<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
THE LESLIE FAY COMPANY, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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.
(6) Amount Previously Paid:
----------------------------------------------------------
(7) Form, Schedule or Registration Statement No.:
(8) Filing Party:
----------------------------------------------------------
(9) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
THE LESLIE FAY COMPANY, INC.
1412 BROADWAY
NEW YORK, NEW YORK 10018
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 21, 2000
------------------------
To the Stockholders of
THE LESLIE FAY COMPANY, INC.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Meeting") of The Leslie Fay Company, Inc. (the "Company") will be held at
Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, 9th Floor, New
York, New York, on Thursday, September 21, 2000 at 10:30 a.m., New York City
time, to consider and act upon the following matters:
(1) the election of six (6) directors;
(2) the approval of certain provisions of employment arrangements to be
entered into by the Company and John J. Pomerantz;
(3) the approval of certain provisions of employment arrangements to be
entered into by the Company and John A. Ward;
(4) the approval of certain provisions of employment arrangements to be
entered into by the Company and Dominick Felicetti;
(5) the approval of certain provisions of employment arrangements to be
entered into by the Company and Warren T. Wishart;
(6) the ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending
December 30, 2000; and
(7) the transaction of such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on August 25, 2000, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
WARREN T. WISHART
SECRETARY
New York, New York
September 1, 2000
------------------------
It is important that your shares be represented at the Meeting. Each
stockholder is urged to sign, date and return the enclosed proxy card which is
being solicited on behalf of the Board of Directors. An envelope addressed to
the Company's transfer agent is enclosed for that purpose and needs no postage
if mailed in the United States.
------------------------
<PAGE>
THE LESLIE FAY COMPANY, INC.
1412 BROADWAY
NEW YORK, NEW YORK 10018
PROXY STATEMENT
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share ("Common Stock"), of The Leslie Fay Company, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation by and on
behalf of its Board of Directors of proxies ("Proxy" or "Proxies") for use at
the 2000 Annual Meeting of Stockholders (the "Meeting") to be held on Thursday,
September 21, 2000, at 10:30 a.m., New York City time, at Parker Chapin LLP, The
Chrysler Building, 405 Lexington Avenue, 9th Floor, New York, New York and at
any adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The cost of preparing,
assembling and mailing the Notice of Annual Meeting of Stockholders, this Proxy
Statement and Proxies is to be borne by the Company. The Company will also
reimburse brokers who are holders of record of Common Stock for their expenses
in forwarding Proxies and Proxy soliciting material to the beneficial owners of
such shares. In addition to the use of the mails, Proxies may be solicited
without additional compensation by directors, officers and employees of the
Company by telephone, telecopy, electronic mail or personal contact. The
approximate mailing date of this Proxy Statement is September 1, 2000.
A Proxy may be revoked by a stockholder at any time before its exercise by
filing with Warren T. Wishart, the Secretary of the Company, at the address set
forth above, an instrument of revocation or a duly executed proxy bearing a
later date, or by attendance at the Meeting and electing to vote in person.
Attendance at the Meeting will not, in and of itself, constitute revocation of a
Proxy.
PURPOSES OF THE MEETING
At the Meeting, the Company's stockholders will consider and vote upon the
following matters:
(1) the election of six (6) directors;
(2) the approval of certain provisions of employment arrangements to be
entered into by the Company and John J. Pomerantz;
(3) the approval of certain provisions of employment arrangements to be
entered into by the Company and John A. Ward;
(4) the approval of certain provisions of employment arrangements to be
entered into by the Company and Dominick Felicetti;
(5) the approval of certain provisions of employment arrangements to be
entered into by the Company and Warren T. Wishart;
(6) the ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending
December 30, 2000;
(7) the transaction of such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
Unless otherwise specified, all Proxies, in proper form, received by the
time of the Meeting will be voted for the election of all nominees named herein
to serve as directors and in favor of each of the proposals set forth in the
accompanying Notice of Annual Meeting of Stockholders and described below.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The close of business on August 25, 2000 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Meeting and any
adjournment thereof. As of the Record Date, there were 5,073,138 shares of
Common Stock outstanding. Each share of Common Stock outstanding on the Record
Date will be entitled to one vote on all matters to come before the Meeting.
A majority of the shares entitled to vote, represented in person or by
proxy, is required to constitute a quorum for the transaction of business.
Directors are elected by a plurality of votes of the shares of Common Stock
represented in person or by proxy at the Meeting. The affirmative vote of the
majority of the shares of Common Stock represented in person or by proxy at the
Meeting will be required for approval of each other matter that is being
submitted to a vote of the stockholders. Proxies submitted that contain
abstentions or broker nonvotes will be deemed present at the Meeting for
determining the presence of a quorum. Abstentions and broker nonvotes will not
have the effect of votes in favor of or in opposition to any matter.
SECURITY AND VOTING OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding security and
voting ownership of the Common Stock by (i) each person or entity who owns of
record or beneficially five percent or more of the Company's Common Stock,
(ii) each director of the Company, (iii) each Named Officer (as hereinafter
defined) of the Company, (iv) each nominee for election as a director of the
Company and (v) all directors and executive officers of the Company as a group.
All of such information is given as of August 25, 2000 except as otherwise
indicated. To the knowledge of the Company, each of such stockholders has sole
voting and investment power as to the shares shown unless otherwise noted.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) BENEFICIALLY OWNED OF COMMON STOCK
---------------------------------------- ------------------ ---------------
<S> <C> <C>
Three Cities Research, Inc.
650 Madison Avenue
New York, NY 10022........................................ 3,660,764(2) 67.1%
John J. Pomerantz
c/o The Leslie Fay Company, Inc.
1412 Broadway
New York, NY 10018........................................ 3,660,764(3) 67.1%
Constable Asset Management, Ltd.
Constable Partners, L.P.
5 Radnor Corp. Center
100 Matsonford Rd.
Suite 520
Radnor, Pennsylvania 19087................................ 441,407(4) 8.7%
John A. Ward
c/o The Leslie Fay Company, Inc.
1412 Broadway
New York, NY 10018........................................ 331,560(5) 6.1%
Dominick Felicetti.......................................... 220,758(6) 4.2%
Warren T. Wishart........................................... 218,758(5) 4.1%
Clifford B. Cohn............................................ 24,000(7) (12)
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) BENEFICIALLY OWNED OF COMMON STOCK
---------------------------------------- ------------------ ---------------
<S> <C> <C>
Robert L. Sind.............................................. 24,000(7) (12)
Mark Kaufman................................................ 14,000(8) (12)
Bernard Olsoff.............................................. 10,600(9) (12)
H. Whitney Wagner........................................... 5,300(10) (12)
Thomas G. Weld.............................................. 5,300(10) (12)
Officers and Directors as a group (10 persons).............. 4,515,040(11) 71.8%
</TABLE>
------------------------
(1) Pursuant to the rules of the Securities and Exchange Commission (the "SEC"),
addresses are only given for holders of 5% or more of the outstanding Common
Stock of the Company.
(2) Consists of 1,215,081 and 2,054,885 shares of Common Stock directly owned by
Three Cities Fund II, L.P. ("Fund II") and Three Cities Offshore II, C.V.
("Offshore II"), respectively and 10,000 shares directly owned by
Mr. Pomerantz and 380,798 shares of Common Stock beneficially owned by
Mr. Pomerantz, as described in note (3) below, as to which Fund II and
Offshore II have shared voting and investment power. Pursuant to Rule 13d-5
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
Fund II and Offshore II may each be considered the beneficial owner of
3,660,764 shares of Common Stock. TCR Associates, L.P. ("TCR Associates") is
the sole general partner of Fund II and may be deemed the beneficial owner
of all of the shares beneficially owned by Fund II. Three Cities
Research, Inc. ("TCR") is the sole general partner of TCR Associates and is
the investment advisor to Fund II and Offshore II. Pursuant to a management
agreement, TCR has voting and dispositive power over all of the shares of
Common Stock beneficially owned by Fund II and Offshore II and may be deemed
the beneficial owner of all of such shares. TCR Offshore Associates ("TCR
Offshore") is the sole general partner of Offshore II and may be deemed the
beneficial owner of all of the shares of Common Stock beneficially owned by
Offshore II. Three Cities Associates, N.V. ("TCA, N.V.") is the sole general
partner of TCR Offshore and may be deemed the beneficial owner of all of the
shares of Common Stock beneficially owned by TCR Offshore. J. William Uhrig
is the sole stockholder, President and sole director of TCA, N.V. and,
pursuant to Rules 13d-3 and 13d-5 under the Exchange Act, may be deemed the
beneficial owner of all of the shares beneficially owned by TCA, N.V. The
information provided above was obtained from Amendment No. 1 to a
Schedule 13D filed with the SEC on August 30, 1999.
(3) Includes 380,798 shares of Common Stock issuable upon exercise of stock
options presently exercisable or exercisable within 60 days and 3,269,966
shares beneficially owned by TCR, as to which Mr. Pomerantz has shared
voting and investment power. Mr. Pomerantz has entered into a letter
agreement dated July 26, 1999 with Fund II and Offshore II containing
certain agreements as to the election of directors of the Company.
(4) Consists of 441,407 and 356,789 shares of Common Stock as to which John
Constable d/b/a/ Constable Asset Management, Ltd. and Constable Partners,
L.P., respectively, have shared voting and dispositive power. John Constable
is the General Partner of Constable Partners, L.P. The information provided
above was obtained from a Schedule 13G filed with the SEC on December 10,
1999.
(5) Consists of shares of Common Stock issuable upon exercise of stock options
presently exercisable or exercisable within 60 days.
(6) Includes 218,758 shares of Common Stock issuable upon exercise of stock
options presently exercisable or exercisable within 60 days.
(7) Includes 20,000 shares of Common Stock issuable upon exercise of presently
exercisable stock options.
-3-
<PAGE>
(8) Includes 10,000 shares of Common Stock issuable upon exercise of stock
options presently exercisable or exercisable within 60 days.
(9) Includes 6,600 shares of Common Stock issuable upon exercise of presently
exercisable stock options.
(10) Includes 3,300 shares of Common Stock issuable upon exercise of presently
exercisable stock options.
(11) Includes 1,213,074 shares of Common Stock issuable upon exercise of stock
options presently exercisable or exercisable within 60 days and 3,269,966
shares beneficially owned by Three Cities as to which Mr. Pomerantz shares
certain voting rights as to the election of directors.
(12) Less than 1% of the outstanding shares of Common Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect six directors to serve until the
annual meeting of stockholders scheduled to be held in the year 2001 and until
their respective successors are elected and qualified. Each of the nominees has
advised the Company of his willingness to serve as a director of the Company. In
case any nominee should become unavailable for election to the Board of
Directors for any reason, the persons named in the Proxies have discretionary
authority to vote the Proxies for one or more alternative nominees who will be
designated by the Board of Directors.
INFORMATION ABOUT NOMINEES
The following table sets forth certain information concerning the nominees
for director of the Company (as of August 25, 2000):
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
---- -------- ------------------------------------ --------------
<S> <C> <C> <C>
John J. Pomerantz................... 67 Chairman of the Board(3) 1984
President and Chief Executive
John A. Ward........................ 47 Officer 1997
Robert L. Sind...................... 67 Director(1)(2) 1997
Bernard Olsoff...................... 71 Director(1)(3) 1998
H. Whitney Wagner................... 44 Director(1) 1999
Thomas G. Weld...................... 38 Director(2)(3) 1999
</TABLE>
------------------------
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Nominating Committee of the Board of Directors.
-4-
<PAGE>
John J. Pomerantz has been the Chief Executive or Chief Operating Officer of
the Company and its predecessors from 1971 until May 2000, and an executive
thereof for over 30 years. Mr. Pomerantz was President of the Leslie Fay
business from 1971 until August 1986, when he became Chairman of the Board of
the Company.
John A. Ward joined the Company in August 1989 as head of the Andrea Gayle
division. From July 1991 to June 1993 he was Chairman of the Leslie Fay
Sportswear Group. In June 1993 he became Chairman of the combined Leslie Fay
Dress and Sportswear divisions. He was elected a Senior Vice President of the
Company in September 1991, President of the Company in June 1997 and Chief
Executive Officer of the Company in May 2000. From June 1988 until August 1989
he was Senior Vice President and General Merchandise Manager for Ready-to-Wear,
Men's and Boys' at B. Altman & Co. For fifteen years prior thereto, he had been
an executive at Filene's.
Robert L. Sind founded Recovery Management Corporation ("RMC") in 1984. RMC
specializes in developing and implementing hands-on business, financial and
operational turnaround programs and providing crisis management to troubled
commercial, industrial and real estate clients and their creditors. For
20 years prior thereto, Mr. Sind served in corporate operating positions,
managing turnarounds and restructurings, including Londontown Manufacturing
Company, Beker Industries, and Nice-Pak Products, Inc. For ten years he also
served as investment banker for distressed companies.
Bernard Olsoff was President and Chief Executive Officer of Frederick
Atkins, Inc., an international retail merchandising and product development
organization for department stores from 1987 and 1994, respectively, until his
retirement in April 1997. From 1971 to 1983, Mr. Olsoff was President of May
Merchandising Corporation in New York City. From August 1955 to August 1971 he
was Vice President and General Merchandise Manager of Associated Merchandising
Corporation. Mr. Olsoff is also a director of Elder Beerman Stores, Inc.
H. Whitney Wagner is Managing Director of Three Cities Research, Inc. which
he joined in 1993. Mr. Wagner is responsible for deal origination and also
focuses on the development and execution of exit strategies. Previously, he was
an officer in the Corporate division of Chemical Bank. Mr. Wagner currently
serves as a director of Factory 2-U Stores.
Thomas G. Weld is Managing Director of Three Cities Research, Inc. which he
joined in 1993. Mr. Weld focuses on the development and growth strategies for
portfolio companies. Prior to joining Three Cities Research, Inc., he worked on
a variety of client engagements focused on profit improvement as a consultant
with McKinsey & Company.
INFORMATION ABOUT NON-DIRECTOR EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
non-director executive officers of the Company (as of August 25, 2000):
<TABLE>
<CAPTION>
NAME POSITIONS WITH THE COMPANY AGE OFFICER SINCE
---- ------------------------------------- -------- -------------
<S> <C> <C> <C>
Dominick Felicetti................... Senior Vice President-Manufacturing 46 1995
and Sourcing
Warren T. Wishart.................... Senior Vice President-Administration 48 1993
and Finance, Secretary and Chief
Financial Officer
</TABLE>
-5-
<PAGE>
Dominick Felicetti rejoined the Company in May 1995 as Senior Vice President
of Worldwide Sourcing and Manufacturing. From 1994 to 1995 he was Vice President
Manufacturing and Production for S.L. Fashions. Mr. Felicetti was previously
employed by The Leslie Fay Companies, Inc. from December 1991 to July 1993 in
the position of Director of Technical Services and Production. From 1986 to 1990
he served as President of American Dress Company and from 1979 to 1986 as
Production Manager for Betsy's Things.
Warren T. Wishart joined the Company in March 1993. He held the position of
Vice President--Planning from July 1993 through December 1994. In January 1995
he became Senior Vice President--Finance, in September 1995 he was appointed
Chief Financial Officer and Treasurer of the Company. In June 1997 he became
Senior Vice President--Administration and Finance and Secretary of the Company.
Before joining Leslie Fay Mr. Wishart was Vice President--Strategic Planning at
Galerias Preciados from 1991 to the end of 1992. Prior to that, he had seventeen
years of financial management and business planning experience with several
department stores including Filene's and the L.J. Hooker Retail Group.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended January 1, 2000, the Board of Directors held
eight meetings and took certain action on one other occasion by written consent.
During such year, each director attended at least 75 percent of the aggregate of
(i) the number of meetings of the Board of Directors held during the period he
served on the Board, and (ii) the number of meetings of the Compensation and
Audit Committees held during the period he served on such committees.
The Compensation Committee, currently composed of Messrs. Olsoff, Sind and
Wagner, has authority over officer compensation and administers the Company's
1997 Management Stock Option Plan and 1997 Non-Employee Director Stock Option
and Stock Incentive Plan. During the fiscal year ended January 1, 2000, the
Compensation Committee did not hold any formal meetings.
The Audit Committee, currently composed of Messrs. Cohn, Kaufman, Sind and
Weld, held three meetings during the fiscal year ended January 1, 2000. The
Audit Committee serves as the Board's liaison with the Company's auditors.
The Nominating Committee, currently composed of Messrs. Olsoff, Pomerantz
and Weld, did not hold any formal meetings during the fiscal year ended
January 1, 2000, although its members met informally from time to time. The
Nominating Committee is responsible for making recommendations for membership on
the Board. The Nominating Committee will consider recommendations by
stockholders for nominees to the Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Exchange Act officers, directors and holders
of more than 10% of the outstanding shares of the Company's Common Stock are
required to file periodic reports of their ownership of, and transactions
involving, the Company's Common Stock with the SEC. Based solely on its review
of copies of such reports received by the Company, the Company believes that its
reporting persons have complied with all Section 16 filing requirements
applicable to them with respect to the Company's fiscal year ended January 1,
2000, except that H. Whitney Wagner, a director of the Company, filed a late
Form 5, reflecting an option to purchase 10,000 shares of the Company's Common
Stock.
-6-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows, for 1999, 1998 and 1997, the compensation paid or
accrued by the Company and its subsidiaries to the Chief Executive Officer and
all other executive officers of the Company who received compensation greater
than $100,000 during 1999 (the "Named Officers").
ANNUAL COMPENSATION(1)
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------------
AWARDS PAYOUTS
----------- --------
RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY(2) BONUS AWARDS OPTIONS (#) PAYOUTS COMPENSATION
------------------------------------ -------- --------- -------- ---------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Pomerantz................... 1999 $500,000 $440,000 -- -- -- $ 3,450(3)
Chairman of the Board of Directors 1998 $498,654 $350,000 -- 117,042 -- $ 2,650(3)
and Chief Executive Officer 1997 $611,129 $300,000 -- 263,756 -- $ 8,699(4)
John A. Ward........................ 1999 $450,000 $350,000 -- -- -- $ 3,450(3)
President 1998 $449,039 $280,000 -- 91,440 -- $ 2,650(3)
1997 $462,692 $225,000 -- 140,120 -- $ 2,650(4)
Dominick Felicetti.................. 1999 $350,000 $285,000 -- -- -- $ 3,450(3)
Senior Vice President 1998 $349,519 $230,000 -- 78,638 -- $ 2,650(3)
Manufacturing and Sourcing 1997 $337,500 $200,000 -- 140,120 -- $ 1,938(4)
Warren T. Wishart................... 1999 $225,000 $250,000 -- -- -- $ 3,450(3)
Senior Vice President 1998 $224,519 $200,000 -- 78,638 -- $ 2,650(3)
Administration and Finance, 1997 $207,692 $180,000 -- 140,120 -- $102,650(4)
Chief Financial Officer and
Treasurer
</TABLE>
------------------------
(1) In 1999, 1998 and 1997, perquisites and other personal benefits did not
exceed the lesser of $50,000 or 10% of reported annual salary and bonuses
for any of the Named Officers.
(2) 1997 was a 53 week year. 1999 and 1998 were 52 week years. Amounts represent
salaries paid during the above calendar years.
(3) For 1999 and 1998, consists of amounts contributed as Company matching
contributions for each Named Officer under the Company's 401(k) savings plan
(the "401(k) Plan") for such year.
(4) For 1997, consists of the following: (a) amounts contributed as Company
matching contributions for each Named Officer under the Company's 401(k)
Plan as follows: Mr. Pomerantz $2,286; Mr. Ward $2,650; Mr. Felicetti $1,938
and Mr. Wishart $2,650, (b) $6,413 paid by the Company for split dollar life
insurance coverage for Mr. Pomerantz and (c) $100,000 paid by the Company as
earned retention for Mr. Wishart.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options were granted to any of the Named Officers in fiscal 1999.
-7-
<PAGE>
AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR AND FISCAL YEAR END VALUE
TABLE
The following table sets forth information with respect to the Named
Officers concerning the exercise of stock options during fiscal 1999 and
unexercised stock options held as of the end of such fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ------------ -------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
John J. Pomerantz........... None None 232,600/148,198 $705,941/449,787
John A. Ward................ None None 138,199/93,361 $419,437/283,348
Dominick Felicetti.......... None None 131,798/86,960 $400,013/263,924
Warren T. Wishart........... None None 131,798/86,960 $400,013/263,924
</TABLE>
------------------------
(1) Aggregate market value of the shares of Common Stock covered by the stock
options at fiscal year end less the exercise price of such stock options.
COMPENSATION OF DIRECTORS
Each director who is not a full-time employee of or consultant to the
Company receives an annual director's fee of $12,500 and 2,000 shares of the
Company's common stock. Each initial non-employee director, upon becoming a
director, received stock options to purchase 20,000 shares, vesting 33%, 33% and
34% each year and each subsequent non-employee director, upon becoming a
director, has received or will receive stock options to purchase 10,000 shares,
vesting 33%, 33% and 34% each year.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with John J. Pomerantz expiring on
January 3, 2001, providing for his employment as Chief Executive Officer at a
current annual base salary of $500,000. Mr. Pomerantz has agreed to enter into a
new employment agreement with the Company. See Proposal 2.
The Company also has an employment agreement with John A. Ward expiring on
January 3, 2001, pursuant to which he is employed as President of the Company at
a current annual base salary of $500,000. Mr. Ward has agreed to enter into a
new employment agreement with the Company. See Proposal 3.
The Company also has an employment agreement with Dominick Felicetti
expiring on January 3, 2001, pursuant to which he is employed as Senior Vice
President--Manufacturing and Sourcing at a current annual base salary of
$375,000. Mr. Felicetti has agreed to enter into a new employment agreement with
the Company. See Proposal 4.
The Company also has an employment agreement with Warren T. Wishart expiring
on January 3, 2001, pursuant to which he is employed as Senior Vice
President--Administration and Finance, Chief Financial Officer and Treasurer at
a current annual base salary of $250,000. Mr. Wishart has agreed to enter into a
new employment agreement with the Company. See Proposal 5.
In addition, these employment agreements provide for a shared bonus pool
payable to the employees of the Company if EBITDA (as defined in such
agreements) exceeds $4,626,550. The bonus pool will equal 9.6% of EBITDA plus an
additional 0.2% of EBITDA for each $54,430 by which EBITDA exceeds $4,626,550 up
to a maximum of 12.5% of EBITDA plus an additional 5% of the amount by which
EBITDA exceeds $11,500,000, subject to certain adjustments.
SEVERANCE AGREEMENTS
None.
-8-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is charged with
determining the compensation of officers. During 1999, the Compensation
Committee consisted of H. Whitney Wagner (from June 29, 1999), Robert L. Sind
(from June 29, 1999), Bernard Olsoff (from June 29, 1999), Chaim Edelstein (from
November 10, 1998 through June 29, 1999), Clifford B. Cohn (through June 29,
1999) and Mark B. Dickstein (through May 12, 1999).
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee's responsibility is to make recommendations to
the Board of Directors with respect to the compensation of executive officers of
the Company. Following the resignations of Messrs. Dickstein and Edelstein as
directors of the Company and the appointment of Messrs. Olsoff, Sind and Wagner
to the Compensation Committee on June 29, 1999, the Compensation Committee is
presently composed of Messrs. Olsoff, Sind and Wagner.
The Company's compensation policies are designed to enable the Company to
attract, motivate and retain senior management by providing competitive
compensation opportunities based both on individual performance and on the
financial performance of the Company. This is particularly true since each of
the Named Officers has an employment agreement with the Company. Accordingly,
benefits are provided through stock option incentives and bonuses which are
generally consistent with the goal of coordinating rewards to management with a
maximization of stockholder return. In reviewing Company performance,
consideration is given to the Company's earnings. Also taken into account are
external economic factors that affect results of operations. An attempt is also
made to maintain compensation within the range of that afforded like executive
officers of companies whose size and business is comparable to that of the
Company.
CEO COMPENSATION
In the case of the Chief Executive Officer, the Compensation Committee
evaluates the Company's mid and long range strategic planning and implementation
as well as the considerations impacting the compensation of executive officers
generally described above. Based on the Company's 1999 operating performance,
financial results and condition and the achievement of EBITDA targets contained
in his employment agreement, a bonus of $440,000 was granted to Mr. Pomerantz by
the Compensation Committee.
The foregoing report is approved by all members of the Compensation
Committee.
Respectfully submitted,
Compensation Committee
Bernard Olsoff
Robert L. Sind
H. Whitney Wagner
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly change, post-emergence from
bankruptcy, in the cumulative stockholder return on the Company's Common Stock
with the NASDAQ Composite Index and a peer group. The peer group consists of the
following four companies engaged in the distribution of ladies' apparel: Liz
Claiborne, Inc., Kellwood Company, Oxford Industries, Inc. and Jones & Co. The
graph assumes $100 invested on June 4, 1997 (the date of the Company's emergence
from bankruptcy) in the Company's Common Stock and in each of the indices and
that all dividends on stocks in the NASDAQ
-9-
<PAGE>
Composite Index and a peer group index were reinvested. No cash dividends were
paid on the Common Stock of the Company between June 4, 1997 and January 1,
2000. The stockholder return shown on the graph below is not necessarily
indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
6/4/97 1/3/98 1/2/99 1/1/00
<S> <C> <C> <C> <C>
The Leslie Fay Company, Inc. $100 $202 $191 $175
Nasdaq Composite Index $100 $115 $159 $295
Peer Group Index $100 $109 $98 $93
</TABLE>
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
6/04/97 1/03/98 1/02/99 1/01/00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
The Leslie Fay Company, Inc................................. $100 $202 $191 $175
Nasdaq Composite Index...................................... $100 $115 $159 $295
Peer Group Index............................................ $100 $109 $ 98 $ 93
</TABLE>
VOTING REQUIRED AND RECOMMENDATION
The election of each director requires the affirmative vote of a plurality
of the votes cast by the holders of the shares of Common Stock, in person or by
proxy, at the Meeting and entitled to vote thereon. THE BOARD RECOMMENDS A VOTE
"FOR "EACH NOMINEE FOR DIRECTOR.
-10-
<PAGE>
PROPOSAL 2
APPROVAL OF CERTAIN PROVISIONS
OF EMPLOYMENT ARRANGEMENTS
WITH JOHN J. POMERANTZ
The Board of Directors believes it would be in the best interests of the
Company to enter into a new employment agreement with John J. Pomerantz,
commencing on December 31, 2000, and certain related agreements (collectively,
the "New Pomerantz Contract"). Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), contains special limits on the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer and
to each of the other four most highly compensated executive officers if the
compensation exceeds $1 million in any one year. However, the Company can
preserve the deductibility of compensation in excess of $1 million if the
compensation is paid under a plan that has been approved by the stockholders and
otherwise qualifies as "performance-based" under Section 162(m). The Board of
Directors is therefore submitting the compensation provisions of the New
Pomerantz Contract to the stockholders for approval.
The following is a summary of the material compensation-related provisions
of the New Pomerantz Contract:
John J. Pomerantz will serve as Chairman of the Board and receive a base
salary of $500,000 per year for up to five (5) years. The Company will also loan
him $1,176,665.82 to exercise all of his stock options, which will be evidenced
by a seven year limited recourse promissory note bearing interest at a rate of
6.22% per year secured by such stock. Mr. Pomerantz will also receive a signing
bonus of $1,500,000 plus the product of 380,798 times the difference between the
closing market price of a share of Common Stock on the date preceding his
exercise of all of his stock options and $3.09. Mr. Pomerantz will also be
entitled to receive not less than 22% of an annual cash bonus pool (the "Cash
Bonus Pool") as incentive compensation. The Cash Bonus Pool for each year will
be calculated as follows: (a) 25% of the difference between (b) EBITAB for the
fiscal year and (c) 20% of the average monthly RONA Net Assets for such fiscal
year (as EBITAB and RONA Net Assets are defined in the New Pomerantz Contract).
Mr. Pomerantz's actual percentage of the Cash Bonus Pool is to be determined by
the Compensation Committee as follows: 13.2% of the annual Cash Bonus Pool
automatically and at least an additional 8.8% if specific measurable objectives
are met. Mr. Pomerantz will receive additional bonuses as follows: $37,500 on
April 1, 2001, $150,000 annually during the term of his employment and an
additional amount in the years 2003, 2004 and 2005 equal to 20% of the
difference between $7.00 and the closing market price of a share of Common Stock
on September 21, 2000 multiplied by 380,798.
VOTE REQUIRED AND RECOMMENDATION
Approval of the foregoing compensation arrangement requires the affirmative
vote of a majority of the votes cast by the holders of the shares of Common
Stock, in person or by proxy, at the Meeting and entitled to vote on this
proposal. The Board of Directors recommends a vote "FOR" approval of this
proposal. Fund II and Offshore II have agreed to vote for this proposal.
-11-
<PAGE>
PROPOSAL 3
APPROVAL OF CERTAIN PROVISIONS
OF EMPLOYMENT ARRANGEMENTS
WITH JOHN A. WARD
The Board of Directors believes it would be in the best interests of the
Company to enter into a new employment agreement with John A. Ward, commencing
on December 31, 2000, and certain related agreements (collectively, the "New
Ward Contract"). The Board of Directors is submitting the compensation
provisions of the New Ward Contract to stockholders for approval in order to
satisfy Section 162(m) of the Code which is more fully described in the
introduction to Proposal 2.
The following is a summary of the material compensation-related provisions
of the New Ward Contract:
John A. Ward will serve as President and Chief Executive Officer and receive
a base salary of $500,000 per year for up to five (5) years. Mr. Ward will
receive an option to purchase 100,000 shares of Common Stock at the fair market
value on the date of grant. The Company will also loan him approximately
$1,115,520 (assuming an exercise price of the options referred to in the
preceding sentence of $4.00 per share) to exercise all of his stock options,
which will be evidenced by a seven year limited recourse promissory note bearing
interest at a rate of 6.22% per year secured by such stock. Mr. Ward will also
receive a signing bonus equal to the sum of (A) the product of 231,560 times the
difference between the closing market price of a share of Common Stock on the
date preceding his exercise of 231,560 of his stock options and $3.09 and
(B) the product of 100,000 times the difference between the closing market price
of a share of Common Stock on the date preceding his exercise of 100,000 of his
stock options and the exercise price thereof. Mr. Ward will also be entitled to
receive not less than 22% of the annual Cash Bonus Pool as incentive
compensation. Mr. Ward's actual percentage of the Cash Bonus Pool is to be
determined by the Compensation Committee as follows: 13.2% of the annual Cash
Bonus Pool automatically and at least an additional 8.8% if specific measurable
objectives are met. Mr. Ward will receive additional bonuses as follows: $35,000
on April 1, 2001, $140,000 annually during the term of his employment and an
additional amount in the years 2003, 2004 and 2005 equal to 20% of the
difference between $7.00 and the closing market price of a share of Common Stock
on September 21, 2000 multiplied by 331,560.
VOTE REQUIRED AND RECOMMENDATION
Approval of the foregoing compensation arrangement requires the affirmative
vote of a majority of the votes cast by the holders of the shares of Common
Stock, in person or by proxy, at the Meeting and entitled to vote on this
proposal. The Board of Directors recommends a vote "FOR" approval of this
proposal. Fund II and Offshore II have agreed to vote for this proposal.
-12-
<PAGE>
PROPOSAL 4
APPROVAL OF CERTAIN PROVISIONS
OF EMPLOYMENT ARRANGEMENTS
WITH DOMINICK FELICETTI
The Board of Directors believes it would be in the best interests of the
Company to enter into a new employment agreement with Dominick Felicetti,
commencing on December 31, 2000, and certain related agreements (collectively,
the "New Felicetti Contract"). The Board of Directors is submitting the
compensation provisions of the New Felicetti Contract to stockholders for
approval in order to satisfy Section 162(m) of the Code which is more fully
described in the introduction to Proposal 2.
The following is a summary of the material compensation-related provisions
of the New Felicetti Contract:
Dominick Felicetti will serve as Senior Vice-President of Manufacturing and
Sourcing and receive a base salary of $375,000 per year for up to five
(5) years. The Company will loan him $675,962.22 to exercise all of his stock
options, which will be evidenced by a seven year limited recourse promissory
note bearing interest at a rate of 6.22% per year secured by such stock.
Mr. Felicetti will also receive a signing bonus equal to the product of 218,758
times the difference between the closing market price of a share of Common Stock
on the date preceding his exercise of all of his stock options and $3.09.
Mr. Felicetti will also be entitled to receive as incentive compensation such
portion of the annual Cash Bonus Pool as may be determined by the Compensation
Committee. Mr. Felicetti will receive additional bonuses as follows: $21,250 on
April 1, 2001, $85,000 annually during the term of his employment and an
additional amount in the years 2003, 2004 and 2005 equal to 20% of the
difference between $7.00 and the closing market price of a share of Common Stock
on September 21, 2000 multiplied by 218,758.
VOTE REQUIRED AND RECOMMENDATION
Approval of the foregoing compensation arrangement requires the affirmative
vote of a majority of the votes cast by the holders of the shares of Common
Stock, in person or by proxy, at the Meeting and entitled to vote on this
proposal. The Board of Directors recommends a vote "FOR" approval of this
proposal. Fund II and Offshore II have agreed to vote for this proposal.
-13-
<PAGE>
PROPOSAL 5
APPROVAL OF CERTAIN PROVISIONS
OF EMPLOYMENT ARRANGEMENTS
WITH WARREN T. WISHART
The Board of Directors believes it would be in the best interests of the
Company to enter into a new employment agreement with Warren T. Wishart,
commencing on December 31, 2000, and certain related agreements (collectively,
the "New Wishart Contract"). The Board of Directors is submitting the
compensation provisions of the New Wishart Contract to stockholders for approval
in order to satisfy Section 162(m) of the Code which is more fully described in
the introduction to Proposal 2.
The following is a summary of the material compensation-related provisions
of the New Wishart Contract:
Warren T. Wishart will serve as Senior Vice-President of Administration and
Finance, Secretary and Chief Financial Officer and receive a base salary of
$250,000 per year for up to five (5) years. The Company will loan him
$675,962.22 to exercise all of his stock options, which will be evidenced by a
seven year limited recourse promissory note bearing interest at a rate of 6.22%
per year secured by such stock. Mr. Wishart will also receive a signing bonus
equal to the product of 218,758 times the difference between the closing market
price of a share of Common Stock on the date preceding his exercise of all of
his stock options and $3.09. Mr. Wishart will also be entitled to receive as
incentive compensation such portion of the annual Cash Bonus Pool as may be
determined by the Compensation Committee. Mr. Wishart will receive additional
bonuses as follows: $21,250 on April 1, 2001, $85,000 annually during the term
of his employment and an additional amount in the years 2003, 2004 and 2005
equal to 20% of the difference between $7.00 and the closing market price of a
share of Common Stock on September 21, 2000 multiplied by 218,758.
VOTE REQUIRED AND RECOMMENDATION
Approval of the foregoing compensation arrangement requires the affirmative
vote of a majority of the votes cast by the holders of the shares of Common
Stock, in person or by proxy, at the Meeting and entitled to vote on this
proposal. The Board of Directors recommends a vote "FOR" approval of this
proposal. Fund II and Offshore II have agreed to vote for this proposal.
-14-
<PAGE>
PROPOSAL 6
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed, subject to ratification by the
stockholders, Arthur Andersen LLP as the independent auditors of the Company for
the fiscal year ending December 30, 2000. This firm of auditors has audited the
accounts of the Company for approximately eight years. By virtue of their
familiarity with the Company's affairs and their ability, the Board of Directors
considers them best qualified to perform this important function. It is expected
that representatives of Arthur Andersen LLP will be present at the Meeting with
the opportunity to make a statement and to be available to respond to questions
regarding these and any other appropriate matters.
VOTE REQUIRED AND RECOMMENDATION
Approval of this proposal requires the affirmative vote of a majority of the
votes cast by the holders of the shares of Common Stock, in person or by proxy,
at the Meeting and entitled to vote on this proposal. The Board of Directors
recommends a vote "FOR" approval of this proposal.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Rule 14a-4 of the SEC proxy rules allows the Company to use discretionary
voting authority to vote on matters coming before an annual meeting of
stockholders if the Company does not have notice of the matter at least 45 days
before the date corresponding to the date on which the Company first mailed its
proxy materials for the prior year's annual meeting of stockholders or the date
specified by an overriding advance notice provision in the Company's By-Laws.
The Company's By-Laws contain an advance notice provision which requires a
stockholder to submit written notice of the matter to the Secretary of the
Company not less than 70 days nor more than 90 days prior to the first
anniversary date of the prior year's annual meeting of stockholders in order for
such notice to be timely. For the Company's 2001 Annual Meeting of Stockholders,
stockholders must submit such written notice to the Secretary of the Company no
earlier than June 23, 2001 and no later than July 13, 2001.
Stockholders of the Company wishing to include proposals in the proxy
material for the 2001 Annual Meeting of Stockholders must submit the same in
writing so as to be received by the Secretary of the Company on or before
May 4, 2001. Such proposals must also meet the other requirements of the rules
of the SEC relating to stockholder proposals.
OTHER MATTERS
The Board of Directors does not intend to bring before the Meeting for
action any matters other than those specifically referred to above and is not
aware of any other matters which are proposed to be presented by others. If any
other matters or motions should properly come before the Meeting, the persons
named in the Proxy intend to vote thereon in accordance with their judgment on
such matters or motions, including any matters or motions dealing with the
conduct of the Meeting.
By Order of the Board of Directors,
WARREN T. WISHART
SECRETARY
September 1, 2000
-15-
<PAGE>
PROXY PROXY
THE LESLIE FAY COMPANY, INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of The Leslie Fay Company, Inc.,
revoking all proxies heretofore given, hereby constitutes and appoints John
J. Pomerantz, John A. Ward and Warren T. Wishart, and each of them, Proxies,
with full power of substitution, for the undersigned and in the name, place
and stead of the undersigned, to vote all of the undersigned's shares of said
stock, according to the number of votes and with all the powers the
undersigned would possess if personally present, at the 2000 Annual Meeting
of Stockholders of The Leslie Fay Company Inc., to be held at Parker Chapin
LLP, The Chrysler Building, 405 Lexington Avenue, 9th Floor, New York, New
York, on Thursday, September 21, 2000 at 10:30 a.m., New York City time, and
at any adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the meeting and hereby revokes any proxy or
proxies heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXIES
ON ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING. WHERE NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES TO SERVE AS
DIRECTORS AND FOR EACH OF THE PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
THE LESLIE FAY COMPANY, INC.
SEPTEMBER 21, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
PLEASE MARK YOUR
A /X/ VOTES AS IN THE
EXAMPLE
FOR WITHHOLD THE BOARD OF DIRECTORS RECOMMENDS A
all nominees AUTHORITY VOTE FOR ALL LISTED NOMINEES, AND
listed to vote FOR PROPOSALS 2 THROUGH 6.
(except as for all
marked to listed
the contrary) nominees
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
(1) Election / / / / NOMINEES: John J. Pomerantz (2) Proposal to approve certain / / / / / /
of John A. Ward provisions of an employment
Directors Robert L. Sind agreement to be entered into
Bernard Olsoff by the Company and John J.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO H. Whitney Wagner Pomerantz.
VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE Thomas G. Weld
THAT NOMINEE'S NAME IN THE LIST PROVIDED (3) Proposal to approve certain / / / / / /
AT RIGHT.) provisions of an employment
agreement to be entered into
by the Company and John A.
Ward.
(4) Proposal to approve certain / / / / / /
provisions of an employment
agreement to be entered into
by the Company and Dominick
Felicetti.
(5) Proposal to approve certain / / / / / /
provisions of an employment
agreement to be entered into
by the Company and Warren T.
Wishart.
(6) Proposal to ratify the Board of / / / / / /
Director's selection of Arthur
Andersen LLP as the Company's
independent auditors for the
fiscal year ending December
30, 2000.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
THE MANNER DIRECTED. IN THE ABSENCE OF ANY DIRECTION, THE
SHARES WILL BE VOTED FOR EACH NOMINEE NAMED IN PROPOSAL 1
AND FOR PROPOSALS 2 THROUGH 6 AND IN ACCORDANCE WITH THEIR
DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME
Signatures(s)_____________________________ Dated: ____________,2000 BEFORE THE MEETING.
Signatures(s)_____________________________ Dated: ____________,2000
NOTE: (Signature(s) should conform to names as registered. For PLEASE MARK AND SIGN AT LEFT AND RETURN PROMPTLY
jointly owned shares, each owner should sign. When signing as
attorney, executor, administrator, trustee, guardian or officer
of a corporation, please give full title).
</TABLE>
