<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / 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)
- --------------------------------------------------------------------------------
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:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 Thursday, June 17, 1999, 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 appointment of
auditors for the Company to serve for the current fiscal year;
(3) to consider and act upon the proposal of a stockholder to request
the Board of Directors to consider the discontinuance of all
bonuses, options, rights, stock appreciation rights, etc., after
termination of any existing programs, for top management; and
(4) 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 19, 1999 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
April 30, 1999
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, 1999
------------------------
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 Thursday, June 17, 1999, at
10:00 a.m. and at any adjournments thereof.
The principal executive offices of the Company are located at 200 Madison
Avenue, New York, New York 10016-3903. The approximate date on which this Proxy
Statement and the enclosed form of proxy were first sent or given to
stockholders was April 30, 1999.
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 elections 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.
Stockholders of record at the close of business on April 19, 1999 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 27,287,985 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 19, 1999. 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>
Crabbe Huson Group, Inc.(1) .............. 3,855,800 14.1
121 SW Morrison
Suite 1400
Portland, Oregon 97204
Vaneton International, Inc.(2) ........... 4,429,001 16.2
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
The Prudential Insurance Company of 1,804,500 6.6
America(3) .............................
751 Broad Street
Newark, New Jersey 07102-3777
Mellon Bank Corporation(4) ............... 1,666,372 6.1
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Dimensional Fund Advisors Inc.(5) ........ 1,464,700 5.4
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) Crabbe Huson Group, Inc. ("CHG") is a registered investment adviser
which shares voting and dispositive power with investors for which it
serves as investment adviser with respect to the 3,855,800 shares of
Common Stock owned by such investors. CHG disclaims beneficial
ownership of all shares owned by such investors. Information as to the
shares of Common Stock which may be deemed to be beneficially owned by
CHG is as set forth in a Schedule 13G dated February 12, 1999 and filed
with the Securities and Exchange Commission.
(2) Dr. Richard Lee, 6/F TAL Building, 49 Austin Road, Kowloon, Hong Kong,
may be deemed to beneficially own the 4,429,001 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 April 19, 1999 and as set forth in information filed with the
Company.
(3) Prudential Insurance Company of American ("Prudential") is an insurance
company under Section 3(a)(19) of the Securities Exchange Act of 1934
(the "Exchange Act") which may have direct or indirect voting and/or
investment discretion over 1,804,500 shares of Common Stock which are
held for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment companies,
subsidiaries and/or other affiliates. Prudential or its applicable
affiliate or affiliates may have sole voting or dispositive power with
respect to 334,000 of such shares and shared voting or dispositive
power with respect to 1,470,500 of such shares. Information as to the
shares of Common Stock which may be deemed to be beneficially owned by
Prudential is as set forth in a Schedule 13G dated February 2, 1999 and
filed with the Securities and Exchange Commission. Prudential reported
the combined holdings of such entities for administrative convenience
and such
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
filing should not be construed as an admission by Prudential that it
is, for purposes of Section 13 or 16 of the Exchange Act, the
beneficial owner of such shares.
(4) Mellon Bank Corporation ("MBC"), through certain of its direct and
indirect subsidiaries, may be deemed to be the beneficial owner of
1,666,372 shares of Common Stock, including 1,499,972 shares over which
MBC or its applicable subsidiary or subsidiaries may have sole voting
power, 1,513,752 shares over which MBC or its applicable subsidiary or
subsidiaries may have sole dispositive power and 152,800 shares over
which MBC or its applicable subsidiary or subsidiaries may have shared
dispositive power. Information as to the shares of Common Stock which
may be deemed to be beneficially owned by MBC is as set forth in a
Schedule 13G dated January 26, 1999 and filed with the Securities and
Exchange Commission, which filing is not to be construed as an
admission by MBC that MBC or any such subsidiary is, for purposes of
Section 13(d) or 13(g) of the Exchange Act, a beneficial owner of such
shares.
(5) Dimensional Fund Advisors Inc. ("Dimensional"), an investment adviser
registered under the Investment Advisers Act of 1940, furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940 and serves as investment manager to
certain other investment vehicles, including commingled group trusts
(such investment companies and investment vehicles being referred to as
the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over
the Common Stock owned by the Portfolios. Dimensional disclaims
beneficial ownership of such securities. Information as to the shares
of Common Stock which may be deemed to be beneficially owned by
Dimensional is as set forth in a Schedule 13G dated February 12, 1999
and 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 19, 1999.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME OWNED(1) CLASS
- -------------------------------------------------- ------------ ----------
<S> <C> <C>
Michael J. Blitzer................................ 18,963 *
Edward H. Cohen................................... 17,715 *
Joseph B. Fuller.................................. 7,215 *
Joel H. Goldberg.................................. 20,600 *
Marc Grosman...................................... 1,000 *
Dennis F. Hightower............................... 1,500 *
Bruce J. Klatsky.................................. 109,364 *
Maria Elena Lagomasino............................ 5,529 *
Harry N.S. Lee(2)................................. 4,528 *
Bruce Maggin...................................... 39,215 *
Sylvia M. Rhone................................... 0 *
Allen E. Sirkin................................... 51,793 *
Peter J. Solomon.................................. 23,715 *
Mark Weber........................................ 59,970 *
Irwin W. Winter................................... 54,151 *
All directors, nominees for director and executive
officers as a group (16 persons)................ 421,607 1.5
</TABLE>
- ---------------
* Less than 1% of class.
3
(Footnotes continued on next page)
<PAGE>
(Footnotes continued from previous page)
(1) The figures in the table are based upon information furnished to the
Company by the directors, nominees for director and executive officers.
The figures do not include the shares held for the executive officers
in a master trust by virtue of their participation in the Company's
Associates Investment Plan ("AIP"), nor do they include the 1,304,634
shares of Common Stock (4.8%) held in such master trust as of
December 31, 1998 for all participants in the AIP. Messrs. Klatsky and
Winter are members of the committee that administers the AIP and have
the power, under most circumstances, to vote the shares held in the AIP
master trust. 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 4,429,001 shares (16.2%) of Common Stock. See the
prior table for certain information regarding Vaneton International,
Inc.
The figures in the foregoing table include 600 shares held by Joel H.
Goldberg and his wife as custodian for their children, as to which Mr. Goldberg
has disclaimed beneficial ownership, 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, 12,000 shares held by Bruce Maggin as
custodian for his children, as to which Mr. Maggin 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,
18,963 shares; Edward H. Cohen, 11,715 shares; Joseph B. Fuller, 6,715 shares;
Bruce J. Klatsky, 60,506 shares; Maria Elena Lagomasino, 5,329 shares; Harry
N.S. Lee, 3,528 shares; Bruce Maggin, 11,715 shares; Allen E. Sirkin, 51,693
shares; Peter J. Solomon, 11,715 shares; Mark Weber, 32,470 shares; Irwin W.
Winter, 35,626 shares; and all directors, nominees for director and executive
officers as a group, including the foregoing, 265,914 shares.
4
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of 13 members, all of one class.
Only 12 persons have been nominated to serve on the Board of Directors due to
the retirement of one of the current directors and the decision in connection
therewith to decrease to 12 the number of directors constituting the full Board
of Directors. All members of the Board of Directors 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. All of the
nominees for director have previously been elected directors of the Company by
the stockholders.
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 is no arrangement or understanding 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 ON THE FOLLOWING PAGE. PROXIES RECEIVED IN RESPONSE TO THIS
SOLICITATION WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNLESS OTHERWISE
SPECIFIED IN THE PROXY.
<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 60 1987
firm
Joseph B. Fuller.............................. President and Chief Executive Officer of 42 1991
Monitor Company, a management consulting firm
Joel H. Goldberg.............................. President of Career Consultants, Inc., a 55 1997
management consulting firm
Marc Grosman.................................. Founder and Chief Executive Officer of Marc 44 1997
Laurent SA, the owner of a chain of European
apparel stores which trade under the name
CELIO
Dennis F. Hightower........................... Professor of Management, Harvard University 57 1997
Graduate School of Business Administration
Bruce J. Klatsky.............................. Chairman and Chief Executive Officer of the 50 1985
Company
Maria Elena Lagomasino........................ Senior Managing Director, Chase Manhattan 50 1993
Bank, N.A.
Harry N.S. Lee................................ Managing Director of TAL Apparel Limited, an 56 1995
apparel manufacturer and exporter based in
Hong Kong
Bruce Maggin.................................. Principal of The H.A.M. Media Group, LLC, a 56 1987
media investment company and Chief Executive
Officer of TDN, Inc., a marketer of
interactive television advertising
Sylvia M. Rhone............................... Chairman and Chief Executive Officer of the 47 1997
Elektra Entertainment Group of Time-Warner
Inc.
5
<PAGE>
Peter J. Solomon.............................. Chairman of Peter J. Solomon Company, Ltd., 60 1987
an investment banking firm
Mark Weber.................................... President and Chief Operating Officer of the 50 1998
Company
</TABLE>
Mr. Cohen is also a director of Franklin Electronic Publishers, Inc.,
Levcor International, Inc. and Merrimac Industries, Inc. Mr. Goldberg is also a
director of Hampshire Group, Limited and Merrimac Industries, Inc. Mr. Grosman
is also a director of the AigPe SA. Mr. Hightower is also a director of TJX
Companies, Northwest Airlines Corp., Inc. and Pan Am Sat Corporation.
Mr. Maggin is also a director of Newstar Media, Inc. (formerly Dove
Entertainment, Inc.). Mr. Solomon is also a director of General Cigar Holding,
Inc., Monro Muffler Brake, Inc. and Office Depot, Inc.
Each of the directors has been engaged in the principal occupation
indicated in the foregoing table for more than the past five years, except Mr.
Klatsky, who was elected Chairman of the Board of Directors in June 1994; Mr.
Maggin, who, until October 1996, was Executive Vice President of Multimedia
Group, Capital Cities/ABC, Inc.; Mr. Hightower, who until June 1996 was
President of Walt Disney Television and Telecommunications and prior to 1995 was
President, Consumer Products Europe, Middle East and Africa, of The Walt Disney
Company; and Mr. Weber, who was elected President and Chief Operating Officer of
the Company in March 1998, having served as Vice Chairman of the Company for the
prior three years and as a Vice President of the Company for the prior seven
years.
No family relationship exists between any director or executive officer of
the Company.
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.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended January 31, 1999, 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 served, except Ms. Sylvia Rhone who
attended two meetings.
The Board of Directors of the Company has a standing Audit Committee and a
standing Compensation Committee; the Company does not have a standing
Nominating Committee.
Audit Committee
The Audit Committee, composed of Messrs. Cohen, Hightower and Maggin, 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 January 31,
1999.
6
<PAGE>
Compensation Committee
The Compensation Committee, composed of Ms. Lagomasino and Messrs. Fuller
and Solomon, is charged with setting the compensation of all executive
officers, administering the Company's existing incentive compensation plans in
which executive officers participate and (subject to approval by the Board of
Directors) recommending new incentive compensation plans and implementing
changes and improvements to existing incentive compensation plans, in each case
to the extent they affect executive officers. The Compensation Committee held
five meetings during the fiscal year ended January 31, 1999.
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 Exchange Act and on representations from its
executive officers and directors, all filing requirements of Section 16(a) of
said Act were complied with during the fiscal year ended January 31, 1999,
except that each of Messrs. Blitzer, Chirico and Weber each filed late one
report covering one transaction (option grants).
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 fiscal years, ended January 31, 1999, February 1, 1998 and February 2,
1997 (fiscal years 1998, 1997 and 1996, respectively).
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS ALL OTHER
------------------------ ------------ COMPENSATION(1)
NAME AND FISCAL SALARY BONUS OPTIONS -------------
PRINCIPAL POSITION YEAR ($) ($) # ($)
- -------------------------------------------- ------ ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Michael J. Blitzer.......................... 1998 600,000 -- 40,000 55,951
Vice Chairman, 1997 475,000 -- 20,000 21,864
Phillips-Van Heusen Corporation 1996 456,250 -- 15,000 20,827
Bruce J. Klatsky............................ 1998 850,000 700,000(2) 100,000 49,485
Chairman and CEO, 1997 850,000 -- 60,000 63,497
Phillips-Van Heusen Corporation 1996 850,000 -- 35,000 60,324
Allen E. Sirkin............................. 1998 650,000 -- 30,000 28,136
Vice Chairman, 1997 650,000 -- 30,000 27,536
Phillips-Van Heusen Corporation 1996 650,000 -- 25,000 26,640
Mark Weber.................................. 1998 690,417 200,000(3) 75,000 42,187
President and COO, 1997 600,000 -- 30,000 25,855
Phillips-Van Heusen Corporation 1996 575,000 -- 25,000 24,390
Irwin W. Winter............................. 1998 500,000 -- 78,178 25,834
Executive Vice President, 1997 500,000 -- 30,000 25,504
Phillips-Van Heusen Corporation 1996 500,000 -- 25,000 22,140
</TABLE>
7
<PAGE>
No 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 years.
- ---------------
(1) All Other Compensation includes payments or contributions required by
the AIP and Supplemental Savings Plan, Executive Medical Reimbursement
Insurance Plan and Educational Benefit Trust.
Under the combination of the AIP and the Company's Associates Investment
Plan for Residents of the Commonwealth of 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. Prior to April 1, 1999, the Company or its subsidiaries
contributed an amount equal to 50% of an employee's contribution up to a
maximum of 3% of such employee's total compensation. The Company or its
subsidiaries currently will contribute an amount equal to 100% of the
first 2% of total compensation contributed by an employee and an amount
equal to 25% of the next 4% of total compensation contributed by such
employee.
Prior to April 1, 1999, the entire amount contributed by the Company was
invested in Common Stock and the amount contributed by the employee was
invested, at the employee's direction, in up to 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 was in
the form of phantom shares of Common Stock and the employee's
contribution earned 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. Currently, the amount contributed by the Company
and the amount contributed by the employee will be invested, at the
employee's direction, in up to eight investment funds including Common
Stock (with a 25% cap on the amount of an employee's contributions which
may be invested in Common Stock), except that, in the case of the
Supplemental Savings Plan, the Company contribution will be invested, at
the employee's direction, in either the form of phantom shares of Common
Stock or will earn interest at the same rate as is paid on 10-year
United States Treasury bonds and the employee's contribution will earn
interest at the same rate as is paid on 10-year United States Treasury
bonds. Prior to April 1, 1999, a participant's interest in the amounts
arising out of employer contributions vested after the earlier of five
years, at age 65 or upon disability or death. Currently, a participant's
interest in the amounts arising out of employer contributions vests
ratably over four years, or, if earlier, at age 65 or upon disability or
death. In the fiscal years 1998, 1997 and 1996, respectively, the Company
made contributions which are reflected under this column in the amounts
of $18,865, $14,724 and $13,687 for Mr. Blitzer; $27,710, $26,826 and
$25,500 for Mr. Klatsky; $21,013, $20,396 and $19,500 for Mr. Sirkin;
$21,965, $18,715 and $17,250 for Mr. Weber; and $18,711, $18,364 and
$15,500 for Mr. 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 1998, 1997, and 1996, respectively, the
Company incurred the following annual premiums for single or family
coverage for the Named Executive Officers which are reflected under this
column:
(Footnotes continued on next page)
8
<PAGE>
(Footnotes continued from previous page)
$7,123, $7,140 and $7,140 for Mr. Blitzer; $7,123, $7,140 and
$7,140 for Mr. Klatsky; $7,123, $7,140 and $7,140 for Mr. Sirkin; $7,123,
$7,140 and $7,140 for Mr. Weber; and $7,123, $7,140 and $7,140 for Mr.
Winter.
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 1998, 1997 and 1996, respectively, the
benefits received by the Named Executive Officers, which are reflected
under this column, were in the amounts of $29,964, $0 and $0 for
Mr. Blitzer; $14,652, $29,531 and $27,684 for Mr. Klatsky; and $13,099,
$0 and $0 for Mr. Weber.
(2) Mr. Klatsky was awarded a bonus in 1999 to compensate for the fact
that he has not received a raise in base salary or a bonus since 1995
and in recognition that his compensation is below the median for chief
executive officers of comparable companies in similar industries.
(3) Mr. Weber received a bonus in 1999 to reflect the additional
responsibilities he assumed upon his elevation to President of the
Company in March 1998.
9
<PAGE>
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 1997 Stock Option
Plan (the "Option Plan") granted to the Named Executive Officers during the
fiscal year ended January 31, 1999. 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....... 30,000 2.8 13.0625 6/18/08 246,448 624,548
10,000 0.9 11.6875 4/23/08 73,502 186,269
Bruce J. Klatsky......... 100,000 9.3 13.0625 6/18/08 821,494 2,081,826
Allen E. Sirkin.......... 30,000 2.8 13.0625 6/18/08 246,448 624,548
Mark Weber............... 50,000 4.6 13.0625 6/18/08 410,747 1,040,913
25,000 2.3 12.7500 3/5/08 200,460 508,005
Irwin W. Winter.......... 38,178 3.5 13.0625 6/18/08 313,628 794,80
15,000 1.4 14.7500 6/18/08 139,143 352,61
25,000 2.3 13.1250 6/18/08 206,355 522,947
All stockholders(2)...... N/A N/A N/A N/A 223,386,883 566,106,222
</TABLE>
- ------------------
(1) Generally, one-third of the outstanding options granted to each person
become exercisable on each of the third, fourth and fifth
anniversaries of the grant date.
(2) These figures were calculated assuming that the price of the
27,192,772 shares of Common Stock outstanding on June 18, 1998
increased from $13.0625 per share at a compound rate of 5% and 10% per
year for 10 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.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to option
exercises by the Named Executive Officers during the fiscal year ended January
31, 1999 and with respect to the value at January 31, 1999 of unexercised stock
options held by the Named Executive Officers. No stock appreciation rights have
been granted by the Company.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
OPTIONS
IN-THE-MONEY
NUMBER OF UNEXERCISED AT FISCAL
SHARES OPTIONS AT FISCAL YEAR-END YEAR-END(1)
ACQUIRED ON VALUE ----------------------------------------------------- -------------
EXERCISABLE/
EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
NAME # $ # $
- ---------------------------- ----------- -------- ----------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
Michael J. Blitzer.......... -- -- 11,006 80,457 --
Bruce J. Klatsky............ -- -- 40,621 209,886 --
Allen E. Sirkin............. -- -- 37,325 96,035 --
Mark Weber.................. 10,000 59,375 20,817 135,820 --
Irwin W. Winter............. 10,000 85,500 21,312 95,984 --
</TABLE>
- ------------------
(1) Fair market value at fiscal year end of securities underlying the
options minus the exercise price of the options.
10
<PAGE>
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 $72,600.
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION -------------------------------------------
$ 15 20 25 30 35
- ---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
200,000 39,876 52,572 65,082 77,454 89,766
300,000 62,376 82,572 102,582 122,464 142,266
400,000 84,876 112,572 140,082 167,454 194,766
500,000 107,376 142,572 177,582 212,454 247,266
600,000 129,876 172,572 215,082 257,454 299,766
700,000 152,376 202,572 252,582 302,454 352,266
800,000 174,876 232,572 290,082 347,454 404,766
900,000 197,376 262,572 327,582 392,454 457,266
1,000,000 219,876 292,572 365,082 437,454 509,766
</TABLE>
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 January 31,
1999, 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.......................................................... 18
Bruce J. Klatsky............................................................ 26
Allen E. Sirkin............................................................. 12
Mark Weber.................................................................. 26
Irwin W. Winter............................................................. 11
</TABLE>
11
<PAGE>
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries receives a fee of $20,000 for his or her services as a
director of the Company and $1,000 for each Board of Directors' meeting
attended. Each director who is a member of the Audit Committee or the
Compensation Committee receives an additional fee of $2,500. Pursuant to the
Option Plan, each outside director is entitled to receive, on an annual basis,
a non-incentive 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 January 31, 1999, and the Company expects to continue to engage such
firm for the fiscal year ending January 30, 2000.
During the fiscal year ended January 31, 1999, Career Consultants Inc. and
S & K Associates, Inc. were paid an aggregate of $396,550 for management
consulting and recruiting services they provided to the Company. Mr. Goldberg
owns more than 50% of the stock of each of these companies. The Company expects
to continue to purchase such services during the fiscal year ending January 30,
2000.
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 January 31, 1999, the Company purchased
approximately $26,660,000 of products and services from TAL Apparel Limited and
certain related companies. The Company expects to continue to purchase such
goods during the fiscal year ending January 30, 2000.
Peter J. Solomon Company, Ltd., of which Mr. Solomon is Chairman, provided
services to the Company during the current fiscal year in connection with the
Company's sale of its "Gant" trademarks and related assets and provided advice
with regard to certain other strategic issues.
12
<PAGE>
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 14 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 Special Severance Benefit 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.
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 Capital Accumulation 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 option plans and which have
not expired or been otherwise cancelled become immediately exercisable in full
(regardless of whether such options have fully vested).
Mr. Klatsky is also entitled to the payment under the Special Severance
Benefit Plan and the Capital Accumulation Plan (i) if he is not continued as the
Company's Chief Executive Officer and Chairman of the Board of Directors prior
to his retirement as an employee of the Company, (ii) in the event of the
appointment by the Board of Directors of an officer or the hiring by the Board
of 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) if the Company fails to maintain the terms and conditions of
Mr. Klatsky's employment, including a minimum level of compensation, as such
existed on April 28, 1993.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 31, 1999, the members of the
Compensation Committee consisted of Joseph B. Fuller, Maria Elena Lagomasino and
Peter J. Solomon. There were no interlocks or insider participations as defined
in the proxy regulations of the Securities and Exchange Commission, except Peter
J. Solomon Company, Ltd., of which Mr. Solomon is Chairman, provided services to
the Company during the current fiscal year in connection with the Company's sale
of its "Gant" trademarks and related assets and provided advice with regard to
certain other strategic issues.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibility is to set the compensation of
all executive officers, administer the Company's existing incentive compensation
plans in which executive officers participate and (subject to approval by the
Board of Directors) recommend new incentive compensation plans and implement
changes and improvements to existing incentive compensation plans, in each case
to the extent they affect executive officers.
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
13
<PAGE>
success. The Compensation Committee has structured the Company's executive
compensation program primarily (i) 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, (ii) to provide short-term incentives to
executive officers to attain certain financial targets and to reward certain
accomplishments or activities through annual bonuses, (iii) to link a portion of
its executive officers' compensation through stock options to long-term
increases in value created for the Company's stockholders by the efforts of
these officers and (iv) to be consistent with the Company's high ethical
standards. Although the Company's compensation program does not rely to any
significant extent on fringe benefits or perquisites, its fringe benefit plans
are generally competitive. The Company believes that it has a reputation for
providing a reasonably high level of job security in an industry known for high
levels of executive turnover.
The Compensation Committee reviews annually 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 each 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 the Company's Chief
Executive Officer are considered by the Compensation Committee in their review
of the performance and compensation of each individual executive officer.
BASE SALARIES. Annual salaries are determined by evaluating the
performance of the Company and of each individual executive officer. In the case
of executive officers 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 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.
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
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 the Company's Chief Executive Officer for
the fiscal year ended January 31, 1999, 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 and the Company's sales and earnings
results compared to those of
14
<PAGE>
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.
SHORT-TERM INCENTIVES.
SENIOR MANAGEMENT BONUS PROGRAM. Based upon the Compensation Committee's
recommendation, for each of the past two fiscal years and the current fiscal
year, the Board of Directors adopted a senior management bonus program under
which 17 eligible senior management executives, including the Company's
executive officers, could receive a bonus based on earnings targets for the
Company as a whole or, in the case of divisional presidents and the vice
chairmen, earnings targets for their respective divisions. Participants for each
fiscal year the program has been in effect were approved by the Board of
Directors during the first quarter of the applicable fiscal year. Threshold,
budget and maximum earnings targets were also set by the Board of Directors
during the first quarter of each fiscal year. In order to remain eligible to
receive a bonus, a participant must be employed by the Company on the last day
of the vesting period described below. If an executive dies during a fiscal year
for which he or she was selected as a participant in the program, his or her
estate would receive the bonus, if any, payable to the participant for that
fiscal year, pro rated to reflect the portion of the year worked by the
participant. For the current fiscal year, bonus payments will be calculated in
relation to the extent, if any, to which earnings fall within the target range.
The amount of a participant's bonus payment, if any, for a fiscal year is
determined by the end of the first quarter of the succeeding fiscal year.
Payment of any bonus earned is subject to a one year vesting period, ending on
the last day of the succeeding fiscal year, except that vesting may be
accelerated at the discretion of the Chief Executive Officer. Interest will
accrue on any unpaid bonus amounts beginning with the first day of the second
quarter of the fiscal year following the fiscal year for which the bonus had
been awarded. For the fiscal year ended January 31, 1999, no bonuses were earned
or awarded to executive officers under the Senior Management Bonus Program.
DISCRETIONARY BONUSES. The Compensation Committee has the authority to
award annual bonuses to executive officers on a discretionary basis. In
determining the discretionary bonuses of Messrs. Klatsky, Weber and Chirico for
the fiscal year ended January 31, 1999, the Compensation Committee reviewed each
executive's overall compensation package and took into account factors
including, but not limited to, the assessment by the Compensation Committee of
each executive's individual performance and the compensation awarded to
executives in other companies, especially companies involved in the apparel,
footwear and specialty retail industries. The Compensation Committee also
considered that certain major changes in the Company's overall strategic focus
were executed during the fiscal year ended January 31, 1999 and that such
changes are expected to have long-term benefits for the Company and its
stockholders. In determining Mr. Klatsky's bonus, the Compensation Committee
also took into account the fact that Mr. Klatsky has not received a raise in
base salary or a bonus since 1995 and that his compensation falls below the
median compensation for chief executive officers at comparable companies. In
determining the bonuses of Messrs. Weber and Chirico, the Compensation Committee
also took into account the fact that each of them assumed additional
responsibilities upon their elevations to new positions within the Company.
(Mr. Weber was promoted from Vice Chairman to President in March 1998, and
Mr. Chirico was promoted from Vice President and Controller to Executive Vice
President and Chief Financial Officer in December 1998.)
LONG-TERM INCENTIVES. Under the Option Plan, stock options are granted to
employees of the Company, including the executive officers. Stock options are
designed to align the interests of employees with those of the stockholders.
Stock options are 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 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 stock options granted to executive officers (and other employees)
under the Option Plan 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,
15
<PAGE>
since the full benefit of the options granted cannot be realized unless stock
price appreciation occurs over a number of years.
In view of changing tax laws and economic and employment conditions, the
Compensation Committee regularly examines other methods of incentive based
compensation for executive officers and intends to implement, when appropriate,
such methods in lieu of or in addition to stock options.
Grants under the Option Plan were awarded in June 1998 to approximately 240
of the key employees of the Company, including the executive officers. Each such
individual 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
base compensation and, for participants in the Senior Management Bonus Program,
the potential award that executive might receive under the Senior Management
Bonus Program, 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, 1998 were, on average, 24% of the direct
compensation for the Named Executive Officers for the fiscal year ended
January 31, 1999.
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 many 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 evidences their deep commitment
to and belief in the future success of the Company.
FEDERAL INCOME TAX DEDUCTIBILITY OF EXECUTIVE
COMPENSATION. Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), limits the amount of compensation a publicly held corporation may
deduct as a business expense for Federal income tax purposes. The limit, which
applies to a company's chief executive officer and the four other most highly
compensated executive officers, is $1 million (the "Deductibility Limit"),
subject to certain exceptions. The exceptions include the general exclusion of
performance-based compensation from the calculation of an executive officer's
compensation for purposes of determining whether his or her compensation exceeds
the Deductibility Limit. While the Company generally does not expect to pay its
executive officers compensation in excess of the Deductibility Limit, the
Compensation Committee also recognizes that in certain instances it may be in
the best interest of the Company to provide compensation that is not fully
deductible. For the fiscal year ended January 31, 1999, the Company's Chief
Executive Officer, Bruce J. Klatsky, was awarded a discretionary bonus, which
brought his compensation above the Deductibility Limit.
Compensation Committee
Maria Elena Lagomasino, Chairperson
Joseph B. Fuller
Peter J. Solomon
16
<PAGE>
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly
change in the cumulative total stockholder return on the 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 January 31, 1999. The figures represented in the performance
graph assume the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN
[CHART APPEARS HERE]
Phillips- S&P 500 Line of Business
Van Heusen Composite Index Index
---------- --------------- ----------------
Jan-94 100.00 100.00 100.00
Jan-95 44.52 97.89 98.89
Jan-96 29.68 132.30 112.09
Jan-97 38.16 163.41 144.61
Jan-98 34.10 203.72 156.00
Jan-99 17.84 265.90 183.37
- ---------------
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 $ 17.84
S&P 500 Composite Index $265.90
Line of Business Index $183.37
</TABLE>
17
<PAGE>
SELECTION OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Ernst & Young LLP, independent auditors, as auditors for the fiscal
year ending January 30, 2000. 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 29, 2001, since it
would be impracticable to replace the Company's auditors so late into the
Company's current fiscal year. The auditing and tax fee paid to Ernst & Young
LLP for the fiscal year ended February 1, 1998 was $814,000. The audit and tax
work for the fiscal year ended January 31, 1999 is not yet completed, but it is
estimated that total fees will be greater as they include expenses related to
the Company's debt offering in April 1998.
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.
STOCKHOLDER PROPOSAL
Robert D. Morse, of 212 Highland Avenue, Moorestown, New Jersey 08057, who
is the holder of $2,000 or more of the Common Stock, has given notice that he
intends to present the following proposal for a vote at the Annual Meeting of
Stockholders:
"[T]hat the officers and directors consider the discontinuance of all
bonuses, options, rights, SAR's, etc. (This applies only to future bonus
agreements.) This does not include any programs for employees."
Mr. Morse has submitted the following in support of this resolution:
"Reasons:
Management and directors are compensated enough to buy on open
market, just as you and I, if they are motivated.
Management is already well paid with base pay, life insurance,
retirement plans, paid vacations, free use of vehicles, etc.
Options, rights, SAR's, etc. are available elsewhere, and a higher
offer would induce transfers, not necessarily 'hold and retain'
qualified persons.
Comparison with 'peer groups', [other similar companies] pay is
unfair, as other management could be better or worse. Would they also
accept the mistakes of others?
'Align management with shareowners' is a repeated ploy or 'line' to
lull us as to continually increasing their takes of our assets. Do we
get any purchase options at previous rates?
Please vote YES for this proposal.
If officers filled out a daily work sheet, what would the output
show?"
THE COMPANY RECOMMENDS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL. PROXIES
RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED AGAINST THE ADOPTION OF
THIS RESOLUTION UNLESS OTHERWISE SPECIFIED IN THE PROXY.
The Company has developed an executive compensation program that it
believes encourages management stability in an industry known for high levels of
executive turnover and one which incentivizes the Company's executives to make
responsible business decisions that are designed to result in Company
performance that benefits all stockholders. The Company's executive compensation
structure is more fully described in the Compensation Committee Report on
Executive Compensation that appears on page 12 of this Proxy Statement. In
general, the Company's executive compensation program is intended to provide
executive officers with a stable, competitive annual base salary and short-term
and long-term incentives to encourage improved Company performance and align
compensation with changes in the market price of the
18
<PAGE>
Common Stock. Short-term incentives consist of annual bonuses, the awarding of
which are dependent on the annual financial and non-financial performance of the
Company and/or the executive's business group and/or the executive. Long-term
incentives consist of stock option grants, which only provide value to
executives if the market price of the Common Stock increases over an extended
period. Stock options generally may not be exercised until the third anniversary
of the date on which they are granted, and do not become fully exercisable until
the fifth anniversary of the date on which they are granted. Moreover, the
Company must remain competitive in the area of executive compensation so that it
will continue to attract and retain strong, well-qualified executives. Without
these programs, the Company does not believe it could remain competitive for
executive talent. For these reasons, the Company believes it is not in the
stockholders' interest to adopt this proposed resolution, and you are urged to
vote against it.
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 1, 2000. The proxy or proxies designated by the Company will
have discretionary authority to vote on any matter properly presented by a
stockholder for consideration at the next Annual Meeting of Stockholders but not
submitted for inclusion in the proxy materials for such Meeting unless notice of
the matter is received by the Company not later than March 17, 2000 and certain
other conditions of the applicable rules of the Securities and Exchange
Commission are satisfied. Stockholder proposals should be directed to the
Secretary of the Company at the address set forth below.
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/or 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 1998 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,
please send your written request to the Secretary of the Company at the address
indicated below to discontinue mailing a duplicate copy to the account or
accounts selected by you.
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 JANUARY 31, 1999 UPON WRITTEN REQUEST TO:
The Secretary
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016
By order of the Board of Directors,
PAMELA N. HOOTKIN
Secretary
New York, New York
April 30, 1999
19
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APPENDIX 1 - PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PHILLIPS-VAN HEUSEN CORPORATION
200 Madison Avenue
New York, New York 10016
BRUCE J. KLATSKY and MARK WEBER, or either of them, with the 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, 1999, 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 of the nominees for director;
o FOR the appointment of auditors; and
o AGAINST the stockholder proposal.
(Continued, and to be dated and signed on the other side.)
PHILLIPS-VAN HEUSEN CORPORATION
P.O. BOX 11287
NEW YORK, NEW YORK 10203-0287
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[REVERSE]
The Board recommends a vote FOR proposals 1 and 2 below.
1. Election of the nominees for director listed below:
FOR all nominees /_/ WITHHOLD AUTHORITY to /_/ *EXCEPTIONS /_/
listed below vote 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 and MARK
WEBER
(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. Appointment of auditors. FOR /_/ AGAINST /_/ ABSTAIN /_/
3. Stockholder proposal to request the Officers and Directors to consider
the discontinuance of all bonuses immediately, and options, rights,
SAR's, etc. after termination of any existing programs for top
management.
The Board recommends a vote AGAINST this stockholder proposal.
FOR /_/ AGAINST /_/ ABSTAIN /_/
4. 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 should sign.
Dated: _____________, 1999
________________________________
Signature
________________________________
Signature, if held jointly
To vote, fill in (x) with black or blue ink only. /x/
