<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant / /
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))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Phillips-Van Heusen Corporation
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The Annual Meeting of Stockholders of PHILLIPS-VAN HEUSEN CORPORATION (the
'Company'), a Delaware corporation, will be held at the offices of Chase
Securities Inc., 270 Park Avenue, Third Floor Auditorium, New York, New York,
on Tuesday, June 17, 1997, at 10:00 A.M., for the following purposes:
(1) To elect 12 directors of the Company to serve for a term of one
year;
(2) To consider and act upon a proposal to ratify the exchange, on a
like-value basis, of certain directors' options;
(3) To consider and act upon a proposal to approve the Company's 1997
Stock Option Plan;
(4) To consider and act upon a proposal to ratify the appointment of
auditors for the Company to serve for the current fiscal year; and
(5) To consider and act upon such other matters as may properly come
before the meeting.
Only stockholders of record at the close of business on April 17, 1997 are
entitled to vote at the meeting.
Attendance at the meeting will be limited to holders of record of the
Company's Common Stock or their proxies, beneficial owners having evidence of
ownership, and guests of the Company. If you hold stock through a bank or
broker, a copy of an account statement from your bank or broker as of the
record date will suffice as evidence of ownership.
You are requested to fill in, date and sign the enclosed proxy, which is
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed envelope.
By order of the Board of Directors,
PAMELA N. HOOTKIN
Secretary
New York, New York
May 2, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
PHILLIPS-VAN HEUSEN CORPORATION
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1997
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PHILLIPS-VAN HEUSEN CORPORATION (the
'Company') to be used at the Annual Meeting of Stockholders of the Company
which will be held at the offices of Chase Securities Inc., 270 Park Avenue,
Third Floor Auditorium, New York, New York, on Tuesday, June 17, 1997, at 10:00
A.M., and at any adjournments thereof.
The principal executive offices of the Company are at 1290 Avenue of the
Americas, New York, New York 10104. The approximate date on which this Proxy
Statement and the enclosed form of proxy were first sent or given to
stockholders was May 2, 1997.
Stockholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the meeting or by presenting a later dated proxy. Unless so revoked,
the shares represented by proxies will be voted at the meeting. The shares
represented by the proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Stockholders
vote at the meeting by casting ballots (in person or by proxy) which are
tabulated by a person who is appointed by the Board of Directors before the
meeting to serve as inspector of election at the meeting and who has executed
and verified an oath of office. Abstentions and broker 'non-votes' are included
in the determination of the number of shares present at the meeting for quorum
purposes. Abstentions will have the same effect as negative votes, except that
abstentions will have no effect on the election of directors because directors
are elected by a plurality of the votes cast. Broker 'non-votes' are not
counted in the tabulations of the votes cast on proposals presented to
stockholders because shares held by a broker are not considered to be entitled
to vote on matters as to which broker authority is withheld. A broker
'non-vote' occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner. Pursuant to the rules of the New York Stock Exchange,
brokers holding shares for a beneficial owner will not have discretion to vote
on the proposal to ratify the exchange, on a like-value basis, of certain
directors' options or the proposal to approve the Company's 1997 Stock Option
Plan (the '1997 Option Plan').
Stockholders of record at the close of business on April 17, 1997 will be
entitled to one vote for each share of the Company's common stock (the 'Common
Stock') then held. There were outstanding on such date 27,063,489 shares of
Common Stock. The Common Stock is the only outstanding class of voting stock of
the Company.
The rights to purchase shares of the Company's Series A Cumulative
Participating Preferred Stock, which automatically trade with the Common Stock,
do not vote. Such rights become exercisable, unless they theretofore have been
redeemed or have expired, 10 days after a person or affiliated or associated
group acquires 20% or more of the Common Stock in a transaction not previously
approved by the Company's Board of Directors or commences a tender offer for
30% or more of the Common Stock.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information with respect to the
persons who are known to the Company to be the beneficial owners of more than
five percent of the Common Stock as of April 17, 1997. Except as otherwise
indicated, the persons listed below have advised the Company that they have
sole voting and investment power with respect to the shares listed as owned by
them.
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
- ------------------------------------------ ------------ ----------
<S> <C> <C>
Vaneton International, Inc.(1) ........... 2,835,794 10.5%
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
The Crabbe Huson Group, Inc.(2) .......... 2,469,500 9.1
121 SW Morrison
Suite 1400
Portland, Oregon 97204
Merrill Lynch & Co., Inc.(3) ............. 1,438,855 5.3
World Financial Center
250 Vesey Street
New York, New York 10281
The PVH Associates Investment Plan Master 1,402,254 5.2
Trust(4) ...............................
1290 Avenue of the Americas
New York, New York 10104
</TABLE>
- ---------------
(1) Dr. Richard Lee, 6/F TAL Building, 49 Austin Road, Kowloon, Hong Kong,
may be deemed to beneficially own the 2,835,794 shares of Common Stock
owned of record by Vaneton International, Inc. Dr. Richard Lee and
Vaneton International, Inc. have shared voting and dispositive power
over such shares. Information as to the shares of Common Stock
beneficially owned by Vaneton International, Inc. and Dr. Richard Lee
is as of March 22, 1995 and as set forth in a Schedule 13D filed with
the Securities and Exchange Commission.
(2) The Crabbe Huson Group, Inc. ('CHG') is a registered investment
advisor which, as of December 31, 1996, shares voting and dispositive
power with approximately 33 investors for which it serves as
investment advisor with respect to the 2,469,500 shares of Common Stock
owned by such investors. CHG disclaims beneficial ownership of all
shares owned by such investors. The address for CHG is 121 SW
Morrison, Suite 1400, Portland, Oregon 97204. Information as to the
shares of Common Stock owned by CHG is as set forth in a Schedule 13G
filed with the Securities and Exchange Commission.
(3) Merrill Lynch & Co., Inc. ('MLC') is the parent company of (i) Merrill
Lynch Global Asset Management Limited ('MLGAM') and (ii) Merrill Lynch
Group, Inc. ('MLG'). As such, MLC may be deemed to be the beneficial
owner of the aggregate of the 1,438,855 shares (5.3%) of Common Stock
which may be deemed to be beneficially owned by MLGAM and MLG. The
address of each of MLC, MLGAM and MLG is World Financial Center, North
Tower, 250 Vesey Street, New York, New York 10281. MLG may be deemed
to be the beneficial owner of 1,418,855 shares (5.2%) of Common Stock
by virtue of its control of its wholly-owned subsidiary, Princeton
Services, Inc. ('PSI'), and of Merrill Lynch Bank (Suisse) S.A. ('Bank
Suisse') and various Merrill Lynch Trust Companies, each of which is a
wholly-owned subsidiary of MLG. PSI may be deemed to be the beneficial
owner of 1,139,255 shares (4.2%) of Common Stock by virtue of the fact
that it is the general partner of Merrill Lynch Asset
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
Management, L.P. ('MLAM'). MLAM is a registered investment adviser
which may be deemed to be the beneficial owner of the 1,139,255 shares
(4.2%) of Common Stock. The address of each of PSI and MLAM is 800
Scudders Mill Road, Plainsboro, New Jersey 08536. Each of MLC, MLG and
PSI has disclaimed beneficial ownership of such shares. Information as
to the shares of Common Stock beneficially owned by MLC, MLG, PSI and
MLAM is as of December 31, 1996 and as set forth in a Schedule 13G
filed with the Securities and Exchange Commission.
(4) Includes all shares held by the Master Trust relating to the Company's
Associates Investment Plan, its Associates Investment Plan (Crystal
Brands Division) and its Associates Investment Plan for Associates in
Puerto Rico. The Master Trust does not have dispositive power as to the
shares of Common Stock beneficially owned by it. Information as to the
shares of Common Stock owned by the PVH Associates Investment Plan
Master Trust is as of December 31, 1996 and as set forth in a Schedule
13G filed with the Securities and Exchange Commission.
The following table presents certain information with respect to the
number of shares of Common Stock beneficially owned by each of the directors
and nominees for director of the Company, the chief executive officer, the four
most highly compensated executive officers of the Company other than the chief
executive officer, and all of the directors, nominees for director and
executive officers of the Company as a group as of April 17, 1997.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME OWNED(1) CLASS
- -------------------------------------------------- ------------ ----------
<S> <C> <C>
Michael J. Blitzer................................ 4,906 *
Edward H. Cohen................................... 11,000 *
Estelle Ellis..................................... 12,000 *
Joseph B. Fuller.................................. 500 *
Dennis F. Hightower............................... 0 *
Joel H. Goldberg.................................. 20,000 *
Marc Grosman...................................... 0 *
Bruce J. Klatsky.................................. 70,426 *
Maria Elena Lagomasino............................ 200 *
Harry N.S. Lee(2)................................. 1,000 *
Bruce Maggin...................................... 24,500 *
Ellis E. Meredith................................. 10,010 *
Steven L. Osterweis............................... 15,000 *
Sylvia M. Rhone................................... 0 *
William S. Scolnick............................... 5,500 *
Allen E. Sirkin................................... 25,401 *
Peter J. Solomon.................................. 17,000 *
Mark Weber........................................ 40,246 *
Irwin W. Winter................................... 48,143 *
All directors, nominees for director and executive 306,332 1.1%
officers as a group (20 persons)................
</TABLE>
- ---------------
* Less than 1% of class.
(1) The figures in the table are based on information furnished to the
Company by the directors, nominees for director and executive
officers. The figures do not include the shares held in the
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
Master Trust for the executive officers by virtue of their
participation in the Company's Associates Investment Plan. See the
prior table for information regarding the Associates Investment Plan.
Except as otherwise indicated, each of the directors, nominees and
executive officers has sole voting and investment power with respect
to the shares listed as owned by them.
(2) Harry N.S. Lee is a director of Vaneton International, Inc. which
beneficially owns 2,835,794 shares (10.5%) of Common Stock. See the
prior table for certain information regarding Vaneton International,
Inc.
The figures in the foregoing table include 190 shares held by Bruce J.
Klatsky's child and by Mr. Klatsky's wife as custodian for his child, as to
which Mr. Klatsky has disclaimed beneficial ownership, 8,000 shares held by
Bruce Maggin as custodian for his children, 300 shares held by Allen E. Sirkin
with his wife as joint tenants, 200 shares held by the Keogh Plan of Mr.
Sirkin's wife, as to which Mr. Sirkin has disclaimed beneficial ownership, and
100 shares held by Mr. Sirkin's wife as custodian for one of Mr. Sirkin's
children, as to which Mr. Sirkin has disclaimed beneficial ownership.
The foregoing table also includes shares which the following directors and
executive officers have the right to acquire within 60 days upon the exercise
of options granted under the Company's stock option plans: Michael J. Blitzer,
4,906 shares; Edward H. Cohen, 5,000 shares; Estelle Ellis, 5,000 shares; Joel
H. Goldberg, 20,000 shares; Bruce J. Klatsky, 21,568 shares; Bruce Maggin,
5,000 shares; Ellis E. Meredith, 5,000 shares; Steven L. Osterweis, 5,000
shares; William S. Scolnick, 5,000 shares; Allen E. Sirkin, 25,101 shares;
Peter J. Solomon, 5,000 shares; Mark Weber, 32,746 shares; Irwin W. Winter,
29,118 shares; and all directors, nominees for director and executive officers
as a group, including the foregoing, 168,439 shares.
ELECTION OF DIRECTORS
The Board of Directors currently consists of 12 members, all of one class.
All members of the Board are elected by the stockholders at the annual meeting
of stockholders of the Company for a term of one year or until their successors
are elected and qualified.
Pursuant to a policy adopted by the Board in 1996, effective at this
meeting, directors who have attained the age of 69 are not eligible to stand
for re-election. As a result, Estelle Ellis, who became a director in 1982,
Ellis E. Meredith, who became a director in 1984, Steven L. Osterweis, who
became a director in 1976, and William S. Scolnick, who became a director in
1962, have not been nominated for the forthcoming year.
At the meeting, the stockholders will elect 12 members of the Board of
Directors to serve until the 1998 Annual Meeting of Stockholders and until
their respective successors shall have been elected and shall qualify.
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock present in person or by proxy at the meeting. At
this time, the Board of Directors knows of no reason why any nominee might be
unable to serve. There are no arrangements or understandings between any
director or nominee and any other person pursuant to which such person was
selected as a director or nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE 12
NOMINEES NAMED BELOW. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES UNLESS OTHERWISE SPECIFIED IN THE PROXY.
4
<PAGE>
The following eight nominees are currently Company directors whose terms
of office expire at the meeting. All of these individuals have previously been
elected directors of the Company by the stockholders.
<TABLE>
<CAPTION>
YEAR
BECAME A
NAME PRINCIPAL OCCUPATION AGE DIRECTOR
- ---------------------------------------------- ---------------------------------------------- --- --------
<S> <C> <C> <C>
Edward H. Cohen............................... Senior Partner of Rosenman & Colin LLP, a law 58 1987
firm
Joseph B. Fuller.............................. Director of Monitor Company, a management 40 1991
consulting firm
Bruce J. Klatsky.............................. Chairman, President and Chief Executive 48 1985
Officer of the Company
Maria Elena Lagomasino........................ Senior Vice President of The Chase Manhattan 48 1993
Bank, N.A.
Harry N.S. Lee................................ Director of TAL Apparel Limited, an apparel 54 1995
manufacturer and exporter based in Hong Kong
Bruce Maggin.................................. Principal of The H.A.M. Media Group, LLC, a 54 1987
media investment company
Peter J. Solomon.............................. Chairman of Peter J. Solomon Company, Ltd., 58 1987
an investment banking firm
Irwin W. Winter............................... Executive Vice President and Chief Financial 63 1987
Officer of the Company
</TABLE>
The following individuals are nominees to the Company's Board of Directors
who have not previously served as directors of the Company.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AGE
- ----------------------------------------------- ----------------------------------------------- ---
<S> <C> <C> <C>
Joel H. Goldberg............................... President of Career Consultants, Inc., a 53
management consulting firm
Marc Grosman................................... Founder and Chief Executive Officer of Marc 45
Laurent SA, the owner of a chain of European
apparel stores which trade under the name CELIO
Dennis F. Hightower............................ Consultant; formerly President of Walt Disney 55
Television and Telecommunications
Sylvia M. Rhone................................ Chairman and Chief Executive Officer of the 45
Elektra Entertainment Group of Time-Warner Inc.
</TABLE>
Mr. Cohen is also a director of Franklin Electronic Publishers, Inc. Mr.
Solomon is also a director of Centennial Cellular Corp., Century Communications
Corporation, Culbro Corporation, Monro Muffler Brake, Inc. and Office Depot,
Inc. Mr. Winter is also a director of Trend-Lines, Inc. Mr. Hightower is also a
director of TJX Companies.
Each of the directors or nominees for director has been engaged in the
principal occupation indicated in the foregoing table for more than the past
five years, except Mr. Klatsky who, while
5
<PAGE>
serving as President of the Company for more than the past five years, was
elected the Company's Chief Executive Officer in June 1993 and Chairman of the
Board in June 1994, Mr. Maggin, who, until October 1996, was Executive Vice
President of Multimedia Group, Capital Cities/ABC, Inc., and Mr. Hightower, who
until June 1996 was President of Walt Disney Television and Telecommunications
and prior to 1995 was Executive Vice President, Consumer Products, of The Walt
Disney Corporation.
No family relationship exists between any director or executive officer of
the Company.
The Board of Directors of the Company has standing Audit and Compensation
Committees; it does not have a standing Nominating Committee. The Audit
Committee, composed during the fiscal year ended February 2, 1997 of Messrs.
Maggin, Osterweis and Scolnick, is charged with recommending annually to the
Board of Directors the independent auditors to be retained by the Company,
reviewing the audit plan with the auditors, reviewing the results of the audit
with the officers of the Company and its auditors and reviewing with the
officers and internal auditors of the Company the scope and nature of the
Company's internal audit function. The Audit Committee held three meetings
during the fiscal year ended February 2, 1997. The Compensation Committee,
composed during the fiscal year ended February 2, 1997 of Messrs. Maggin,
Meredith and Osterweis and Ms. Lagomasino, is charged with setting the
compensation of all executive officers, recommending new incentive compensation
plans and implementing changes and improvements to existing incentive
compensation plans, all subject to approval by the Board of Directors. The
Compensation Committee held three meetings during the fiscal year ended February
2, 1997.
During the fiscal year ended February 2, 1997, there were five meetings of
the Board of Directors. All of the directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and the Committees of
the Board of Directors on which they serve, except for Joseph B. Fuller, who
attended three of the five meetings of the Board of Directors.
The Company will consider for election to the Board of Directors a nominee
recommended by a stockholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the Board
of Directors, (ii) the principal occupations and employment of the proposed
nominee during the past five years, (iii) each directorship currently held by
the proposed nominee and (iv) a statement that the proposed nominee has
consented to the nomination. The recommendation should be addressed to the
Secretary of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of the filings furnished to the Company pursuant to
Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934 (the
'Exchange Act') and on representations from its executive officers and
directors, all filing requirements of Section 16(a) of the Exchange Act were
complied with during the fiscal year ended February 2, 1997, except that each of
Irwin W. Winter and Peter J. Solomon filed late one report relating to one
transaction.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to the Company's chief executive officer and its four
most highly compensated executive officers, other than the chief executive
officer (together, the 'Named Executive Officers'), for services rendered in
all capacities to the Company and its subsidiaries for each of the Company's
last three
6
<PAGE>
fiscal years, ended February 2, 1997, January 28, 1996 and January 29, 1995
(fiscal years 1996, 1995 and 1994, respectively).
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL
COMPENSATION AWARDS ALL OTHER
------------ ------------ COMPENSATION(2)
NAME AND FISCAL SALARY OPTIONS(1) -------------
PRINCIPAL POSITION YEAR $ # $
- ------------------------------------------------------- ------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Michael J. Blitzer..................................... 1996 456,250 15,000 20,827
Senior Vice President, 1995 383,333 7,500 16,593
Phillips-Van Heusen Corporation 1994 333,333 2,320 18,952
Bruce J. Klatsky....................................... 1996 850,000 35,000 60,324
Chairman, 1995 816,666 20,000 56,427
Phillips-Van Heusen Corporation 1994 750,000 7,890 93,977
Allen E. Sirkin........................................ 1996 650,000 25,000 26,640
Vice Chairman, 1995 633,333 15,000 24,093
Phillips-Van Heusen Corporation 1994 575,000 5,260 25,627
Mark Weber............................................. 1996 575,000 25,000 24,390
Vice Chairman, 1995 491,666 7,500 19,763
Phillips-Van Heusen Corporation 1994 462,500 4,170 22,252
Irwin W. Winter........................................ 1996 500,000 25,000 22,140
Executive Vice President, 1995 491,666 15,000 19,843
Phillips-Van Heusen Corporation 1994 456,250 5,000 17,533
</TABLE>
No bonuses, other annual compensation, restricted stock awards, stock
appreciation rights ('SARs') or long-term incentive plan ('LTIP') payouts (all
as defined in the proxy regulations of the Securities and Exchange Commission)
were awarded to, earned by, or paid to the Named Executive Officers during any
of the Company's last three fiscal years.
- ---------------
(1) The options granted listed in the table do not include grants made in
connection with the like-value exchange of stock options, as described
under 'Like-Value Exchange of Stock Options.'
(2) All Other Compensation includes payments or contributions required by
the Company's Associates Investment Plan and Supplemental Savings
Plan, Executive Medical Reimbursement Insurance Plan and Educational
Benefit Trust.
Under the combination of the Company's Associates Investment Plan, its
Associates Investment Plan (Crystal Brands Division) and its
Associates Investment Plan for Associates in Puerto Rico, each
employee, including the Named Executive Officers, eligible to
participate may authorize his or her employer to withhold a specified
percentage of his or her compensation, up to 6% in the case of certain
management and highly compensated employees, including the Named
Executive Officers, and otherwise up to 15% (subject to certain
limitations). Under the Supplemental Savings Plan applicable to
certain management and highly compensated employees, each employee,
including the Named Executive Officers, eligible to participate may
currently authorize his or her employer to withhold a specified
percentage of his or her compensation, up to 15% after deductions for
contributions to the Company's Associates Investment Plans. The
Company or its subsidiaries will contribute an amount equal to 50% of
an employee's contribution up to a maximum of 3% of such employee's
total compensation. The entire amount contributed by the Company will
be invested in Common Stock and the amount contributed by the employee
will be invested, in the employee's sole direction, in up to
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
six investment funds (including up to 25% in additional Common Stock),
except that, in the case of the Supplemental Savings Plan, the
Company's contribution will be in the form of phantom shares of Common
Stock and the employee's contribution will earn interest at the same
rate as is paid on 10-year United States Treasury bonds, except for
certain employee contributions made prior to July 1, 1995 which were
invested in the form of phantom shares of Common Stock. A participant's
interest in the amounts arising out of employer contributions vests
after the earlier of five years, at age 65 or upon disability or death.
In fiscal years 1996, 1995 and 1994, respectively, the Company made
contributions which are reflected under this column in the amounts of
$13,687, $11,500 and $10,575 for Michael J. Blitzer, $25,500, $24,500
and $22,500 for Bruce J. Klatsky, $19,500, $19,000 and $17,250 for
Allen E. Sirkin, $17,250, $14,670 and $13,875 for Mark Weber and
$15,000, $14,750 and $13,688 for Irwin W. Winter.
The Company's Executive Medical Reimbursement Insurance Plan covers
eligible employees for most medical charges up to a specified annual
maximum. During fiscal years 1996, 1995 and 1994, respectively, the
Company incurred the following annual premiums for single or family
coverage for the Named Executive Officers which are reflected under
this column: Michael J. Blitzer--$7,140, $5,093 and $8,377; Bruce J.
Klatsky--$7,140, $5,093 and $8,377; Allen E. Sirkin--$7,140, $5,093
and $8,377; Mark Weber--$7,140, $5,093 and $8,377; and Irwin W.
Winter--$7,140, $5,093 and $3,845.
Under the Company's Educational Benefit Trust, children of eligible
employees received reimbursement of tuition and room and board charges
while attending an accredited college or vocational school. The plan
was terminated in 1986 except with respect to children who were then
covered by the plan. For fiscal years 1996, 1995 and 1994, the
education benefits received by Mr. Klatsky's son, the only child of a
Named Executive Officer who in this period was eligible to receive
benefits under the plan, are reflected under this column and totalled
$27,684, $26,834, and $26,100, respectively.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's 1987 Stock Option
Plan (the '1987 Option Plan') granted to the Named Executive Officers during
the fiscal year ended February 2, 1997. No stock appreciation rights have been
granted by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE ------------------------
GRANTED(1) IN FISCAL PRICE EXPIRATION 5% 10%
NAME # YEAR $/SH DATE $ $
- ------------------------- ---------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Blitzer....... 15,000 2.2 13.13 6/18/06 123,810 313,770
Bruce J. Klatsky......... 35,000 5.2 13.13 6/18/06 288,890 732,130
Allen E. Sirkin.......... 25,000 3.7 13.13 6/18/06 206,350 522,950
Mark Weber............... 25,000 3.7 13.13 6/18/06 206,350 522,950
Irwin W. Winter.......... 25,000 3.7 13.13 6/18/06 206,350 522,950
All stockholders(2)...... N/A N/A N/A N/A 220,209,250 558,073,309
</TABLE>
(Footnotes on next page)
8
<PAGE>
(Footnotes from previous page)
- ---------------
(1) All options granted to the Named Executive Officers in the fiscal year
ended February 2, 1997 were granted on June 18, 1996. One third of the
outstanding options become exercisable on each of the third, fourth
and fifth anniversaries of the grant date.
The options granted listed in the table do not include grants made in
connection with the like-value exchange of stock options, as described
under 'Like-Value Exchange of Stock Options.'
(2) These figures were calculated assuming that the price of the
26,679,095 shares of Common Stock outstanding on June 18, 1996
increased from $13.13 per share at a compound rate of 5% and 10% per
year for ten years. The purpose of including this information is to
indicate the potential realizable value at the assumed annual rates of
stock price appreciation for the option term for all of the Company's
stockholders.
FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the value at
February 2, 1997 of unexercised stock options held by the Named Executive
Officers. No stock appreciation rights have been granted by the Company and no
stock options were exercised during the fiscal year ended February 2, 1997 by
the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL OPTIONS IN-THE-MONEY AT
YEAR-END FISCAL YEAR-END(1)
------------------------ ------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME # $
- ---------------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Michael J. Blitzer.......... 4,906 26,557 24,530 35,226
Bruce J. Klatsky............ 21,568 68,939 107,840 138,389
Allen E. Sirkin............. 25,101 48,259 147,175 166,874
Mark Weber.................. 32,746 38,891 226,855 244,219
Irwin W. Winter............. 29,118 48,178 161,840 181,438
</TABLE>
(Footnotes from previous page)
- ---------------
(1) Fair market value at fiscal year-end of securities underlying the
options minus the exercise price of the options.
PENSION PLAN TABLE
The following table sets forth the aggregate estimated annual benefits
payable, upon retirement at age 65, to employees under the combination of the
pension plan for salaried employees and a supplemental defined benefit plan
applicable to certain management and highly compensated employees (including
the Named Executive Officers), in various compensation and years-of-service
classifications, assuming that the Social Security maximum limit does not
change from its present level of $65,400.
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION -------------------------------------------
$ 15 20 25 30 35
- ---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
175,000 34,761 45,792 56,637 67,374 78,051
275,000 57,261 75,792 94,137 112,374 130,551
375,000 79,761 105,792 131,637 157,374 183,051
475,000 102,261 135,792 169,137 202,374 235,551
575,000 124,761 165,792 206,637 247,374 288,051
675,000 147,261 195,792 244,137 292,374 340,551
775,000 169,761 225,792 281,637 337,374 393,051
825,000 181,011 240,792 300,387 359,874 419,301
</TABLE>
9
<PAGE>
The benefits under the Company's pension plans are generally based on a
participant's career average compensation (except that pre-1994 benefits are
based on pre-1994 high five-year average compensation and exclude bonuses).
Absent any election by a participant of an optional form of benefit, benefits
under the pension plans become payable at the time of retirement, normally at
age 65; such benefits under the pension plans for salaried employees are
payable monthly for the life of the participant and, in most cases, for the
life of such participant's surviving spouse, and benefits under the
supplemental defined benefit plan are payable in a lump sum. Notwithstanding
the method of payment of benefits under the pension plans, the amounts shown in
the above table are shown in the actuarial equivalent amount of a life annuity.
The benefits listed above are not subject to any deduction for social security
or other offset amounts.
The credited years of service under the pension plans, as of February 2,
1997, for each of the Named Executive Officers is set forth in the following
table.
<TABLE>
<CAPTION>
CREDITED YEARS
NAME OF SERVICE
- ------------------------------ --------------
<S> <C>
Michael J. Blitzer............ 16
Bruce J. Klatsky.............. 24
Allen E. Sirkin............... 10
Mark Weber.................... 24
Irwin W. Winter............... 9
</TABLE>
LIKE-VALUE EXCHANGE OF STOCK OPTIONS
On June 18, 1996, the Board of Directors approved a program allowing a
'like-value exchange' of certain options previously awarded to employees,
including the Named Executive Officers, one other executive officer and the
non-employee directors. Optionees were given the opportunity to exchange
options awarded between September 1, 1991 and March 31, 1995 for new options
which had a value equal to the old options, but were for fewer shares, at the
then current stock price and with the same term as the remaining term of the
old options.
This program was offered because the Company's Common Stock had
experienced significant volatility over the past five years. Much of that
volatility was created by dramatic shifts in the retail and apparel industries
as well as in the investment community. The Board believed that options at
exercise prices significantly higher than current market prices no longer
served as an incentive to the optionees and, as a result, did not adequately
focus the optionees on the goal of increasing stockholder value as measured by
the price of the Common Stock.
All stock options have a value which is measured in terms of vesting
period, years elapsed and remaining in the option's ten year term, the option
price at issuance, the current market price of the underlying stock and the
volatility of the underlying stock over a period of years. The Black-Scholes
model has become generally accepted in the financial community as a proper
means of valuing a stock option at any point during its option life. William M.
Mercer and Company, a compensation and benefits consultant, calculated the
relevant Black-Scholes values for both the options to be exchanged and the new
options and determined the exchange ratios for each of the option grants
included in the program. The exchange ratios were set such that the new options
had the same value as the exchanged options. The net result is that the
exercise price of the new options is lower than the exercise price of the
options exchanged, but the number of shares of Common Stock underlying the
options is reduced, while the term of the new options is the same as the
remaining term of the exchanged options. The Company should incur no
significant new costs in conjunction with the program, since the overall value
of the grants remained the same. The Board of Directors believed that the
reduced exercise price would create a more immediate positive incentive to the
optionees who agreed to the exchange. This
10
<PAGE>
was, and continues to be, especially important during a period of transition
where continuity and intensified commitment of management is essential. To
support this incentive effect, the program requires optionees to hold their new
options at least one year after exchange before exercising them, irrespective
of prior exercisability. The participation of the non-employee directors in the
like-value exchange program is subject to stockholder approval, as discussed
under 'Like-Value Exchange of Certain Director Stock Options.'
Board of Directors
<TABLE>
<S> <C> <C>
Edward H. Cohen Maria Elena Lagomasino Steven L. Osterweis
Estelle Ellis Harry N.S. Lee William S. Scolnick
Joseph B. Fuller Bruce Maggin Peter J. Solomon
Bruce J. Klatsky Ellis E. Meredith Irwin W. Winter
</TABLE>
The following table sets forth the details of all exchanges and repricings
of options held by any executive officer during the last ten completed fiscal
years. The data with respect to the July 10, 1996 transactions relate to the
like-value exchange program described above. The data with respect to the
November 5, 1987 transactions relate to a repricing of certain then outstanding
options; Mr. Klatsky is the only executive officer who was an executive officer
at that time.
<TABLE>
<CAPTION>
10-YEAR OPTION REPRICINGS
-----------------------------------------------------------------------------------------
NUMBER OF NUMBER OF LENGTH OF
SECURITIES MARKET SECURITIES ORIGINAL
UNDERLYING PRICE OF EXERCISE UNDERLYING OPTION TERM
OPTIONS STOCK AT PRICE AT OPTIONS REMAINING
DATE OF EXCHANGED TIME OF TIME OF NEW AFTER AT DATE OF
NAME AND EXCHANGE OR OR EXCHANGE OR EXCHANGE OR EXERCISE EXCHANGE OR EXCHANGE OR
POSITION REPRICING REPRICED REPRICING REPRICING PRICE REPRICING REPRICING
- ---------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Blitzer ......... 7/10/96 2,700 $12.25 $22.375 $12.25 1,674 5.9 years
Senior Vice 7/10/96 2,070 $12.25 $31.625 $12.25 1,014 7.2 years
President 7/10/96 2,320 $12.25 $27.875 $12.25 1,369 7.9 years
11/5/87 15,000 $4.75 $8.50 $4.75 15,000 9.9 years
Emanuel Chirico ............ 7/10/96 10,000 $12.25 $33.375 $12.25 4,800 7.3 years
Vice President 7/10/96 1,930 $12.25 $27.875 $12.25 1,139 7.9 years
Bruce J. Klatsky ........... 7/10/96 8,840 $12.25 $22.375 $12.25 5,481 5.9 years
Chairman 7/10/96 7,760 $12.25 $31.625 $12.25 3,803 7.2 years
7/10/96 7,890 $12.25 $27.875 $12.25 4,655 7.9 years
11/5/87 25,000 $4.75 $7.50 $4.75 25,000 8.6 years
11/5/87 60,000 $4.75 $8.50 $4.75 60,000 9.9 years
Allen E. Sirkin ............ 7/10/96 4,910 $12.25 $22.375 $12.25 3,044 5.9 years
Vice Chairman 7/10/96 4,310 $12.25 $31.625 $12.25 2,112 7.2 years
7/10/96 5,260 $12.25 $27.875 $12.25 3,103 7.9 years
11/5/87 10,000 $4.75 $8.50 $4.75 10,000 9.9 years
Mark Weber ................. 7/10/96 3,440 $12.25 $22.375 $12.25 2,133 5.9 years
Vice Chairman 7/10/96 3,670 $12.25 $31.625 $12.25 1,798 7.2 years
7/10/96 4,170 $12.25 $27.875 $12.25 2,460 7.9 years
11/5/87 10,000 $4.75 $8.50 $4.75 10,000 9.9 years
Irwin W. Winter ............ 7/10/96 5,160 $12.25 $22.375 $12.25 3,199 5.9 years
Executive Vice 7/10/96 4,140 $12.25 $31.625 $12.25 2,029 7.2 years
President 7/10/96 5,000 $12.25 $27.875 $12.25 2,950 7.9 years
11/5/87 50,000 $4.75 $9.94 $4.75 50,000 9.7 years
</TABLE>
11
<PAGE>
COMPENSATION OF DIRECTORS
During the fiscal year ended February 2, 1997, each director of the
Company who was not an employee of the Company or any of its subsidiaries
received a fee of $10,000 for his or her services as a director of the Company
and $750 for each Board meeting attended. Each director who was a member of the
Audit Committee received an additional fee of $2,500 and each director who was a
member of the Compensation Committee received an additional fee of $2,500.
Commencing with 1997, the annual fee for directors who are not employees of the
Company has been increased to $20,000 and the fee for each meeting increased to
$1,000. Pursuant to the 1987 Option Plan, each outside director is entitled to
receive, on an annual basis, a non-incentive option to purchase the number of
shares of Common Stock derived by dividing $50,000 by the fair market value of
a share of Common Stock on the date of grant. Pursuant to the 1987 Option Plan,
on June 18, 1996, each outside director was granted an option to purchase 3,809
shares of Common Stock. If the 1997 Option Plan is approved by the stockholders
at the meeting, each outside director will be granted, on an annual basis
commencing with 1997, an option to purchase 4,000 shares of Common Stock at the
fair market value on the date of grant.
The law firm of Rosenman & Colin LLP, of which Mr. Cohen is a senior
partner, was engaged as the Company's general outside counsel for the fiscal
year ended February 2, 1997 and will continue to be so engaged for the fiscal
year ending February 1, 1998.
Peter J. Solomon Company, Ltd., of which Mr. Solomon is Chairman, provides
investment banking services to the Company.
Business Image, Inc., of which Ms. Ellis is President, provides marketing
and communications services to the Company, including the publication of a
corporate newsletter. During the fiscal year ended February 2, 1997, Business
Image, Inc. was paid $98,309 for its services to the Company.
Monitor Company, of which Mr. Fuller is a director, provided business
consulting services to the Company during the fiscal year ended February 2,
1997.
TAL Apparel Limited, of which Mr. Lee is a director, has been, and
continues to be, one of the principal manufacturers of the Company's apparel
products. During the fiscal year ended February 2, 1997, the Company purchased
approximately $34,500,000 of products from TAL Apparel Limited and certain
related companies.
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has had in effect since 1987 a Special Severance Benefit Plan
providing benefits for 18 key employees of the Company and its subsidiaries,
including the Named Executive Officers. Upon the termination of employment by
any participant within two years after a change in control of the Company (as
defined in the Plan), the participant receives a lump sum payment in an amount
generally equal to three times the average annual total cash compensation paid
to or accrued for him or her during the two-year period preceding the date of
termination. In addition, the Company has agreed to indemnify each participant
in the Plan against any and all liabilities he or she may incur under Section
4999(a) of the Internal Revenue Code (relating to excise taxes on excess
parachute payments), including any income taxes and/or additional excise taxes
applicable to such indemnification payment. Mr. Klatsky is also entitled to the
payment under the Plan if (i) he is not continued as the Company's chief
executive officer and Chairman of the Board prior to his retirement as an
employee of the Company, (ii) the appointment by the directors of an officer or
the hiring by the directors of an employee with authority equal or superior to
the authority of Mr. Klatsky at any time prior to his retirement as an employee
of the Company, or (iii) the Company fails to maintain the terms and
12
<PAGE>
conditions of Mr. Klatsky's employment, including a minimum level of
compensation, as such existed on April 28, 1993.
Certain other plans of the Company in which certain of the Named Executive
Officers participate provide for benefits upon the occurrence of a change in
control of the Company. The Company's Capital Accumulation Plan, under which
participants remaining in the employ of the Company until established target
dates earn specified dollar amounts, provides that if a participant's
employment with the Company is terminated following a change in control of the
Company, the full undiscounted value of the future payments to be made to the
participant under the Plan becomes immediately payable in a lump sum. Further,
each participant's rights are subject to non-competition and non-disclosure
restrictions which automatically terminate upon a change in control of the
Company. Upon a change in control of the Company, all options which were
previously granted under the Company's 1973 Stock Option Plan and the 1987
Option Plan and which have not expired or been otherwise cancelled become
immediately exercisable in full (regardless of whether such options have fully
vested).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended
February 2, 1997 were Maria Elena Lagomasino, Bruce Maggin, Ellis E. Meredith
and Steven L. Osterweis. There were no interlocks or insider participation as
defined in the proxy regulations of the Securities and Exchange Commission.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibility is to set the compensation of
all executive officers, recommend new incentive compensation plans and
implement changes and improvements to existing incentive compensation plans,
all subject to approval by the Board.
OVERALL POLICY. The Compensation Committee believes that the Company's
executive officers constitute a highly qualified management team who have
largely been responsible for the Company's success. The Compensation Committee
has structured the Company's compensation program (1) primarily to compensate
its executive officers on an annual basis with a stable, secure cash salary at
a sufficiently high level to retain and motivate these officers, (2) to link a
portion of its executive officers' compensation to long-term increases in value
created for the Company's stockholders by the efforts of these officers and (3)
to be consistent with the Company's high ethical standards. The Company's
compensation program does not rely, to any significant extent, on fringe
benefits or perquisites.
The key elements of the Company's executive compensation package have been
base salaries and stock options. In addition, the Company believes its fringe
benefit plans are generally competitive and that it has a reputation for
providing a reasonably high level of job security in an industry known for high
levels of executive turnover. Although the Company had eliminated the annual
bonus portion of executive compensation several years ago, in response to
competitive pressures and in light of the reorganization of the Company's
business units, the Compensation Committee has determined to reinstate the
annual bonus portion of executive compensation for 1997. Annual bonuses awarded
may exceed limits as to deductibility established by Section 162(m) of the
Internal Revenue Code.
Based upon the Compensation Committee's recommendation and the information
provided by its consultant, Towers Perrin, in April 1995, the Board adopted the
Performance Restricted Stock Plan, which was approved by the Company's
stockholders at the 1995 Annual Meeting of Stockholders. No awards were made
under this Plan, as performance goals were not achieved in fiscal years 1995 and
1996, and the Plan was terminated by the Board in March 1997.
13
<PAGE>
The Compensation Committee annually reviews the Company's executive
compensation package, taking into account corporate performance, stock price
performance and total return to stockholders, as well as industry conditions,
recommendations of the Company's chief executive officer and compensation
awarded to executives in other companies, especially those involved in the
apparel, footwear and specialty retail industries. In establishing future
executive compensation packages, the Compensation Committee may adopt
additional long-term incentive and/or annual bonus plans to meet the needs of
changing employment markets and economic, accounting and tax conditions. In
determining the compensation of an individual executive, the Compensation
Committee intends to take into account the performance of the executive and the
full compensation package afforded by the Company to him or her, including
pension benefits, insurance and other benefits. The views of Bruce J. Klatsky,
as chief executive officer, are considered by the Compensation Committee in
their review of the performance and compensation of individual executives.
BASE SALARIES. Annual salaries are determined by evaluating the
performance of the Company and of each executive. In the case of executives
with responsibility for particular operations of the Company, the financial
results of those operations are also considered. In evaluating overall
performance and results of particular operations of the Company, the
Compensation Committee reviews the extent to which the Company or the
particular operations achieved budgeted estimates for sales, gross and
after-tax margins and earnings per share presented to and reviewed by the Board
for the fiscal year, and the Company's sales and earnings results compared to
those of many public peer companies (including companies that are part of the
Line of Business Index). Where appropriate, the Compensation Committee
considers non-financial performance measures, including market share increases,
manufacturing and distribution efficiency gains, improvements in product
quality, improvements in relations with customers and suppliers and a
demonstrated commitment to the welfare and dignity of the Company's associates.
Also considered are years of service to the Company. In addition, the
Compensation Committee considers information provided by Towers Perrin regarding
competitive executive compensation. Finally, the Compensation Committee takes
into account the relative salaries of the executive officers and determines
what it believes are appropriate compensation level distinctions among the
executive officers and between the executive officers, on the one hand, and the
Company's chief executive officer, on the other hand. There is no specific
relationship between achieving or failing to achieve the budgeted estimates or
the Company's relative results and the annual salaries determined by the
Compensation Committee for any of the Named Executive Officers. No specific
weight is attributed to any of the factors considered by the Compensation
Committee; the Compensation Committee considers all factors and makes a
subjective determination, based upon the experience of its members and the
recommendations of the Company's chief executive officer, of appropriate
compensation levels.
In determining the base salary of Bruce J. Klatsky, as chief executive
officer for the fiscal year ended February 2, 1997, the Compensation Committee
took into account the salaries of chief executive officers of many public peer
companies (including companies that are part of the Line of Business Index) and
private peer companies known to the members of the Committee, the performance
of the Common Stock over the prior several years and the assessment by the
Compensation Committee of Mr. Klatsky's individual performance. In evaluating
whether the Company achieved its financial goals, the Compensation Committee
reviewed the extent to which the Company achieved budgeted estimates for sales,
gross and after-tax margins and earnings per share presented to and reviewed by
the Board and the Company's sales and earnings results compared to those of
many public peer companies (including companies that are part of the Line of
Business Index). The Compensation Committee also reviewed several compensation
surveys in determining Mr. Klatsky's compensation package.
LONG-TERM INCENTIVES. Under the 1987 Option Plan, stock options are
granted to executives of the Company. Stock options are designed to align the
interests of executives with those of the stockholders. Stock options are
customarily granted at prices equal to fair market value at the date of grant.
Generally stock options may not be exercised until the third anniversary of the
date on which
14
<PAGE>
they are granted and grants of stock options do not become fully exercisable
until the fifth anniversary of the date on which they are granted. The options
generally remain exercisable during employment until the tenth anniversary of
the date of grant. This approach provides an incentive to the executive to
increase stockholder value over the long term, since the full benefit of the
options granted cannot be realized unless stock price appreciation occurs over
a number of years. Such grants will continue under the 1997 Option Plan, if
approved by the stockholders of the Company at the meeting.
In view of changing tax laws and economic and employment conditions, the
Compensation Committee regularly examines other methods of incentive based
compensation and intends to implement, when appropriate, such methods in lieu
of or in addition to stock options.
Grants under the 1987 Option Plan were awarded in June 1996 to
approximately 250 of the top executives of the Company. Each executive received
a fixed number of shares relative to his or her salary range and based on an
option valuation model as of the date of the grant. The options were granted in
an amount such that the value of the award, when combined with direct
compensation and, for participants in the Performance Restricted Stock Plan,
the potential award that executive might receive under the Performance
Restricted Stock Plan, would provide competitive total compensation relative to
comparable positions at other companies. The value of the options granted to
the Named Executive Officers on June 18, 1996 were, on average, 21% of the
direct compensation for the Named Executive Officers for the fiscal year ended
February 2, 1997. No awards were made under the Performance Restricted Stock
Plan, as performance goals were not achieved.
STOCK OWNERSHIP. To ensure that management's interests remain aligned
with stockholders' interests, the Company encourages key executives to retain
shares acquired pursuant to the exercise of stock options. In addition,
employees of the Company acquire Common Stock of the Company through the
Company's Associates Investment Plans. The fact that the majority of the
Company's executive officers have chosen to invest a large portion of the
discretionary portion of their Associates Investment Plan funds in Common Stock
of the Company evidences their deep commitment to and belief in the future
success of the Company.
Compensation Committee
<TABLE>
<S> <C>
Maria Elena Lagomasino Ellis E. Meredith
Bruce Maggin Steven L. Osterweis
</TABLE>
15
<PAGE>
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly
change in the cumulative total stockholder return on the Company's Common Stock
against the cumulative return of the S&P 500 Composite Index, and a line of
business index comprised of the S&P 500 Retail Store Composite Index, the S&P
500 Textile (Apparel Manufacturers) Index and the S&P 500 Shoes Index for the
five fiscal years ended February 2, 1997. The figures represented in the
performance graph assume the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN
[CHART]
<TABLE>
<CAPTION>
Phillips-Van-Heusen S & P 500 Composite Index Line of Business Index
<S> <C> <C> <C>
Jan-92 100 100 100
Jan-93 139.79 110.57 122.31
Jan-94 171.32 124.74 117.90
Jan-95 76.77 125.42 85.83
Jan-96 51.74 173.79 79.14
Jan-97 67.37 219.52 115.72
</TABLE>
- ---------------
Note: Line of Business Index is composed of a blended weighting of the S&P
500 Retail Store Composite Index (50%), the S&P 500 Textile (Apparel
Manufacturers) Index (33%) and the S&P 500 Shoes Index (17%) to
correspond generally to the Company's relative sales over the
five-year period attributable to its retail, wholesale apparel and
wholesale footwear operations.
VALUE OF $100.00 INVESTED AFTER FIVE YEARS:
<TABLE>
<S> <C>
Phillips-Van Heusen Corporation Common Stock $ 67.37
S&P 500 Composite Index $219.52
Line of Business Index $115.72
</TABLE>
16
<PAGE>
LIKE-VALUE EXCHANGE OF CERTAIN DIRECTOR STOCK OPTIONS
On June 18, 1996, the Board of Directors approved a program allowing a
'like-value exchange' of certain options previously awarded to certain
employees and the non-employee directors. Optionees were given the opportunity
to exchange options awarded between September 1, 1991 and March 31, 1995 for
new options which had a value equal to the old options but were for fewer
shares, at the then current stock price and with a term equal to the term of
the exchanged options. For information with respect to the program, see
'Executive Compensation--Like-Value Exchange of Stock Options.' Since the 1987
Option Plan permits only formula option grants to non-employee directors, their
participation in the program requires an amendment to the Plan. Stockholder
ratification of the Board of Directors' action to amend the Plan in this
respect is required to effect the like-value exchange for non-employee
directors. If the stockholders disapprove of the program for non-employee
directors, their like-value exchanges will be rescinded.
The following table sets forth the details of the like-value exchange of
options held by non-employee directors:
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET NUMBER OF ORIGINAL
SECURITIES PRICE OF EXERCISE SECURITIES OPTION TERM
UNDERLYING STOCK AT PRICE AT NEW UNDERLYING REMAINING
DATE OF OPTIONS TIME OF TIME OF EXERCISE OPTIONS AFTER AT DATE OF
NAME EXCHANGE EXCHANGED EXCHANGE EXCHANGE PRICE EXCHANGE EXCHANGE
- -------------------------- -------- ---------- ----------- -------------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward H. Cohen........... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Estelle Ellis............. 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Joseph B. Fuller.......... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Maria Elena Lagomasino.... 7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Bruce Maggin.............. 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Ellis E. Meredith......... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Steven Osterweis.......... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
William Scolnick.......... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
Peter J. Solomon.......... 7/10/96 2,235 $12.25 $22.375 $12.25 1,386 5.9 years
7/10/96 1,581 $12.25 $31.625 $12.25 743 6.9 years
7/10/96 1,793 $12.25 $27.875 $12.25 1,058 7.9 years
</TABLE>
Ratification of the like-value exchange of non-employee directors' stock
options requires the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
LIKE-VALUE EXCHANGE OF NON-EMPLOYEE DIRECTORS' STOCK OPTIONS. PROXIES RECEIVED
IN RESPONSE TO THIS SOLICITATION WILL BE VOTED FOR THE RATIFICATION OF THE
EXCHANGE OF THE DIRECTORS' STOCK OPTIONS UNLESS OTHERWISE SPECIFIED IN THE
PROXY.
17
<PAGE>
APPROVAL OF 1997 STOCK OPTION PLAN
On April 29, 1997, the Board of Directors adopted, upon the recommendation
of the Compensation Committee and subject to stockholder approval, a new 1997
Stock Option Plan (the '1997 Option Plan'). The 1997 Option Plan is intended to
replace the 1987 Option Plan, which expired pursuant to its terms on April 1,
1997.
The following summary of certain features of the 1997 Option Plan is
qualified in its entirety by reference to the full text of the Plan, which is
Exhibit A to this Proxy Statement.
The 1997 Option Plan authorizes the grant of an aggregate of 2,500,000
shares of Common Stock to key employees of the Company and its subsidiaries and
to directors of the Company who are not employees. Under the Plan, the Company
may grant to eligible individuals incentive stock options, as defined in Section
422(b) of the Internal Revenue Code (the 'Code'), and/or non-incentive stock
options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 1997
OPTION PLAN.
NATURE AND PURPOSE OF THE 1997 OPTION PLAN
The purpose of the 1997 Option Plan is to induce certain individuals to
remain in the employ or service of the Company and its subsidiaries, to attract
new employees and directors and to encourage such individuals to secure or
increase on reasonable terms their stock ownership in the Company. The Board of
Directors believes that the Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping and carrying out
the long-range plans of the Company and securing its continued growth and
financial success. The approximate number of persons eligible to participate in
the 1997 Option Plan is 250.
DURATION AND MODIFICATION
The 1997 Option Plan will terminate not later than April 28, 2007. The
Board of Directors may at any time terminate the Plan or make such
modifications of the Plan as it may deem advisable. However, except in certain
limited circumstances, the Board may not, without further approval by the
stockholders, increase the number of shares of Common Stock as to which options
may be granted under the Plan, or change the class of persons eligible to
participate in the Plan or change the manner of determining the option prices.
ADMINISTRATION
The 1997 Option Plan is administered by the Compensation Committee. The
Compensation Committee consists of from three to five members of the Board of
Directors who are 'non-employee directors' within the meaning of Rule 16b-3
under the Exchange Act and 'outside directors' within the meaning of Section
162(m) of the Code. The members of the Compensation Committee are appointed
annually by, and serve at the pleasure of, the Board. The present members of the
Compensation Committee are Messrs. Maggin, Meredith and Osterweis and Ms.
Lagomasino. The Compensation Committee has discretion to determine the
participants under the 1997 Option Plan, the time and price at which options
will be granted, the period during which options will be exercisable, the
number of shares subject to each option and whether an option will be an
incentive stock option, a non-incentive stock option or a combination thereof.
The Committee will not have the discretion to determine any of the foregoing
with respect to the non-discretionary options granted to non-employee
directors, and all options granted to non-employee directors are non-incentive
stock options. In addition to the fees payable to the Compensation Committee
members as directors of the Company, they receive a $2,500 annual fee for their
service as Compensation Committee members. The members of the Compensation
Committee do not receive additional compensation for service in connection with
the administration of the 1997 Option Plan.
18
<PAGE>
DESCRIPTION OF OPTIONS
Under the 1997 Option Plan, the per share exercise price of any option may
not be less than the fair market value of a share of Common Stock on the
business day preceding the date of grant. The aggregate fair market value of
the shares of Common Stock for which a participant may be granted incentive
stock options which are exercisable for the first time in any calendar year may
not exceed $100,000. No participant may, during any fiscal year, be granted
options to purchase more than 100,000 shares of the Common Stock.
Directors who are not employees of the Company or its subsidiaries receive
a non-discretionary annual grant of options to purchase 4,000 shares of Common
Stock at 100% of the fair market value on the date of grant.
Options granted under the 1997 Option Plan are exercisable with respect to
33 1/3% of the underlying shares on the third anniversary of the date of grant,
66 2/3% of the underlying shares on the fourth anniversary of the date of
grant, and in full on the fifth anniversary of the date of grant, unless
otherwise determined by the Committee at the time of the grant of the option.
The Board may permit any option to be exercised in whole or in part prior to
the time that it would otherwise be exercisable. Upon the exercise of an
option, the option price must be paid in cash or, if the Committee so
determined at the time of the grant of the option, in shares of Common Stock.
An option may not be granted for a period in excess of ten years from the date
of grant.
In the event of the death or retirement of an optionee, all options
theretofore granted will become immediately exercisable and, if not exercised,
will terminate, generally within three months of such optionee's death or three
years of such optionee's retirement. In the event an optionee leaves the employ
of the Company or one of its subsidiaries or ceases to serve as a director of
the Company prior to his or her death or retirement, any options previously
granted to but not exercised by such optionee will terminate, generally within
30 days of such optionee's termination of employment or service as a director.
Options are not transferable except upon death.
The number of shares reserved for issuance under the 1997 Option Plan and
the number of shares covered by each option granted under the Plan will be
adjusted in the event of a stock dividend, reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation
in which the Company is the surviving corporation. In the event of the
dissolution or liquidation of the Company, or a merger, reorganization or
consolidation in which the Company is not the surviving corporation, each
option will terminate.
The Committee may not, without further approval by the stockholders, amend
any outstanding option to reduce the option price, or cancel any outstanding
option and contemporaneously award a new option to the same optionee for
substantially the same number of shares at a lower option price.
SECURITIES SUBJECT TO THE 1997 OPTION PLAN
2,500,000 authorized but unissued shares of the Common Stock have been
reserved for issuance upon the exercise of options granted under the 1997
Option Plan. The number of authorized but unissued shares so reserved will be
reduced from time to time to the extent that a corresponding amount of
outstanding shares are purchased by the Company and set aside for issuance upon
the exercise of options granted under the 1997 Option Plan. If any such options
were to expire or terminate for any reason without having been exercised in
full, the unpurchased shares subject thereto would again become available for
the purposes of the Plan.
The market value of the Common Stock, as of April 17, 1997 was $11.875 per
share.
FEDERAL INCOME TAX CONSEQUENCES OF ISSUANCE AND EXERCISE OF OPTIONS
The following discussion of the Federal income tax consequences of the
granting and exercise of options under the 1997 Option Plan, and the sale of
Common Stock acquired as a result thereof, is based on an analysis of the Code,
as currently in effect, existing laws, judicial decisions and
19
<PAGE>
administrative rulings and regulations, all of which are subject to change. In
addition to being subject to the Federal income tax consequences described
below, an optionee may also be subject to state and/or local income tax
consequences in the jurisdiction in which he or she works and/or resides.
Non-Incentive Stock Options
No income will be recognized by an optionee at the time a non-incentive
stock option is granted. Ordinary income will be recognized by an optionee at
the time a non-incentive stock option is exercised, and the amount of such
income will be equal to the excess of the fair market value on the exercise
date of the shares issued to the optionee over the option price. This ordinary
(compensation) income will also constitute wages subject to withholding, and
the Company will be required to make whatever arrangements are necessary to
ensure that the amount of the tax required to be withheld is available for
payment in money.
The Company will be entitled to a deduction for Federal income tax
purposes in the same amount that the optionee is required to include in income.
If an optionee makes payment of the option price by delivering shares of
Common Stock, the optionee generally will not recognize any gain as a result of
such delivery, but the amount of gain, if any, which is not so recognized will
be excluded from his or her basis in the new shares received.
Capital gain or loss on a subsequent sale or other disposition of the
shares acquired upon the exercise of a non-incentive stock option will be
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis of the shares acquired upon the
exercise of any non-incentive stock option will be equal to the sum of the
exercise price of such non-incentive stock option and the amount included in
income with respect to such option.
Incentive Stock Options
In general, neither the grant nor the exercise of an incentive stock
option will result in taxable income to an optionee or a deduction to the
Company. However, for purposes of the alternative minimum tax, the spread on
the exercise of an incentive stock option will be considered as part of the
optionee's income.
The sale of Common Stock received pursuant to the exercise of an incentive
stock option which satisfies the holding period rules will result in capital
gain to an optionee and will not result in a tax deduction to the Company. To
receive incentive stock option treatment as to the shares acquired upon
exercise of an incentive stock option, an optionee must neither dispose of such
shares within two years after such incentive stock option is granted nor within
one year after the exercise of such incentive stock option. In addition, an
optionee generally must be an employee of the Company or a subsidiary of the
Company at all times between the date of grant and the date three months before
exercise of such incentive stock option.
If the holding period rules are not satisfied, the portion of any gain
recognized on the disposition of the shares acquired upon the exercise of an
incentive stock option that is equal to the lesser of (a) the fair market value
of the shares on the date of exercise minus the option price or (b) the amount
realized on the disposition minus the option price, will be treated as ordinary
(compensation) income, with any remaining gain being treated as capital gain.
The Company will be entitled to a deduction equal to the amount of such
ordinary income.
If an optionee makes payment of the option price by delivering shares of
Common Stock, the optionee generally will not recognize any gain as a result of
such delivery, but the amount of gain, if any, which is not so recognized will
be excluded from his or her basis in the new shares received. However, the use
by an optionee of shares previously acquired pursuant to the exercise of an
incentive stock option to exercise an option will be treated as a taxable
disposition if the transferred shares are not held by the optionee for the
requisite holding period.
20
<PAGE>
CERTAIN INFORMATION WITH RESPECT TO OPTIONS GRANTED
The following table sets forth, for the three-year period ended February
2, 1997, with respect to the Named Executive Officers, each nominee for
director, all executive officers as a group, all directors who are not
executive officers as a group, and all employees as a group, the number of
shares of Common Stock subject to options granted.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL
OR IDENTITY OF GROUP CAPACITIES OPTIONS GRANTED(1)
- ------------------------------------------ ----------------------------------------------- ---------------------
<S> <C> <C>
Michael J. Blitzer........................ Senior Vice President, Phillips-Van Heusen
Corporation 24,820
Bruce J. Klatsky.......................... Chairman, Phillips-Van Heusen Corporation, and
Nominee for Director 62,890
Allen E. Sirkin........................... Vice Chairman, Phillips-Van Heusen Corporation 45,260
Mark Weber................................ Vice Chairman, Phillips-Van Heusen Corporation 36,670
Irwin W. Winter........................... Executive Vice President, Phillips-Van Heusen
Corporation, and Nominee
for Director 45,000
Edward H. Cohen........................... Nominee for Director 8,991
Joseph B. Fuller.......................... Nominee for Director 8,991
Maria Elena Lagomasino.................... Nominee for Director 8,991
Harry N.S. Lee............................ Nominee for Director 7,198
Bruce Maggin.............................. Nominee for Director 8,991
Peter J. Solomon.......................... Nominee for Director 8,991
All executive officers as a group (6
officers)............................... 239,070
All directors who are not executive
officers as a group(2).................. 52,153
All employees as a group(3)............... 1,181,664
</TABLE>
- ---------------
(1) The options granted listed in the table do not include grants made in
connection with the like-value exchange of stock options, as described
under 'Like-Value Exchange of Stock Options.'
(2) Includes options granted to the nominees for director.
(3) Excluding executive officers.
Approval of the 1997 Option Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the meeting.
PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED FOR THE
1997 OPTION PLAN UNLESS OTHERWISE SPECIFIED IN THE PROXY.
SELECTION OF AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young LLP, independent auditors, as auditors for the fiscal
year ending February 1, 1998. Although stockholder ratification of the Board of
Directors' action in this respect is not required, the Board of Directors
considers it desirable for stockholders to pass upon the selection of auditors
and, if the stockholders disapprove of the selection, intends to reconsider the
selection of auditors for the fiscal year ending January 31, 1999, since it
would be impracticable to replace the Company's auditors so
21
<PAGE>
late into the Company's current fiscal year. The auditing and tax fee paid to
Ernst & Young LLP for the fiscal year ended January 28, 1996 was $1,007,900. The
audit and tax work for the fiscal year ended February 2, 1997 is not yet
completed, but it is estimated that the fee will be lower.
It is expected that representatives of Ernst & Young LLP will be present
at the meeting, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THE AUDITORS. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION
WILL BE VOTED FOR THE APPOINTMENT OF THE AUDITORS UNLESS OTHERWISE SPECIFIED IN
THE PROXY.
MISCELLANEOUS
Any proposal of an eligible stockholder intended to be presented at the
next Annual Meeting of Stockholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting no
later than January 2, 1998.
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than that set forth in the accompanying Notice of
Annual Meeting of Stockholders. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to stockholders in connection with this solicitation. Solicitation may be
made by mail, telephone, telegraph and personal interview. The Company may
reimburse persons holding shares in their names or in the names of nominees for
their expense in sending proxies and proxy material to their principals. In
addition, Georgeson & Company, which is retained by the Company on a continuing
basis at an annual fee not to exceed $6,000, will aid in the solicitation of
proxies for the meeting.
Copies of the 1996 Annual Report to Stockholders are being mailed to the
stockholders simultaneously with this Proxy Statement. If you want to save the
Company the cost of mailing more than one Annual Report to the same address, at
your request to the Secretary of the Company, mailing of the duplicate copy to
the account or accounts you select will be discontinued.
THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED FEBRUARY 2, 1997 UPON WRITTEN REQUEST TO:
The Secretary
Phillips-Van Heusen Corporation
1290 Avenue of the Americas
New York, New York 10104
By order of the Board of Directors,
PAMELA N. HOOTKIN
Secretary
New York, New York
May 2, 1997
22
<PAGE>
EXHIBIT A
PHILLIPS-VAN HEUSEN CORPORATION
------------------------
1997 STOCK OPTION PLAN
------------------------
1. PURPOSE
The purposes of the 1997 Stock Option Plan (the 'Plan') are to induce
certain individuals to remain in the employ, or to continue to serve as
directors, of Phillips-Van Heusen Corporation (the 'Company') and its present
and future subsidiary corporations (each a 'Subsidiary'), as defined in Section
424(f) of the Internal Revenue Code of 1986, as amended (the 'Code'), to
attract new individuals to enter into such employment and service and to
encourage such individuals to secure or increase on reasonable terms their
stock ownership in the Company. The Board of Directors of the Company (the
'Board') believes that the granting of stock options (the 'Options') under the
Plan will promote continuity of management and increased incentive and personal
interest in the welfare of the Company by those who are or may become primarily
responsible for shaping and carrying out the long range plans of the Company
and securing its continued growth and financial success. Options granted
hereunder are intended to be either (a) 'incentive stock options' (which term,
when used herein, shall have the meaning ascribed thereto by the provisions of
Section 422(b) of the Code) or (b) options which are not incentive stock
options ('non-incentive stock options') or (c) a combination thereof, as
determined by the Committee (the 'Committee') referred to in Section 5 hereof
at the time of the grant thereof.
2. EFFECTIVE DATE OF THE PLAN
The Plan became effective on April 29, 1997, subject to ratification by
the stockholders of the Company.
3. STOCK SUBJECT TO PLAN
2,500,000 of the authorized but unissued shares of the common stock, $1.00
par value, of the Company (the 'Common Stock') are hereby reserved for issue
upon the exercise of Options granted under the Plan; provided, however, that
the number of shares so reserved may from time to time be reduced to the extent
that a corresponding number of issued and outstanding shares of the Common
Stock are purchased by the Company and set aside for issue upon the exercise of
Options. If any Options expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have complete authority, in its
discretion, to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective option agreements or certificates (which need not be identical), to
determine the individuals (each a 'Participant') to whom and the times and the
prices at which Options shall be granted, the periods during which each Option
shall be exercisable, the number of shares of the Common Stock to be subject to
each Option and whether such Option shall be an incentive stock option or a non-
incentive stock option and to make all other determinations necessary or
advisable for the administration of the Plan. In making such determinations,
the Committee may take into account the nature of the services rendered by the
respective individuals, their present and potential contributions to the
success of the Company and the Subsidiaries and such other factors as the
Committee in its
<PAGE>
discretion shall deem relevant. The Committee's determination on the matters
referred to in this Section 4 shall be conclusive. Any dispute or disagreement
which may arise under or as a result of or with respect to any Option shall be
determined by the Committee, in its sole discretion, and any interpretations by
the Committee of the terms of any Option shall be final, binding and conclusive.
5. COMMITTEE
The Committee shall consist of two or more members of the Board both or
all of whom shall be 'non-employee directors' within the meaning of Rule
16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as amended
(the 'Exchange Act'), and both or all of whom shall be 'outside directors'
within the contemplation of Section 162(m)(4)(C)(i) of the Code. The Committee
shall be appointed annually by the Board, which may at any time and from time
to time remove any members of the Committee, with or without cause, appoint
additional members to the Committee and fill vacancies, however caused, in the
Committee. A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members present at a meeting duly called and held, except that the Committee
may delegate to any one of its members the authority of the Committee with
respect to the grant of Options to persons who shall not be officers and/or
directors of the Company and who are not, and in the judgment of the Committee
may not be reasonably expected to become, a 'covered employee' within the
meaning of Section 162(m)(3) of the Code. Any decision or determination of the
Committee reduced to writing and signed by all of the members of the Committee
(or by the member of the Committee to whom authority has been delegated) shall
be fully as effective as if it had been made at a meeting duly called and held.
6. ELIGIBILITY
An Option may be granted only to a key employee of the Company or a
Subsidiary or to a director of the Company or a Subsidiary who is not an
employee of the Company or a Subsidiary.
7. OPTION PRICES
A. The initial per share option price of any Option shall be the price
determined by the Committee, but not less than the fair market value of a share
of the Common Stock on the date of grant; provided, however, that, in the case
of a Participant who owns more than 10% of the total combined voting power of
the Common Stock at the time an Option which is an incentive stock option is
granted to him or her, the initial per share option price shall not be less
than 110% of the fair market value of a share of the Common Stock on the date
of grant.
B. For all purposes of the Plan, the fair market value of a share of the
Common Stock on any date shall be equal to (i) the closing sale price of the
Common Stock on the New York Stock Exchange on the business day preceding such
date or (ii) if there is no sale of the Common Stock on such Exchange on such
business day, the average of the bid and asked prices on such Exchange at the
close of the market on such business day.
8. OPTION TERM
Participants shall be granted Options for such term as the Committee shall
determine, not in excess of ten years from the date of the granting thereof;
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him or her, the term with respect to
such Option shall not be in excess of five years from the date of the granting
thereof.
2
<PAGE>
9. LIMITATIONS ON AMOUNT OF OPTIONS GRANTED
A. The aggregate fair market value of the shares of the Common Stock for
which any Participant may be granted incentive stock options which are
exercisable for the first time in any calendar year (whether under the terms of
the Plan or any other stock option plan of the Company) shall not exceed
$100,000.
B. No Participant shall, during any fiscal year of the Company, be granted
Options to purchase more than 100,000 shares of the Common Stock.
10. EXERCISE OF OPTIONS
A. Except as otherwise determined by the Committee at the time of grant, a
Participant may not exercise an Option during the period commencing on the date
of the granting of such Option to him or her and ending on the day next
preceding the third anniversary of such date. Except as otherwise determined by
the Committee at the time of grant, a Participant may (i) during the period
commencing on the third anniversary of the date of the granting of an Option to
him or her and ending on the day next preceding the fourth anniversary of such
date, exercise such Option with respect to one-third of the shares granted
thereby, (ii) during the period commencing on such fourth anniversary and ending
on the day next preceding the fifth anniversary of the date of the granting of
such Option, exercise such Option with respect to two-thirds of the shares
granted thereby, and (iii) during the period commencing on such fifth
anniversary, exercise such Option with respect to all of the shares granted
thereby.
B. Except as hereinbefore otherwise set forth, an Option may be exercised
either in whole at any time or in part from time to time.
C. An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specific number of shares of the Common
Stock and payment to the Company of the amount of the option price for the
number of shares of the Common Stock so specified; provided, however, that, if
the Committee shall in its sole discretion so determine at the time of the
grant of any Option, all or any portion of such payment may be made in kind by
the delivery of shares of the Common Stock having a fair market value equal to
the portion of the option price so paid; provided, further, however, that no
portion of such payment may be made by delivering shares of the Common Stock
acquired upon the exercise of an Option if such shares shall not have been held
by the Participant for at least six months; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Exchange Act, the Committee may implement procedures to
allow a broker chosen by a Participant to make payment of all or any portion of
the option price payable upon the exercise of an Option and receive, on behalf
of such Participant, all or any portion of the shares of the Common Stock
issuable upon such exercise.
D. The Board may, in its discretion, permit any Option to be exercised, in
whole or in part, prior to the time when it would otherwise be exercisable.
E. I. Notwithstanding the provisions of paragraph A of this Section 10, in
the event that a Change in Control shall occur, then, each Option theretofore
granted to any Participant which shall not have theretofore expired or
otherwise been cancelled or become unexercisable shall become immediately
exercisable in full. For the purposes of this paragraph E, a 'Change in
Control' shall be deemed to occur upon (a) the election of one or more
individuals to the Board which election results in one-third of the directors
of the Company consisting of individuals who have not been directors of the
Company for at least two years, unless such individuals have been elected as
directors or nominated for election by the stockholders as directors by
three-fourths of the directors of the Company who have been directors of the
Company for at least two years, (b) the sale by the Company of all or
substantially all of its assets to any Person, the consolidation of the Company
with any Person, the merger of the Company with any Person as a result of which
merger the Company is not the surviving entity as a
3
<PAGE>
publicly held corporation, (c) the sale or transfer of shares of the Company by
the Company and/or any one or more of its stockholders, in one or more
transactions, related or unrelated, to one or more Persons under circumstances
whereby any Person and its Affiliates shall own, after such sales and
transfers, at least one-fourth, but less than one-half, of the shares of the
Company having voting power for the election of directors, unless such sale or
transfer has been approved in advance by three-fourths of the directors of the
Company who have been directors of the Company for at least two years, or (d)
the sale or transfer of shares of the Company by the Company and/or any one or
more of its stockholders, in one or more transactions, related or unrelated, to
one or more Persons under circumstances whereby any Person and its Affiliates
shall own, after such sales and transfers, at least one-half of the shares of
the Company having voting power for the election of directors. For the purposes
of this division I, (1) the term 'Affiliate' shall mean any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, any other Person, (2) the term
'Person' shall mean any individual, partnership, firm, trust, corporation or
other similar entity and (3) when two or more Persons act as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Company, such partnership, limited
partnership, syndicate or group shall be deemed a 'Person'.
II. In the event that a Change of Control shall occur, then, from and
after the time of such event, neither the provisions of this paragraph E nor
any of the rights of any Participant thereunder shall be modified or amended in
any way.
F. Notwithstanding any other provision of the Plan to the contrary,
including, but not limited to, the provisions of paragraph D of Section 10, if
any Participant shall have effected a Hardship Withdrawal from a 401(k) Plan
maintained by the Company and/or one or more of the Subsidiaries, then, during
the period of one year commencing on the date of such Hardship Withdrawal,
such Participant may not exercise any Option using cash. For the purpose of
this paragraph F, a 'Hardship Withdrawal' shall mean a distribution to a
Participant provided for in Reg. Section 1.401(k)-1(d)(1)(ii) promulgated under
Section 401(k)(2)(B)(i)(IV) of the Code or an analogous provision of the Puerto
Rico Internal Revenue Code of 1994, as amended (the 'Puerto Rico Code') and the
regulations promulgated thereunder, and a '401(k) Plan' shall mean a plan which
is a 'qualified plan' within the contemplation of Section 401(a) of the Code or
an analogous provision of the Puerto Rico Code which contains a 'qualified cash
or deferred arrangement' within the contemplation of Section 401(k)(2) of the
Code or an analogous provision of the Puerto Rico Code.
11. TRANSFERABILITY
No Option shall be assignable or transferable except by will and/or by the
laws of descent and distribution and, during the life of any Participant, each
Option granted to him or her may be exercised only by him or her.
12. TERMINATION OF EMPLOYMENT
In the event a Participant leaves the employ, or ceases to serve as a
director, of the Company and the Subsidiaries, whether voluntarily or otherwise
but other than by reason of his or her death or retirement, each Option
theretofore granted to him or her which shall not have theretofore expired or
otherwise been cancelled shall, to the extent exercisable on the date of such
termination of employment or service and not theretofore exercised, terminate
upon the earlier to occur of the expiration of 30 days after the date of such
Participant's termination of employment or cessation of service and the date of
termination specified in such Option. Notwithstanding the foregoing, if a
Participant is terminated for cause (as defined herein), each Option
theretofore granted to him or her which shall not have theretofore expired or
otherwise been cancelled shall, to the extent not theretofore exercised,
terminate forthwith. In the event a Participant leaves the employ, or ceases to
serve as a director, of the Company and the Subsidiaries by reason of his or
her retirement, each Option theretofore granted to him or her
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which shall not have theretofore expired or otherwise been cancelled shall
become immediately exercisable in full and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three years
after the date of such retirement and the date of termination specified in such
Option. In the event a Participant's employment, or service as a director, with
the Company and the Subsidiaries terminates by reason of his or her death, each
Option theretofore granted to him or her which shall not have theretofore
expired or otherwise been cancelled shall become immediately exercisable in
full and shall, to the extent not theretofore exercised, terminate upon the
earlier to occur of the expiration of three months after the date of the
qualification of a representative of his or her estate and the date of
termination specified in such Option. For purposes of the foregoing, (a) the
term 'cause' shall mean: (i) the commission by the Participant of any act or
omission that would constitute a crime under federal, state or equivalent
foreign law, (ii) the commission by the Participant of any act of moral
turpitude, (iii) fraud, dishonesty or other acts or omissions that result in a
breach of any fiduciary or other material duty to the Company and/or the
Subsidiaries, or (iv) continued alcohol or other substance abuse that renders
the Participant incapable of performing his or her material duties to the
satisfaction of the Company and/or the Subsidiaries and (b) the term
'retirement' shall mean (i) the termination of a Participant's employment with
the Company and all of the Subsidiaries (A) other than for cause or by reason
of his or her death and (B) on or after the earlier to occur of (I) the first
day of the calendar month in which his or her 65th birthday shall occur and
(II) the date on which he or she shall have both attained his or her 55th
birthday and completed 10 years of employment with the Company and/or the
Subsidiaries or (ii) the termination of a Participant's service as a director
with the Company (A) other than for cause or by reason of his or her death and
(B) on or after the first day of the calendar month in which his or her 65th
birthday shall occur.
13. ADJUSTMENT OF NUMBER OF SHARES
In the event that a dividend shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
then subject to any Option and the number of shares of the Common Stock
reserved for issuance in accordance with the provisions of the Plan but not yet
covered by an Option and the number of shares set forth in paragraph B of
Section 9 hereof shall be adjusted by adding to each share the number of shares
which would be distributable thereon if such shares had been outstanding on the
date fixed for determining the stockholders entitled to receive such stock
dividend. In the event that the outstanding shares of the Common Stock shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, sale
of assets, merger or consolidation in which the Company is the surviving
corporation, then, there shall be substituted for each share of the Common
Stock then subject to any Option and for each share of the Common Stock
reserved for issuance in accordance with the provisions of the Plan but not yet
covered by an Option and for each share of the Common Stock referred to in
paragraph B of Section 9 hereof, the number and kind of shares of stock or
other securities into which each outstanding share of the Common Stock shall be
so changed or for which each such share shall be exchanged. In the event that
there shall be any change, other than as specified in this Section 13, in the
number or kind of outstanding shares of the Common Stock, or of any stock or
other securities into which the Common Stock shall have been changed, or for
which it shall have been exchanged, then, if the Committee shall, in its sole
discretion, determine that such change equitably requires an adjustment in the
number or kind of shares then subject to any Option and the number or kind of
shares reserved for issuance in accordance with the provisions of the Plan but
not yet covered by an Option and the number or kind of shares referred to in
paragraph B of Section 9 hereof, such adjustment shall be made by the Committee
and shall be effective and binding for all purposes of the Plan and of each
stock option agreement or certificate entered into in accordance with the
provisions of the Plan. In the case of any substitution or adjustment in
accordance with the provisions of this Section 13, the option price in each
stock option agreement or certificate for each share covered thereby prior to
such substitution or adjustment shall be the option price for all shares of
stock or other securities which shall have been
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substituted for such share or to which such share shall have been adjusted in
accordance with the provisions of this Section 13. No adjustment or
substitution provided for in this Section 13 shall require the Company to sell
a fractional share under any stock option agreement or certificate. In the
event of the dissolution or liquidation of the Company, or a merger,
reorganization or consolidation in which the Company is not the surviving
corporation, then, except as otherwise provided in the second sentence of this
Section 13, each Option, to the extent not theretofore exercised, shall
terminate forthwith.
14. PURCHASE FOR INVESTMENT, WITHHOLDING AND WAIVERS
Unless the shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of
the Company's obligation to issue such shares, be required to give a
representation in writing that he or she is acquiring such shares for his or
her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any thereof. In the event of the death of a
Participant, a condition of exercising any Option shall be the delivery to the
Company of such tax waivers and other documents as the Committee shall
determine. In the case of each non-incentive stock option, a condition of
exercising the same shall be the entry by the person exercising the same into
such arrangements with the Company with respect to withholding as the Committee
may determine.
15. NO STOCKHOLDER STATUS
Neither any Participant nor his or her legal representatives, legatees or
distributees shall be or be deemed to be the holder of any share of the Common
Stock covered by an Option unless and until a certificate for such share has
been issued. Upon payment of the purchase price thereof, a share issued upon
exercise of an Option shall be fully paid and non-assessable.
16. NO RESTRICTIONS ON CORPORATE ACTS
Neither the existence of the Plan nor any Option shall in any way affect
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
17. NO EMPLOYMENT RIGHT
Neither the existence of the Plan nor the grant of any Option shall
require the Company or any Subsidiary to continue any Participant in the employ
of the Company or such Subsidiary.
18. TERMINATION AND AMENDMENT OF THE PLAN
The Board may at any time terminate the Plan or make such modifications of
the Plan as it shall deem advisable; provided, however, that the Board may not,
without further approval of the holders of a majority of the shares of the
Common Stock present in person or by proxy at any special or annual meeting of
the stockholders, increase the number of shares as to which Options may be
granted under the Plan (as adjusted in accordance with the provisions of Section
13 hereof), or change the class of persons eligible to participate in the Plan,
or change the manner of determining the option prices. Except as otherwise
provided in Section 13 hereof, no termination or amendment of the Plan may,
without the consent of the Participant to whom any Option shall theretofore
have been granted, adversely affect the rights of such Participant under such
Option. The Committee may not, without
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further approval of the holders of a majority of the shares of the Common Stock
present in person or by proxy at any special or annual meeting of the
stockholders, amend any outstanding Option to reduce the option price, or
cancel any outstanding Option and contemporaneously award a new Option to the
same optionee for substantially the same number of shares at a lower option
price.
19. EXPIRATION AND TERMINATION OF THE PLAN
The Plan shall terminate on April 28, 2007 or at such earlier time as the
Board may determine. Options may be granted under the Plan at any time and from
time to time prior to its termination. Any Option outstanding under the Plan at
the time of the termination of the Plan shall remain in effect until such
Option shall have been exercised or shall have expired in accordance with its
terms.
20. OPTIONS FOR OUTSIDE DIRECTORS
A. A director of the Company who is not an employee of the Company or a
Subsidiary (an 'Outside Director') shall be eligible to receive, in addition to
any other Option which he or she may receive pursuant to Section 7 hereof, an
annual Option. Except as otherwise provided in this Section 20, each such
Option shall be subject to all of the terms and conditions of the Plan.
B. I. At the first meeting of the Board immediately following each annual
meeting of the stockholders of the Company, each Outside Director shall be
granted an Option, which shall be a non-incentive stock option, to purchase
4,000 shares of the Common Stock.
II. The initial per share option price of each Option granted to an
Outside Director shall be equal to the fair market value of a share of the
Common Stock on the date of grant.
III. The term of each Option granted to an Outside Director shall be ten
years from the date of the granting thereof.
IV. All or any portion of the payment required upon the exercise of an
Option granted to an Outside Director may be made in kind by the delivery of
shares of the Common Stock having a fair market value equal to the portion of
the option price so paid.
C. The provisions of this Section 20 may not be amended except by the vote
of a majority of the members of the Board and by the vote of a majority of the
members of the Board who are not Outside Directors.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas
New York, New York 10104-0101
BRUCE J. KLATSKY and IRWIN W. WINTER, or either of them, with power of
substitution, are hereby authorized to represent the undersigned and to vote all
shares of the Common Stock of PHILLIPS-VAN HEUSEN CORPORATION held by the
undersigned at the Annual Meeting of Stockholders to be held in New York, New
York, on June 17, 1997, and any adjournments thereof, on the matters printed on
the reverse side.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If this Proxy is executed but no
directions are given, this Proxy will be voted:
o FOR the election of all nominees for director;
o FOR the exchange of certain directors' options;
o FOR the approval of the Company's 1997 Stock Option Plan; and
o FOR the appointment of auditors.
(Continued, and to be dated and signed on the other side.)
PHILLIPS-VAN HEUSEN CORPORATION
P.O. BOX 11287
NEW YORK, N.Y. 10203-0287
<PAGE>
[ ]
The Board recommends a vote FOR proposals 1, 2, 3 and 4 below:
1. Election of the nominees for director listed below:
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS* [ ]
listed below for all nominees listed below
Nominees: Edward H. Cohen, Joseph B. Fuller, Joel H. Goldberg,
Marc Grosman, Dennis F. Hightower, Bruce J. Klatsky,
Maria Elena Lagomasino, Harry N.S. Lee, Bruce Maggin,
Sylvia M. Rhone, Peter J. Solomon, Irwin W. Winter
(Instruction: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
* Exceptions ______________________________________________________________
2. Exchange of certain directors' options. FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of the 1997 Stock Option Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Appointment of auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Address change [ ]
and/or comments
NOTE: The signature should agree with
the name on your stock certificate. If
acting as executor, administrator,
trustee, guardian, etc., you should so
indicate when signing. If the signer is
a corporation, please sign the full
corporate name, by duly authorized
officer. If shares are held jointly,
each stockholder named should sign.
Dated:___________________________, 1997
|
| _______________________________________
_____| Signature
_______________________________________
Signature, if held jointly
To vote, fill in (X) with black or blue ink only. [X]
