<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.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] No fee required.
[ ] 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 6, 2000
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 Tuesday, June 6, 2000, at 9:30 a.m., for the
following purposes:
1. To elect four Class II Directors to serve for a three-year term until
the 2003 Annual Meeting and until their respective successors are
elected and qualified;
2. To ratify the selection of KPMG LLP as independent auditors for the
fiscal year ending February 3, 2001; 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 15, 2000 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
MICHAEL A. O'HARA
Clerk
Canton, Massachusetts
May 3, 2000
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 6, 2000
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about May 3, 2000. 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 6, 2000, 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 15, 2000 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 10, 2000, there were 14,067,948 shares of Common Stock, par value $.50
per share ("Common Stock"), of the Company issued and outstanding. Each share of
Common Stock 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.
1
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 10, 2000,
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 a Director of the Company,
(iii) each of the executive officers named in the Summary Compensation Table
beginning on page 12 (the "Summary Compensation Table") and (iv) the current
Directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME, AND WITH RESPECT TO OWNERS OF 5% OR MORE BENEFICIAL PERCENT
OF COMMON STOCK, $.50 PAR VALUE, ADDRESS OWNERSHIP(1) OF CLASS
- ---------------------------------------------- ------------ --------
<S> <C> <C>
FMR Corp.................................................... 2,197,223(2) 14.7%
82 Devonshire Street
Boston, MA 02109
Putnam Investments, Inc..................................... 1,023,553(3) 7.3%
One Post Office Square
Boston, MA 02109
Dimensional Fund Advisors, Inc.............................. 949,172(4) 6.7%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Schneider Capital Management Corporation.................... 894,100(5) 6.3%
460 E. Swedesford Road, Suite 1080
Wayne, PA 19087
First Manhattan Co.......................................... 849,537(6) 6.0%
437 Madison Avenue
New York, NY 10022
The TCW Group, Inc.......................................... 729,300(7) 5.2%
865 South Figueroa Street
Los Angeles, CA 90017
Sherman N. Baker............................................ 417,264(8) 2.9%
J. Christopher Clifford..................................... 42,000(9) *
Douglas J. Kahn............................................. 24,000(10) *
Harold Leppo................................................ 33,900(11) *
David Pulver................................................ 111,193(12) *
Theodore M. Ronick.......................................... 10,500(13) *
Melvin M. Rosenblatt........................................ 46,100(14) *
Nancy Ryan.................................................. 16,000(10) *
Alan I. Weinstein........................................... 242,187(15) 1.7%
Michael J. Fine............................................. 35,125(16) *
Stuart M. Glasser........................................... 256,750(17) 1.8%
Thomas J. Konecki........................................... 3,750(18) *
Philip G. Rosenberg......................................... 100,545(19) *
Directors and Executive Officers as a Group (14 persons).... 1,348,239(20) 9.2%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise noted each person has sole voting and investment power
with respect to such shares.
2
<PAGE> 5
(2) Information based solely on Schedule 13G of FMR Corp., Edward C. Johnson,
III, Chairman of FMR Corp. and Abigail P. Johnson, a Director of FMR Corp.,
dated February 14, 2000. The beneficial owner has reported that it has sole
voting power with respect to 134,724 shares and sole dispositive power with
respect to 2,197,223 shares. According to such information, Mr. Johnson,
Ms. Johnson and various Johnson family members, through their ownership of
voting common stock of FMR Corp. and the execution of a 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 2,062,500 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 824,799 shares of the Company's
Common Stock issuable upon the conversion of the Company's convertible
subordinated debentures. Each of Mr. Johnson and FMR Corp., through its
control of Fidelity and the Fidelity Funds, have sole dispositive power
over such 2,062,500 shares. Neither Mr. Johnson nor FMR Corp. has sole or
shared voting power over such shares; as such power resides with the Boards
of Trustees of the Fidelity Funds and is carried out by Fidelity under
written guidelines established by the Boards of Trustees. In addition, the
information indicates that one investment company, Fidelity
Equity -- Income Fund, is the beneficial owner of 824,799 shares of the
Company's Common Stock. Such information further indicates that Fidelity
Management Trust Company ("Fidelity Trust"), a bank and a wholly owned
subsidiary of FMR Corp., is the beneficial owner of 134,724 shares of the
Company's Common Stock as a result of its serving as investment manager of
certain institutional accounts, of which 16,123 shares are issuable upon
conversion of the Company's convertible subordinated debentures. Mr.
Johnson and FMR Corp., through its control of Fidelity Trust, each has sole
voting and sole dispositive power over all such shares.
(3) Information based solely on Schedule 13G of Putnam Investments, Inc. on
behalf of itself and Marsh & McLennan Companies, Inc., Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc., dated February 8,
2000. Such information indicates that Putnam Investments, Inc., Putnam
Investment Management, Inc. and The Putnam Advisory Company, Inc. share
dispositive power with respect to 1,023,553, 305,653 and 717,900 shares,
respectively, and Putnam Investments, Inc. and The Putnam Advisory Company,
Inc. share voting power with respect to 58,700 shares.
(4) Information based solely on Schedule 13G of Dimensional Fund Advisors, Inc.
dated February 4, 2000. The beneficial owner has reported it has sole
voting and dispositive power with respect to all of such shares.
(5) Information based solely on Schedule 13G of Schneider Capital Management
Corporation, dated February 14, 2000. The beneficial owner has reported it
has sole voting power with respect to 149,400 shares and sole dispositive
power with respect to 894,100 shares.
(6) Information based solely on Schedule 13G of First Manhattan Co. dated
February 9, 2000. The beneficial owner has reported that 20,770 shares are
owned by family members of General Partners of First Manhattan Co. First
Manhattan Co. disclaims dispositive power as to 14,100 of such shares and
beneficial ownership as to 6,670 of such shares. The beneficial owner has
reported it has sole voting and dispositive power with respect to 18,945
shares, shared voting power with respect to 783,906 shares and shared
dispositive power with respect to 830,592 shares.
(7) Information based solely on Schedule 13G of The TCW Group, Inc. and Robert
Day dated January 20, 2000. Such information indicates that The TCW Group,
Inc. and Robert Day have shared voting and dispositive power with respect
to all of such shares.
(8) Includes currently exercisable options with respect to 38,396 shares.
3
<PAGE> 6
(9) 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 30,000 shares.
(10) Includes currently exercisable options with respect to 15,000 shares.
(11) Includes currently exercisable options with respect to 10,000 shares.
(12) Includes 67,193 shares and currently exercisable warrants to purchase
24,000 shares owned by Cornerstone Capital, Inc., a corporation of which
Mr. Pulver is the sole stockholder. Includes currently exercisable options
with respect to 20,000 shares.
(13) Includes 4,000 shares held by Mr. Ronick as trustee of a trust and
currently exercisable options with respect to 5,000 shares.
(14) Includes 1,000 shares owned by Mr. Rosenblatt's wife as to which Mr.
Rosenblatt disclaims beneficial ownership, currently exercisable options
with respect to 32,500 shares and 3,100 shares underlying convertible
subordinated debentures, 1,550 shares of which are owned by Mr.
Rosenblatt's wife and as to which Mr. Rosenblatt disclaims beneficial
ownership.
(15) Includes currently exercisable options with respect to 107,695 shares and
3,125 shares subject to options that are exercisable within sixty (60)
days.
(16) Includes currently exercisable options with respect to 33,125 shares.
(17) Includes currently exercisable options with respect to 153,750 shares.
(18) Represents currently exercisable options.
(19) Mr. Rosenberg passed away on January 2, 2000. Represents shares and
currently exercisable options with respect to 77,605 shares owned by his
estate. Upon his death, pursuant to the terms of the Amended and Restated
1994 Equity Incentive Plan, all of Mr. Rosenberg's options vested
automatically.
(20) Includes currently exercisable options with respect to 549,350 shares,
3,875 shares subject to options that are exercisable within 60 days, 24,000
shares underlying currently exercisable warrants and 3,100 shares
underlying convertible subordinated debentures.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent beneficial
owners are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on its
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with during the fiscal year ended January 29,
2000.
4
<PAGE> 7
(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 2000 Annual Meeting will
continue until the Annual Meeting of Stockholders to be held in 2003 and until
their respective successors are elected and qualified.
The nominees for the four Class II Directors to be voted upon at the
meeting are Nancy Ryan, Douglas J. Kahn, Harold Leppo and Stuart M. Glasser, the
incumbent Class II Directors. 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 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.
The following table sets forth information regarding Ms. Ryan and Messrs.
Kahn, Leppo and Glasser, the Board of Directors' nominees for election as
Directors, as well as information regarding each Director whose term is to
expire at the 2001 or 2002 Annual Meeting of Stockholders.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL EMPLOYMENT AND DIRECTOR
NAME AGE PRIOR BUSINESS EXPERIENCE SINCE
- ---- --- -------------------------------- --------
<S> <C> <C> <C>
(NOMINEES FOR CLASS II TERM TO EXPIRE IN 2003)
Nancy Ryan................................ 50 Since 1980 President of Pro Media, Inc., 1995
a provider of advertising and media
buying services. Prior to 1980, Vice
President/ Media Director of S & N
Advertising. Trustee of Emerson
College, Boston, Massachusetts.
Douglas J. Kahn........................... 43 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>
Harold Leppo.............................. 62 Chief Executive Officer of Harold Leppo 1997
and Company, a retail consulting firm
in Stamford, Connecticut, since 1988.
Prior to 1988, held a number of
managerial positions at Lord & Taylor
and Allied Stores, Inc., including
President and Chief Operating Officer
of Lord & Taylor (1987) and Executive
Vice President of Allied Stores
(1988). Mr. Leppo is also a Director
of Royce Hosiery Mills, Inc., a
privately held manufacturer of hosiery
and Homebase, Inc., a warehouse-style
home improvement retailer.
Stuart M. Glasser......................... 52 Senior Executive Vice President of the 1999
Company since June 1998 and President
and Chief Executive Officer of The
Casual Male, Inc. since September
1997, and has served as a member of
the Board of Directors of the Company
since December 1999. From January 1991
until September 1997, served as
Executive Vice President and General
Merchandise Manager of the men's,
boy's, children's and cosmetics
divisions of Bloomingdales, a division
of Federated Department Stores, Inc.
Prior to 1991, served as President and
Chief Executive of the department
store division of Elder-Beerman Stores
Corp. and, prior to that, served as an
Executive Vice President of Lord &
Taylor. Member of the Board of
Directors of Allou Health & Beauty
Care, Inc., a distributor of
nationally advertised health and
beauty aid products, pharmaceuticals,
fragrances, cosmetics and
non-perishable foods, since March
2000.
(CONTINUING DIRECTORS -- CLASS III TERM TO EXPIRE IN 2001)
J. Christopher Clifford................... 54 Managing Director of Berkshire Partners 1985
LLC, a private investment firm. From
1986 until 1999, served as general
partner of Berkshire Partners LLP, the
predecessor of Berkshire Partners LLC.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRESENT PRINCIPAL EMPLOYMENT AND DIRECTOR
NAME AGE PRIOR BUSINESS EXPERIENCE SINCE
- ---- --- -------------------------------- --------
<S> <C> <C> <C>
Alan I. Weinstein......................... 57 President and Chief Executive Officer of 1996
the Company since November 1996 and
March 1997 respectively; Acting
President and Chief Executive Officer,
September 1996 until November 1996 and
March 1997 respectively; Joined the
Company in 1968 and for the past 31
years has held various senior level
management positions; Most recently
served as Senior Executive Vice
President, Chief Financial Officer,
Chief Administrative Officer and
Secretary since September 1988.
David Pulver.............................. 58 President of Cornerstone Capital, Inc. 1993
Chairman of the Board of Directors of
Morse Shoe, Inc., March, 1992 through
January, 1993. Chairman of the Board
and Co-Chief Executive Officer of The
Children's Place, 1968-1984. Director
of Hearst-Argyle Television, Inc., an
owner and manager of independent
television and radio stations. Trustee
of Colby College in Waterville, Maine.
(CONTINUING DIRECTORS -- CLASS I TERM TO EXPIRE IN 2002)
Sherman N. Baker.......................... 80 Chairman of the Board of the Company. 1985
Chief Executive Officer of the Company
and its Predecessor from 1970 until
March 1990.
Theodore M. Ronick........................ 66 Since 1994 retail consultant. Prior to 1998
1994, held a number of managerial
positions at R. H. Macy & Co.,
including Chairman and Chief Executive
Officer of R. H. Macy & Co., Inc.
Corporate Buying Division.
Melvin M. Rosenblatt...................... 69 Certified public accountant and past 1993
Chairman of the Board and Chief
Executive Officer of Greenberg,
Rosenblatt, Kull & Bitsoli, P.C., a
public accounting firm with which he
has been associated since 1957.
Trustee 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.
</TABLE>
On December 14, 1999, the Board of Directors elected Stuart M. Glasser to
serve as a Class II Director.
7
<PAGE> 10
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 to serve on the Board of Directors 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 2000, pursuant to the Directors' Plan, each of Messrs.
Clifford, Kahn, Leppo, Pulver, Rosenblatt, Ronick 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 $6.875, the fair market value of the Company's Common Stock on
the date of grant.
The Company's Board of Directors held eight meetings during fiscal 2000.
All Directors attended at least 75% of these meetings (except for Mr. Kahn, who
attended 62.5% 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 2000, 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), Kahn, Leppo, Pulver and Ronick. Each member of the Audit
Committee is "independent" as defined in the listing standards of the National
Association of Securities Dealers. The Audit Committee performs its duties in
accordance with an Audit Committee charter. Currently, the Audit Committee is
considering adopting an updated charter or modifying its existing charter.
The Compensation Committee, which held two meetings during fiscal 2000,
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, Leppo, Rosenblatt and Ms. Ryan.
The Executive Committee, which met five times during fiscal 2000, 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 (Chairman),
Clifford, Rosenblatt and Weinstein.
The Nominating Committee, which met once during fiscal 2000, identifies,
evaluates and nominates candidates for election to the Board. The Nominating
Committee will consider nominees recommended to the Committee by stockholders;
see "Stockholder Proposals" for the procedure to be followed by stockholders in
submitting such recommendations. The present members of this Committee are
Messrs. Pulver (Chairman), Leppo and Ms. Ryan.
8
<PAGE> 11
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
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 Amended and Restated 1985 Stock Option
Plan (the "1985 Plan"), the Amended and Restated 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 executive officers 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, which 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 a total compensation package that
enables the Company to attract, retain and provide incentives for appropriately
skilled executives. In determining the scope of these compensation packages, the
Committee takes into account compensation programs offered by similar-sized
specialty store retailers and, where appropriate, those of other businesses in
the local market.
With respect to the compensation arrangement for the Company's Chief
Executive Officer, Mr. Weinstein, the components of his total compensation
program are base salary, bonus opportunities under the Incentive Plan, grants of
stock options and grants of performance shares. The specific elements of Mr.
Weinstein'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, which 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, from time-to-time,
outside 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 an assessment
program whereby profitability goals and other objectives for each performance
period are established which are subject to periodic review during the
performance period. At the conclusion of the performance period, a review of the
executive's performance is conducted by the evaluating manager. The assessment
of Mr. Weinstein's performance as Chief Executive Officer is the responsibility
of the Committee. The base salary determined for Mr. Weinstein for fiscal year
2001 is $675,000. In setting Mr. Weinstein's base salary, the Committee
considered (i) his effective role in leading the acquisition of the Repp Ltd.
Big & Tall, Repp Ltd. By Mail, and
9
<PAGE> 12
Shoe Corporation of America businesses, (ii) his recruitment of talented and
experienced executives and (iii) his performance in managing the Company's
overall financial and operating results. The Committee also considered
competitive salary ranges for comparably sized companies, as well as the
opportunities Mr. Weinstein has been offered to enhance total compensation
through the Incentive Plan and 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 income
from operations 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.
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
60% of base salary, with the Chief Executive Officer at the 60% level. The
threshold guideline for awards represents a percentage of each position's target
goal, as determined by the Committee from year to year, and the maximum
guideline (which ties to superior profit results) represents 175% of the target
goal. 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. Weinstein, the award
opportunity is based on consolidated corporate results and the results of the
individual business units. 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 25% upward or downward to reflect all
aspects of the participant's performance for the fiscal year.
For fiscal year 2000, Mr. Weinstein received an award of $154,688 under the
Incentive Plan.
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 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
10
<PAGE> 13
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 Stock upon the achievement of individual or Company performance goals or
such other criteria as the Committee shall determine.
With respect to Mr. Weinstein'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, generally 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 some instances, vesting of such
options is over a five-year period with 20% of any such options vesting annually
over the period. Mr. Weinstein was granted a non-qualified stock option pursuant
to the 1994 Plan for 25,000 shares of Common Stock of the Company on March 11,
1997, at an exercise price of $8.94, in connection with his being elected Chief
Executive Officer and the removal of his "acting" title. This stock option vests
at the rate of 20% per year beginning on the first anniversary date after the
date of grant and ending on the fifth anniversary date. Mr. Weinstein was also
granted a non-qualified stock option for 75,000 shares of Common Stock of the
Company on September 9, 1997 at an exercise price of $9.50, a non-qualified
stock option for 5,000 shares on January 5, 1998 at an exercise price of $5.75
per share, a non-qualified stock option for 25,000 shares on March 30, 1999 at
an exercise price of $3.69 per share and a non-qualified stock option for
100,000 shares on March 14, 2000 at an exercise price of $6.35 per share. Each
of these stock options will vest at the rate of 25% per year beginning on the
first anniversary date after the date of grant and ending on the fourth
anniversary.
The final component of Mr. Weinstein's compensation arrangement consists of
Performance Share Awards. During fiscal 1997, the Committee granted Mr.
Weinstein a Performance Share Award that would have entitled him to receive
between 25,000 and 50,000 shares of the Company's Common Stock in fiscal year
1999 if the price of the Common Stock attained certain targeted levels and
remained at such levels for a fixed period by a date certain. Specifically, the
award was linked to a performance term which began on March 26, 1996 and was
originally scheduled to end on April 30, 1998, which term was subsequently
extended until April 30, 1999. On July 8, 1998, Mr. Weinstein's performance
share award was terminated and in substitution thereof he was granted a
performance based restricted stock award under the 1994 Plan for 50,000 shares
of the Company's common stock at a purchase price of $10.18 per share. Pursuant
to the award, Mr. Weinstein purchased the shares underlying the award and
executed a promissory note in the amount of $509,000, which note will be ratably
forgiven over five years provided Mr. Weinstein remains employed by the Company
during such time. The award originally provided that if the twenty (20) day
average trading price of the Company's
11
<PAGE> 14
common stock culminating on the vesting date, September 15, 1999, is less than
$14.00 per share, the Company shall have the right to repurchase a portion of
the shares, up to a maximum of 40,000 shares, at the lower of $10.18 per share
or the fair market value of such shares on the vesting date. During fiscal 2000,
the Committee agreed to extend the vesting date of its repurchase right until
September 15, 2000 in consideration of Mr. Weinstein's agreement to extend the
trading restrictions with respect to such Common Stock until such date.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code (the "Code") generally limits
the Company's ability to deduct compensation expense in excess of $1 million
paid to the Company's Chief Executive Officer or other executive officers named
in the Summary Compensation Table contained in this proxy statement. Generally,
the Committee expects to attempt to structure compensation payments to executive
officers so as to be deductible under Section 162(m). In the event, however, the
Committee determines that so structuring a compensation payment would not be in
the best interests of the Company, the Committee would adjust its compensation
policies and payments to provide incentives to the executive officers to achieve
the performance measures or goals the Committee believes to be in the best
interests of the Company.
COMPENSATION COMMITTEE
J. Christopher Clifford, Chairman
Douglas J. Kahn
Harold Leppo
Melvin M. Rosenblatt
Nancy Ryan
12
<PAGE> 15
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and the five next most highly compensated executive officers
for the fiscal years ended January 29, 2000, January 30, 1999 and January 31,
1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS COMPENSATION($)
------------------ ---- --------- -------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sherman N. Baker.............. 2000 210,647 46,036(1) -0- -0- 86,098(4)
Chairman of the Board 1999 232,089 -0- -0- -0- 86,098(4)
1998 261,692 -0- -0- -0- 86,098(4)
Alan I. Weinstein............. 2000 596,154 154,688(1) -0- 25,000 129,204(5)(6)
President, Chief Executive 1999 546,154 -0- -0- -0- 18,026(5)(6)
Officer 1998 428,154 66,667(2) -0- 105,000 4,500(5)
Stuart M. Glasser............. 2000 569,231 290,250(1) -0- 125,100 129,204(5)(6)
Senior Executive Vice 1999 519,231 180,820(3) -0- 25,000 20,908(5)(6)(7)
President, President and 1998 192,308* 69,180(3) -0- 210,000 9,373(7)
Chief Executive Officer of
The Casual Male, Inc.
Michael J. Fine............... 2000 409,616 9,563(1) -0- 7,600 95,427(5)(8)
Executive Vice President, 1999 157,692* -0- -0- 125,000 -0-
President of JBI Footwear 1998 -- -- -- -- --
Division
Thomas J. Konecki............. 2000 191,250 4,725(1) -0- 3,100 5,759(9)
Executive Vice President, 1999 175,000 -0- -0- 2,000 7,043(9)
President of Work 'n Gear 1998 3,365* -0- -0- 5,000 -0-
Division
Philip G. Rosenberg........... 2000 243,461 41,250(1) -0- 12,600 320,000(10)
Former Executive Vice 1999 243,750 -0- $34,075(11) -0- 4,500(5)
President, Chief Financial 1998 231,413 33,333(2) -0- 45,000 4,500(5)
Officer and Treasurer
</TABLE>
- ---------------
(*) Amount shown reflects partial year salary.
(1) Amounts shown reflect payments under the Company's Incentive Plan.
(2) Amount shown reflects bonuses paid to each of Mr. Weinstein and Mr.
Rosenberg in monthly installments upon their being named Acting President
and Chief Executive Officer and Acting Chief Financial Officer,
respectively, in September 1996.
(3) Amount shown reflects guaranteed bonus under employment agreement.
(4) Amount shown reflects payments made to Mr. Baker under the Company's
Retirement Plan.
(5) Amounts shown include contributions made by the Company under its 401(k)
Profit Sharing Plan based upon the officer's contributions.
(6) Amounts shown reflect the reduction of $124,404 and $13,526, including
imputed interest, of the amount outstanding under a forgivable note dated
July 8, 1998 in favor of the Company for fiscal 2000 and fiscal 1999,
respectively. See "Certain Relationships and Related Transactions."
(7) Amount shown includes payments for moving and other expenses in connection
with Mr. Glasser's relocation.
13
<PAGE> 16
(8) Amount shown includes payments for moving and other expenses in connection
with Mr. Fine's relocation.
(9) Amount shown reflects the reduction of principal and imputed interest under
two forgivable notes issued January 27, 1998 in favor of the Company, one
of which expired pursuant to its terms in fiscal 1999.
(10) Mr. Rosenberg passed away on January 2, 2000. The amount shown reflects
$320,000 in payments (including payments in respect of accrued vacation)
made pursuant to Mr. Rosenberg's employment contract as a result of his
death. See "Employment and Severance Agreements."
(11) Amount shown reflects the inclusion of $34,075, representing the fair
market value of certain Performance Shares awarded to Mr. Rosenberg on
April 30, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in the fiscal
year ended January 29, 2000 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATE OF
OPTIONS STOCK PRICE APPRECIATION
GRANTED TO EXERCISE FOR OPTION TERM(5)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR(3) ($/SH)(4) DATE 5%($) 10%($)
- ---- ---------- -------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sherman N. Baker......... -- -- -- -- -- --
Alan I. Weinstein........ 25,000 6.9% 3.69 03/30/09 58,016 147,023
Stuart M. Glasser........ 25,000 6.9% 3.69 03/30/09 58,016 147,023
100(2) .03% 4.75 12/10/09 299 757
100,000 27.5% 5.125 12/14/09 322,308 816,793
Michael J. Fine.......... 7,500 2.1% 3.69 03/30/09 17,405 44,107
100(2) .03% 4.75 12/10/09 299 757
Thomas J. Konecki........ 3,000 0.8% 3.69 03/30/09 6,962 17,643
100(2) .03% 4.75 12/10/09 299 757
Philip G. Rosenberg(6)... 7,500 2.1% 3.69 01/02/04 7,238 15,863
5,000 1.4% 7.375 01/02/04 9,067 19,814
100(2) .03% 4.75 01/02/04 131 290
</TABLE>
- ---------------
(1) Except as otherwise indicated, these options become exercisable as to 25% of
the underlying shares on each of the first four anniversaries of the date of
grant.
(2) The options become fully exercisable on the first anniversary of the date of
grant.
(3) The Company granted options representing 363,956 shares to employees in
fiscal 2000.
(4) The exercise price may be paid in cash or in shares of Common Stock valued
at fair market value on the date of exercise.
(5) The dollar amount under these columns shows the hypothetical gain or option
spreads of options granted based on assumed annual compound stock
appreciation rates of 5% and 10% as mandated 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. Except in the case of options granted to Mr. Rosenberg as described
in Note (6) below, the calculation of stock price appreciation hereunder is
based upon an option term of ten (10) years.
14
<PAGE> 17
(6) Mr. Rosenberg passed away on January 2, 2000. Upon his death, pursuant to
the terms of the Amended and Restated 1994 Equity Incentive Plan, all of his
options vested automatically. These options are exercisable by Mr.
Rosenberg's estate for a period of four years from the date of his death.
See "Employment and Severance Agreements."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table provides information on option exercises in fiscal 2000
by the named executive officers and the value of such officers' unexercised
options at January 29, 2000.
<TABLE>
<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>
Sherman N. Baker............ 0 0 38,396 0 0 0
Alan I. Weinstein........... 0 0 93,324 83,125 4,308 47,575
Stuart M. Glasser........... 0 0 141,250 218,850 275,580 94,389
Michael J. Fine............. 0 0 31,250 101,350 28,706 100,476
Thomas J. Konecki........... 0 0 3,000 7,100 2,817 10,328
Philip G. Rosenberg......... 0 0 77,605 0 28,702 0
</TABLE>
- ---------------
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value of the Company's Common Stock of $5.593, the average of
the high and low prices of the Company's Common Stock on January 28, 2000,
the last trading day preceding the Company's fiscal year end.
RETIREMENT PLANS
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.
<TABLE>
<CAPTION>
REPRESENTATIVE YEARS OF SERVICE
AVERAGE OF HIGHEST FIVE -----------------------------------
YEARS OF COMPENSATION 10 20 30(MAXIMUM)
----------------------- ------- -------- ------------
<S> <C> <C> <C>
$ 50,000.................................... $ 4,977 $ 9,953 $ 14,930
100,000.................................... 11,977 23,953 35,930
150,000.................................... 18,977 37,953 56,930
200,000.................................... 25,977 51,953 77,930
250,000*................................... 32,977 65,953 98,930
267,326*................................... 35,402 70,805 106,207
300,000*................................... 39,977 79,953 119,930
</TABLE>
- ---------------
(*) The maximum compensation that may be used as of December 31, 1998 to
calculate benefits under the Retirement Plan and the Supplemental Plan is
$267,326.
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 the qualified plan limit, which is
$160,000, but less than $267,326. The benefit provided by the Retirement Plan
and the
15
<PAGE> 18
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, 1995, compensation for such purposes means all
compensation reported on Form W-2 (excluding such items as bonuses and stock
options) up to a maximum of $267,326 for the calendar year ended December 31,
1998. 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.
Effective as of May 3, 1997, the Board of Directors voted to amend the
Retirement Plan to cease all benefit accruals under the Retirement Plan as of
such date. Effective as of December 31, 1998, the Board of Directors voted to
cease all benefit accruals under the Supplemental Plan.
As of January 29, 2000, the number of years of "benefit service" for each
of the following individuals was as follows: Sherman N. Baker -- 30 years; Alan
I. Weinstein -- 30 years; Stuart M. Glasser -- 0 years; Michael J. Fine -- 0
years; Thomas J. Konecki -- 0 years and Philip G. Rosenberg -- 24 years.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
Mr. Baker is employed pursuant to an employment agreement dated March 25,
1993 which, as amended on April 19, 2000, provides for an annual base salary of
not less than $186,000 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
incentive compensation amount payable to him with respect to such fiscal year
pro-rated through the date of termination of employment. The agreement is
effective through April 1, 2001.
Mr. Weinstein is employed pursuant to an agreement dated April 1, 1997
which, as amended on March 14, 2000, provides for an annual salary of not less
than $675,000 plus incentive bonus compensation to which he may be entitled
pursuant to the Incentive Plan. The agreement (as amended) expires on April 30,
2002. In the event his employment is terminated without cause prior to a Change
of Control (as defined in the agreement), 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. Mr.
Weinstein's agreement further provides that, in the event of a termination of
his employment without cause during the term of his agreement (except in the
event of a change of control), any salary continuation payments, which are in
excess of the amount of his base salary for one year, shall be offset by any
salary or other compensation earned by Mr. Weinstein from other employment.
Further, in the event his employment is terminated within one year after a
Change of Control, the agreement provides for the payment to him 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. 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
incentive compensation amount payable to him with respect to such fiscal year
pro-rated through the date of termination of employment.
Mr. Glasser is employed pursuant to an agreement effective as of September
15, 1997, as amended on April 17, 2000, which provides for an annual salary of
not less than $650,000 plus incentive bonus compensation to which he may be
entitled pursuant to the terms of the Incentive Plan. The agreement further
16
<PAGE> 19
provides that Mr. Glasser's base salary will be increased to $700,000 on April
30, 2001. The Company also guaranteed Mr. Glasser a bonus of $250,000 paid on
the first anniversary of his employment. In the event Mr. Glasser's employment
is terminated without cause, or in the event he resigns for "good reason", as
defined in the agreement, he will receive his base salary (offset by any amounts
earned by him from subsequent employment) and any amounts payable under the
Incentive Plan with respect to the fiscal year in which such termination occurs
which otherwise would have been paid on the basis of the results for such fiscal
year (prorated to the termination date) from the date immediately following the
termination date to and including the date immediately preceding the fourth
anniversary of the effective date of Mr. Glasser's employment date ("Basic
Severance"). Additionally, and in such events, all unvested stock options
previously granted to Mr. Glasser will immediately vest and be exercisable
within 90 days of such termination. In the event of a Change of Control and the
reassignment of Mr. Glasser such that he ceases reporting to Mr. Weinstein, Mr.
Glasser may resign within six months of such reassignment and shall be entitled
to receive Basic Severance. The agreement also contains certain non-competition
restrictions upon termination of employment and further provides that in the
event Mr. Glasser'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 incentive
compensation amount which otherwise would have been paid to him on the basis of
the results for such fiscal year pro-rated through the date of termination of
employment.
Mr. Fine is employed pursuant to an agreement effective September 9, 1998,
as amended on April 5, 2000, which provides for an annual salary of not less
than $440,000 plus incentive bonus compensation to which he may be entitled
pursuant to the Incentive Plan. In the event Mr. Fine's employment is terminated
without cause, or in the event his employment with the Company is terminated
either by the Company or by Mr. Fine for "good reason" within three years after
a Change of Control has occurred or the employment of Mr. Weinstein with the
Company has terminated for any reason, then Mr. Fine shall receive an amount
equal to 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. In
addition, in the event the Company determines, during the term of Mr. Fine's
agreement, to sell or otherwise dispose of the JBI Footwear Division, the
Company shall use all reasonable efforts to offer Mr. Fine an executive position
of comparable responsibility within the Company. If such comparable position is
unavailable, the Company shall pay to Mr. Fine an amount equal to the greater of
the amount of base salary he would have received through the remainder of the
employment term plus one year of additional salary, or two years base salary;
provided, however, that, except only in the event of a change of control, any
such salary in excess of the greater of the amount of base salary payable
through the remainder of the employment term or one year shall be offset by any
salary or other compensation earned by Mr. Fine from other employment. The
agreement also contains certain non-competition restrictions upon termination of
employment and further provides that in the event Mr. Fine'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 incentive compensation amount which otherwise
would have been paid to him on the basis of the results for such fiscal year,
pro-rated through the date of termination of employment.
Mr. Rosenberg was employed pursuant to an agreement dated April 1, 1997
which, as amended, provided for an annual salary of not less than $250,000 plus
incentive bonus compensation to which he may be entitled pursuant to the
Incentive Plan. Mr. Rosenberg passed away on January 2, 2000. The agreement
provided that, upon termination of employment due to death, the Company is to
pay his estate an amount equal to his annual base salary for a period of one
year after termination of employment and any incentive compensation amount which
otherwise would have been paid to him on the basis of the results for such
fiscal year, pro-rated through the date of termination of employment. At the
time of his death, each of the 44,600 unvested stock options previously granted
to Mr. Rosenberg automatically vested pursuant to the terms of the Amended and
Restated 1994 Equity Incentive Plan. On March 14, 2000 the Board of Directors of
the Company voted to extend the
17
<PAGE> 20
period during which Mr. Rosenberg's estate was entitled to exercise his vested
stock options from one year from the date of his death to four years from the
date of his death.
Mr. Konecki is employed pursuant to an agreement dated January 19, 1999, as
amended on April 25, 2000, which provides for an annual salary of not less than
$225,000 plus incentive bonus compensation to which he may be entitled pursuant
to the Incentive Plan. In the event Mr. Konecki's employment is terminated
without cause, then Mr. Konecki shall receive an amount equal to the greater of
his base salary for a period of one year or the amount of base salary he would
have received for the remainder of his employment term, provided that any such
payment is to be offset by any salary or other compensation earned by Mr.
Konecki through other employment. The Agreement also contains certain
non-competition restrictions upon termination of employment and further provides
that in the event that Mr. Konecki's employment terminates due to disability or
death, the Company will pay him or his estate an amount equal to one year of his
base salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are J. Christopher Clifford
(Chairman), Douglas J. Kahn, Harold Leppo, Melvin M. Rosenblatt and Nancy Ryan.
None of these individuals is an executive officer of the Company and no
"compensation committee interlocks" existed during the last fiscal year. Mr.
Clifford is a managing director of Berkshire Partners, LLC ("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 January 29, 2000, the Company paid Berkshire $60,000 for services under
the Management Agreement. The Company believes the terms of the Management
Agreement are as favorable as could be obtained from an unaffiliated entity.
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 the terms of this arrangement are as favorable as could be
obtained from an unaffiliated entity.
The Company has entered into negotiations with Pro Media, Inc., an
advertising company of which Ms. Ryan is the President. To date, the Company has
neither paid compensation to Pro Media, Inc., nor entered into a formal
arrangement therewith. See "Certain Relationships and Related Transactions."
18
<PAGE> 21
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, and the Dow
Jones Retailer -- Specialty Apparel Index for the five years ending January 29,
2000.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG J. BAKER, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES RETAILERS-SPECIALTY-APPAREL INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET DOW JONES RETAILERS-
J. BAKER, INC. (U.S.) SPECIALTY-APPAREL
-------------- ------------------- --------------------
<S> <C> <C> <C>
1/28/95 100.00 100.00 100.00
2/3/96 35.00 142.00 116.00
2/1/97 49.00 184.00 137.00
1/31/98 32.00 218.00 224.00
1/30/99 43.00 340.00 415.00
1/29/00 41.00 513.00 376.00
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Berkshire are parties to the Management Agreement. Mr.
Clifford is a managing director 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 January 29, 2000, the
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<PAGE> 22
Company paid Berkshire $60,000 for services under the Management Agreement. The
Company believes the terms of the Management Agreement are as favorable as could
be obtained from an unaffiliated entity.
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 the terms of this arrangement are as favorable as could be
obtained from an unaffiliated entity.
On July 8, 1998, Mr. Weinstein and Mr. Glasser were each granted a
performance based restricted stock award under the 1994 Plan for 50,000 shares
of the Company's common stock at a purchase price of $10.18 per share. Pursuant
to the awards, each of Mr. Weinstein and Mr. Glasser purchased the shares
underlying the awards and executed a promissory note in the amount of $509,000,
which notes will be ratably forgiven over five years provided Mr. Weinstein and
Mr. Glasser remain employed by the Company during such time. The awards, as
amended, provide that if the twenty (20) day average trading price of the
Company's common stock culminating on the vesting date, September 15, 2000, is
less than $14.00 and $15.00 per share in the case of Mr. Weinstein and Mr.
Glasser, respectively, the Company shall have the right to repurchase a portion
of the shares, up to a maximum of 40,000 shares, at the lower of $10.18 per
share or the fair market value of such shares on the vesting date.
In anticipation of the scheduled May 2000 termination of its arrangement
with the organization that currently provides advertising and media buying
services to the Company, the Company has entered into negotiations with Pro
Media, Inc., an advertising company of which Ms. Ryan is the President. Although
negotiations are ongoing and there can be no assurance that the Company and Pro
Media, Inc. will ultimately enter into a formal arrangement for the provision of
any or all of these services, the Company believes the terms of any such
agreement will be no less favorable than the terms it previously received or
that could otherwise be obtained from an unaffiliated entity. Organizations such
as Pro Media, Inc. typically receive a percentage of their clients' advertising
and media service expenditures as compensation for their services.
(PROPOSAL NUMBER 2)
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP, independent public
accountants, to audit the books, records and accounts of the Company for the
fiscal year ending February 3, 2001. 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 LLP has audited the books of the Company and its
predecessor for more than twenty-five years. KPMG LLP has no direct or indirect
material financial interest in the Company. A representative of KPMG 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 will also 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 voting on the matter 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 2001, but will consider the stockholder vote in
appointing auditors for fiscal 2002.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
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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.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of five
independent outside directors. The Audit Committee has prepared the following
report on its activities with respect to the Company's audited financial
statements for the fiscal year ended January 29, 2000 (the "audited financial
statements").
- The Audit Committee has reviewed and discussed the audited financial
statements with management;
- The Audit Committee has discussed with KPMG LLP, the Company's
independent auditors, the matters required to be discussed by Statement
on Auditing Standards No. 61;
- The Audit Committee has received the written disclosures and the letter
from KPMG LLP required by Independence Standards Board Standard No. 1,
and has discussed with KPMG its independence from the Company; and
- Based upon these reviews and discussions and relying thereon, the Audit
Committee has recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended January 29, 2000, for filing with the
U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
Melvin M. Rosenblatt, Chairman
Douglas J. Kahn
Harold Leppo
Theodore M. Ronick
David Pulver
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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 2001 Annual Meeting, the proposal must be received at the principal
executive offices of the Company on or before January 3, 2001. 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 Clerk
of 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.
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DETACH HERE
PROXY
J. BAKER, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Christopher Clifford and Sherman N.
Baker, 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 15, 2000
at the Annual Meeting of Stockholders to be held June 6, 2000 and any
adjournment or postponement thereof.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE> 26
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
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.
1. Proposal to elect four Class II Directors.
NOMINEES: (01) Nancy Ryan, (02) Douglas J. Kahn,
(03) Harold Leppo, (04) Stuart M. Glasser
FOR WITHHELD
[ ] [ ]
[ ]
--------------------------------------
For all nominees except as noted above
2. Proposal to ratify the selection of KPMG LLP as independent auditors of
the Company for the fiscal year ending February 3, 2001.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE SIGN IN THE SAME FORM AS NAME APPEARS ON THIS CARD. FIDUCIARIES AND
CORPORATE OFFICERS SHOULD INDICATE THEIR TITLE.
Signature: Date:
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Signature: Date:
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