addition, the agreements
provide that the executive will be reimbursed by the Company for any legal fees
and expenses incurred by him as a result of the termination of his employment.
Each agreement provides that if it is determined that any payment or benefit
provided by the Company to or on behalf of the executive, either under the
executive's change of control agreement or otherwise, is subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended,
the Company will make an additional lump-sum payment to the executive which will
be sufficient to make the executive whole for all taxes and any associated
interest and penalties imposed under or as a result of Section 4999. Messrs.
Martinez, Watchmaker and Jones are required under the agreements not to leave
voluntarily the employ of the Company in the event that any person or entity
initiates a change of control until such time as the effort terminates or the
change of control is completed.
The Company has non-competition agreements with Mr. Martinez, Mr.
Watchmaker, Mr. Jones and Mr. Perdue under which each executive has agreed not
to compete, directly or indirectly, with the Company during his employment and
pursuant to which the Company has the right to extend the non-competition
requirement for a period of up to one year after his termination of employment
with the Company (the "Non-Competition Period"). During the Non-Competition
Period, the Company will pay the executive an amount equal to one-half of his
base salary as in effect on his termination date and will continue certain
medical coverage benefits, except that, if the Company terminates the
executive's employment without "cause" (as defined in the agreement), the
executive would be entitled to 100% of his base salary as of the date of his
termination.
For a description of the employment-related agreements between Mr.
Yankowski and the Company, see the section entitled "Transactions with
Management and Affiliates."
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 Report on Form 10-K.
14
<PAGE> 17
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee has submitted the following report:
The Committee in 1999 consisted of Geoffrey Nunes, Chair, William F.
Glavin, Thomas M. Ryan and M. Katherine Dwyer (until her resignation from the
Board in July 1999). The Compensation Committee's 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 other individuals is established by the Chief Executive
Officer. The Committee also functions as the stock option committee, and in that
capacity administers the 1994 Equity Incentive Plan and grants all stock options
to executive officers.
During 1999, as part of a review of Mr. Fireman's total compensation
program, the Committee reviewed comparative compensation data from a group of
companies in the shoe and apparel industries as well as other leading consumer
products organizations 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 for 1999
and to establish Mr. Fireman's target bonus at 100% of his base salary. The
Committee believes that this places Mr. Fireman's base salary at approximately
the median of similarly situated chief executive officers and Mr. Fireman's
target bonus at approximately the 75th percentile of similarly situated
executive officers, in each case based on the survey data. Mr. Fireman's bonus
was determined under the Company's Executive Performance Incentive Plan as
discussed more fully below.
The Committee reviews the compensation for all other executive officers on
an annual basis. As part of such review, the Committee held four meetings from
February through April 1999 and reviewed comparative compensation data from a
group of 14 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 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 between the
50th and 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 the Company's business.
In March 1999, the Committee established financial criteria for the
executive officers of the Company under the Company's 1999 Executive Performance
Incentive Plan (the "Bonus Plan"). The Bonus Plan permits bonuses to be paid
only if the financial criteria established by the Committee are met. Thus,
bonuses paid under the Bonus Plan qualify for a tax deduction pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended. In 1999, for
all executive officers other than Mr. Fireman, the financial criteria were based
on at least two factors: (a) pre-tax operating profit and (b) cash flow from
operations. For certain executives, these criteria are assessed against the
Company's overall financial results, for others they are assessed against the
results of a particular operating unit for which the executive is responsible,
and for other executives their total bonus award is based on a combination of
both. Additionally, for certain executives who were responsible for a particular
operating unit, a third criteria was included in the Bonus Plan that was based
on an increase in sales or year-end sales backlog, as appropriate. The Committee
also determined the amount of the target award that would be paid if the
financial criteria were satisfied. For 1999, participants had the ability to
earn a portion of their award if 60% of the financial criteria were met, 100% of
their target award if the financial criteria were satisfied and could earn more
than 100% of the target award (up to a maximum of
15
<PAGE> 18
200% of the award) if the criteria were exceeded. Under the Bonus Plan, any
award in excess of 125% of the target award is deferred and paid in two equal
installments on the first and second anniversary of the bonus award payment
date. Target awards were fixed as a percentage of base salary and ranged from
50% to 100%. As indicated above, Mr. Fireman's target bonus is 100% of his base
salary and for 1999 was calculated based on two criteria: (a) the Company's
pre-tax operating profits; and (b) the performance of the Company's stock price.
Under the Bonus Plan, the Committee has reserved the ability to reduce any award
or eliminate any award based on the overall financial performance of the
Company, as well as certain other factors.
Bonuses for the executive officers for 1999 were determined in accordance
with the Company's Bonus Plan and the Company's actual 1999 financial results.
In February 2000, the Committee met to review the Company's actual financial
results for 1999 and to determine whether such results satisfied the financial
criteria established under the Bonus Plan. In 1999 the Reebok Brand,Corporate
groups and Rockport met a portion of the pre-tax operating profit target and
exceeded the cash flow target for the year. The Reebok Brand group did not meet
its sales backlog criteria. Based on these financial results, the Bonus Plan
provided for funding of a portion of the target bonuses that were calculated
based on the pre-tax operating profit and maximum payout of the target bonuses
that were calculated based on the Company's cash flow. In accordance with the
Bonus Plan, the amount of any bonus payable in excess of 125% of the target
based on the Company's cash flow criteria was deferred. The Compensation
Committee then exercised its discretion to modify any bonus award paid to an
executive officer based upon overall corporate performance and an individual
assessment of each executive officer's performance in 1999 and whether such
executive officer had met his individual performance objectives for the year.
Based on such assessment, a decision was then made as to the actual bonus each
executive should receive. In addition, if an executive failed to manage
departmental expenses consistent with his budget, his bonus was subject to a
minimum 50% reduction. In the case of Mr. Fireman, because the Company had met a
portion of its pre-tax operating profit target (but not the stock price target)
for 1999, Mr. Fireman was entitled to receive a bonus under the Bonus Plan. Mr.
Fireman, however, declined any bonus.
In December 1999, the Company entered into a separation agreement with Mr.
Yankowski, who until such time served as the President and Chief Executive
Officer of the Reebok Brand. The separation agreement provided for a lump sum
payment equal to one year of his salary and the forgiveness of the balance of a
loan given to Mr. Yankowski at the time of his hire (as more fully described in
"Transactions with Management and Affiliates").
The Committee generally 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 for officers of the Company generally vest over a four-year
period in equal installments. 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. In 1999, the Committee amended the Company's 1994
Equity Incentive Plan to permit options to be granted with a term in excess of
ten years and to permit transfers of stock options to relatives of the option
holder (principally for estate-planning purposes). In December 1999, the
Committee determined that only options granted to executive officers and
directors of the Company would be transferable.
In April 1999, the Committee reviewed Mr. Fireman's stock option position
and the comparative data referred to above in order to determine whether any
options should be granted to Mr. Fireman in 1999. Based on such data, the
Committee determined that, in lieu of a new grant of options, it was appropriate
to effectively extend the term of 500,000 stock options granted to Mr. Fireman
in 1990 for an additional ten years to July 24, 2010 by granting a new option
for 499,000 shares. The 1990 grant of 500,000 options was cancelled. The options
would retain their original exercise price of $18.01, which was higher than the
Company's stock price at such time. The Committee also provided that these
options would be transferable in accordance with
16
<PAGE> 19
the 1994 Equity Incentive Plan. In January 1999, after reviewing the comparative
data referred to above, the Committee also determined that it was appropriate to
grant stock options to certain executive officers of the Company.
The Committee also amended the Company's Supplemental Executive Retirement
Plan in 1999 to provide for forfeiture of benefits in certain circumstances and
adopted more restrictive eligibility requirements. In consideration for their
agreement to be governed by these more restrictive terms, the Committee granted
an additional 1,000 stock options to certain participants in the SERP who
consented to the amendment.
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
of 1986, as amended, and, in appropriate cases, will attempt to structure such
compensation so that any such limitation will not apply.
Geoffrey Nunes, Chair
William F. Glavin
Thomas M. Ryan
17
<PAGE> 20
PERFORMANCE GRAPHS
The following graph shows 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, 1994 to December 31, 1999. The graph assumes an investment of $100
on December 31, 1994 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.
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
REEBOK
INTERNATIONAL TEXTILES
LTD. S&P 500 INDEX FOOTWEAR-500 (APPAREL)-500
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Dec94 100.00 100.00 100.00 100.00
Dec95 72.18 137.58 135.59 112.31
Dec96 108.07 169.17 225.38 154.30
Dec97 74.13 225.60 151.89 166.40
Dec98 38.27 290.08 148.67 144.00
Dec99 21.07 351.12 176.32 107.47
</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.
18
<PAGE> 21
The following graph shows 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, 1999, 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.
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
REEBOK
INTERNATIONAL TEXTILES
LTD. S&P 500 INDEX FOOTWEAR-500 (APPAREL)-500
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
26-Jul85 100.00 100.00 100.00 100.00
Dec85 139.14 112.05 112.27 120.88
Dec86 348.43 132.91 121.99 173.32
Dec87 320.60 139.80 114.82 139.73
Dec88 377.96 163.02 182.58 158.19
Dec89 597.60 214.67 284.03 208.41
Dec90 370.08 208.00 288.90 181.28
Dec91 1077.51 271.38 595.38 290.74
Dec92 1117.30 292.05 642.40 309.48
Dec93 996.17 321.49 451.73 234.00
Dec94 1323.07 325.74 613.01 229.18
Dec95 954.93 448.14 831.16 257.39
Dec96 1429.80 551.04 1381.59 353.63
Dec97 980.84 734.88 931.08 381.36
Dec98 506.39 944.89 911.34 330.02
Dec99 278.74 1143.71 1080.84 246.30
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
From September 1998 until December 1, 1999 when Mr. Yankowski's employment
with the Company ended, Mr. Yankowski served as a director and Executive Vice
President of the Company and the President and Chief Executive Officer of the
Reebok Division under an Employment Agreement, effective September 8, 1998 (the
"Employment Agreement"). Pursuant to the Employment Agreement, Mr. Yankowski was
to receive a base salary of $800,000 in 1999 and was granted an option to
purchase 500,000 shares of Common Stock, which was not exercisable in whole or
part until September 8, 2000. The Employment Agreement contained a
non-competition provision under which Mr. Yankowski agreed that during his
employment with the Company and for one year thereafter he would not accept any
position with any Reebok competitor. Under the terms of the Employment
Agreement, the Company loaned Mr. Yankowski $1,000,000 on an interest-free
basis, evidenced by a promissory note dated September 11, 1998.
In connection with Mr. Yankowski's separation from the Company, he and the
Company entered into a letter agreement, dated as of December 23, 1999 (the
"Separation Agreement"), pursuant to which Mr. Yankowski agreed that, upon the
end of his employment, he had no right to receive an annual bonus for 1999, to
participate in Reebok employee benefit programs upon the date of separation or
soon thereafter, or to exercise any stock options. In addition, Mr. Yankowski
agreed to waive any employment-related claims against the Company. In exchange
for these concessions, the Company agreed to pay Mr. Yankowski an amount equal
to one year of his base salary in one lump sum payable in 2000, to forgive the
loan made under the Employment Agreement, and to make him whole for any taxes
imposed for the forgiveness of the loan and for imputed interest on the loan.
19
<PAGE> 22
In April 1996, the Company entered into a three-year agreement (the "1996
Agreement") with Harlem Globetrotters International, Inc. (the "Globetrotters").
In April 1999, the Company and the Globetrotters entered into another agreement
(the "1999 Agreement"), which extended the arrangement through March 31, 2002.
Under both of these agreements, Reebok is the exclusive athletic footwear and
apparel sponsor of the Globetrotters and has been granted a license to produce
and sell Reebok products bearing the Globetrotter's team trademark for a royalty
payment of 5% of Reebok's production cost, with specified guaranteed royalty
payments. Under the 1996 Agreement, Reebok agreed to pay the Globetrotters
$100,000 during the first year and $200,000 per year during the remaining two
years as a guarantee against potential earned royalties. Reebok also agreed to
supply products having an aggregate retail value not to exceed $140,000 to the
Globetrotters each contract year. The 1999 Agreement provides that Reebok will
pay the Globetrotters $200,000 per year and supply to the Globetrotters Reebok
products having an aggregate wholesale value not to exceed $50,000 per year.
During 1999, Reebok paid to the Globetrotters approximately $200,000 in payments
due in accordance with the agreements and $50,000 for a special television
appearance. Reebok also supplied products to the Globetrotters with an
approximate wholesale value of $97,341 in product. Mannie L. Jackson, a nominee
and a current director of the Company, is the Chairman, Chief Executive Officer
and majority owner of the Globetrotters.
PROPOSAL 2: SHAREHOLDER PROPOSAL TO REPEAL CLASSIFIED BOARD
The following proposal was submitted on behalf of the New York City Fire
Department Pension Fund (the "Fire Department Fund"), a shareholder of the
Company, by Alan G. Hevesi, Comptroller of the City of New York. The Fire
Department Fund has informed the Company that its address is 1 Center Street,
New York, NY 10007-2341 and that it is the owner of approximately 6,860 shares
of the Company's Common Stock.
"BE IT RESOLVED, that the stockholders of Reebok International Ltd. request
that the Board of Directors take the necessary steps to declassify the Board of
Directors and establish annual elections of directors, whereby directors would
be elected annually and not by classes. This policy would take effect
immediately, and be applicable to the re-election of any incumbent director
whose term, under the current classified system, subsequently expires."
SUPPORTING STATEMENT
We believe that the ability to elect directors is the single most important
use of the shareholder franchise. Accordingly, directors should be accountable
to shareholders on an annual basis. The election of directors by classes, for
three-year terms, in our opinion, minimizes accountability and precludes the
full exercise of the rights of shareholders to approve or disapprove annually
the performance of a director or directors.
In addition since only one-third of the Board of Directors is elected
annually, we believe that classified boards could frustrate, to the detriment of
long-term shareholder interest, the efforts of a bidder to acquire control or a
challenger to engage successfully in a proxy contest.
We urge your support for the proposal which requests the Board of Directors
to take the necessary steps to repeal the classified board and establish that
all directors be elected annually.
STATEMENT OF BOARD OF DIRECTORS RECOMMENDING
A VOTE AGAINST THIS STOCKHOLDER PROPOSAL
20
<PAGE> 23
The Board of Directors believes that the present system of electing
directors of the Company in three classes is in the best interests of the
Company and its stockholders and should not be changed. The Board also notes
that the Shareholders rejected an identical proposal made by the Fire Department
Fund at the 1999 Annual Meeting.
A classified board offers important advantages to stockholders and is the
preferred method of governance for the majority of Fortune 500 companies.
Moreover, a classified board protects shareholders against potentially coercive
takeover tactics, whereby a party attempts to acquire control on terms that do
not offer the greatest value to all stockholders. Because a classified board
prevents the immediate removal of directors, any person seeking to acquire
control of the Company is encouraged to negotiate with the Board. This ensures
the Board sufficient time to develop and consider appropriate strategy and
enhances its ability to negotiate the best result for all stockholders.
In addition, Massachusetts law, under which the Company is incorporated,
requires all publicly-held corporations to have a classified board, unless the
company affirmatively exempts itself from such requirement. The legislative
history surrounding enaction of this law shows a decided preference for
classified boards in the interest of public policy.
The Board believes that a classified board enhances continuity and
stability in the Company's management and policies since a majority of the
directors at any given time will have had prior experience and familiarity with
the business of the Company. This continuity and stability facilitates more
effective long-term planning and is integral to increasing the Company's value
to stockholders. Moreover, such continuity helps the Company attract and retain
qualified individuals willing to commit the time and dedication necessary to
understand the Company, its operations and competitive environment.
The Board is committed to corporate accountability and does not accept the
proposition that a classified board insulates directors from responsibility. A
classified board permits stockholders to annually change one-third of the
directors and thereby substantially change the Board's composition and
character. Corporate accountability depends on the selection of responsible and
experienced individuals, not on whether they serve terms of one year or three.
The Company understands that the Board should be responsive to shareholders
and has taken steps to assure corporate accountability through such measures as
maintaining a majority of outside directors (five of seven); and having only
outside directors on the Audit Committee, the Compensation Committee, and the
Board Affairs Committee, which has responsibility for corporate governance
issues. In addition, to encourage the alignment of the interests of the members
of the Board with those of shareholders, the Board has a policy mandating
required levels of stock ownership by its Directors and requiring the deferral
of at least 40% of an outside directors' annual retainer into Reebok Common
Stock. Moreover, to promote regular inclusion on the Board of new perspectives
and talent, the Board generally requires that outside directors who have served
twelve or more years on the Board should not be renominated for additional
terms.
Finally, shareholders should be aware that adoption of this stockholder
proposal would not eliminate board classification and institute the annual
election of directors, but would constitute merely a recommendation by the
stockholders that the Board consider enacting such a change. The affirmative
vote of two-thirds of the outstanding shares or a vote of the directors is
required to opt out of the Massachusetts law and declassify the Board.
For the reasons outlined above, the Board has concluded that a classified
board is in the best interests of the Company and its shareholders and thus is
opposed to the Fire Department Fund's shareholder proposal.
21
<PAGE> 24
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THIS PROPOSAL 2.
PROPOSAL 3: SHAREHOLDER PROPOSAL REQUESTING SHAREHOLDER APPROVAL BE OBTAINED
BEFORE THE ADOPTION OF A SHAREHOLDER RIGHTS AGREEMENT
The Amalgamated Bank of New York LongView Collective Investment Fund (the
"LongView Fund"), a shareholder of the Company, has submitted the proposal
described below. The LongView Fund has indicated to the Company that it is
located at 11-15 Union Square, New York, NY 10003, and is the owner of
approximately 17,965 shares of Common Stock.
"RESOLVED: That the shareholders of Reebok International Ltd. request the
Board of Directors not to adopt a shareholder rights agreement unless the Board
has first obtained an affirmative vote of the shareholders."
SUPPORTING STATEMENT
In June 1990 the Board of Directors issued certain rights under a newly
created "Common Stock Rights Agreement." The Board took this action without
first obtaining shareholder approval. The Agreement will expire in June 2000
unless extended or renewed.
In our view, these rights can operate as an anti-takeover device, commonly
known as a "poison pill," which can injure shareholders by reducing management
accountability and adversely affecting shareholder value. Although management
and the Board of Directors should have appropriate tools to ensure that all
shareholders benefit from any proposal to acquire the Company, we do not believe
that the future possibility of a takeover justifies the unilateral imposition or
renewal of such a poison pill. We note too a 1992 study by Professor John Pound
of Harvard's Corporate Research Project and Lilli A. Gordon of the Gordon Group
that found a correlation between high corporate performance and the absence of
poison pills.
We believe that shareholders should have the right to vote on the necessity
of such a powerful tool. We are therefore submitting this nonbinding
recommendation for consideration by the shareholders prior to the expiration of
the 1990 Rights Agreement. We believe that this action is warranted, given the
Board's prior refusal to involve shareholders on this issue, as well as the
Company's disappointing performance in recent years.
Over the past five years, Reebok's stock has declined 75% while the S&P 500
index was rising 200%. Over the same period Reebok stock has underperformed all
five of its peer companies in the S&P 500 Footwear and Textiles (Apparel)
industry groups.
In our view, it is time for shareholders to be heard on this subject.
WE URGE YOU TO VOTE FOR THIS RESOLUTION!
STATEMENT OF BOARD OF DIRECTORS RECOMMENDING
A VOTE AGAINST THIS SHAREHOLDER PROPOSAL
The LongView Fund requests that the Board of Directors not adopt a
shareholder rights agreement unless the Board first obtains an affirmative vote
of the shareholders. Regardless of the outcome of the vote, the proposal is
nonbinding on the Board of Directors and shall be considered to be advisory. The
Company currently has a Common Stock Rights Agreement, dated as of June 14,
1990, as amended (the "Rights Agreement"). The Board believes having the Rights
Agreement, or a similar agreement, in place is in the best interest of the
Company and its shareholders and that such an agreement provides important
protection for shareholders. When the Rights Agreement expires in June 2000, the
Board may decide to either renew or extend the Rights Agreement, or adopt an
agreement similar to the Rights Agreement. If this proposal passes and the Board
were to take the requested action, the Board believes that if shareholders
subsequently do not
22
<PAGE> 25
affirm a renewal or extension of the Rights Agreement, or the adoption of a
similar agreement, the shareholders may be deprived of substantial economic
benefits in the future.
PURPOSE OF THE RIGHTS AGREEMENT
In general, within a certain period of time after (i) a person acquires or
obtains the right to acquire, beneficial ownership of 10% or more of the
outstanding shares of Common Stock, or (ii) the commencement of a tender offer
or exchange offer that would result in any person or its affiliates owning 10%
or more of the Company's outstanding Common Stock, the Rights Agreement allows
the Board of Directors to distribute a dividend that would allow shareholders to
purchase one share of Common Stock for each share owned at the distribution
date.
The primary purpose of the Rights Agreement is to encourage potential
buyers of the Company to negotiate with the Board of Directors and allow the
Board to prevent, or at least mitigate, abusive and coercive takeover tactics
that may harm shareholders. The Rights Agreement also gives the Board time to
evaluate bids, examine alternatives and protect shareholders' interests.
The purpose of the Rights Agreement is not to prevent a takeover of the
Company that is fair and equitable to all shareholders. Nor is the purpose to
prevent a prospective buyer from making an offer for the Company. Rather, the
Rights Agreement is intended to allow the Board sufficient time to make a sound
decision on the merits of any offer and to curb any abuses.
The Board of Directors believes there is strong empirical evidence that
such plans better position the Board to negotiate the most attractive and fair
price for all shareholders. Many companies with rights plans have received
unsolicited offers and have redeemed their rights under the plans after their
directors were satisfied that the offer, as negotiated by the target company's
board of directors, adequately reflected the underlying value of the company and
was fair and equitable to all shareholders. Thus, experience indicates that
rights plans neither prevent unsolicited offers from occurring, nor prevent
companies from being acquired at prices that are fair and adequate to
shareholders.
The Board's conclusions are supported by a study of merger and acquisition
activity between 1992 and 1996 conducted by Georgeson & Company, Inc. (the
"Georgeson Report"). The Georgeson Report's study of approximately 319
transactions found the following:
- Premiums paid to targets with shareholder rights plans were on average
8% higher than the premiums paid to targets without a shareholder rights
plan;
- The presence of a shareholder rights plans contributed an additional $13
billion in shareholder value in the merger and acquisition transactions
studied while the shareholders of acquired companies without shareholder
rights plans gave away $14.5 billion in potential premiums;
- The presence of a shareholder rights plans at a target company did not
increase the likelihood of the withdrawal of a friendly bid nor the
defeat of a hostile one; and
- Shareholder rights plans did not reduce the likelihood of a company
becoming a takeover target -- companies with shareholder rights plans
had a slightly higher takeover rate than companies without such plans.
The Board can redeem the rights granted under the Rights Agreement in order
to facilitate an acquisition that it determines to be at a fair price and in the
best interests of all shareholders.
FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS
When the Board of Directors carries out the Company's business and affairs,
including the evaluation of any offer to purchase the Company, the Board must
satisfy its fiduciary obligations to the Company's shareholders. The Board
believes that the adoption of the Rights Agreement was an appropriate exercise
of its
23
<PAGE> 26
fiduciary duties, as would be a renewal or an extension of the Rights Agreement
or the adoption of a similar agreement. Because implementation of the LongView
Fund's proposal would increase costs associated with, cause delay of, and make
less likely, such renewal, extension or enactment, the Board also believes that
its recommendation to vote against the proposal is consistent with its fiduciary
duties.
ENHANCING STOCKHOLDER VALUE
The Board of Directors believes that the Rights Agreement, or a similar
agreement, will give the Board greater bargaining power with potential buyers
than the Board would have otherwise. The Board believes that this enhanced
bargaining power will increase the Board's ability to (i) secure the best
possible offer from a potential buyer, thereby raising the price that
shareholders receive in a tender offer, and (ii) prevent coercive takeover
tactics that may harm shareholders. The Board believes that the Georgeson Report
supports these conclusions.
EFFECT OF THE PROPOSAL
The LongView Fund's proposal, if enacted by the Board of Directors, will
have several negative effects. First, if the Board follows the recommendation,
the cost of extending or renewing the Rights Agreement, or adopting a new,
similar agreement, will be increased because the Company will have to secure
shareholder approval.
Second, if the Board follows the recommendation, the extension or renewal
of the Rights Agreement, or the adoption of a similar agreement, will be
delayed. This delay may result in the Company being without the benefits of the
Rights Agreement for a period of time.
Third, if the Board follows the recommendation, it will be more likely that
the Company will be without the benefits of the Rights Agreement or any similar
agreement.
For the reasons outlined above, the Board of Directors has concluded that
the Rights Agreement, or a similar agreement, is in the best interests of the
Company and its shareholders, and thus opposes the LongView Fund's proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST PROPOSAL 3.
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.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP has been selected to audit the consolidated financial
statements of the Company for the year ended December 31, 2000, 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, will have the opportunity to make a statement if the
representative desires to do so, and will be available to respond to appropriate
questions from shareholders.
24
<PAGE> 27
ADVANCE NOTICE PROCEDURES
Under the Company's bylaws, nominations for director may be made only (a)
by or at the direction of the Board of Directors or an appropriate committee of
the Board of Directors or (b) by any stockholder of record who is entitled to
vote for the election of directors at the meeting who has delivered notice to
the principal executive offices of the Company (containing certain information
specified in the bylaws) (i) not less than 75 nor more than 120 days prior to
the first anniversary date of the preceding year's annual meeting or (ii) if the
meeting is called for a date which is more than 75 days prior to such
anniversary date, not later than the close of business on the 10th day following
the date notice of such meeting is mailed or made public, whichever is earlier.
Under recent changes to the federal proxy rules, if a stockholder who wishes to
present such a proposal fails to notify the Company by the date required by the
Company's bylaws, then the proxies that management solicits for the annual
meeting will include discretionary authority to vote on the stockholder's
proposal in the event it is properly brought before the meeting notwithstanding
the Company's bylaws.
The bylaws also provide that no business may be brought before an annual
meeting except as specified in the notice of the meeting or as otherwise brought
before the meeting (a) by or at the direction of the Board of Directors, (b) by
the presiding officer, or (c) by a stockholder entitled to vote at such annual
meeting who has delivered notice to the principal executive offices of the
Company (containing certain information specified in the bylaws) (i) not less
than 75 nor more than 120 days prior to the first anniversary of the preceding
year's annual meeting, or (ii) if the meeting is called for a date which is more
than 75 days prior to such anniversary date, not later than the close of
business on the 10th day following the date notice of such meeting is mailed or
made public, whichever is earlier. These requirements apply to any matter that a
stockholder wishes to raise at an annual meeting other than those stockholder
proposals included in the Company's proxy materials in accordance with the
procedures under Rule 14a-8 of the Securities Exchange Act of 1934, as amended.
A copy of the full text of the bylaws provisions discussed above may be
obtained by writing to the Clerk of the Company at 100 Technology Center Drive,
Stoughton, Massachusetts 02072 and is filed with the Securities and Exchange
Commission as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
SHAREHOLDER PROPOSALS
Proposals of shareholders submitted for consideration at the Annual Meeting
of Shareholders in 2001 must be received by the Company no later than November
30, 2000.
OTHER BUSINESS
The Board of Directors knows of no business that will properly come before
the meeting for action except as described in the accompanying Notice of
Meeting. However, as to any such business which properly comes before the
Meeting, 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, 2000
25
<PAGE> 28
PROXY
ANNUAL MEETING OF REEBOK INTERNATIONAL LTD.
MAY 2, 2000
The undersigned hereby constitutes and appoints KENNETH WATCHMAKER and
DAVID PACE, or either one of them with power of substitution to each, proxies
to vote and act at the Annual Meeting of Shareholders to be held at Fleet
National Bank (formerly known as BankBoston, N.A.), Long Lane Conference Room,
Second Floor, 100 Federal Street, Boston, Massachusetts on May 2, 2000 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 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 against
proposals 2 and 3 in the discretion of the named proxies as to any other matter
that may come before the meeting or any adjournments thereof.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON THE OTHER SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 29
[REEBOK LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
April 3, 2000
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders to
be held at 10:00 a.m. on Tuesday, May 2, 2000 at Fleet National Bank (formerly
known as BankBoston, N.A.), Long Lane Conference Room, Second Floor, 100
Federal Street, Boston, Massachusetts. The accompanying Notice of Annual Meeting
and Proxy Statement contain detailed information as to the formal business to
be transacted at the meeting.
Regardless of whether you plan to attend the meeting, it is important that
your shares be voted. Accordingly, please complete, sign and date the proxy
card attached below and return it in the enclosed postage-paid envelope.
Sincerely,
David A. Pace
Clerk
Please Detach and Mail in the Envelope Provided
<TABLE>
<S> <C>
A [X] Please mark your
vote as in this
example.
The Board of Directors Recommends a vote "FOR" Proposal 1.
FOR ALL WITHHELD FROM
NOMINEES ALL NOMINEES
1. Election of [ ] [ ] Nominees: Geoffrey Nunes
Class I Mannie Jackson The Board of Directors Recommends a vote "AGAINST"
Directors. Proposal 2.
The undersigned hereby GRANTS authority to elect FOR AGAINST ABSTAIN
as Class I directors the nominees listed at right. 2. Shareholder proposal to request [ ] [ ] [ ]
the Board to take action to
declassify the Board of Directors.
--------------------------------------------------
For all nominees except as noted above The Board of Directors Recommends a vote "AGAINST"
Proposal 3.
FOR AGAINST ABSTAIN
3. Shareholder proposal to request [ ] [ ] [ ]
the Board not to adopt a share-
holder rights agreement unless
the Board has first obtained an
affirmative vote of the share-
holders.
PLEASE DO NOT FOLD THIS PROXY.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Signature(s) ___________________________________________ ____________________________________________ Date: _______________, 2000
</TABLE>
NOTE: Please sign exactly as your name(s) appears hereon. When signing as
attorney, executor, administrator, trustee, or guardian, please sign your
full title as such. Each joint owner should sign.
