<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to [section]240.14a-11(c) or
[section]240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
J. Baker, Inc.
(Name of Registrant as Specified In Its Charter)
J. Baker, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
J. BAKER, INC.
555 TURNPIKE STREET
CANTON, MASSACHUSETTS 02021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1996
To the Stockholders of
J. BAKER, INC.
Notice is hereby given that the Annual Meeting of Stockholders of J. Baker,
Inc. (the "Company") will be held at the offices of the Company, 555 Turnpike
Street, Canton, Massachusetts on Wednesday, June 5, 1996, at 9:30 a.m., for the
following purposes:
1. To elect three Class I Directors to serve for a three-year term until
the 1999 Annual Meeting and until their respective successors are
elected and qualified;
2. To ratify the selection of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending February 1, 1997; and
3. To consider and act upon any matters incidental to the foregoing or any
other matters which may properly come before the meeting or any
adjournments thereof.
Only stockholders of record at the close of business on April 18, 1996 will
be entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
ALAN I. WEINSTEIN
Clerk
Canton, Massachusetts
May 3, 1996
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU SO CHOOSE, YOU
MAY VOTE YOUR SHARES IN PERSON AT THE MEETING.
<PAGE> 3
J. BAKER, INC.
555 TURNPIKE STREET
CANTON, MASSACHUSETTS 02021
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 5, 1996
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about May 3, 1996. The accompanying proxy is
solicited by the Board of Directors of J. Baker, Inc. (the "Company") for use at
its Annual Meeting of Stockholders to be held at the offices of the Company, 555
Turnpike Street, Canton, Massachusetts on June 5, 1996, at 9:30 a.m., and any
adjournments or postponements thereof. The cost of solicitation of proxies will
be borne by the Company. Directors, officers and a limited number of employees
may assist in the solicitation of proxies by mail, telephone and personal
interview without additional compensation.
When a proxy is returned properly signed, the shares represented thereby
will be voted by the persons named as proxies in accordance with the
stockholder's directions. If a proxy is signed and no instructions are given,
the shares will be voted "FOR" the nominees named herein under proposal number 1
and "FOR" proposal number 2 as set forth in the preceding Notice of Annual
Meeting, and in the proxies' discretion as to other matters that may properly
come before the meeting. The presence of a stockholder at the Annual Meeting
will not automatically revoke a stockholder's proxy. A stockholder may, however,
revoke a proxy at any time prior to the voting thereof on any matter by filing
with the Clerk of the Company a written notice of revocation, by delivering a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting in person.
The Board of Directors has fixed April 18, 1996 as the record date for the
meeting. Only stockholders of record on the record date are entitled to notice
of and to vote at the meeting and any adjournments or postponements thereof. As
of April 18, 1996, there were 13,879,386 shares of Common Stock, par value $.50
per share ("Common Stock"), of the Company issued and outstanding. Each share is
entitled to one vote. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business. Abstentions and broker non-votes are not counted for purposes of
determining whether a proposal presented to stockholders has been approved.
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<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information as of April 1, 1996,
with respect to the shares of Common Stock of the Company beneficially owned by
(i) any person who is known to the Company to be the beneficial owner of more
than 5% of the outstanding Common Stock of the Company, (ii) each Director of
the Company and each of the nominees for election as Director of the Company,
(iii) each of the executive officers named in the Summary Compensation Table
beginning on page 11 (the "Summary Compensation Table") and (iv) all Directors
and executive officers as a group.
<CAPTION>
AMOUNT AND
NATURE OF
TITLE NAME, AND WITH RESPECT TO OWNERS BENEFICIAL PERCENT
OF CLASS OF 5% OR MORE, ADDRESS OWNERSHIP(1) OF CLASS
- ------------- ---------------------------------------------------- ------------- --------
<S> <C> <C> <C>
Common Stock State of Wisconsin Investment Board 1,056,000(2) 7.6%
$.50 par P.O. Box 7842
value Madison, WI 53707
Merrill Lynch & Co., Inc. 1,439,432(3) 10.4%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
M.D. Sass Associates, Inc. 1,163,100(4) 8.4%
1185 Avenue of the Americas
New York, NY 10036
FMR Corp. 1,173,627(5) 8.5%
82 Devonshire Street
Boston, MA 02109
Goldman Sachs & Co. 1,225,670(6) 8.8%
85 Broad Street
New York, NY 10004
Strong Capital Management, Inc. 753,500(7) 5.4%
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
First Pacific Advisors, Inc. 850,500(8) 6.1%
11400 West Olympic Boulevard
Suite 1200
Los Angeles, California 90064
Sherman N. Baker 344,566(9) 2.5%
J. Christopher Clifford 32,000(10) *
Ervin D. Cruce 30,000(11) *
Nancy Ryan 5,000(12) *
Douglas J. Kahn 5,000(12) *
David Pulver 37,193(13) *
Melvin M. Rosenblatt 26,500(14) *
Stanley Simon 32,500(11) *
Jerry M. Socol 150,607(15) 1.1%
David A. Levin 0 *
Larry I. Kelley 29,800(12) *
Alan I. Weinstein 101,491(16) *
All Directors and Executive Officers as a Group
(16 persons) 868,217(17) 6.1%
</TABLE>
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<PAGE> 5
- ---------------
* Less than 1%
(1) Unless otherwise noted each person has sole voting and investment power
with respect to such shares.
(2) Information based solely on Schedule 13G of State of Wisconsin Investment
Board dated February, 1996. The beneficial owner has reported that it has
sole voting and dispositive power with respect to all of such shares.
(3) Information based solely on Schedule 13G of Merrill Lynch & Co., Inc. filed
on behalf of itself and certain of its subsidiaries dated February 12,
1996. Such information indicates that shares are held by Merrill Lynch &
Co., Inc., Merrill Lynch Group, Inc. and Princeton Services, Inc. as parent
holding companies in accordance with Rule 13d-1(b)(ii)(G) of the Securities
Exchange Act of 1934, and by Merrill Lynch Asset Management, L.P.; a
registered investment advisor. The Schedule 13G indicates that shares are
held as follows: (i) 1,439,432 are held by Merrill Lynch & Co., Inc., which
includes 218,606 shares issuable upon conversion of the Company's
convertible subordinated debentures; (ii) 1,438,606 are held by Merrill
Lynch Group, Inc. and Princeton Services, Inc.; and, (iii) 918,943 are held
by Merrill Lynch Asset Management, L.P. on behalf of client discretionary
investment accounts. The information indicates that each entity has shared
voting and dispositive power with respect to such shares.
(4) Information based solely on Schedule 13G of M.D. Sass Associates, Inc. and
M.D. Sass Investment Services, Inc., dated February 14, 1996. The
beneficial owners have reported that they have sole voting power with
respect to 1,151,600 shares and sole dispositive power with respect to
1,163,100 shares.
(5) Information based solely on Schedule 13G of FMR Corp., Edward C. Johnson,
III, Chairman of FMR Corp. and Abigail P. Johnson, Director of FMR Corp.
dated February 14, 1996. The beneficial owner has reported that it has sole
voting power with respect to 149,456 shares and sole dispositive power with
respect to 1,173,627 shares. According to such information, Mr. Johnson,
Abigail P. Johnson and various Johnson family members and trusts for the
benefit of Johnson family members, through their ownership of voting common
stock of FMR Corp. and the execution of a family shareholders' agreement,
may be deemed to form a controlling group with respect to FMR Corp. The
information indicates that Fidelity Management & Research Company
("Fidelity"), a wholly owned subsidiary of FMR Corp., is the beneficial
owner of 970,838 shares of the Company's Common Stock as a result of acting
as investment advisor to several registered investment companies (the
"Fidelity Funds"). Such shares include 819,838 shares of the Company's
common stock issuable upon the conversion of convertible subordinated
debentures. Each of Mr. Johnson, FMR Corp., through its control of Fidelity
and the Fidelity Funds have sole dispositive power over such 970,838
shares. Neither Mr. Johnson nor FMR Corp. has sole or shared voting power
over such shares, as such power resides with the Board of Trustees of the
Fidelity Funds and is carried out by Fidelity under written guidelines
established by the Board of Trustees. In addition, such information
indicates that Fidelity Management Trust Company ("Fidelity Trust"), a bank
and a wholly owned subsidiary of FMR Corp., is the beneficial owner of
202,789 shares of the Company's common stock as a result of its serving as
investment manager of certain institutional accounts. Mr. Johnson and FMR
Corp., through its control of Fidelity Trust, each has sole dispositive
power over all such shares, sole voting power over 149,456 shares and no
voting power with respect to 53,333 shares of the Company's common stock
owned by the institutional account as reported above.
(6) Information based solely on Schedule 13G of Goldman Sachs & Co., the
Goldman Sachs Group, L.P. and the Goldman Sachs Equity Portfolio, Inc.
dated February 14, 1996. Such information indicates that Goldman Sachs &
Company and the Goldman Sachs Group, L.P. share voting and dispositive
power
3
<PAGE> 6
with respect to 1,225,670 shares and Goldman Sachs Equity Portfolios, Inc.
on behalf of Goldman Sachs Small Cap Equity Fund shares voting and
dispositive power with respect to 992,708 shares.
(7) Information based solely on joint filing on Schedule 13G of Strong Capital
Management, Inc., a registered investment advisor and Mr. Richard S.
Strong, Chairman of the Board and principal shareholder of Strong Capital
Management, Inc. dated February 13, 1996. Such information indicates that
each of Strong Capital Management, Inc. and Mr. Richard S. Strong have sole
voting and sole dispositive power with respect to 753,500 shares.
(8) Information based solely on Schedule 13G of First Pacific Advisors, Inc.
dated February 13, 1996. The beneficial owner has reported that it has
shared voting power with respect to 810,500 shares and shared dispositive
power with respect to 850,500 shares.
(9) Includes currently exercisable options with respect to 36,698 shares.
(10) Includes 2,000 shares held by a charitable trust of which Mr. Clifford is a
trustee and as to which Mr. Clifford disclaims beneficial ownership and
currently exercisable options with respect to 20,000 shares.
(11) Includes currently exercisable options with respect to 25,000 shares.
(12) Represents currently exercisable options.
(13) Includes currently exercisable options with respect to 10,000 shares.
(14) Includes 1,000 shares owned by Mr. Rosenblatt's wife as to which Mr.
Rosenblatt disclaims beneficial ownership and currently exercisable options
with respect to 22,500 shares.
(15) Includes 7,000 shares owned by Mr. Socol's wife as to which Mr. Socol
disclaims beneficial ownership and currently exercisable options with
respect to 81,357 shares.
(16) Includes currently exercisable options with respect to 25,003 shares.
(17) Includes currently exercisable options with respect to 314,089 shares.
Includes 806 shares issuable upon the conversion of convertible
subordinated debentures.
(PROPOSAL NUMBER 1)
ELECTION OF DIRECTORS
Pursuant to Massachusetts law, the Board of Directors of the Company has
voted to fix the number of directors at ten. The Board of Directors is divided
into three classes of approximately equal size. The members of each class are
elected for terms to continue until the annual meeting of stockholders held in
the third year following the year of their election and until their respective
successors are elected and qualified. Consequently, the term of office of the
nominees elected to the Board of Directors at the 1996 annual meeting will
continue until the annual meeting of stockholders to be held in 1999 and until
their respective successors are elected and qualified.
The nominees for the three Class I Directors to be voted upon at the
meeting are Sherman N. Baker, Ervin D. Cruce and Melvin M. Rosenblatt, the
current holders of the Class I directorships. PROXIES WILL BE VOTED FOR THESE
NOMINEES UNLESS OTHERWISE SPECIFIED IN THE PROXY. Management does not
contemplate that any of the nominees will be unable to serve, but in such an
event, proxies solicited hereby will be voted for the election of another person
or persons, if any, to be designated by the Board of Directors.
The affirmative vote of a plurality of the outstanding shares of the
Company's Common Stock present or represented at the Annual Meeting is required
for the election of Directors.
4
<PAGE> 7
<TABLE>
The following table sets forth information regarding Messrs. Baker, Cruce
and Rosenblatt, the Board of Directors' nominees for election as Directors, as
well as information regarding each Director whose term is not to expire until
the 1997 or 1998 Annual Meeting of Stockholders.
<CAPTION>
PRESENT PRINCIPAL EMPLOYMENT AND DIRECTOR
NAME AGE PRIOR BUSINESS EXPERIENCE SINCE
- -------------------------------------------- --- ------------------------------------------- -----
<S> <C> <C> <C>
(NOMINEES FOR CLASS I TERM TO EXPIRE IN 1999)
Sherman N. Baker............................ 76 Chairman of the Board of the Company. Chief 1985
Executive Officer of the Company and its
predecessor from 1970 until March 1990.
Ervin D. Cruce.............................. 64 Since January 1992, individual investor. 1986
During 1991, General Partner in the firm of
Cruce & O'Brien. Since April 1985,
Partner of BMA, the general partner of
Investment Limited Partnership. Former
Vice President of RER Texas, Inc.,
general partner of BMA. Prior to 1985,
partner in accounting firm of KPMG Peat
Marwick, where associated for 32 years.
Director of Central BanCorporation, Inc.
Melvin M. Rosenblatt........................ 65 Certified public accountant and Chairman of 1993
the Board and Chief Executive Officer of
Greenberg, Rosenblatt, Kull & Bitsoli,
P.C., a public accounting firm which he
has been associated with since 1957.
Chairman of the Board of Trustees of
Clark University in Worcester,
Massachusetts. Director and Chairman of
the Asset Development Committee of the
Greater Worcester Community Foundation.
Formerly a Director of Ames Department
Stores, Inc., from 1979 through 1992.
(CONTINUING DIRECTORS -- CLASS II TERM TO EXPIRE IN 1997)
Stanley Simon............................... 78 Since 1958, Principal of Stanley Simon & 1985
Associates. Director of the Company's
predecessor, National Shoes, Inc., from
1965 to 1985. Director of Gerber
Scientific, Inc., Vornado Realty Trust
and General Microwave Corp.
Nancy Ryan.................................. 46 Since 1980 President of Pro Media, Inc., 1995
Prior to 1980, Vice President/Media
Director of S & N Advertising.
Douglas J. Kahn............................. 39 Since 1993 President and Chief Operating 1995
Officer of the Royal Home Fashions Division
of Croscill Home Fashions Inc., Prior to
1993, Senior Vice President -- Merchant
Banking Group, Donaldson, Lufkin and
Jenrette Securities Corporation.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
PRESENT PRINCIPAL EMPLOYMENT AND DIRECTOR
NAME AGE PRIOR BUSINESS EXPERIENCE SINCE
- --------------------------------- --- ----------------------------------------- -----
<S> <C> <C> <C>
(CONTINUING DIRECTORS -- CLASS III TERM TO EXPIRE IN 1998)
J. Christopher Clifford.......... 50 Since 1986, General Partner of Berkshire 1985
Partners and affiliated partnerships.
Jerry M. Socol................... 54 President of the Company since September 1988
1988 and Chief Executive Officer of the
Company since March 1990. Chief Executive
Officer of Filene's Department Stores
("Filene's"), August 1987 to June 1988.
President of Filene's, January 1984 to
August 1987. Director of County Seat,
Inc.
David Pulver..................... 54 President of Cornerstone Capital, Inc. 1993
Chairman of the Board of Directors of Morse
Shoe, Inc., 1992-January 1993. Chairman
of the Board and Co-Chief Executive
Officer of The Children's Place,
1968-1984. Director of Costco Wholesale
Corporation, a subsidiary of PriceCostco;
County Seat, Inc. and Argyle Television,
Inc. Trustee of Colby College in
Waterville, Maine.
</TABLE>
INFORMATION ABOUT BOARD OF DIRECTORS AND COMMITTEES
Directors who are not employees of the Company are eligible to participate
in the Company's 1992 Directors' Stock Option Plan (the "Directors' Plan") and,
if they are not otherwise compensated by the Company currently receive an annual
fee of $20,000 and an annual fee of $2,500 for each committee of the Board on
which they serve. Pursuant to the Directors' Plan, each eligible director is
automatically granted an option to purchase 2,500 shares of the Company's Common
Stock upon his or her initial election to the Board of Directors and at the
close of business on the fifth business day following the Company's annual
meeting of stockholders, at an exercise price equal to the closing price of the
Company's Common Stock on the date of grant. In fiscal 1996, pursuant to the
Directors' Plan, each of Messrs. Clifford, Cruce, Kahn, Pulver, Rosenblatt,
Simon and Ms. Ryan were granted an option to purchase 2,500 shares of the
Company's Common Stock at a per share exercise price of $12.75, the fair market
value of the Company's Common Stock on the date of grant.
The Company's Board of Directors held 16 meetings during fiscal 1996. All
of the Directors attended at least 75% of these meetings and any meetings of any
committees of which such Director was a member.
The Board of Directors has standing Audit, Compensation, Executive and
Nominating Committees. These committees are reconstituted at the first meeting
of the Board following the annual meeting of stockholders.
The Audit Committee, which met two times during fiscal 1996, meets with the
Company's independent auditors and the principal financial personnel of the
Company to review the results of the annual audit. The Audit Committee also
reviews the scope of, and approves fees for, audit and non-audit services
performed by the independent auditors, reviews the independence of the
independent auditors and reviews the adequacy and effectiveness of internal
accounting controls. The present members of the Audit Committee are Messrs.
Rosenblatt (Chairman), Cruce, Kahn, Pulver and Simon.
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<PAGE> 9
The Compensation Committee, which held five meetings during fiscal 1996,
reviews and makes recommendations to the full Board regarding the compensation
of senior officers of the Company. The present members of this committee are
Messrs. Clifford (Chairman), Kahn, Rosenblatt, Simon, and Ms. Ryan.
The Executive Committee, which met eight times during fiscal 1996, monitors
and follows developments in the Company's business between meetings of the Board
of Directors. The Executive Committee has no authority to take or authorize any
official actions on behalf of the Company or to act in place of the Board of
Directors. The present members of this committee are Messrs. Baker, Clifford,
Rosenblatt and Socol.
The Nominating Committee, which met one time during fiscal 1996,
identifies, evaluates and nominates candidates for election to the Board. The
present members of this committee are Messrs. Pulver (Chairman), Cruce and Ms.
Ryan.
On October 27, 1993, Sherman N. Baker entered into a consent decree
settling SEC allegations of certain Federal securities law violations with
respect to sales of Company stock which Mr. Baker had made in the fall of 1991
for estate planning purposes. The Company's Board of Directors is aware of the
SEC allegations and Mr. Baker's settlement thereof, in which he neither admitted
nor denied the allegations. The Board was aware that several factors came into
play in Mr. Baker's decision to settle the claim, including the stress and
significant costs of continuing legal proceedings. The Board notes further Mr.
Baker's long and distinguished record of service and dedication to the Company
and reaffirms its confidence in Mr. Baker's integrity and ability to serve the
Company as a Director.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of five outside Directors. The Board of Directors delegates to the
Compensation Committee the responsibility for developing and administering the
policies which govern the total compensation program for executive officers of
the Company. The Committee also administers the Company's 1985 Amended and
Restated Stock Option Plan (the "1985 Plan"), the 1994 Equity Incentive Plan
(the "1994 Plan") and the Cash Incentive Compensation Plan (the "Incentive
Plan") for all plan participants, including awards made to the executive
officers of the Company. In making pay decisions for the named executives whose
compensation is detailed in this proxy statement (other than the Chief Executive
Officer and the Chairman of the Board), the Committee also takes into
consideration the views and recommendations of the Chief Executive Officer
concerning each executive's overall contribution to the Company's performance.
The Committee has prepared the following report to summarize the executive
compensation approach of the Company and describe specific decisions made by the
Committee with respect to the Chief Executive Officer's compensation and future
compensation guidelines.
The general philosophy of the Committee is to link overall executive
compensation with the performance of the Company and the individual executive,
with operating division performance also emphasized for division executives. The
focus of the performance is on the achievement of both annual and long-term
business objectives that contribute to the creation of long-term stockholder
value. This philosophy is reflected in the Company's executive compensation
approach that provides a major portion of total compensation in
pay-for-performance programs that consist of long-term stock-based incentives,
an annual incentive plan and merit salary increases. The combination of these
compensation elements is intended to produce total pay at the median of the
marketplace among similar-size specialty store retailers when the Company's
performance also reflects median performance in the same group. Similarly, total
compensation is intended to vary above or below the competitive median when
Company performance varies from the comparative industry median.
With respect to the long-term compensation arrangement for the Company's
Chief Executive Officer, Mr. Socol, the Committee has implemented a program
which offers Mr. Socol an opportunity to substantially increase his equity
ownership in the Company over several years if the Company meets important
7
<PAGE> 10
performance targets that link to significant stockholder value. The four
components of Mr. Socol's total compensation program are base salary, grants of
stock options, grants of performance shares and an enhanced annual incentive
stock bonus opportunity which is linked to the Company's Incentive Plan. The
equity incentive components of Mr. Socol's total compensation are emphasized in
this arrangement to reflect the Committee's philosophy that Mr. Socol's total
compensation should substantially depend on the Company's stock price. The
specific elements of Mr. Socol's compensation are discussed in further detail
below.
Base Salary
Base salaries for the Company's executive officers are reviewed annually
and are determined through an assessment of individual performance against
assigned objectives and key qualitative factors that include personal
accomplishments, strategic impact and career contribution to the Company. As a
guide for setting salaries, the Committee relies on competitive salary ranges
developed by the Company's human resources department and its compensation
consultants. These ranges reflect median market practice for positions of
comparable responsibility and scope in the specialty retailing marketplace.
On an annual basis, each executive of the Company engages in a formal
system of assessment known as the Performance Management Review Process whereby
goals and objectives for each performance period are established by the
executive which are subject to periodic review and assessment during the
performance period. At the conclusion of the performance period, the executive
completes a self-appraisal and a formal review of his or her performance is
conducted by the evaluating manager. The assessment of Mr. Socol's performance
as Chief Executive Officer is the responsibility of the Committee. The base
salary determined for Mr. Socol for fiscal year 1997 remains at $450,000, the
same salary paid for fiscal year 1996 and fiscal year 1995. In setting Mr.
Socol's base salary, the Committee considered his performance in managing the
Company's overall financial and operating results and competitive salary ranges,
as well as the opportunities Mr. Socol has been offered to enhance total
compensation through the equity incentive arrangements implemented by the
Committee.
Cash Incentive Compensation Plan
The Company's Incentive Plan represents an annual incentive opportunity
designed to reward certain key employees for the performance of the Company
relative to the achievement of pre-determined profit goals established for the
year. Such goals are based on the Company's budgeted corporate pre-tax operating
income as well as on each operating division's pre-tax operating income, prior
to allocation of corporate overhead. Payments under the Incentive Plan are based
on the achievement of such corporate and divisional profit goals as are
recommended by management. These goals are subject to review by the Committee
and are then recommended to the full Board for approval.
The Incentive Plan is linked to relative achievement of goals that are
defined by a scale of threshold, target and superior profit results for the
fiscal year, with target performance linked to a target award size that
approximates median bonus opportunity in the marketplace. For the Incentive Plan
participants, the target award guidelines range by position level from 12% to
54% of base salary, with the Chief Executive Officer at the 54% level. The
threshold guideline for awards represents a percentage of each position's target
size, as determined by the Committee from year to year, and the maximum
guideline (which ties to superior profit results) represents 175% of the target
size. Each executive's award opportunity is also allocated on a weighted basis
across the operating units for which the executive has responsibility, including
a portion allocated to corporate profit results. For Mr. Socol, the entire award
opportunity is based on consolidated corporate results. In addition to these
award funding guidelines, the Incentive Plan provides for an individual
performance modifier that can adjust a participant's funded award by as much as
50% upward or downward to reflect all aspects of the participant's performance
for the fiscal year.
As indicated, one component of Mr. Socol's total compensation program is an
enhanced annual incentive stock bonus opportunity. Under this component of the
program, any amount awarded to Mr. Socol under the
8
<PAGE> 11
provisions of the Incentive Plan which exceeds $100,000 will be awarded to him
half in cash and half in shares of equivalent value of Common Stock of the
Company. In addition, as a bonus enhancement, that portion of any Incentive Plan
award which is made in stock will be matched by the Company with an equal number
of additional shares of Common Stock of the Company. This component of Mr.
Socol's compensation program will operate for five fiscal years, beginning with
fiscal year 1995 and ending with fiscal year 1999. Further, the individual
performance modifier provided for in the Incentive Plan will apply to Mr. Socol
only to the extent that his incentive compensation is modified downward to
reflect individual performance factors. This change in the Incentive Plan
provisions is necessary to comply with certain deductibility rules under Section
162(m) of the Internal Revenue Code.
For fiscal year 1996, Mr. Socol did not receive an award under the
Incentive Plan since the Company did not achieve its corporate pre-tax operating
income goals. Also, no stock bonus award was made to Mr. Socol under the
enhanced stock bonus component described above.
1985 Stock Option Plan and 1994 Equity Incentive Plan
The Company's 1985 Plan terminated, according to its terms, in June, 1995.
Although stock option grants are still outstanding under this Plan, no future
grants can be made from the Plan. However, on June 7, 1994, the Stockholders of
the Company voted to adopt the 1994 Plan which allows for the issuance of
incentive and non-qualified stock options, restricted stock grants, unrestricted
stock grants and performance share awards to executives and other key employees
of the Company. The 1994 Plan provides increased flexibility in the award of
equity based compensation through a combination of the incentive vehicles
authorized under the Plan and furthers the Committee's objective of aligning
executive officer compensation closely with long term stockholder interests. As
with the 1985 Plan, the 1994 Plan is administered by the Committee, which has
full power to select, from among the employees eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
participants, and to determine the specific terms of each award, subject to the
provisions of the 1994 Plan.
Grants of incentive or non-qualified stock options are made to executives
and other key employees of the Company under the 1994 Plan. As referenced,
grants of stock options under the 1994 Plan are made to such executives and
other key employees to enable them to participate in the creation of stockholder
value in the Company as well as to permit the accumulation of an equity interest
in the Company, thereby aligning the interests of executives with those of
stockholders. Options granted under the 1985 Plan and the 1994 Plan generally
vest at the rate of 25% per year and the term of each option is ten years.
Individual grants under the 1985 Plan and the 1994 Plan have been and are based
upon the level of position held, individual contribution to the achievement of
the Company's financial goals and such other performance factors as management
and the Committee may consider.
The Committee may also award shares of Common Stock to officers and other
eligible employees under the 1994 Plan subject to such conditions and
restrictions as the Committee may determine ("Restricted Stock"). Such
conditions and restrictions may include the achievement of certain performance
goals and/or continued employment with the Company through specified periods of
time. The purchase price, if any, of shares of Restricted Stock will be
determined by the Committee and failure to achieve performance goals or other
restrictions as determined by the Committee may result in employee forfeiture of
such awards.
Under the 1994 Plan, the Committee may also award shares of Common Stock
which are free from any restrictions ("Unrestricted Stock"). Unrestricted Stock
may be issued to eligible employees under the 1994 Plan in recognition of past
services or other valid consideration and may be issued in lieu of cash bonuses
paid to such employees. Unrestricted Stock may be issued at no cost or for a
purchase price determined by the Committee. Finally, the Committee may also
grant performance share awards ("Performance Share Awards") to eligible
employees under the 1994 Plan entitling the recipient to receive shares of
Common
9
<PAGE> 12
Stock upon the achievement of individual or Company performance goals or such
other criteria as the Committee shall determine.
With respect to Mr. Socol's compensation, stock option grants are made at
fair market value, with a ten year term for each option granted. Vesting of such
options are in accordance with the provisions of the 1985 Plan and the 1994
Plan, respectively, with 25% of any such options vesting on each grant
anniversary date beginning on the first anniversary date after the date of grant
and ending on the fourth anniversary date. In accordance with Mr. Socol's total
compensation program adopted by the Committee in 1994, Mr. Socol was granted a
non-qualified stock option pursuant to the 1985 Plan for 50,000 shares of Common
Stock of the Company on August 11, 1994, at an exercise price of $18.75. This
award was in addition to a non-qualified stock option for 10,125 shares of
Common Stock of the Company granted to Mr. Socol in March, 1994 at an exercise
price of $19.875. Under this component of the program, the Committee also
committed to future grants of non-qualified stock options for 50,000 shares each
to Mr. Socol in April, 1995, subject to the Company achieving earnings per share
goals of $1.70 or higher for the fiscal year ended January 28, 1995 ("Fiscal
1995") and again in April, 1996, subject to the Company achieving the approved
profit plan for the fiscal year ending February 3, 1996 ("Fiscal 1996"). The
earnings per share performance measurements set forth above for the stock option
component of Mr. Socol's equity incentive arrangement are structured as absolute
performance requirements. Therefore, as a result of the Company not achieving
the stated goal for Fiscal 1995 and Fiscal 1996, Mr. Socol did not receive the
specified stock option award for each such fiscal year. The award of 50,000
shares made to Mr. Socol on August 11, 1994 was without any performance
contingency.
The final component of Mr. Socol's equity incentive arrangement consists of
Performance Share Awards. During Fiscal 1995, the Committee granted Mr. Socol a
Performance Share Award which would have entitled him to receive up to 75,000
shares of the Company's Common Stock contingent upon the Company's achievement
of certain targeted growth in earnings per share during overlapping three-year
cycles ending in fiscal year 1999. The Committee recently reexamined this grant
of a Performance Share Award to Mr. Socol and concluded that it would be in the
best interests of the Company to cancel this Award and to grant Mr. Socol a new
Performance Share Award that would entitle him to receive between 25,000 to
50,000 shares of the Company's Common Stock in fiscal year 1998 if the price of
the Common Stock attains certain targeted levels and remains so for a fixed
period by a date certain. It is the view of the Committee that the change in
targets from growth in earnings per share to stock price appreciation would more
closely align the interests of management to the interests of the stockholders
and would contribute to the creation of stockholder value.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code (the "Code"), which became
effective on January 1, 1994, will generally limit the Company's liability to
deduct compensation expense in excess of $1 million paid to the Company's Chief
Executive Officer or other executive officers named in the Summary Compensation
Table contained in this proxy statement. Generally, the Committee expects to
attempt to structure compensation payments to executive officers so as to be
deductible under Section 162(m). In the event, however, that the Committee
determines that so structuring a compensation payment would not be in the best
interests of the Company, the Committee would adjust its compensation policies
and payments to provide incentives to the executive officers to achieve the
performance measures or goals that the Committee believes to be in the best
interests of the Company.
COMPENSATION COMMITTEE
J. Christopher Clifford, Chairman
Douglas Kahn
Melvin M. Rosenblatt
Nancy Ryan
Stanley Simon
10
<PAGE> 13
EXECUTIVE COMPENSATION
<TABLE>
The following table discloses compensation received by the Company's Chief
Executive Officer and the four next most highly compensated executive officers
for the fiscal years ended February 3, 1996, January 28, 1995 and January 29,
1994.
SUMMARY COMPENSATION TABLE
<CAPTION>
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS COMPENSATION ($)
- ----------------------------- ---- ---------- --------- ----------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Jerry M. Socol............... 1996 458,654 0 0 0 1,125(5)
President, Chief Executive 1995 446,154 89,910(1) 0 60,125 2,250(5)
Officer and Director 1994 420,673 168,683(1) 93,110(4) 60,000 3,538(5)
Sherman N. Baker............. 1996 327,115 0 0 0 0
Chairman of the Board 1995 350,000 69,930(1) 0 7,500 0
1994 350,000 92,610(1) 0 0 0
David A. Levin............... 1996 245,192 100,000(2) 0 150,000 1,125(5)
Senior Executive Vice President, 1995 -- -- -- -- --
Director of Shoe Merchandising 1994 -- -- -- -- --
and Operations, Acting President
of Parade of Shoes and General
Manager of International Shoe
Operations
Alan I. Weinstein............ 1996 313,923 0 0 10,000 1,125(5)
Senior Executive Vice President, 1995 305,231 45,584(1) 0 7,500 2,250(5)
Chief Financial Officer, Chief 1994 280,000 56,840(1) 0 30,000 3,538(5)
Administrative Officer and
Secretary
Larry I. Kelley.............. 1996 285,450 0 0 5,000 20,391(5)(6)
Executive Vice President, 1995 268,539 75,663(3) 0 5,000 22,788(5)(6)
President of The Casual Male, 1994 252,404 74,868(3) 0 10,000 25,327(5)(6)
Inc.
- ---------------
<FN>
(1) Amounts shown reflect payments under the Company's Incentive Plan.
(2) Amount shown reflects guaranteed bonus under employment agreement.
(3) Includes payment under the Company's Incentive Plan and guaranteed bonus
under employment agreement for fiscal 1994 only.
(4) Amount shown reflects reimbursement for income taxes payable in connection
with the sale of shares acquired upon the exercise of certain stock options.
(5) Amounts shown reflect contributions made by the Company under the 401(k)
Profit Sharing Plan based upon the officer's contributions.
(6) Amount shown reflects the reduction of $19,266, $20,538 and $21,789,
including imputed interest, of the principal amount outstanding under a
Note dated June 3, 1991 in favor of The Casual Male, Inc., for fiscal 1996,
fiscal 1995 and fiscal 1994, respectively.
</TABLE>
11
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
The following table provides information on option grants in the fiscal
year ended February 3, 1996 to the named executive officers.
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATE OF
OPTIONS STOCK PRICE APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(3) DATE 0% ($) 5% ($) 10% ($)
- --------------------------------- ---------- -------------- --------- ---------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry M. Socol................... 0 -- $ -- -- -- -- --
Sherman N. Baker................. 0 -- $ -- -- -- -- --
David A. Levin................... 100,000 31.2% $ 13.00 6/12/05 0 817,570 2,071,862
50,000 15.6% $ 13.00 6/12/05 0 408,785 1,035,931
Alan I. Weinstein................ 10,000 3.1% $ 13.25 6/6/05 0 83,329 211,171
Larry I. Kelley.................. 5,000 1.6% $ 13.25 6/6/05 0 41,665 105,585
- ---------------
<FN>
(1) The options will become exercisable as to 25% of the underlying shares on
June 6, 1996 except for the 100,000 share grant to Mr. Levin which will
become exercisable as to 25% of the underlying shares on June 12, 1996 and
will become exercisable as to 25% of the underlying shares on each
successive anniversary date thereof, and the 50,000 share grant to Mr.
Levin, which will become exercisable on December 12, 1996 subject to the
achievement of certain stock price appreciation criteria.
(2) The Company granted options representing 320,500 shares to employees in
Fiscal 1996.
(3) The exercise price may be paid in cash or in shares of Common Stock valued
at fair market value on the date of exercise.
(4) The dollar amount under these columns are the result of calculations at 0%
and at the 5% and 10% rates set by the SEC and therefore are not intended
to forecast possible appreciation, if any, of the Company's stock price.
The Company did not use an alternative formula for grant date valuation, as
the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors. The calculation of stock price appreciation hereunder is based
upon an option term of ten (10) years.
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUE
<TABLE>
The following table provides information on option exercises in Fiscal 1996
by the named executive officers and the value of such officers' unexercised
options at February 3, 1996.
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry M. Socol................. 0 0 100,032 78,843 0 0
Sherman N. Baker............... 0 0 36,875 5,625 0 0
David A. Levin................. 0 0 0 150,000 0 0
Alan I. Weinstein.............. 0 0 33,500 32,500 0 0
Larry I. Kelley................ 0 0 32,000 15,000 0 0
- ---------------
<FN>
(1) Fiscal year ended February 3, 1996. The average of the high and low prices
of the Company's Common Stock on February 2, 1996, the last trading day
preceding the Company's fiscal year end, was $4.875.
</TABLE>
12
<PAGE> 15
RETIREMENT PLANS
<TABLE>
The following table shows the annual benefits payable under the Company's
Retirement Plan and Supplemental Plan to persons in specified compensation and
years of service classifications, based on a straight life annuity form of
retirement income.
<CAPTION>
REPRESENTATIVE YEARS OF SERVICE
--------------------------------
AVERAGE OF HIGHEST FIVE 30
YEARS OF COMPENSATION 10 20 (MAXIMUM)
------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
$ 50,000................................... $ 5,208 $10,415 $ 15,623
100,000................................... 12,208 24,415 36,623
150,000................................... 19,208 38,415 57,623
200,000................................... 26,208 52,415 78,623
250,000*.................................. 33,208 66,415 99,623
254,064*.................................. 33,777 67,553 101,330
300,000*.................................. 40,208 80,415 120,623
350,000*.................................. 47,208 94,415 141,623
400,000*.................................. 54,208 108,415 162,623
450,000*.................................. 61,208 122,415 183,623
500,000*.................................. 68,208 136,415 204,623
- ---------------
<FN>
(*) The maximum compensation that may be used as of February 1, 1996 to
calculate benefits under the Retirement Plan and the Supplemental Plan is
$254,064.
</TABLE>
In December, 1993, the Board of Directors of the Company established a
Supplemental Retirement Plan (the "Supplemental Plan") to provide benefits
attributable to compensation in excess of $150,000, but less than $254,064. The
benefit provided by the Retirement Plan and the Supplemental Plan is equal to
(i) the sum of 0.75% of the executive's highest consecutive five-year average
annual compensation plus 0.65% of the excess of the executive's highest
consecutive five-year average annual compensation over the average of the Social
Security taxable wage bases, multiplied by (ii) the executive's years of
"benefit service" with the Company (not to exceed 30 years). Effective February
1, 1996, compensation for such purposes means all eligible compensation up to a
maximum of $254,064 for the calendar year ended December 31, 1996. Annual
benefits are payable under the Company's Retirement Plan for retirees at age 65,
prior to the offset, if any, for benefits accrued under the retirement plan of
the Company's predecessor and for Social Security benefits. As of January 31,
1996, the number of years of "benefit service" for each of the following
individuals was as follows: Sherman N. Baker -- 30 years; Jerry M. Socol -- 7
years; David A. Levin -- 0 years; Larry I. Kelley -- 5 years; and Alan I.
Weinstein -- 27 years.
EMPLOYMENT ARRANGEMENTS
Mr. Baker is employed pursuant to an employment agreement dated March 25,
1993 which, as amended on March 31, 1996, provides for an annual base salary of
not less than $283,500 plus incentive bonus compensation to which he may be
entitled pursuant to the Incentive Plan. The agreement contains certain
non-competition restrictions upon termination of employment and further provides
that in the event Mr. Baker's employment terminates due to his disability or
death, the Company will pay him or his estate an amount equal to his annual base
salary for a period of one year after termination of employment and any bonus
amount payable with respect to such fiscal year pro-rated through the date of
termination of employment. The agreement is effective through March 31, 1997.
Mr. Socol is employed pursuant to an employment agreement dated March 25,
1993 which, as amended on March 7, 1996 and April 5, 1996, provides for an
annual base salary of not less than $450,000 plus incentive
13
<PAGE> 16
bonus compensation to which he may be entitled pursuant to the Incentive Plan.
In the event his employment is terminated without cause, the agreement provides
for the payment to Mr. Socol of the greater of his base salary for one year or
the amount of base salary he would have received for the remainder of his
employment term. Further, in the event his employment is terminated within one
year after a Change of Control (as defined in the agreement), the agreement
provides for the payment to Mr. Socol of up to three years base salary, offset,
subject to certain conditions, by any amounts earned by him from subsequent
employment. The agreement also contains certain non-competition restrictions
upon termination of employment and further provides that in the event Mr.
Socol's employment terminates due to his disability or death, the Company will
pay him or his estate an amount equal to his annual base salary for a period of
one year after termination of employment and any bonus amount payable with
respect to such fiscal year pro-rated through the date of termination of
employment. The agreement is effective through April 1, 1998.
Mr. Levin is employed pursuant to an employment agreement dated June 12,
1995 which as amended on April 5, 1996, provides for an annual base salary of
not less than $375,000 plus incentive bonus compensation to which he may be
entitled pursuant to the Incentive Plan. In the event his employment is
terminated without cause, the agreement provides for the payment to Mr. Levin of
the greater of his base salary for one year or the amount of base salary he
would have received for the remainder of his employment term. Further, in the
event his employment is terminated within one year after a Change of Control (as
defined in the agreement), the agreement provides for the payment to Mr. Levin
of up to three years base salary, offset, subject to certain conditions, by any
amounts earned by him from subsequent employment. The agreement also provides
for the payment on January 31, 1996 of a one-time bonus to Mr. Levin of
$100,000, which payment is to be reimbursed to the Company in the event Mr.
Levin were to voluntarily terminate his employment with the Company prior to
June 12, 1996. The agreement contains certain non-competition restrictions upon
termination of employment and further provides that in the event Mr. Levin's
employment terminates due to his disability or death, the Company will pay him
or his estate an amount equal to his annual base salary for a period of one year
after termination of employment and any bonus amount payable with respect to
such fiscal year pro-rated through the date of termination of employment. The
agreement is effective through April 1, 1998.
Mr. Kelley is employed pursuant to an agreement dated March 25, 1993 which,
as amended on November 7, 1995 and April 5, 1996, provides for an annual base
salary of not less than $283,000 plus incentive bonus compensation to which he
may be entitled pursuant to the Incentive Plan. In the event his employment is
terminated without cause, or within three years after a Change of Control (as
defined in the agreement), or the termination of certain key executives of the
Company, the agreement provides for the payment to Mr. Kelley of the greater of
his base salary for one year or the amount of base salary he would have received
for the remainder of his employment term. The agreement also contains certain
non-competition restrictions upon termination of employment and further provides
that in the event Mr. Kelley's employment terminates due to disability or death,
the Company will pay him or his estate an amount equal to his annual base salary
for a period of one year after termination of employment and any bonus amount
payable with respect to such fiscal year pro-rated through the date of
termination of employment. The agreement is effective through April 1, 1998.
Mr. Weinstein is employed pursuant to an agreement dated March 25, 1993
which, as amended on March 7, 1995 and April 5, 1996, provides for an annual
salary of not less than $308,000 plus incentive bonus compensation to which he
may be entitled pursuant to the Incentive Plan. In the event his employment is
terminated without cause, the agreement provides for the payment to Mr.
Weinstein of the greater of his base salary for one year or the amount of base
salary he would have received for the remainder of his employment term. Further,
in the event his employment is terminated within one year after a Change of
Control (as defined in the agreement), the agreement provides for the payment to
him of up to three years base salary,
14
<PAGE> 17
offset, subject to certain conditions, by any amounts earned by him from
subsequent employment. The agreement also contains certain non-competition
restrictions upon termination of employment and further provides that in the
event Mr. Weinstein's employment terminates due to disability or death, the
Company will pay him or his estate an amount equal to his annual base salary for
a period of one year after termination of employment and any bonus amount
payable with respect to such fiscal year pro-rated through the date of
termination of employment. The agreement is effective through April 1, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are J. Christopher Clifford
(Chairman), Douglas Kahn, Melvin M. Rosenblatt, Nancy Ryan and Stanley Simon.
None of these individuals is an executive officer and no "compensation committee
interlocks" existed during the last fiscal year. Mr. Clifford is a principal
partner of Berkshire Partners ("Berkshire") which receives fees from the Company
for consulting and management services in the areas of financial and strategic
corporate planning under a Management Agreement dated as of June 30, 1995 (the
"Management Agreement"). For the fiscal year ended February 3, 1996, the Company
paid Berkshire $60,000 for services under the Management Agreement. The Company
believes that the terms of the Management Agreement are as favorable as could be
obtained from an unaffiliated entity.
15
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return (stock
price appreciation plus dividends) on the Company's Common Stock with the
cumulative total return of the NASDAQ Stock Market -- U.S. Index, the Dow Jones
Retailer -- Specialty Apparel Index and a peer group (1) for the five years
ending February 3, 1996.
<TABLE>
[GRAPH]
<CAPTION>
2/2/91 2/1/92 1/30/93 1/29/94 1/28/95 2/3/96
($) ($) ($) ($) ($) ($)
------ ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
J. Baker, Inc. 100 296 518 459 365 130
Peer Group 100 172 200 168 120 119
NASDAQ Stock Market - US 100 153 173 199 190 268
Dow Jones Retailers - Specialty Apparel 100 151 144 133 117 119
</TABLE>
(1) The peer group is comprised of the following companies: Burlington Coat
Factory Warehouse, Charming Shoppes, Inc., Consolidated Stores, Edison
Brothers Stores, House of Fabrics, Petrie Stores Corp., Pier 1 Imports,
Ross Stores Inc. and Strawbridge & Clothier.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Berkshire are parties to the Management Agreement. Mr.
Clifford is a principal of Berkshire and a Director and stockholder of the
Company. The Management Agreement provides for an initial term of one year with
automatic extensions of one year unless otherwise terminated by either party.
Pursuant to the Management Agreement, Berkshire provides consulting and
management services to the Company in the areas of financial and strategic
corporate planning. In exchange for such services, the Company has agreed to pay
Berkshire a monthly fee of $5,000 plus expenses, subject to change by mutual
agreement for any extension of the Management Agreement. For the fiscal year
ended February 3, 1996, the Company paid Berkshire $60,000 for services under
the Management Agreement. The Company believes that the terms of the Management
Agreement are as favorable as could be obtained from an unaffiliated entity.
16
<PAGE> 19
The Company pays Greenberg, Rosenblatt, Kull & Bitsoli, P.C. $60,000
annually for consulting and management services provided to the Company in the
areas of financial and strategic corporate planning. Mr. Rosenblatt is a
principal of such firm and a Director and stockholder of the Company. The
Company believes that the terms of this arrangement are as favorable as could be
obtained from an unaffiliated entity.
(PROPOSAL NUMBER 2)
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP, independent
public accountants, to audit the books, records and accounts of the Company for
the fiscal year ending February 1, 1997. In accordance with a vote of the Board
of Directors, this selection is being presented to the stockholders for
ratification at this meeting.
The firm of KPMG Peat Marwick LLP has audited the books of the Company and
its predecessor for more than twenty years. KPMG Peat Marwick LLP has no direct
or indirect material financial interest in the Company. A representative of KPMG
Peat Marwick LLP is expected to be present at the meeting and will be given the
opportunity to make a statement, if he so desires. The representative also will
be available to respond to questions raised by those in attendance at the
meeting.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the Annual Meeting is required
to approve the proposal. Ratification by the stockholders is not required. If
the proposal is not approved by the stockholders, the Board of Directors does
not plan to change the appointment for fiscal 1997, but will consider the
stockholder vote in appointing auditors for fiscal 1998.
------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
------------------------
OTHER MATTERS
The management of the Company knows of no matter not specifically referred
to above as to which any action is expected to be taken at the meeting. It is
intended, however, that the persons named as proxies will vote the proxies in
regard to such other matters and the transaction of such other business as may
properly be brought before the meeting, as seems to them to be in the best
interest of the Company and its stockholders.
STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC for a proposal of a
stockholder to be included in the Board of Directors' proxy statement for the
Company's 1997 Annual Meeting, the proposal must be received at the principal
executive offices of the Company on or before January 5, 1997. Such a proposal
must also comply with the requirements as to form and substance established by
the SEC in order to be included in the proxy statement.
In addition, the Company's By-Laws provide that any stockholder of record
wishing to nominate a director or have a stockholder proposal considered at an
annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the By-Laws, to the
Company at its principal executive offices not less than 75 days nor more than
180 days prior to the anniversary date of the prior year's annual meeting or
special meeting in lieu thereof (the "Anniversary Date"); provided, however,
that in the event that the annual meeting is called for a date more than seven
calendar days prior to the Anniversary Date, stockholders may, under certain
circumstances set forth in the Company's By-Laws, have additional time to
deliver their stockholder notice.
17
<PAGE> 20
PROXY J. BAKER, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Christopher Clifford and Jerry M. Socol,
and each of them individually, attorneys with full power of substitution in each
for and in the name of the undersigned, with all powers the undersigned would
possess if personally present, to vote all shares of the Common Stock of J.
Baker, Inc. (the "Company") held of record by the undersigned on April 18, 1996
at the Annual Meeting of Stockholders to be held June 5, 1996 and any
adjournment or postponement thereof.
1.PROPOSAL to elect / / FOR all nominees / / WITHHOLD AUTHORITY to
three Class I Directors: listed below vote for any nominee
(except as marked listed below
to the contrary
below)
Sherman N. Baker Ervin D. Cruce Melvin M. Rosenblatt
(INSTRUCTION: To withhold authority to vote for one of the nominees, strike
a line through the nominee's name in the list above.)
2. PROPOSAL to ratify the selection of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending February 1, 1997.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED ON REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE SIGN IN THE SAME FORM AS NAME Date:...............................
APPEARS ON THIS CARD.
FIDUCIARIES AND CORPORATE OFFICERS Signature:..........................
SHOULD INDICATE THEIR TITLE.
Signature:..........................
.
