<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 Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Under 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 headquarters of
Citibank, N.A., 399 Park Avenue, Twelfth Floor Auditorium, New York, New York,
on Tuesday, June 13, 2000, at 10:00 a.m., for the following purposes:
(1) to elect 11 directors of the Company to serve for a term of one year;
(2) to consider and act upon a proposal to approve the Company's 2000
Stock Option Plan;
(3) to consider and act upon a proposal to approve the Company's
Performance Incentive Bonus Plan;
(4) to consider and act upon a proposal to approve the Company's Long-Term
Incentive Plan;
(5) to consider and act upon a proposal to ratify the appointment of
auditors for the Company to serve for the current fiscal year; and
(6) 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 14, 2000 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,
MARK D. FISCHER
Secretary
New York, New York
May 1, 2000
- --------------------------------------------------------------------------------
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 13, 2000
---------------
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 headquarters of Citibank, N.A., 399 Park Avenue, Twelfth
Floor Auditorium, New York, New York, on Tuesday, June 13, 2000, 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 proxy card were first sent or given to stockholders
was May 1, 2000.
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 14, 2000 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 27,289,869 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, subject to certain exceptions, 10
days after a person or affiliated or associated group acquires 20% or more of
the outstanding shares of 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 outstanding shares of Common Stock, unless the rights theretofore have
been redeemed or have expired.
<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 21, 2000. 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)............................................ 4,929,001 18.06
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
Crabbe Huson Group, Inc.(2)............................................... 2,205,189 8.08
121 SW Morrison
Suite 1400
Portland, Oregon 97204
High Rock Capital LLC(3).................................................. 2,068,900 7.6
28 State Street
18th Floor
Boston, Massachusetts 02109
Dimensional Fund Advisors Inc.(4)......................................... 1,900,800 6.97
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
The Prudential Insurance
Company of America(5)................................................... 1,457,700 5.34
751 Broad Street
Newark, New Jersey 07102-3777
Mellon Financial Corporation(6)........................................... 1,399,168 5.12
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
PVH Associates Investment Plan Committee(7)............................... 1,375,037 5.04
200 Madison Avenue
New York, New York 10016
</TABLE>
- -----------------------------
1 Dr. Richard Lee, 6/F TAL Building, 49 Austin Road, Kowloon, Hong Kong, may
be deemed to beneficially own the 4,929,001 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 January 31, 2000,
as set forth in a Form 4 dated February 7, 2000 and filed with the
Securities and Exchange Commission.
2 Crabbe Huson Group, Inc. ("CHG") is a registered investment adviser which
shares with investors for which it serves as investment adviser voting
power over 2,036,989 shares and dispositive power over 2,205,189 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 of December
31, 1999, as set forth in a Schedule 13G dated February 3, 2000 and filed
with the Securities and Exchange Commission.
3 High Rock Capital LLC ("HRC"), a registered investment adviser, is the
record owner of 2,010,300 shares of Common Stock. HRC is an affiliate of
High Rock Asset Management LLC ("HRAM"), the record holder of 58,600 shares
of Common Stock. Each of HRC and HRM may be deemed to own beneficially the
aggregate of 2,068,900 shares owned between them by virtue of their
relationship as affiliates. Each of HRC and HRAM disclaims beneficial
ownership of the shares of Common Stock owned by the other. Information as
to the shares of Common Stock owned or which may be deemed to be
beneficially owned by HRC and HRAM is as of December 31, 1999, as set forth
in a Schedule 13G dated February 14, 2000 and filed with the Securities and
Exchange Commission.
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
4 Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
adviser, furnishes investment advice to four registered investment
companies and serves as investment manager to certain other commingled
group trusts and separate accounts (such investment companies, trusts and
accounts are referred to as the "Funds"). In its role as investment advisor
or manager, Dimensional possesses both voting and/or investment power over
the Common Stock owned by the Funds. Dimensional disclaims beneficial
ownership of such securities. Information as to the shares of Common Stock
which may be deemed to be owned beneficially by Dimensional is as of
December 31, 1999, as set forth in a Schedule 13G dated February 11, 2000
and filed with the Securities and Exchange Commission.
5 Prudential Insurance Company of American ("Prudential") is an insurance
company and a registered investment adviser which may have direct or
indirect voting and/or investment discretion over 1,457,700 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 reported that it shares
voting and dispositive power with respect to 1,084,500 of the shares it may
be deemed to own beneficially. Prudential reported the combined holdings of
such entities for administrative convenience and such filing should not be
construed as an admission by Prudential that it is, for purposes of Section
13 or 16 of the Securities Exchange Act of 1934 (the "Exchange Act"), the
beneficial owner of such shares. Information as to the shares of Common
Stock which may be deemed to be owned beneficially by Prudential is as of
December 31, 1999, as set forth in a Schedule 13G dated January 31, 2000
and filed with the Securities and Exchange Commission.
6 Mellon Financial Corporation ("MFC"), through certain of its direct and
indirect subsidiaries, may be deemed to be the beneficial owner of
1,399,168 shares of Common Stock, including 7,200 shares of Common Stock
with respect to which it shares voting power and 30,300 shares of Common
Stock with respect to which it shares dispositive power. Information as to
the shares of Common Stock which may be deemed to be owned beneficially by
MFC is as of December 31, 1999, 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 MFC that MFC or any
such subsidiary is, for purposes of Section 13(d) or 13(g) of the Exchange
Act, a beneficial owner of such shares.
7 Includes all of the shares of Common Stock held in the Master Trust for the
PVH Stock Fund. The PVH Stock Fund is one of the investment options under
the Company's Associates Investment Plans (the "AIPs"), which are employee
benefit plans under Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended. All such shares are held on behalf of the
employees of the Company and its subsidiaries who are participants in one
of the AIPs (consisting of the PVH Associates Investment Plan for Hourly
Associates, the PVH Associates Investment Plan for Salaried Associates and
the PVH Associates Investment Plan for Residents of the Commonwealth of
Puerto Rico) and who have elected to make investments in the PVH Stock
Fund. Participants in the AIPs who make investments in the PVH Stock Fund
may direct the vote of shares of Common Stock held in the Master Trust for
the PVH Stock Fund only with respect to tender or exchange offers subject
to Section 13(e) or Section 14(d) of the Exchange Act and matters which, if
approved or disapproved, would result in a change in control of the Company
(as defined in the AIPs). The AIP Committee has the right to vote such
shares for all other matters. These employees have the right under certain
circumstances to receive a distribution of shares of Common Stock held for
their benefit in the Master Trust, but the Committee makes the decision
regarding the disposition of Common Stock held in the Master Trust.
Information as to the shares of Common Stock held in the Master Trust for
the PVH Stock Fund is as of December 31, 1999, as set forth in a Schedule
13G dated February 2, 2000 and filed with the Securities and Exchange
Commission.
3
<PAGE>
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 21, 2000.
<TABLE>
<CAPTION>
Amount
Beneficially Percent of
Name Owned(1) Class
----- -------------- -----------
<S> <C> <C>
Michael J. Blitzer........................................................ 33,129 *
Emanuel Chirico........................................................... 33,605 *
Edward H. Cohen........................................................... 21,448 *
Joseph B. Fuller.......................................................... 10,948 *
Joel H. Goldberg.......................................................... 21,933 *
Marc Grosman.............................................................. 2,333 *
Dennis F. Hightower....................................................... 2,833 *
Bruce J. Klatsky.......................................................... 147,698 *
Maria Elena Lagomasino.................................................... 9,262 *
Harry N.S. Lee(2) ........................................................ 8,261 *
Bruce Maggin.............................................................. 42,948 *
Allen E. Sirkin........................................................... 68,459 *
Peter J. Solomon.......................................................... 27,448 *
Mark Weber................................................................ 80,803 *
All directors, nominees for director and executive officers as a group
(14 persons).............................................................. 475,170 1.7
</TABLE>
- -----------------------------
* Less than 1% of class.
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
the Master Trust for the PVH Stock Fund, nor do they include the 1,375,037
shares of Common Stock (5.04%) held in such Master Trust as of December
31, 1999 for all participants in the AIPs who invest in the PVH Stock
Fund. Mr. Chirico is a member of the committee that administers the AIPs
and has the power, under most circumstances, to vote the shares held in
the Master Trust. See Note 7 to the prior table for information regarding
the shares of Common Stock held in the Master Trust. Except as otherwise
indicated below, each of the directors, nominees for director 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 an indirect minority shareholder of Vaneton
International, Inc., which beneficially owns 4,929,001 shares of Common
Stock (18.06%). See Note 1 to 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, 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,
33,129 shares; Emanuel Chirico, 30,105 shares; Edward H. Cohen, 15,448 shares;
Joseph B. Fuller, 10,448 shares; Joel Goldberg, 1,333 shares; Marc Grosman,
1,333 shares; Dennis Hightower, 1,333 shares; Bruce J. Klatsky, 98,840 shares;
Maria Elena Lagomasino, 9,062 shares; Harry N.S. Lee, 7,261 shares; Bruce
Maggin, 15,448 shares; Allen E. Sirkin, 68,359 shares; Peter J. Solomon, 15,448
shares; Mark Weber, 53,303 shares; and all directors, nominees for director and
executive officers as a group, including the foregoing, 360,850 shares.
4
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of 11 members, all of one class.
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 11
nominees named below. Proxies received in response to this solicitation will be
voted FOR the election of the nominees unless otherwise specified in a proxy.
<TABLE>
<CAPTION>
Year
Became a
Name Principal Occupation Age Director
- ---- -------------------- --- --------
<S> <C> <C> <C>
Edward H. Cohen........................................... Senior Partner of Rosenman & Colin 61 1987
LLP, a law firm
Joseph B. Fuller.......................................... President and Chief Executive 43 1991
Officer of Monitor Company, a
management consulting firm
Joel H. Goldberg.......................................... President of Career Consultants, 56 1997
Inc., a management consulting firm
Marc Grosman.............................................. Founder and Chief Executive 45 1997
Officer of Marc Laurent SA, the
owner of a chain of European
apparel stores which trade under
the name CELIO
Dennis F. Hightower....................................... Professor of Management, Harvard 58 1997
University Graduate School of
Business Administration
Bruce J. Klatsky.......................................... Chairman and Chief Executive 51 1985
Officer of the Company
Maria Elena Lagomasino.................................... Managing Director, The Chase 51 1993
Manhattan Private Bank
Harry N.S. Lee............................................ Managing Director of TAL Apparel 57 1995
Limited, an apparel manufacturer
and exporter based in Hong Kong
Bruce Maggin.............................................. Principal of The H.A.M. Media 57 1987
Group, LLC, a media investment
company, and Chief Executive
Officer of atTV Media, Inc., a
marketer of interactive television
advertising
Peter J. Solomon.......................................... Chairman of Peter J. Solomon 61 1987
Company Limited, an investment
banking firm
Mark Weber................................................ President and Chief Operating 51 1998
Officer of the Company
</TABLE>
5
<PAGE>
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 Aigle SA. Mr. Hightower is also a director of The Gillette
Company, Northwest Airlines Corporation, PanAmSat Corporation and The TJX
Companies, Inc. Mr. Maggin is also a director of NewStar Media, Inc. Mr. Solomon
is also a director of Baker, Fentress & Company, 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.
Maggin, who, until October 1996, was Executive Vice President of Multimedia
Group, Capital Cities/ABC, Inc.; Mr. Hightower, who was President of Walt Disney
Television and Telecommunications from 1995 until June 1996; 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.
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 30, 2000, 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 Mr. Harry Lee, who attended
three of the five Board 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 is composed of Messrs. Cohen, Hightower and Maggin.
Pursuant to its charter, the Audit Committee is charged with providing
assistance to the Board of Directors in fulfilling the Board's statutory
responsibilities relating to the quality and integrity of the Company's
financial reports, monitoring the Company's financial reporting process and
internal control system and performing such other activities consistent with its
charter and the Company's By-laws as the Audit Committee or the Board deems
appropriate. The Audit Committee held three meetings during the fiscal year
ended January 30, 2000.
Compensation Committee
The Compensation Committee, composed of Ms. Lagomasino and Messrs. Fuller
and Hightower, is charged with setting the compensation of all executive
officers, administering the Company's existing stock option plans and its
cash-based incentive compensation plans for the executive officers, adopting new
cash-based incentive compensation plans and implementing changes and
improvements to existing cash-based incentive compensation plans for the
executive officers and, subject to approval by the Board of Directors,
recommending new stock option plans and other equity-based compensation plans
and implementing changes and improvements to the existing stock option plans.
The Compensation Committee also provides guidance to the executive officers
regarding the compensation of the Company's corporate and divisional officers.
The Compensation Committee held two meetings during the fiscal year ended
January 30, 2000.
6
<PAGE>
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 30, 2000.
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 30, 2000, January 31, 1999 and February 1,
1998 (fiscal years 1999, 1998 and 1997, respectively).
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation ------------
--------------------- Awards All Other
Name and Fiscal Salary Bonus Options Compensation(1)
Principal Position Year ($) ($) (#) ($)
- ------------------ ------ ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael J. Blitzer................... 1999 600,000 120,000(2) 30,000 57,432
Vice Chairman, 1998 600,000 - 40,000 55,951
Phillips-Van Heusen Corporation 1997 475,000 - 20,000 21,864
Emanuel Chirico...................... 1999 475,000 400,000 30,000 25,159
Executive Vice President and CFO, 1998 392,420 100,000 55,000 19,190
Phillips-Van Heusen Corporation 1997 350,000 - 20,000 17,776
Bruce J. Klatsky..................... 1999 850,000 1,207,600 100,000 96,056
Chairman and CEO, 1998 850,000 700,000 100,000 49,485
Phillips-Van Heusen Corporation 1997 850,000 - 60,000 63,497
Allen E. Sirkin...................... 1999 650,000 415,000(2) 30,000 39,746
Vice Chairman, 1998 650,000 339,445(3) 30,000 28,136
Phillips-Van Heusen Corporation 1997 650,000 - 30,000 27,536
Mark Weber........................... 1999 700,000 612,725 50,000 63,822
President and COO, 1998 690,417 200,000 75,000 42,187
Phillips-Van Heusen Corporation 1997 600,000 - 30,000 25,855
</TABLE>
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
AIPs and Supplemental Savings Plan, Executive Medical Reimbursement
Insurance Plan and Educational Benefit Trust.
Under the AIPs, 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
(Footnotes continued on next page)
7
<PAGE>
(Footnotes continued from previous page)
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 AIPs. 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 the PVH Stock Fund, which invests in the 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 the PVH
Stock Fund), 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. Since April 1, 1999, the amounts
contributed by the Company and the amounts contributed by the employee have
been invested, at the employee's direction, in up to eight investment
funds, including the PVH Stock Fund (with a 25% limit on the amount of an
employee's contributions which may be invested in the PVH Stock Fund).
However, in the case of the Supplemental Savings Plan, the Company
contributions, at the employee's direction, either have been invested in
the form of phantom shares of Common Stock or have earned interest at the
same rate as is paid on 10-year United States Treasury bonds and the
employee's contributions have earned interest at the same rate as is paid
on 10-year United States Treasury bonds, except that the Company's
contribution for certain employees, including the Named Executive Officers,
may not be invested in the form of phantom shares and may only earn
interest at the same rate as 10-year 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. Since April 1, 1999, a participant's interest in the
amounts arising out of employer contributions have vested ratably over four
years, or, if earlier, at age 65 or upon disability or death. In the fiscal
years 1999, 1998 and 1997, respectively, the Company made contributions
which are reflected under this column in the amounts of $19,481, $18,865
and $14,724 for Mr. Blitzer; $17,992, $12,067 and $10,636 for Mr. Chirico;
$50,794, $27,710 and $26,826 for Mr. Klatsky; $32,579, $21,013 and $20,396
for Mr. Sirkin; and $29,313, $21,965 and $18,715 for Mr. Weber.
The Company's Executive Medical Reimbursement Insurance Plan covers
eligible employees for most medical charges up to a specified annual
maximum. The Company incurred $7,167, $7,123 and $7,140 during fiscal years
1999, 1998 and 1997, respectively, as annual premiums for coverage for each
of the Named Executive Officers, which amounts are reflected under this
column.
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 1999, 1998 and 1997, respectively, the
benefits received by the Named Executive Officers, which are reflected
under this column, were in the amounts of $30,784, $29,964 and $0 for Mr.
Blitzer; $38,095, $14,652 and $29,531 for Mr. Klatsky; and $27,342, $13,099
and $0 for Mr. Weber.
2 Represents a discretionary bonus contingently awarded to Mr. Blitzer and a
bonus which Mr. Sirkin qualified for under the Company's 1999 Executive
Officer Bonus Program due to the fiscal 1999 performance of the Company's
Dress Shirt division, of which Mr. Sirkin is Chairman. Each such officer's
bonus is payable only if he remains in the Company's employ during a
vesting period that ends on the first day of the 2001 fiscal year, subject
to certain exceptions and limitations.
3 Represents the payment in the current fiscal year of a bonus Mr. Sirkin
qualified for under the Company's 1998 Executive Officer Bonus Program due
to the fiscal 1998 performance of the Company's Dress Shirt division, of
which he is Chairman, the payment of which was subject to his continued
employment during a vesting period that ended on the first day of the
current fiscal year.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's 1997 Stock Option
Plan (the "1997 Option Plan") granted to the Named Executive Officers during the
fiscal year ended January 30, 2000. No stock appreciation rights have been
granted by the Company.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------------------------------
Potential Realizable
Percent of Value at Assumed
Total Annual Rates of Stock
Options Price Appreciation For
Granted to Option Term
Options Employees Exercise ------------------------
Granted(1) in Fiscal Price Expiration 5% 10%
Name (#) Year ($/sh) Date ($) ($)
---- ----------- --------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Blitzer............. 30,000 4.4 9.8125 6/4/09 185,130 469,158
Emanuel Chirico................ 30,000 4.4 9.8125 6/4/09 185,130 469,158
Bruce J. Klatsky............... 100,000 14.6 9.8125 6/4/09 617,000 1,563,860
Allen E. Sirkin................ 30,000 4.4 9.8125 6/4/09 185,130 469,158
Mark Weber..................... 50,000 7.3 9.8125 6/4/09 308,550 781,930
</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.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the value at
January 30, 2000 of unexercised stock options held by the Named Executive
Officers. None of the Named Executive Officers exercised any stock options in
the 1999 fiscal year. No stock appreciation rights have been granted by the
Company.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised Options In-The-Money at
Options at Fiscal Year-End Fiscal Year-End(1)
-------------------------- ----------------
Exercisable/Unexercisable Exercisable/Unexercisable
Name (#) ($)
- ---- -------------------------- -------------------------
<S> <C> <C>
Michael J. Blitzer................. 18,963 / 102,500 - / -
Emanuel Chirico.................... 15,939 / 117,500 - / 6,250
Bruce J. Klatsky................... 60,506 / 290,001 - / -
Allen E. Sirkin.................... 45,026 / 111,667 4,584 / -
Mark Weber......................... 32,470 / 174,167 - / -
</TABLE>
- -------------------
1 Fair market value at fiscal year end of securities underlying the options
minus the exercise price of the options.
9
<PAGE>
LONG-TERM INCENTIVE PLANS -
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts Under
-------------------------------------------
Non-Stock Price-Based Plans(1)
------------------------------
Performance or Other Period Threshold Plan Maximum
Name Until Maturation of Payout ($) ($) ($)
- ---- --------------------------- --------- ---- -------
<S> <C> <C> <C> <C>
Bruce J. Klatsky................... 21 months ending 2/4/01 800,000 1,250,000 2,500,000
33 months ending 2/3/02 800,000 1,250,000 2,500,000
Mark Weber......................... 21 months ending 2/4/01 375,000 600,000 1,125,000
33 months ending 2/3/02 375,000 600,000 1,125,000
Emanuel Chirico.................... 21 months ending 2/4/01 250,000 400,000 750,000
33 months ending 2/3/02 250,000 400,000 750,000
</TABLE>
- -------------------
1 Based on current base salaries. Actual awards are based on the base salary in
effect on the last day of the performance cycle.
The Company's Board of Directors, upon the recommendation of the
Compensation Committee, adopted in June 1999 long-term incentive plans for the
21-month period ending February 4, 2001 and the 33-month period ending February
3, 2002. The terms of the plans are the same. The participants in the plans are
the Company's Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer. The payment of cash awards under each of the plans requires
the Company to achieve both earnings growth and improvement in return on equity
over the applicable performance cycle. Threshold, plan and maximum targets were
established at the time the plans were adopted for each of the performance
objectives, for each performance cycle, and awards were established for
achievement of each of the targets. Awards are based on a percentage of a
participant's base salary in effect on the last day of the performance cycle.
The percentage is lowest for the achievement of the threshold targets and is the
highest if the maximum targets are achieved or exceeded. If the level of
achievement falls between two of the targets, the award will be on a percentage
of the participant's base salary that is on a straight-line interpolation
between the percentages for the two targets. The percentage of base salary that
a participant can earn as an award differs among the participants: the range for
the Chief Executive Officer is 80%-250% of base salary and the range for the
Chief Operating Officer and the Chief Financial Officer is 50%-150% of base
salary. No awards are earned if the threshold targets are not satisfied. In the
event of the death or disability of a participant during a performance cycle,
the participant or his estate will receive the award, if any, which would
otherwise have been payable to the participant for such performance cycle, pro
rated to reflect the portion of the performance cycle worked by the participant.
In all other events, a participant must be employed by the Company on the
payment date for an award or must have died, become disabled, retired under the
Company's retirement plan or have been discharged without cause subsequent to
the end of the performance cycle but prior to the date the award is paid in
order to remain eligible to receive an award.
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 $76,200.
<TABLE>
<CAPTION>
Career Annual Benefits for Years of Service Indicated
Average salary Payable as a Life Annuity at Age 65
-------------- ------------------------------------------------------------------------------
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000 39,432 51,972 64,302 76,518 88,674
$400,000 84,432 111,972 139,302 166,518 193,674
$600,000 129,432 171,972 214,302 256,518 298,674
$800,000 174,432 231,972 289,302 346,518 403,674
$1,000,000 219,432 291,972 364,302 436,518 508,674
$1,200,000 264,432 351,972 439,302 526,518 613,674
$1,400,000 309,432 411,972 514,302 616,518 718,674
$1,600,000 354,432 471,972 589,302 706,518 823,674
$1,800,000 399,432 531,972 664,302 796,518 928,674
$2,000,000 444,432 591,972 739,302 886,518 1,033,674
$2,200,000 489,432 651,972 814,302 976,518 1,138,674
$2,400,000 534,432 711,972 889,302 1,066,518 1,243,674
</TABLE>
The benefits under the Company's pension plans are generally based on a
participant's career average compensation (except that pre-2000 benefits for
current salaried employees are based on pre-2000 last five-years average
compensation, unless the participant's career average compensation is greater
than the last five-years average). 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 30,
2000, for each of the Named Executive Officers is set forth in the following
table.
Credited Years
Name Of Service
---- ----------
Michael J. Blitzer............................ 19
Emanuel Chirico............................... 5
Bruce J. Klatsky.............................. 27
Allen E. Sirkin............................... 13
Mark Weber.................................... 27
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
1997 Option Plan, each outside director is entitled to receive, on an annual
basis, a non-qualified option to purchase 4,000 shares of Common Stock at the
fair market value on the date of grant. Each outside director will be granted,
on an annual basis commencing in 2000, a non-qualified option to purchase 4,000
shares of Common Stock at the fair market value on the date of grant if the 2000
Option Plan is approved by the stockholders at the meeting.
11
<PAGE>
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 30, 2000, and the Company expects to continue to engage such
firm for the fiscal year ending February 4, 2001.
Mr. Goldberg, Career Consultants Inc. and S&K Associates, Inc. were paid
an aggregate of $622,714 for management consulting and recruiting services they
provided to the Company in fiscal 1999. Mr. Goldberg owns more than 50% of the
stock of each of the two companies. The Company is continuing to utilize such
services during the current fiscal year.
The Company purchased approximately $13,429,030 of products and services
from TAL Apparel Limited and certain related companies during the 1999 fiscal
year. Mr. Lee is a director of TAL Apparel Limited. The Company expects to
continue to purchase goods from such companies during the current fiscal year.
Peter J. Solomon Company Limited, of which Mr. Solomon is Chairman,
provided services to the Company during the 1999 fiscal year in connection with
the Company's sale of its "Gant" trademarks and related assets and, from time to
time, provided advice with regard to certain other strategic issues. The Company
expects to continue to utilize such services during the current fiscal year.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has had in effect since 1987 a Special Severance Benefit Plan.
Upon the termination of the employment of any participant in the plan within two
years after a change in control of the Company (as defined in the Special
Severance 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 of 1986, as amended
(the "Code"), which relates to excise taxes on excess parachute payments,
including any income taxes and/or additional excise taxes applicable to such
indemnification payment. There are currently 13 senior executives of the Company
and its subsidiaries, including the Named Executive Officers, who are
participants in the Special Severance Benefit Plan.
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 (as defined
in such plan), 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. Each of the Named Executive Officers is a participant in
the Capital Accumulation Plan, along with nine other senior executives of the
Company and its subsidiaries.
All options that were previously granted under one of the Company's option
plans and which have not expired or been otherwise cancelled become immediately
exercisable in full upon a change in control of the Company, regardless of
whether such options have previously vested.
Mr. Klatsky is also entitled to the payments provided for 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 30, 2000, the members of the
Compensation Committee included Joseph B. Fuller, Dennis F. Hightower, Maria
Elena Lagomasino and Peter J. Solomon. Mr. Solomon was a member from the
beginning of the 1999 fiscal year until June 17, 1999; Mr. Hightower became a
member on June 17, 1999. There were no interlocks or insider participations as
defined in the proxy regulations of the
12
<PAGE>
Securities and Exchange Commission, except that Peter J. Solomon Company
Limited, of which Mr. Solomon is Chairman, provided services to the Company
during the 1999 fiscal year in connection with the Company's sale of its "Gant"
trademarks and related assets and, from time to time, provided advice with
regard to certain other strategic issues.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting the compensation of
all executive officers, administering the Company's existing stock option plans
and cash-based incentive compensation plans for the executive officers, adopting
new cash-based incentive compensation plans and implementing changes and
improvements to existing incentive compensation plans for the executive
officers, and, subject to approval by the Board of Directors, recommending new
stock option plans and other equity-based compensation plans and implement
changes and improvements to the existing stock option plans. The Compensation
Committee also provides guidance to the executive officers regarding the
compensation of the Company's corporate and divisional officers.
Overall Policy. The Compensation Committee believes that the Company's
executive officers constitute a highly qualified management team who have been
largely responsible for the Company's success. The Compensation Committee has
structured the Company's executive officer 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, (iii) 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 (iv) to be consistent with the Company's high ethical standards. The
Compensation Committee targets the compensation levels of its top three
executives to approximate the competitive median if the Company achieves its
budget plan, to exceed the median and approach the 75th percentile of
competitive compensation levels if the plan is exceeded and to be below the
competitive median if the budget plan is not attained. Information regarding
competitive compensation is compiled by the Committee and/or compensation
consultants retained from time to time by the Committee. 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
officer 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 officer 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 officer, 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) and private peer companies known to
the members of the Committee. 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
between and among the executive officers, including between the
13
<PAGE>
Company's Chief Executive Officer and the other executive officers. 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 30, 2000, 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, compensation information
provided by an outside consultant, the performance of the Common Stock over the
prior several years and the assessment by the Compensation Committee of Mr.
Klatsky's individual performance. The Committee also took into account the
incentive components of Mr. Klatsky's compensation package and the potential
payouts and other value under those plans.
Short-Term Incentives.
Executive Officer Bonus Program. Bonus programs have been adopted
for each of the past three fiscal years under which the Company's senior
executives, including the Named Executive Officers, could receive a bonus based
on earnings targets for the Company as a whole or, in the case of the vice
chairmen, earnings targets for their respective divisions. Threshold, plan and
maximum earnings targets were set during the first quarter of each fiscal year.
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. 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. In order to remain eligible to receive a
bonus, certain of the executive officers must be employed as of the end of a
vesting period that ends on the last day of the succeeding fiscal year, subject
to certain exceptions and except that vesting may be accelerated at the
discretion of the Chief Executive Officer. The bonuses under the 1999 Executive
Officer Bonus Program of the executive officers who are participants in the
long-term incentive plans adopted in 1999 (Messrs. Klatsky, Weber and Chirico)
were not subject to vesting and were paid after the Compensation Committee
determined that the bonus targets had been achieved. Interest accrues 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.
Messrs. Klatsky, Weber, Chirico and Sirkin all qualified for bonuses under the
Executive Officer Bonus Program for the fiscal year ended January 30, 2000. The
Compensation Committee has approved, subject to stockholder approval, and the
Board of Directors has recommended to stockholders the approval of, the
Performance Incentive Bonus Plan, which would provide for a substantially
similar bonus plan commencing with the current fiscal year. See "Approval of
Performance Incentive Bonus Plan" for a description of that plan.
Discretionary Bonuses. The Compensation Committee has the authority
to award annual bonuses to executive officers on a discretionary basis. In
determining whether to award discretionary bonuses, the Compensation Committee
reviews each executive's overall compensation package and takes into account
factors including, but not limited to, the assessment by the Compensation
Committee of each executive's individual performance, the compensation awarded
to executives in other companies, especially companies involved in the apparel,
footwear and specialty retail industries and additional duties or special
projects assumed by the executive. The Compensation Committee has the authority
to place restrictions, including a vesting requirement, on any discretionary
bonus it awards to an executive officer. Mr. Blitzer was awarded a contingent
discretionary bonus for fiscal 1999, which is subject to vesting.
Long-Term Incentives.
Stock Options. Under the 1997 Option Plan, stock options are granted
to employees of the Company, including the Named Executive Officers, as well as
the Company's non-employee directors. Stock options are designed to align the
interests of employees with those of the stockholders. Stock options granted
under the 1997 Option Plan are granted at an exercise at price equal to the
closing price of the Common Stock on the New York Stock Exchange on the date
prior to grant. Generally, stock options granted under the 1997 Option Plan 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 grantees) under the 1997 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
14
<PAGE>
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. The Company will continue to use stock options as a component
of its compensation structure if the Company's 2000 Stock Option Plan is
approved by the stockholders, as has been recommended by the Board of Directors.
See "Approval of 2000 Stock Option Plan" for a description of that plan.
Grants under the 1997 Option Plan were awarded in June 1999 to
approximately 235 of the key employees of the Company, including the Named
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. Options were granted to the top three executive officers
in an amount such that the value of the award, when combined with base
compensation and potential bonuses under the Executive Officer Bonus Program,
would provide competitive total compensation relative to comparable positions at
other companies. The value of the options granted to the executive officers in
the 1999 fiscal year were, on average, 16% of the direct compensation for the
executive officers for the 1999 fiscal year.
Long-Term Incentive Plan. Long-term incentive plans were adopted in
June 1999 for the 21-month period ending February 4, 2001 and the 33-month
period ending February 3, 2002. The participants in the plans are the Company's
Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.
The payment of cash awards under each of the plans requires the Company to
achieve both earnings growth and improvement in return on equity over the
applicable performance cycle. Threshold, plan and maximum targets were
established for each performance cycle, and awards were established for
achievement of each of the targets. Awards are based on a percentage of a
participant's base salary. The percentage is lowest for achievement of the
threshold targets and is the highest if the maximum targets are achieved or
exceeded. If the level of achievement falls between two of the targets, the
award will be on a percentage of the participant's base salary that is on a
straight-line interpolation between the percentages for the two targets. The
percentage of base salary that a participant can earn as an award differs among
the participants. No awards are earned if the threshold targets are not
satisfied. The amount of a participant's award, if any, will be determined by
the Compensation Committee, by the end of the first quarter of the fiscal year
immediately following the end of the applicable performance cycle. Payment of
such awards will be made as soon as practicable thereafter. In the event of the
death or disability of a participant during a performance cycle, the participant
or his or her estate will receive the award, if any, which would otherwise have
been payable to the participant for such program period, pro rated to reflect
the portion of the performance cycle worked by the participant. In all other
events, a participant must be employed by the Company on the payment date
therefor or must have died, become disabled, retired under the Company's
retirement plan or have been discharged without cause subsequent to the end of
the performance cycle but prior to the date the award is paid in order to remain
eligible to receive an award. The Compensation Committee has approved, subject
to stockholder approval, and the Board of Directors has recommended to
stockholders the approval of the Long-Term Incentive Plan, which would provide
for a substantially similar plan with a three-year performance cycle. See
"Approval of Long-Term Incentive Plan" for a description of that plan.
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 the existing plans.
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, including the executive officers, acquire Common Stock of the
Company through the AIPs. The fact that many of the Company's executive officers
have chosen to invest a significant portion of their contributions to their AIP
in the PVH Stock Fund 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 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
15
<PAGE>
interest of the Company to provide compensation that is not fully deductible.
For the 1999 fiscal year, the Company's Chief Executive Officer earned
compensation in excess of the Deductibility Limit.
Compensation Committee
Maria Elena Lagomasino, Chairperson
Joseph B. Fuller
Dennis F. Hightower
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, the Russell 2000 Index and
a line of business index comprised of the S&P Retail Composite Index, the S&P
Textile (Apparel) Index and the S&P Footwear Index for the five fiscal years
ended January 30, 2000. The Company intends to use the Russell 2000 Index in
this graph in future years as the "broad equity market index" required under the
Exchange Act, in lieu of the S&P 500 Composite Index that it has used in prior
years, because the market capitalization of the companies included in the
Russell 2000 Index is more similar to the Company's capitalization than the
capitalization of the companies included in the S&P 500 Composite Index. The
figures represented in the performance graph assume the reinvestment of
dividends.
Comparison of 5 Year Cumulative
Total Return
[Graphic Omitted]
- --------------
Note: Line of Business Index is composed of a blended weighting of the S&P
Retail Composite Index (50%), the S&P Textile (Apparel) Index (33%) and
the S&P Footwear 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:
Phillips-Van Heusen Corporation Common Stock $ 42.86
S&P 500 Composite Index $296.84
Russell 2000 Index $201.02
Line of Business Index $172.25
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APPROVAL OF 2000 STOCK OPTION PLAN
On April 27, 2000, the Board of Directors adopted, upon the recommendation
of the Compensation Committee and subject to stockholder approval, a new 2000
Stock Option Plan. Approval of the Plan requires the affirmative vote of a
majority of the shares of Common Stock cast on the proposal at the Annual
Meeting of Stockholders. The 2000 Stock Option Plan is intended to replace the
1997 Option Plan. Outstanding Options granted under the 1997 Option Plan will
continue to be governed by the 1997 Option Plan. As of the date of this Proxy
Statement, there are only 142,822 shares of Common Stock available for the grant
of options under the 1997 Option Plan.
The following summary of certain features of the 2000 Stock 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 2000 Stock Option Plan authorizes the grant of an aggregate of
3,000,000 shares of Common Stock to key employees of the Company and its
subsidiaries, to the non-employee directors of the Company and to certain other
persons. Under the Plan, the Company may grant to eligible individuals incentive
stock options, as defined in Section 422(b) of the Code, and/or non-qualified
stock options.
The Board of Directors recommends a vote FOR the adoption of the 2000
Stock Option Plan.
Nature and Purposes of the 2000 Stock Option Plan
The purposes of the 2000 Stock Option Plan are to induce certain
individuals to remain in the employ or service of the Company and its
subsidiaries, to attract new individuals to enter into such employment or
service 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 2000 Stock Option Plan is 240.
Duration and Modification
The 2000 Stock Option Plan will terminate not later than April 26, 2010.
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, change the class of persons eligible to
participate in the Plan, change the manner of determining the option prices,
amend any option to reduce the option price, or cancel any outstanding option
and contemporaneously award a new option to the same participant for
substantially the same number of shares at a lower option price.
Administration
The 2000 Stock Option Plan is administered by the Compensation Committee
or such other committee of the Board of Directors that the Board may designate
from time to time (the "Option Committee"). The Option Committee must consist of
two or more members of the Board of Directors who are intended to be
"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 Option Committee are appointed annually by the Board. The Option
Committee, among other things, has complete authority, in its discretion, to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it and to determine the participants in the 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-qualified stock option or a combination
thereof. The Option Committee will not have the discretion to determine any of
the foregoing with respect to the non-discretionary options granted to
non-employee directors. All options granted to non-employee directors are
non-qualified stock options. The members of the Option Committee do not receive
additional compensation for service in connection with the administration of the
Plan. Compensation Committee members receive a $2,500 annual fee for serving on
the Compensation Committee.
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Description of Options
Under the 2000 Stock 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 date of grant, which generally is the closing sale price of the Common Stock
on the New York Stock Exchange 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 500,000 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 2000 Stock Option Plan generally become
exercisable with respect to 25% of the underlying shares on the first
anniversary of the date of grant, 50% of the underlying shares on the second
anniversary of the date of grant, 75% of the underlying shares on the third
anniversary of the date of grant and 100% of the underlying shares on the fourth
anniversary of the date of grant, unless otherwise determined by the Option
Committee at the time of the grant of the option. In the event of a change in
control (as defined in the Plan), all options that have been previously granted
and have not expired or otherwise been cancelled or become unexercisable become
immediately exercisable. 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 10 years
from the date of grant.
In the event of the death or retirement of an optionee, all options that
have been previously granted and have not expired or otherwise been cancelled
become immediately exercisable. If such options are not thereafter exercised,
they will terminate, generally within three months of such optionee's death or
three years of such optionee's retirement. If 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 then exercisable 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.
Non-qualified stock options may be transferred for no consideration to or
for the benefit of the optionee's immediate family (as defined in the 2000 Stock
Option Plan), a trust for the exclusive benefit of the optionee and his or her
immediate family or to a partnership or limited liability company for one or
more members of the optionee and his or her immediate family. Any transfer of a
non-qualified stock option must be approved in advance by the Compensation
Committee and may be approved subject to such conditions as the Option Committee
may impose.
The number of shares reserved for issuance under the 2000 Stock 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.
Securities Subject to the 2000 Stock Option Plan
3,000,000 authorized but unissued shares of the Common Stock have been
reserved for issuance upon the exercise of options granted under the 2000 Stock
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 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 25, 2000 was $7.625 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 2000 Stock Option Plan, and the sale
of Common Stock acquired as a result thereof, is based on an analysis of the
Code,
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as currently in effect, existing laws, judicial decisions and 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-Qualified Stock Options
No income will be recognized by an optionee at the time a non-qualified
stock option is granted. Ordinary income will be recognized by an optionee at
the time a non-qualified 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 at such time and in the same amount that the optionee is required to
include in his or her income upon the exercise of a non-qualified stock option.
The Company's ability to take such deduction is subject to the rules regarding
reasonableness of compensation and the Company's timely compliance with
applicable information reporting requirements under the Code.
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-qualified 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-qualified stock option will be equal to the sum of the
exercise price of such non-qualified stock option and the amount included in
income with respect to such option.
If an optionee transfers an option by gift, the optionee will recognize
ordinary income at the time that the transferee exercises the option. The
Company will be required to report the ordinary income recognized by the
optionee, and to withhold income and employment taxes, and pay the Company's
share of employment taxes, with respect to such ordinary income. The optionee
may also be subject to federal gift tax on the value of the transferred option
at the time that the transfer of the option is considered completed for gift
purposes. The Internal Revenue Service takes the position that the transfer is
not complete until the option is fully vested.
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 an incentive stock option is exercised more than
three months after the termination of an optionee's employment with the Company,
the option will be treated as a non-qualified 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 generally 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
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<PAGE>
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.
Benefits to be Received Upon Approval
The following table sets forth, for the fiscal year ended January 30,
2000, with respect to each of the Named Executive Officers, all executive
officers as a group, all non-employee directors as a group, and all
non-executive officer employees as a group, the number of shares of Common Stock
subject to options granted under the 1997 Stock Option Plan. The Company would
expect comparable grants to be made to the individuals and groups identified if
the 2000 Stock Option Plan is approved.
<TABLE>
<CAPTION>
Name and Position Options Granted
----------------- ---------------
<S> <C>
Michael J. Blitzer
Vice Chairman 30,000
Emanuel Chirico
Executive Vice President and Chief Financial Officer 30,000
Bruce J. Klatsky 100,000
Chairman and Chief Executive Officer
Allen E. Sirkin 30,000
Vice Chairman
Mark Weber 50,000
President and Chief Operating Officer
All executive officers as a
group (5 persons) 240,000
All directors who are not
executive officers as a
group (9 persons) 36,000
All employees as a group(1) 445,750
</TABLE>
- --------------------------
1 Excluding executive officers.
Approval of the 2000 Stock 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
2000 Stock Option Plan unless otherwise specified in a proxy.
APPROVAL OF PERFORMANCE INCENTIVE BONUS PLAN
On March 2, 2000, the Compensation Committee of the Board of Directors
adopted, subject to stockholder approval, the Performance Incentive Bonus Plan
effective with respect to the fiscal year of the Company beginning on January
31, 2000. Approval of the Plan requires the affirmative vote of a majority of
the shares of Common Stock cast on the proposal at the Annual Meeting of
Stockholders.
The following summary of certain features of the Performance Incentive
Bonus Plan is qualified in its entirety by reference to the full text of the
Plan, which is Exhibit B to this Proxy Statement.
The Board of Directors recommends a vote FOR the adoption of the
Performance Incentive Bonus Plan.
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Nature and Purposes of the Performance Incentive Bonus Plan
The purposes of the Performance Incentive Bonus Plan are to induce certain
senior executive employees to remain in the employ of the Company and its
subsidiaries, to attract new senior executive employees and to provide
additional incentive to such senior executive employees to promote the success
of the business of the Company and its subsidiaries. The approximate number of
persons currently eligible to participate in the Plan is 22.
Duration and Modification
The Performance Incentive Bonus Plan is effective for fiscal years 2000
through 2004 and will terminate after payment of all bonuses, if any, earned
with respect to the Company's fiscal year ending on January 31, 2005, unless the
stockholders approve the continuation of the Plan no later than the date of the
2004 Annual Meeting of Stockholders. The Board (or committee administering the
Plan) may at any time terminate the Plan or make such modifications thereof as
it determines. However, the Board (or committee administering the Plan) may not
amend the Plan, without the approval of the holders of a majority of the then
outstanding shares of Common Stock, to the extent such approval is necessary to
continue to qualify the amounts payable under the Plan to "covered employees"
(within the meaning of Section 162(m) of the Code) as deductible under Section
162(m) of the Code.
Administration of the Performance Incentive Bonus Plan
The Performance Incentive Bonus Plan is administered by the Compensation
Committee (or such other committee of the Board of Directors that the Board may
designate from time to time (the "Plan Committee"). The Plan Committee must
consist of two or more members of the Board of Directors who are intended to be
"outside directors" within the meaning of Section 162(m) of the Code. The Plan
Committee has the complete authority and discretion to administer and interpret
the Plan, including to determine the participants in the Plan and establish the
performance objectives for each fiscal year. The Plan Committee may delegate
authority to the Chief Executive Officer of the Company to administer the Plan
with respect to employees who are not, and are not reasonably expected to
become, "covered employees." The members of the Plan Committee will not receive
any additional compensation for any service in connection with the
administration of the Plan. Members of the Compensation Committee receive a
$2,500 annual fee for serving on the Compensation Committee.
Determination of Participation, Performance Objectives and Bonuses
Within 90 days after the commencement of each fiscal year, the Plan
Committee is required to determine the executives of the Company and its
subsidiaries who will be participants in the Performance Incentive Bonus Plan
with respect to such fiscal year and the performance objectives that must be
satisfied for a participant to be eligible to receive a bonus. Performance
objectives are based upon the achievement of earnings targets, with respect to
the Company, for participants with corporate responsibilities and, for a
subsidiary, division or business unit, for participants who are responsible for
a subsidiary, division or business unit. If and to the extent the performance
objectives are achieved, participants are eligible to receive a bonus based upon
a percentage of their base salary in effect on the last day of the fiscal year.
Threshold, plan and maximum targets are established for each fiscal year and
bonus percentages are established for the achievement of each of the targets.
The percentage is lowest for achievement of the threshold target and is highest
if the maximum target is achieved or exceeded. If the level of achievement falls
between two of the targets, the bonus is based on a percentage of the
participant's base salary that is on a straight-line interpolation between the
percentages for the two targets. The percentage of base salary that a
participant can earn as a bonus may differ among participants. No bonus is
earned if the participant's threshold target is not achieved. The maximum bonus
payable to any participant for a fiscal year is $3,000,000.
Payment of Bonuses
Participants who qualify for a bonus and who are also participants in the
Company's Long-Term Incentive Plan receive their bonuses in the form of a single
sum cash payment no later than 30 days after the Plan Committee certifies that
the performance criteria have been satisfied. All other participants who qualify
for a bonus must remain in the Company's employ until the last day of the fiscal
year following the fiscal year for which the performance criteria was satisfied
to receive their bonuses, subject to certain limited exceptions and the right of
the Plan Committee to accelerate vesting for participants who are not "covered
employees" under Section 162(m) of the Code. Interest accrues on any bonus not
paid from the date that it is determined that the participant qualified for a
bonus until the date it is paid.
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If a participant dies or becomes disabled during a fiscal year, the
participant or his or her estate will receive the bonus, if any, that would have
otherwise been payable to the participant for such year, pro rated to reflect
the portion of the year worked by the participant.
Federal Income Tax Consequences of the Payment of Bonuses
The following discussion of the Federal income tax consequences of the
payment of bonuses under the Performance Incentive Bonus Plan is based on an
analysis of the Code, as currently in effect, existing laws, judicial decisions
and administrative rulings and regulations, all of which are subject to change.
In addition to being subject to the Federal income tax consequences described
below, a participant may also be subject to state and local tax consequences in
the jurisdiction in which he or she works and/or resides.
Ordinary income will be recognized by a participant at the time he or she
receives payment of a bonus under the Performance Incentive Bonus Plan. This
ordinary (compensation) income will constitute wages subject to withholding and
the Company will be required to make whatever arrangements are necessary to
ensure that the amount of tax required to be withheld is available for payment.
The Company generally will be entitled to a deduction for Federal income
tax purposes in an amount equal to the amount included in income by the
participant.
Benefits to be Received Upon Approval
The benefits which a participant will receive in the event that the
Performance Incentive Bonus Plan is approved by the stockholders or which would
have been received had the Plan been in effect during the 1999 fiscal year
cannot be determined because the goals to be achieved are set annually, receipt
of bonuses is dependent on achievement of such goals, the size of a bonus is
dependent on the extent to which goals are achieved, the formula for calculating
the bonus can change from year-to-year and the receipt of a bonus is subject to
a vesting period under certain circumstances.
Proxies received in response to this solicitation will be voted FOR the
Performance Incentive Bonus Plan unless otherwise specified in a proxy.
APPROVAL OF LONG-TERM INCENTIVE PLAN
On March 2, 2000, the Compensation Committee adopted, subject to
stockholder approval, the Long-Term Incentive Plan effective with respect to the
fiscal year of the Company beginning on January 31, 2000. Approval of the Plan
requires the affirmative vote of a majority of the shares of Common Stock cast
on the proposal at the Annual Meeting of Stockholders.
The following summary of certain features of the Long-Term Incentive Plan
is qualified in its entirety by reference to the full text of the Plan, which is
Exhibit C to this Proxy Statement.
The Board of Directors recommends a vote FOR the adoption of the Long-Term
Incentive Plan.
Nature and Purposes of the Long-Term Incentive Plan
The purposes of the Long-Term Incentive Plan are to induce certain senior
executive employees to remain in the employ of the Company and its subsidiaries
and to provide inducement for such senior executive employees to promote the
success of the business of the Company and its subsidiaries. The Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer are the
only persons currently eligible to participate in the Plan.
Duration and Modification
The Long-Term Incentive Plan is effective for fiscal years 2000 through
2004 and will terminate after payment of all awards earned thereunder with
respect to the performance cycle ending on February 4, 2006, unless the
stockholders approve the continuation of the Plan, no later than the date of the
2004 Annual Meeting of Stockholders. The Board or the committee administering
the Plan may at any time terminate the Plan or make such modifications thereof
as it determines. However, the Board (or committee administering the Plan) may
not amend the Plan, without the approval of
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<PAGE>
the holders of a majority of the then outstanding shares of Common Stock, to the
extent such approval is necessary to continue to qualify the amounts payable
under the Plan to "covered employees" (within the meaning of Section 162(m) of
the Code) as deductible under Section 162(m) of the Code.
Administration of the Long-Term Incentive Plan
The Long-Term Incentive Plan is administered by the Compensation Committee
of the Board or such other committee designated by the Board. The committee
designated by the Board to administer the Plan is designated annually and must
consist of two or more members of the Board of Directors who are intended to be
"outside directors" within the meaning of Section 162(m) of the Code. The
administrative committee has the complete authority and discretion to administer
and interpret the Plan, including to establish the performance objectives for
each performance cycle. The members of the administrative committee will not
receive additional compensation for service in connection with the
administration of the Plan. Members of the Compensation Committee receive a
$2,500 annual fee for serving on the Compensation Committee.
Determination of Participation, Performance Objectives and Awards
Within 90 days after the commencement of each fiscal year, the
administrative committee is required to determine the performance objectives
with respect to the three-year performance cycle commencing on the first day of
the fiscal year and the basis upon which awards will be calculated. Performance
objectives are based upon earnings per share growth, return on equity
performance or other performance criteria established by the administrative
committee. Threshold, plan and maximum targets are established for each
performance cycle, and awards are established for the achievement of each of the
targets. Awards are based upon a percentage of a participant's base salary. The
percentage is lowest for achievement of the threshold targets and is highest if
the maximum targets are achieved or exceeded. If the level of achievement falls
between two of the targets, the award will be based on a percentage of the
participant's base salary that is a straight-line interpolation between the
percentage for the two targets. The percentage of base salary that a participant
can earn as an award can differ among the participants. No awards are earned if
the threshold targets are not satisfied. The maximum award that may be made to
any participant with respect to any performance cycle is $5,000,000.
Payment of Awards
If a participant dies or becomes disabled during a performance cycle, the
participant or his or her estate will receive the award, if any, that would have
been payable to the participant for such performance cycle, pro rated to reflect
the portion of the performance cycle worked by the participant. In all other
cases, a participant must be employed by the Company on the payment date
therefor or must have died, become disabled, retired under the Company's
retirement plan or have been discharged without cause subsequent to the end of
the performance cycle but prior to the date the award is paid in order to remain
eligible to receive an award. If a participant earns an award with respect to a
performance cycle, he or she will receive his or her award in the form of a
single sum cash payment no later than 30 days following the administrative
committee's certification that the performance objectives have been achieved. In
the event of a change of control (as defined in the Plan), each participant will
become immediately entitled to an award under the Plan. Such award will be in an
amount equal to the maximum award such participant could receive for the
performance cycle ending on the last day of the fiscal year during which the
change of control occurs.
Federal Income Tax Consequences of the Payment of Awards
The following discussion of the Federal income tax consequences of the
payment of awards under the Long-Term Incentive Plan is based on an analysis of
the Code, as currently in effect, existing laws, judicial decisions and
administrative rulings and regulations, all of which are subject to change. In
addition to being subject to the Federal income tax consequences described
below, a participant may also be subject to state and local tax consequences in
the jurisdiction in which he or she works and/or resides.
Ordinary income will be recognized by a participant at the time he or she
receives payment of an award under the Long-Term Incentive Plan. This ordinary
(compensation) income will constitute wages subject to withholding and the
Company will be required to make whatever arrangements are necessary to ensure
that the amount of tax required to be withheld is available for payment.
The Company generally will be entitled to a deduction for Federal income
tax purposes in an amount equal to the amount included in income by the
participant.
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<PAGE>
Benefits to be Received Upon Approval
The benefits which a participant will receive in the event that the
Long-Term Incentive Plan is approved by the stockholders or which would have
been received had the Plan been in effect during the 1999 fiscal year cannot be
determined because the goals to be achieved are different for each performance
cycle and may be based on different performance criteria, the receipt of awards
is dependent on achievement of such goals over the three-year performance cycle,
the size of an award is dependent on the extent to which goals are achieved and
the formula for calculating awards can change from performance cycle to
performance cycle.
Approval of the Long-Term Incentive 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
Long-Term Incentive Plan unless otherwise specified in a proxy.
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 February 4, 2001. 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 February 3, 2002, 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 January 31, 1999 was $620,000. The audit and tax
work for the fiscal year ended January 30, 2000 is not yet completed, but it is
estimated that total fees will not change significantly.
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
a 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 December 31, 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 16, 2001 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.
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Copies of the 1999 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 30, 2000 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,
MARK D. FISCHER
Secretary
New York, New York
May 1, 2000
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EXHIBIT A
PHILLIPS-VAN HEUSEN CORPORATION
2000 STOCK OPTION PLAN
1. Purpose. The purposes of the 2000 Stock Option Plan (the "Plan") are
to induce certain individuals to remain in the employ, or to continue to serve
as directors of, or consultants or advisors to, 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 or 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 (i) "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 (ii) options which are not
incentive stock options ("non-qualified stock options") or (iii) 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 27,
2000, subject to ratification by the stockholders of the Company.
3. Stock Subject to Plan. 3,000,000 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-qualified 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
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the Company and the Subsidiaries and such other factors as the Committee in its
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. It is intended that all of the members of the Committee 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
"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 (or more, if there are more than two
members) of its members the authority of the Committee with respect to the grant
of Options to any person who shall not be an officer and/or director of the
Company and who is 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(s) 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 or to an independent consultant
or advisor who renders services to 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 10 years from the date of the
granting thereof;
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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.
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 500,000 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 grant of such Option to him or her and ending on
the day immediately preceding the first 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 first anniversary of the date of the
grant of an Option to him or her and ending on the day immediately preceding the
second anniversary of such date, exercise such Option with respect to
one-quarter of the shares granted thereby, (ii) during the period commencing on
the second anniversary of the date of such grant and ending on the day
immediately preceding the third anniversary of the date of such grant, exercise
such Option with respect to one-half of the shares granted thereby, (iii) during
the period commencing on the third anniversary of the date of such grant and
ending on the day immediately preceding the fourth anniversary of such date,
exercise such Option with respect to three-quarters of the shares granted
thereby and (iv) during the period commencing on the fourth anniversary of the
date of such grant and ending at the time the Option expires pursuant to the
terms hereof, 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; and 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
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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 Committee 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) (1) Notwithstanding the provisions of Section 10(a) or the
last sentence of Section 13 hereof, 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 Section
10(e), a "Change in Control" shall be deemed to occur upon (i) 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, (ii) 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 publicly held corporation,
(iii) 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, (iv) 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 or (v) as defined in the Participant's
employment agreement, if any, with the Company or a Subsidiary. For the purposes
of this paragraph (1) of this Section 10(e), (i) 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, (ii) the term "Person" shall mean any individual, partnership, firm,
trust, corporation or other similar entity and (iii) 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."
(2) In the event that a Change of Control shall
occur, then, from and after the time of such event, neither the provisions of
this Section 10(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 Section 10(d) hereof,
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
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Withdrawal, such Participant may not exercise any Option using cash. For the
purpose of this Section 10(f), a "Hardship Withdrawal" shall mean a distribution
to a Participant provided for in Reg. ss. 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. (a) Except as otherwise provided in Section 11(b)
hereof, 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 such Participant may be exercised only by him or her.
(b) A Participant may, with the prior approval of the
Committee, transfer for no consideration an Option which is a non-qualified
stock option to or for the benefit of the Participant's Immediate Family, a
trust for the exclusive benefit of the Participant's Immediate Family or to a
partnership or limited liability company for one or more members of the
Participant's Immediate Family, subject to such limits as the Committee may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Option prior to such transfer. The term "Immediate
Family" shall mean the Participant's children, stepchildren, grandchildren,
parents, stepparents, grandparents, spouse, former spouse, siblings, nieces,
nephews, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships or any person
sharing the Participant's household (other than a tenant or employee).
12. Termination of Employment or Service. In the event a Participant
leaves the employ or service, 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, in the case of Participant who shall be an employee or
director, retirement, each Option theretofore granted to him or her which shall
not have been exercisable prior to the date of the termination of his or her
employment or service shall terminate immediately. Each other 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 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 with the Company and the Subsidiaries terminates by reason of his or her
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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, (iv) continued substance abuse that renders the Participant
incapable of performing his or her material duties to the satisfaction of the
Company and/or the Subsidiaries, or (v) as defined in the Participant's
employment agreement, if any, with the Company or a Subsidiary and (b) the term
"retirement" shall mean (I) the termination of a Participant's employment with
the Company and all of the Subsidiaries (x) other than for cause or by reason of
his or her death and (y) on or after the earlier to occur of (1) the first day
of the calendar month in which his or her 65th birthday shall occur and (2) 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
and all of the Subsidiaries (x) other than for cause or by reason of his or her
death and (y) 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 Section 9(b) 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
Section 9(b) 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 Section 9(b) 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
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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
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 Section 10(e) and 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-qualified 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 or service 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
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(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 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 27, 2010 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-qualified 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 under this Section 20 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; provided, 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 such Outside
Director for at least six months; and 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 such Outside Director 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 Outside Director, all or any portion of the shares of the Common Stock
issuable upon such exercise.
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(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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EXHIBIT B
PHILLIPS-VAN HEUSEN CORPORATION
PERFORMANCE INCENTIVE BONUS PLAN
1. Purpose. The purposes of the Plan are to induce certain senior executive
employees of the Company and its Subsidiaries to remain in the employ of the
Company and its Subsidiaries, to attract new individuals to enter into such
employ and to provide such persons with additional incentive to promote the
success of the business of the Company and its Subsidiaries.
2. Definitions.
(a) Defined Terms. The following words as used in the Plan shall have
the meanings ascribed to each below.
"Board" means the Board of Directors of the Company.
"Cause" means (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, (iv) continued substance abuse that renders the Participant
incapable of performing his or her material duties to the satisfaction of the
Company and/or the Subsidiaries, or (v) as defined in the Participant's
employment agreement (or other document or documents evidencing the terms of the
Participant's employment), if any, with the Company or a Subsidiary.
"Code" means the Internal Revenue Code of 1986, as in effect
at the time with respect to which such term is used.
"Committee" means the committee of the Board that the Board
shall designate from time to time to administer the Plan or any subcommittee
thereof.
"Company" means Phillips-Van Heusen Corporation, a Delaware
corporation.
"Fiscal Year" means each fiscal year of the Company, as set
forth in the Company's books and records.
"Participant" means each senior executive officer of the
Company or a Subsidiary selected by the Committee to be a participant under the
Plan, as provided herein.
"Plan" means the Phillips-Van Heusen Corporation Performance
Incentive Bonus Plan, as set forth herein and as may be amended from time to
time.
"Subsidiary" has the meaning ascribed to such term in section
424(f) of the Code.
(b) Interpretation.
(i) The definitions of terms defined herein shall apply
equally to both the singular and plural forms of the defined terms.
(ii) Any pronoun shall include the corresponding masculine,
feminine and neuter forms, as the context may require.
(iii) All references herein to Sections shall be deemed to be
references to Sections of the Plan unless the context shall otherwise
require.
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(iv) The headings of the Sections are included for convenience
of reference only and are not intended to be part of or to affect the
meaning or interpretation of the Plan.
3. Committee. The Plan shall be administered by the Compensation Committee
of the Board or such other committee of the Board that the Board shall designate
from time to time. The Committee shall consist of two or more members of the
Board each of whom it is intended would be "outside directors" within the
meaning of section 162(m)(4)(C) of the Code. The Committee shall be appointed
annually by the Board. The Board may, at any time, from time to time, remove any
members of the Committee, with or without cause, appoint additional directors as
members of the Committee and fill vacancies on the Committees, however created.
A majority of the members of the Committee shall constitute a quorum. All
determinations of the Committee shall be made by a majority vote of its members
at a meeting duly called and held.
4. Administration.
(a) Subject to the express provisions of the Plan, the Committee shall
have complete authority to administer and interpret the Plan. The Committee
shall establish the performance objectives for any Fiscal Year in accordance
with Section 5 hereof and certify whether such performance objectives have been
attained. Any determination made by the Committee under the Plan shall be final
and conclusive. The Committee in its sole discretion shall resolve any dispute
or disagreement that may arise hereunder or as a result of or in connection with
any action taken hereunder. The Committee may employ such legal counsel,
consultants and agents (including counsel or agents who are employees of the
Company or a Subsidiary) as it may deem desirable for the administration of the
Plan and may rely upon any opinion received from any such counsel or consultant
or agent and any computation received from such consultant or agent. The Company
shall pay all expenses incurred in the administration of the Plan, including,
without limitation, for the engagement of any counsel, consultant or agent. No
member or former member of the Board or the Committee shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan other than as a result of such individual's willful misconduct.
(b) The Committee may delegate authority to the Chief Executive Officer
of the Company to administer the Plan with respect to employees of the Company
or a Subsidiary whose compensation is not, and is reasonably not expected to
become, subject to the provisions of Section 162(m) of the Code, subject to such
conditions, restrictions and limitations as may be imposed by the Committee. Any
actions duly taken by the Chief Executive Officer with respect to the
administration of the Plan and the qualification for and payment of bonuses to
employees shall be deemed to have been taken by the Committee for purposes of
the Plan.
5. Determination of Participation, Performance Criteria and Bonuses.
(a) Participation and Performance Criteria. The Committee shall
determine who the Participants for each Fiscal Year will be and establish the
performance objective or objectives that must be satisfied in order for a
Participant to be eligible to receive a bonus for such Fiscal Year, within 90
days of the commencement of such Fiscal Year. Notwithstanding the foregoing, if
a person whose compensation is not, and is reasonably not expected to become,
subject to the provisions of Section 162(m) of the Code, becomes employed by the
Company and/or one or more of its Subsidiaries more than 90 days after a Fiscal
Year commences or the Committee determines that a senior executive employee of
the Company and/or one or more of its Subsidiaries whose compensation is not,
and is reasonably not expected to become, subject to the provisions of Section
162(m) of the Code should become a Participant after such 90-day period has
ended, the Committee shall establish the performance objective or objectives
that must be satisfied in order for a Participant to receive a bonus for such
Fiscal Year at the time such determination is made.
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<PAGE>
(b) Performance Objectives. Performance objectives shall be based upon
the achievement of earnings targets, with respect to (i) the Company, for
Participants with corporate responsibilities and (ii) a Subsidiary or a division
or business unit of the Company or a Subsidiary, for Participants who are
responsible for a Subsidiary, division or business unit. For Participants with
responsibility for more than one Subsidiary, division or business unit,
performance objectives shall be established for each such Subsidiary, division
and business unit for which he has responsibility, in each case, as established
by the Committee. The Committee shall establish three earnings targets for each
Fiscal Year for the Company and, to the extent necessary, due to the
responsibilities of a Participant, each Subsidiary, division and business unit.
The three targets shall consist of a threshold level (below which no bonus shall
be payable), a plan level and a maximum level (above which no additional bonus
shall be payable).
(c) Bonus Percentages.
(i) At the time that the Committee determines the Participants
and establishes the performance criteria with respect to a Fiscal Year,
it shall determine the bonus percentage payable to each Participant
with respect to such Fiscal Year if the applicable threshold, plan or
maximum level of earnings is attained. The bonus percentages represent
the percentage of a Participant's base salary that he shall be entitled
to receive as a bonus if the corresponding earnings are attained. There
shall be no limit to the minimum or maximum bonus percentages that may
be established for any Fiscal Year, bonus percentages may differ from
Participant to Participant in any Fiscal Year and a Participant's bonus
percentages may change from year to year, but with respect to each
Participant for each Fiscal Year, the bonus percentage for attaining
the maximum level of earnings shall exceed the bonus percentage for
attaining the plan level of earnings which, in turn, shall exceed the
bonus percentage for attaining the threshold level of earnings. In
determining the bonus percentage for each Participant, the Committee
may take into account the nature of the services rendered by such
Participant, his past, present and potential contribution to the
Company and its Subsidiaries, his seniority with the Company or any of
its Subsidiaries and such other factors as the Committee, in its
discretion, shall deem relevant.
(ii) If a threshold, plan or maximum level of earnings is
achieved, each applicable Participant shall receive a bonus equal to
his base salary as of the last day of the applicable Fiscal Year times
the applicable assigned bonus percentage. If the level of earnings
achieved falls between two of the target levels, then each applicable
Participant shall receive a bonus equal to his base salary as of the
last day of the applicable Fiscal Year times a percentage that is on a
straight line interpolation between the bonus percentages for the two
target levels. If a maximum level of earnings is exceeded, each
applicable Participant shall receive a bonus equal to his base salary
as of the last day of the applicable Fiscal Year times the bonus
percentage assigned to the maximum level of earnings.
(d) Termination of Employment During Fiscal Year. If a Participant's
employment terminates during a Fiscal Year he was determined to be a Participant
by reason of his death or disability and for no other reason, such Participant
or his estate shall receive the bonus, if any, which would otherwise have been
payable to such Participant for such Fiscal Year pro rated to the portion of
such Fiscal Year actually worked by such Participant. Any such bonus shall be
paid promptly after it is determined to be payable or at the end of the vesting
period described in Section 6(a).
(e) Determination of Bonuses. The Committee shall determine whether any
earnings targets were achieved for a Fiscal Year, which Participants shall have
earned bonuses as the result thereof, and the bonus percentage such Participants
are entitled to no later than the end of
3
<PAGE>
the first quarter of the Fiscal Year immediately subsequent to the Fiscal Year
with respect to which the bonuses were earned.
(f) Absolute Maximum Bonus. Notwithstanding any other provision in the
Plan to the contrary, the maximum bonus that may be paid to any Participant
under the Plan with respect to any Fiscal Year may not exceed $3,000,000.
6. Payment.
(a) Vesting. Except as otherwise provided hereunder, payment of any
bonus amount determined under Section 5 shall be subject to vesting, ending on
the last day of the Fiscal Year immediately subsequent to the Fiscal Year with
respect to which such bonus was earned. Payment of such bonus shall be made on
the first day of the Fiscal Year immediately subsequent to the Fiscal Year
during which such bonus vests, together with interest at a rate equal to the
1-year Treasury Bill rate on the date such bonus was determined or any other
reasonable rate determined by the Committee from the date on which such bonus
was determined. Notwithstanding the foregoing, (i) payment of any bonus amount
to a Participant who shall also be a participant in the Company's Long-Term
Incentive Plan shall be made within 30 days after such bonus amount has been
determined under Section 5 hereof and (ii) the Chief Executive Officer shall
have the authority to waive the vesting period (or any portion thereof) at any
time for any Participant whose compensation is not, and is reasonably not
expected to become, subject to the provisions of Section 162(m) of the Code, and
to cause the payment of such bonus at such time, together with interest, if any,
accrued on such payment as of the date of such payment in accordance with the
terms hereof.
(b) Forfeiture. Except as otherwise set forth in Section 5(d), 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 or must have died, become
disabled, retired under the Company's retirement plan or have been discharged
without cause during the vesting period.
(c) Form of Payment. All bonuses payable under the Plan, if any, shall
be payable in cash. All amounts hereunder shall be paid solely from the general
assets of the Company. The Company shall not maintain any separate fund to
provide any benefits hereunder, and each Participant shall be solely an
unsecured creditor of the Company with respect thereto.
7. General Provisions of the Plan.
(a) Effective Date. The Plan became effective on March 2, 2000, subject
to the ratification of the Plan by the Company's stockholders.
(b) Term of the Plan. The Plan shall be effective with respect to
Fiscal Years 2000 through 2004 and shall terminate upon the payment of all
bonuses, if any, earned with respect to Fiscal Year 2004, unless the holders of
a majority of the shares of the Company's Common Stock present in person or by
proxy at any special or annual meeting of the stockholders of the Company
occurring on or prior to the date of the 2004 Annual Meeting of Stockholders
shall approve the continuation of the Plan.
(c) Eligibility. Participation in the Plan with respect to any Fiscal
Year shall be available only to persons who are senior executive employees of
the Company and/or one or more of its Subsidiaries on the date of the
Committee's determination of performance criteria for such Fiscal Year pursuant
to Section 5(a) hereof or who thereafter become employed by the Company and/or
one or more of its Subsidiaries or who are thereafter otherwise determined by
the Committee to be Participants.
4
<PAGE>
(d) Amendment and Termination. Notwithstanding Section 8(b), the Board
or the Committee may at any time amend, suspend, discontinue or terminate the
Plan as it deems advisable; provided, however, that no such action shall be
effective without approval by the holders of a majority of the shares of the
Company's Common Stock present in person or by proxy at any special or annual
meeting of the Company's stockholders, to the extent such approval is necessary
to continue to qualify the amounts payable hereunder to "covered employees"
(within the meaning of section 162(m) of the Code) as deductible under section
162(m) of the Code.
(e) Designation of Beneficiary. Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant's death. Such designation may be changed or canceled at any time
without the consent of any such beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Committee and shall not be
effective until received by the Committee. If no beneficiary has been named, or
the designated beneficiary or beneficiaries shall have predeceased the
Participant, the beneficiary shall be the Participant's spouse or, if no spouse
survives the Participant, the Participant's estate. If a Participant designates
more than one beneficiary, the rights of such beneficiaries shall be payable in
equal shares, unless the Participant has designated otherwise.
(f) Withholding. Any amount payable to a Participant or a beneficiary
under this Plan shall be subject to any applicable Federal, state and local
income and employment taxes and any other amounts that the Company or a
Subsidiary is required at law to deduct and withhold from such payment.
8. No Right of Continued Employment. Neither the existence nor any term of
the Plan shall be construed as conferring upon any Participant any right to
continue in the employment of the Company or any of its Subsidiaries, nor shall
participation herein for any Fiscal Year confer upon any Participant any right
to participate in the Plan with respect to any subsequent Fiscal Year.
9. No Limitation on Corporate Actions. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary from taking any corporate
action, which is deemed by it to be appropriate or in its best interest, whether
or not, such action would have an adverse effect on any awards made under the
Plan. No employee, beneficiary or other person shall have any claim against the
Company or any Subsidiary as a result of any such action.
10. Miscellaneous.
(a) Nonalienation of Benefits. Except as expressly provided herein, no
Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant's interest under the Plan. The
Company's obligations under this Plan are not assignable or transferable except
to (i) a corporation or other entity which acquires all or substantially all of
the Company's assets or (ii) any corporation or other entity into which the
Company may be merged or consolidated. The provisions of the Plan shall inure to
the benefit of each Participant and the Participant's beneficiaries, heirs,
executors, administrators or successors in interest.
(b) Severability. If any provision of this Plan is held unenforceable,
the remainder of the Plan shall continue in full force and effect without regard
to such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.
(c) Governing Law. The Plan shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the conflict of law principles thereof.
5
<PAGE>
EXHIBIT C
PHILLIPS-VAN HEUSEN CORPORATION
LONG-TERM INCENTIVE PLAN
1. Purpose. The purposes of the Plan are to induce the Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer and to
provide such persons with additional incentive to promote the success of the
business of the Company and its Subsidiaries.
2. Definitions.
(a) Defined Terms. The following words as used in the Plan shall have
the meanings ascribed to each below.
"Award" means a benefit payable under the Plan, as provided
herein.
"Board" means the Board of Directors of the Company.
"Cause" means (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, (iv) continued substance abuse that renders the Participant
incapable of performing his or her material duties to the satisfaction of the
Company and/or the Subsidiaries, or (v) as defined in the Participant's
employment agreement (or other document or documents evidencing the terms of the
Participant's employment), if any, with the Company or a Subsidiary.
"Change in Control" means (i) 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, (ii) 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 publicly held corporation, (iii) 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, (iv) 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 or
(v) as defined in the Participant's employment agreement (or other document or
documents evidencing the terms of the Participant's employment), if any, with
the Company or a Subsidiary. For the purposes hereof, (i) the term
<PAGE>
"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, (ii) the term "Person" shall mean any individual,
partnership, firm, trust, corporation or other similar entity and (iii) 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."
"Code" means the Internal Revenue Code of 1986, as in effect
at the time with respect to which such term is used.
"Committee" means the Compensation Committee of the Board or
such other Committee of the Board that the Board shall designate from time to
time to administer the Plan or any subcommittee thereof.
"Company" means Phillips-Van Heusen Corporation, a Delaware
corporation.
"Fiscal Year" means each fiscal year of the Company, as set
forth in the Company's books and records.
"Participant" means each of the Company's Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer.
"Performance Cycle" means a three-year period commencing on
the first day of a Fiscal Year and ending on the last day of the second
subsequent Fiscal Year.
"Plan" means the Phillips-Van Heusen Corporation Long-Term
Incentive Plan, as set forth herein and as may be amended from time to time.
"Subsidiary" has the meaning ascribed to such term in section
424(f) of the Code.
(b) Interpretation.
(i) The definitions of terms defined herein shall apply
equally to both the singular and plural forms of the defined terms.
(ii) Any pronoun shall include the corresponding masculine,
feminine and neuter forms, as the context may require.
(iii) All references herein to Sections shall be deemed to be
references to Sections of the Plan unless the context shall otherwise
require.
(iv) The headings of the Sections are included for convenience
of reference only and are not intended to be part of or to affect the
meaning or interpretation of the Plan.
3. Effective Date. The Plan became effective January 31, 2000, subject to
ratification by the Company's stockholders.
2
<PAGE>
4. Eligibility. Participation in the Plan with respect to any Performance
Cycle shall be available only to the Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer of the Company.
5. Committee. The Plan shall be administered by the Committee. The
Committee shall consist of two or more members of the Board each of whom it is
intended would be "outside directors" within the meaning of section 162(m)(4)(C)
of the Code. The Committee shall be appointed annually by the Board. The Board
may, at any time, from time to time, remove any members of the Committee, with
or without cause, appoint additional directors as members of the Committee and
fill vacancies on the Committee, however created. A majority of the members of
the Committee shall constitute a quorum. All determinations of the Committee
shall be made by a majority vote of its members at a meeting duly called and
held.
6. Administration. Subject to the express provisions of the Plan, the
Committee shall have complete authority to administer and interpret the Plan.
The Committee shall establish the performance objectives for any calendar year
in accordance with Section 5 hereof and certify whether such performance
objectives have been attained prior to the payment of any Award. Any
determination made by the Committee under the Plan shall be final and
conclusive. Any dispute or disagreement that may arise hereunder or as a result
of or in connection with any action taken hereunder shall be resolved by the
Committee in its sole discretion. The Committee may employ such legal counsel,
consultants and agents (including counsel or agents who are employees of the
Company or a Subsidiary) as it may deem desirable for the administration of the
Plan and may rely upon any opinion received from any such counsel or consultant
or agent and any computation received from such consultant or agent. The Company
shall pay all expenses incurred in the administration of the Plan, including,
without limitation, for the engagement of any counsel, consultant or agent. No
member or former member of the Board or the Committee shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan other than as a result of such individual's willful misconduct.
7. Determination of Participation, Performance Criteria and Bonuses.
(a) Participation and Performance Criteria. The Committee shall
determine who the Participants for each Performance Cycle will be and establish
the performance objective or objectives that must be satisfied in order for a
Participant to receive an Award for such Performance Cycle, within 90 days of
the commencement of such Performance Cycle.
(b) Performance Objectives. Performance objectives shall be based upon
earnings per share growth, return on equity performance or such other
performance criteria as may be established by the Committee. The Committee shall
establish three targets for each Performance Cycle for the performance
objectives established by the Committee. The three targets shall consist of a
threshold level (below which no Award shall be payable), a plan level and a
maximum level (above which no additional Award shall be payable).
3
<PAGE>
(c) Award Percentages.
(i) At the time that the Committee determines the Participants
and establishes the performance objectives with respect to a
Performance Cycle, it shall determine the Award payable to each
Participant with respect to such Performance Cycle if the applicable
threshold, plan or maximum target level is attained. An Award for a
Performance Cycle shall be equal to a percentage of a Participant's
base salary on the last day of such Performance Cycle. In determining
the Award percentage for each Participant, the Committee may take into
account the nature of the services rendered by such Participant, his
past, present and potential contribution to the Company and its
Subsidiaries, his seniority with the Company or any of its Subsidiaries
and such other factors as the Committee, in its discretion, shall deem
relevant.
(ii) If a threshold, plan or maximum target level is achieved,
each applicable Participant shall receive the applicable Award
determined, as provided above, for the target level achieved. If the
level achieved falls between two of the target levels, a Participant
shall receive an Award based on a straight line interpolation between
the Awards for the two target levels.
(d) Termination of Employment During Performance Cycle. If a
Participant's employment terminates during a Performance Cycle for which he was
determined to be a Participant by reason of his death or disability, such
Participant or his estate shall receive the Award, if any, which would otherwise
have been payable to such Participant for such Performance Cycle pro rated to
the portion of such Performance Cycle actually worked by such Participant. Any
such Award shall be paid promptly after it is determined to be payable.
(e) Determination of Awards. The Committee shall determine whether any
targets were achieved for a Performance Cycle, which Participants shall have
earned bonuses as the result thereof, and the Awards, if any, to which such
Participants are entitled no later 90 days subsequent to the last day of the
Performance Cycle with respect to which such Awards were earned.
(f) Change in Control. Notwithstanding the foregoing, in the event that
there shall be a Change In Control during the third year of a Performance Cycle,
each Participant for such Performance Cycle shall be entitled to receive the
Award payable to such Participant if the maximum target level for such
Performance Cycle had been achieved.
(g) Absolute Maximum Award. Notwithstanding any other provision in the
Plan to the contrary, the maximum Award that may be paid to any Participant
under the Plan with respect to any Performance Cycle may not exceed $5,000,000.
8. Payment.
(a) Timing. Payment of any Award determined under Section 7 shall be
paid (i) within 30 days following the Compensation Committee's certification as
to performance results as set forth in Section 7(e) above or (ii) in the case of
an Award payable in accordance with the provisions of Section 7(f) above, within
30 days of a Change in Control.
4
<PAGE>
(b) Forfeiture. Except as otherwise set forth in Section 7(d), in order
to remain eligible to receive an Award, a Participant must be employed by the
Company on the payment date or must have died, become disabled, retired under
the Company's retirement plan or have been discharged without cause subsequent
to the end of the Performance Cycle and prior to the payment date.
(c) Form of Payment. All Awards payable under the Plan, if any, shall
be payable in cash. All amounts hereunder shall be paid solely from the general
assets of the Company. The Company shall not maintain any separate fund to
provide any benefits hereunder, and each Participant shall be solely an
unsecured creditor of the Company with respect thereto.
9. General Provisions of the Plan.
(a) Term of the Plan. The Plan shall be effective with respect to
Performance Cycles commencing in 2000 through 2004 and shall terminate upon the
payment of all Awards, if any, earned with respect to the Performance Cycle
commencing in 2004, unless the holders of a majority of the shares of the
Company's Common Stock present in person or by proxy at any special or annual
meeting of the stockholders of the Company occurring on or prior to the date of
the 2004 Annual Meeting of Stockholders shall approve the continuation of the
Plan.
(b) Designation of Beneficiary. Each Participant may designate a
beneficiary or beneficiaries (which beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant's death. Such designation may be changed or canceled at any time
without the consent of any such beneficiary. Any such designation, change or
cancellation must be made in a form approved by the Committee and shall not be
effective until received by the Committee. If no beneficiary has been named, or
the designated beneficiary or beneficiaries shall have predeceased the
Participant, the beneficiary shall be the Participant's spouse or, if no spouse
survives the Participant, the Participant's estate. If a Participant designates
more than one beneficiary, the rights of such beneficiaries shall be payable in
equal shares, unless the Participant has designated otherwise. (c) Withholding.
Any amount payable to a Participant or a beneficiary under this Plan shall be
subject to any applicable Federal, state and local income and employment taxes
and any other amounts that the Company or a Subsidiary is required at law to
deduct and withhold from such payment.
10. No Right of Continued Employment. Neither the existence nor any term of
the Plan shall be construed as conferring upon any Participant any right to
continue in the employment of the Company or any of its Subsidiaries, nor shall
participation herein for any Performance Cycle confer upon any Participant any
right to participate in the Plan with respect to any subsequent Performance
Cycle.
11. No Limitation on Corporate Actions. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary from taking any corporate
action which is deemed by it to be appropriate or in its best interest, whether
or not such action would have an adverse effect on any Awards made under the
Plan. No employee, beneficiary or other person shall have any claim against the
Company or any Subsidiary as a result of any such action.
5
<PAGE>
12. Miscellaneous.
(a) Nonalienation of Benefits. Except as expressly provided herein, no
Participant or beneficiary shall have the power or right to transfer,
anticipate, or otherwise encumber the Participant's interest under the Plan. The
Company's obligations under this Plan are not assignable or transferable except
to (i) a corporation or other entity which acquires all or substantially all of
the Company's assets or (ii) any corporation or other entity into which the
Company may be merged or consolidated. The provisions of the Plan shall inure to
the benefit of each Participant and the Participant's beneficiaries, heirs,
executors, administrators or successors in interest.
(b) Severability. If any provision of this Plan is held unenforceable,
the remainder of the Plan shall continue in full force and effect without regard
to such unenforceable provision and shall be applied as though the unenforceable
provision were not contained in the Plan.
(c) Governing Law. The Plan shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to the conflict of law principles thereof.
13. Amendment and Termination. The Board or the Committee may at any
time amend, suspend, discontinue or terminate the Plan as it deems advisable;
provided, however, that no such action shall be effective without approval by
the holders of a majority of the shares of the Company's Common Stock present in
person or by proxy at any special or annual meeting of the Company's
stockholders, to the extent such approval is necessary to continue to qualify
the amounts payable hereunder to "covered employees" (within the meaning of
section 162(m) of the Code) as deductible under section 162(m) of the Code.
6
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PHILLIPS-VAN HEUSEN CORPORATION
200 Madison Avenue
New York, New York 10018-3903
BRUCE J. KLATSKY and MARK WEBER, 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 13, 2000, and any adjournments thereof, on the matters printed on
the reverse side.
This Proxy when properly executed will be voted on 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 the nominees for director;
o FOR the approval of the Company's 2000 Stock Option Plan;
o FOR the approval of the Company's Performance Incentive Bonus Plan;
o FOR the approval of the Company's Long-Term Incentive 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, NY 10203-0287
<PAGE>
Detach Proxy Card Here
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____
|____|
The Board recommends a vote FOR proposals 1, 2, 3, 4 and 5 below:
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<TABLE>
<S> <C> <C> <C>
1. Election of the nominees for FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS*
director listed below: listed below /X/ for all nominees listed below /X/ /X/
</TABLE>
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, 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 ____________________________________________________________________
<TABLE>
<S> <C>
2. Approval of the Company's 2000 Stock Option Plan. 3. Approval of the Company's Performance Incentive Bonus Plan.
FOR /X/ AGAINST /X/ ABSTAIN /X/ FOR /X/ AGAINST /X/ ABSTAIN /X/
4. Approval of the Company's Long-Term Incentive Plan. 5. Appointment of auditors.
FOR /X/ AGAINST /X/ ABSTAIN /X/ FOR /X/ AGAINST /X/ ABSTAIN /X/
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
Address change
and/or comments /X/
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:_________________________________, 2000
_____________________________________________
Signature
_____________________________________________
Signature, if held jointly
To vote, fill in (X) with black or blue ink, only. /X/
----
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Please Detach Here
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