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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE WARNACO GROUP, INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
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THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1997
------------------------
To the Stockholders
of The Warnaco Group, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of The
Warnaco Group, Inc. (the 'Company') will be held at The Four Seasons Hotel, 57
East 57th Street, New York, New York 10022 on Friday, May 9, 1997, at 10:00
a.m., local time, or at any adjournments or postponements thereof (the 'Annual
Meeting') for the following purposes:
1. To re-elect three directors to serve until the Company's annual
meeting in 2000 and until such directors' successors are duly elected and
shall have qualified; and
2. To transact such other business as may properly come before the
Annual Meeting.
A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. The Board of Directors has fixed the close
of business on March 31, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting and at any
adjournment or postponement thereof. A list of stockholders entitled to vote at
the Annual Meeting will be located at the principal executive offices of the
Company located at 90 Park Avenue, New York, New York, 10016 for at least 10
days prior to the Annual Meeting and will also be available for inspection at
the Annual Meeting.
Whether or not you expect to attend, WE URGE YOU TO SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you
attend the Annual Meeting, you may vote your shares in person, which will revoke
any previously executed proxy.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the Annual Meeting, you must obtain a letter from the broker,
bank or other nominee confirming your beneficial ownership of the shares and
bring it to the Annual Meeting. In order to vote your shares at the Annual
Meeting, you must obtain from the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important. Please
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By order of the Board of Directors
STANLEY P. SILVERSTEIN,
Secretary
New York, New York
April 10, 1997
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THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1997
------------------------
INTRODUCTION
This proxy statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors (the 'Board of Directors') of The
Warnaco Group, Inc., a Delaware corporation (the 'Company'), to be voted at the
1997 Annual Meeting of Stockholders to be held at The Four Seasons Hotel, 57
East 57th Street, New York, New York 10022, on Friday, May 9, 1997, at 10:00
a.m., local time, or at any adjournments or postponements thereof (the 'Annual
Meeting'). The Notice of Annual Meeting, this proxy statement and the
accompanying proxy are first being mailed on or about April 10, 1997 to
stockholders of record as of the close of business on March 31, 1997. You can
ensure that your shares are voted at the meeting by signing, dating and promptly
returning the enclosed proxy in the envelope provided. Sending in a signed proxy
will not affect your right to attend the meeting and vote in person. You may
revoke your proxy at any time before it is voted by notifying the Company's
Transfer Agent, ChaseMellon Shareholder Services, 450 West 33rd Street, 15th
Floor, New York, New York 10001 in writing, or by executing a subsequent proxy,
which revokes your previously executed proxy.
The Company's principal executive offices are located at 90 Park Avenue,
New York, New York 10016.
VOTING OF PROXIES
A proxy which is properly signed and not revoked will be voted FOR election
as directors of the nominees listed herein unless contrary instructions are
given, and such proxy will be voted by the persons named in the proxy in their
discretion upon such other business as may be properly brought before the Annual
Meeting. The Board of Directors knows of no other business to come before the
Annual Meeting, but if other matters properly come before the Annual Meeting,
the persons named in the proxy intend to vote thereon in accordance with their
best judgment. Under the Delaware General Corporation Law, the Company's Amended
and Restated Certificate of Incorporation (the 'Charter') and the Company's
By-Laws, as amended, a plurality of the votes of the outstanding shares of
Common Stock entitled to vote and present, in person or by properly executed
proxy, will be required to elect a nominated director. Votes that are withheld
will be excluded entirely from the vote and will have no effect. Under the rules
of the New York Stock Exchange ('NYSE'), brokers who hold shares in 'street'
name have the authority to vote on certain routine matters when they have not
received instructions from beneficial owners. Brokers who do not receive
instructions are entitled to vote on the election of directors. Broker non-votes
will be considered present for purposes of verifying a quorum, but under
applicable law will have no effect on the outcome of the election of directors.
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At the Annual Meeting, the Company's stockholders will be asked (1) to
re-elect the following persons as directors of the Company until the Company's
annual meeting in 2000 and until such directors' successors are duly elected and
shall have qualified: Linda J. Wachner, William R. Fields and Andrew G. Galef;
and (2) to transact such other business as may properly come before the Annual
Meeting.
OUTSTANDING VOTING SECURITIES
As of March 31, 1997, the record date for the Annual Meeting, there were
outstanding and entitled to vote 51,762,384 shares of Common Stock of the
Company. Each share of Common Stock is entitled to one vote per share with
respect to the election of directors and with respect to each other matter as
may properly be brought before the Annual Meeting. Only stockholders of record
as of the close of business on March 31, 1997 will be entitled to vote.
SOLICITATION OF PROXIES
The cost of soliciting proxies for the Annual Meeting will be borne by the
Company. In addition to solicitation by mail, solicitations may also be made by
personal interview, facsimile transmission, telegram, telephone and other
methods of electronic communication. The Company may use the services of
ChaseMellon Shareholder Services to assist in soliciting proxies. If such
services are requested, the Company expects that the fees and expenses for such
services would not exceed $10,000. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
material to their principals, and the Company will reimburse them for expenses
in so doing. Consistent with the Company's confidential voting procedure,
directors, officers and other regular employees of the Company, as yet
undesignated, may also request the return of proxies by telephone, telegram,
personal visit or otherwise.
ELECTION OF DIRECTORS
At the meeting, three directors are to be elected to serve for a term to
expire at the 2000 annual meeting of the stockholders. The nominees for these
positions are Mrs. Linda J. Wachner, Mr. William R. Fields and Mr. Andrew G.
Galef. Information regarding the Board's nominees for directors are set forth on
page 3. Information regarding the five continuing directors whose terms expire
in 1998 and 1999 is set forth on pages 3-4.
The accompanying proxy will be voted FOR the election of the Board's
nominees unless contrary instructions are given. If one or more of the Board's
nominees is unable to serve, which is not anticipated, the persons named as
proxies intend to vote, unless the number of nominees is reduced by the Board of
Directors, for such other person or persons as the Board of Directors may
designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES.
The name, age (as of April 1, 1997), principal occupation for the last five
years, selected biographical information and the period of service as a director
of the Company of each director and director nominee are set forth below.
2
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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR A THREE-YEAR TERM
TO EXPIRE AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Mrs. Linda J. Wachner, 51, has been a Director, President and Chief
Executive Officer of the Company since August 1987, and the Chairman of the
Board since August 1991. Mrs. Wachner was a Director and President of the
Company from March 1986 to August 1987. Mrs. Wachner has been Chairman and Chief
Executive Officer of Authentic Fitness Corporation since May 1990. Mrs. Wachner
held various positions, including President and Chief Executive Officer, with
Max Factor and Company from December 1978 to October 1984. Mrs. Wachner also
serves as a Director of Travelers Group Inc., Applied Graphics Technologies,
Inc. and Authentic Fitness Corporation.
Mr. William R. Fields, 47, has been a Director of the Company since January
1997. Mr. Fields has been Chairman of the Board of Directors and Chief Executive
Officer of Blockbuster Entertainment Group, a unit of Viacom Inc., since March
1996. Mr. Fields previously served as Executive Vice President of Wal-Mart Inc.
and President and Chief Executive Officer of the Wal-Mart Stores division.
Mr. Andrew G. Galef, 64, has been a Director of the Company since March
1986, and served as Chairman of the Board of Directors until August 1991. Mr.
Galef has been Chairman and a principal of The Spectrum Group, Inc., a private
investment and management firm, since its incorporation in California in 1978.
Mr. Galef has been the Chairman of the Board of MagneTek, Inc., an electrical
products manufacturer, since July 1984. Mr. Galef served as the Chairman of the
Board of Exide Corporation, a maker of industrial, commercial and automotive
batteries, from July 1982 until June 1989. Mr. Galef has served as a director of
Petco Animal Supplies, a retail animal food and supplies company, since 1988.
Mr. Galef served as the Chairman of the Board of Aviall, Inc., an aviation
support and aircraft parts distribution company, and its predecessor company,
from 1979 to 1985.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE;
TERMS TO EXPIRE AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Mr. William S. Finkelstein, 48, has been Senior Vice President of the
Company since May 1992 and Chief Financial Officer and a Director of the Company
since May 1995. Mr. Finkelstein served as Vice President and Controller of the
Company from November 1988 until his appointment as Senior Vice President. Mr.
Finkelstein served as Vice President of Finance of the Company's Activewear and
Olga Divisions from March 1988 until his appointment as Controller of the
Company. Mr. Finkelstein served as Vice President and Controller of SPI
Pharmaceuticals Inc. from February 1986 to March 1988 and held various financial
positions, including Assistant Corporate Controller with Max Factor and Company,
between 1977 and 1985. Mr. Finkelstein also serves as a Director of Authentic
Fitness Corporation.
Mr. Walter F. Loeb, 72, has been President and Publisher of the Loeb Retail
Letter and has served as a consultant to domestic and international retail
companies, real estate developers, apparel companies and others doing business
with the retail industry since February 1990. He is a Director of Federal Realty
Investment Trust, Gymboree Corporation, InterTAN, Inc., Mothers Work, Inc.,
Performance Inc., Wet Seal, Inc. and the Fashion Institute of Technology. Mr.
Loeb also serves as Advisor to the Commanding General of Army and Air Force
Exchange Services. Mr. Loeb was Senior Retail Analyst and Principal with Morgan
Stanley & Company, Inc. from 1974 to 1990 and has worked in the retail industry
for over 45 years.
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Mr. Stewart A. Resnick, 60, has served as the Chief Executive Officer and
Chairman of Franklin Mint Corporation since 1985. Mr. Resnick is also Chairman
of the Board of Roll International Corporation, a company which, through various
divisions and affiliates, has interests in the flowers-by-wire, agriculture and
real estate businesses. Mr. Resnick is a member of the Board of Trustees of Bard
College in New York, the Acquisitions Committee of the National Gallery in
Washington, D.C. and Co-Chairman of the Marketing Department Advisory Board and
member of the Management Education Council of The Wharton School at the
University of Pennsylvania.
TERMS TO EXPIRE AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Mr. Joseph A. Califano, Jr., 65, has been a Director of the Company since
March 1992. Mr. Califano is Chairman and President of The National Center on
Addiction and Substance Abuse at Columbia University. He is a Director of
Authentic Fitness Corporation, Automatic Data Processing, Inc., Chrysler
Corporation, Kmart Corporation, New York / New England Telephone Companies
and Travelers Group Inc. Mr. Califano is a Trustee of New York University and
the Twentieth Century Fund, a Governor of New York Hospital and a Director of
the New York and Presbyterian Hospitals, Inc. He serves as Chairman of the Board
of the Institute for Social and Economic Policy in the Middle East at the
Kennedy School of Government at Harvard University and as a member of the
governing council of the Institute of Medicine of the National Academy of
Sciences. Mr. Califano served as Secretary of the United States Department
of Health, Education, and Welfare from 1977 to 1979. He was Special
Assistant for Domestic Affairs to the President of the United States from
1965 to 1969. He is the author of nine books.
Mr. Joseph H. Flom, 73, has been a Director of the Company since January
1997. Mr. Flom has been a partner in Skadden, Arps, Slate, Meagher & Flom LLP, a
law firm and counsel to the Company, for more than the past five years. Mr. Flom
is a Director of the United Way of New York City and the America-Israel
Friendship League. He is a Trustee of the New York University Medical Center and
is a Trustee of the Petrie Stores Liquidating Trust. Mr. Flom also serves as
Chairman of the Board of Trustees of the Woodrow Wilson International Center for
Scholars.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors held eight meetings in the fiscal year ended January
4, 1997 ("fiscal 1996"). All of the directors attended at least 75% of the
meetings of the Board of Directors and the respective committees of the Board of
which they were a member during fiscal 1996.
The Board of Directors has the following standing committees:
AUDIT COMMITTEE
The Audit Committee, which met two times in 1996, recommends the
appointment of the Company's external auditors and meets with both internal and
external auditors to review the scope of their audits and the results thereof.
In addition, the Audit Committee reviews and comments on the proposed plans of
the internal and external auditors, audit fee proposals, financial statements
and other documents submitted to shareholders and regulators and reviews the
internal control policies and procedures of the Company.
During fiscal 1996, the members of the Audit Committee were Mr. Califano,
Mr. Galef and Mr. Resnick.
4
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PENSION COMMITTEE
The Pension Committee, which met four times in 1996, reviews and makes
recommendations concerning the Company's pension, profit sharing and other
employee benefit plans, recommends the appointment of the Plan Accountant and
Plan Actuary for the Company's pension and profit sharing plans and consults
with the persons so appointed.
During fiscal 1996, the members of the Pension Committee were Mr.
Finkelstein, Mr. Resnick and Mrs. Wachner.
COMPENSATION COMMITTEE
The Compensation Committee, which met two times in 1996, reviews and
approves the remuneration arrangements for the Officers and Directors of the
Company and reviews and recommends new executive compensation or stock plans in
which the officers and/or directors are eligible to participate, including the
granting of stock options.
During fiscal 1996, the members of the Compensation Committee were Mr.
Califano, Mr. Galef, Mr. Resnick (beginning in November 1996), and Mr. Robert D.
Walter (until his resignation in May 1996).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, during fiscal 1996, Messrs. Califano, Galef, Resnick and
Walter served as members of the Compensation Committee. Mr. Walter was an
officer of the Company from June 1986 to February 1988 pursuant to a consulting
contract.
Mr. Galef, a stockholder of the Company, is the sole stockholder of and
serves as Chairman and a director of The Spectrum Group, Inc. ('Spectrum').
Spectrum and the Company are parties to an agreement pursuant to which Spectrum
has agreed to render consulting and advisory services to the Company through May
1998. The agreement provides for annual fees of $350,000 (plus cost of living
increases), with total payments not to exceed $500,000 including expenses,
payable in equal monthly installments. Payments to Spectrum during fiscal 1995
aggregated $500,000.
In addition, pursuant to the Company's Amended and Restated 1988 Employee
Stock Purchase Plan, through 1991, Mr. Galef acquired 1,020,000 shares of the
Company's Common Stock in exchange for a non-recourse, non-interest bearing
note, which was repaid in full in May 1995. Such shares were acquired at their
then fair market value.
Mr. Califano, Mr. Finkelstein and Mr. Walter are Directors, and Mrs.
Wachner is the Chairman of the Board of Directors, Chief Executive Officer and a
significant stockholder, of Authentic Fitness Corporation ('Authentic Fitness').
From time to time, the Company and Authentic Fitness jointly negotiate contracts
and agreements with vendors and suppliers. Throughout the fiscal year, Authentic
Fitness purchased certain occupancy services related to leased facilities,
laboratory testing, transportation and contract production services from the
Company, all of which were charged at the Company's cost. The total amount
charged to Authentic Fitness by the Company for such services during fiscal 1996
was approximately $5.4 million. The Company sold certain inventory to Authentic
Fitness for sale in Authentic Fitness' retail stores, which totaled
approximately $0.3 million in fiscal 1996. The Company purchases certain design
and occupancy services from Authentic Fitness. All of such services are charged
at Authentic Fitness' cost. Charges for design and occupancy services purchased
from
5
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Authentic Fitness were approximately $1.2 million during fiscal 1996. The
Company purchases inventory from Authentic Fitness for sale in the Company's
outlet stores. Inventory purchases from Authentic Fitness were approximately
$15.5 million during fiscal 1996. In July 1996, Authentic Fitness announced that
it was exiting the outlet store business. Pursuant to an agreement, leases
relating to four outlet stores were assigned to the Company and the Company
purchased the existing Authentic Fitness outlet store inventory for its net book
value of approximately $2.0 million (included in merchandise purchases above).
In 1995, the Company entered into a sub-license agreement with Authentic
Fitness whereby the Company secured rights to design, manufacture and distribute
certain intimate apparel using the Speedo'r' brand name. The Company paid a
royalty to Authentic Fitness for garments sold under the Speedo label of
approximately $0.5 million in fiscal 1996.
The Company believes that the terms of the relationships and transactions
described above are at least as favorable to the Company as could have been
obtained from an unaffiliated third party.
COMPENSATION OF DIRECTORS
The Company does not pay any additional remuneration to employees for
serving as directors. For purposes of directors' compensation, Mr. Galef is
deemed an employee of the Company. In fiscal 1996, directors of the Company who
are not employees received an annual retainer fee of $20,000 plus fees of $1,500
per day for attendance at meetings of the Board of Directors and $1,000 per day
for attendance at meetings of its committees. Directors of the Company are also
reimbursed for out-of-pocket expenses.
During fiscal 1996, each of the non-employee directors, Messrs. Califano
and Resnick, was granted an option under the 1993 Non-Employee Director Stock
Plan ('Director Stock Plan') to purchase 10,000 shares of Common Stock at an
exercise price of $29.25 per share, the fair market value at the date of grant.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of April 1, 1997, by (i)
each of the Company's directors, (ii) each of the Company's executive officers,
(iii) all directors and executive officers as a group and (iv) each person who
is known by the Company to beneficially own five percent or more of any class of
the Company's voting securities.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------------
NUMBER PERCENT
NAME OF SHARES OF SHARES
- ------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS(a)
Linda J. Wachner(b)..................................................... 8,283,038 14.6%
William S. Finkelstein(a)............................................... 391,495 *
Stanley P. Silverstein(a)............................................... 199,903 *
Carl J. Deddens(a)...................................................... 8,750 *
Joseph A. Califano, Jr.(c).............................................. 62,000 *
Andrew G. Galef......................................................... 500,000 1.0%
Stewart A. Resnick(c)................................................... 120,000 *
Walter F. Loeb(d)....................................................... 30,200 *
William R. Fields(d).................................................... 30,000 *
Joseph H. Flom(d)....................................................... 30,000 *
All directors and executive officers as a group (10 persons)............ 9,550,386 16.7%
OTHER 5% STOCKHOLDERS
Dietche & Field Advisers, Inc.(e) ...................................... 2,721,900 5.2%
437 Madison Ave.
New York, NY 10022
Lincoln Capital Management Company(f) .................................. 2,712,100 5.2%
200 South Wacker Drive
Chicago, IL 60606
</TABLE>
- ------------------
* Less than 1%
(a) The business address of each of the directors and officers is c/o The
Warnaco Group, Inc., 90 Park Avenue, New York, New York 10016. The number
of shares beneficially owned by the following officers includes vested but
unexercised options in the following amounts: Mrs. Wachner: 4,900,000; Mr.
Finkelstein: 285,500; Mr. Silverstein: 156,703; and Mr. Deddens: 8,750.
(b) Includes 44,000 shares of Common Stock held by the Linda J. Wachner
Charitable Trust of which Mrs. Wachner is the Trustee. Mrs. Wachner has the
sole power to vote and no power to dispose of such 44,000 shares.
(c) Includes vested but unexercised options to purchase 60,000 shares of Common
Stock granted pursuant to the Director Stock Plan.
(d) Includes vested but unexercised options to purchase 30,000 shares of Common
Stock granted pursuant to the Director Stock Plan.
(e) Information based on a Schedule 13G, dated January 7, 1997, filed with the
Securities and Exchange Commission (the 'SEC') by Dietche & Field Advisers,
Inc. ('Dietche'), reporting the
(footnotes continued on following page)
7
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(footnotes continued from previous page)
beneficial ownership of the shares of Common Stock set forth in the table.
According to such Schedule 13G, Dietche has sole voting power to vote, or
direct the vote of 2,712,900 shares and does not have shared voting power,
sole dispositive power or shared dispositive power for any of the shares.
(f) Information based on a Schedule 13G, dated February 10, 1997, filed with
the SEC by Lincoln Capital Management Company ('Lincoln'), an investment
advisor registered under Section 203 of the Investment Advisors Act of
1940, reporting the beneficial ownership of the shares of Common Stock set
forth in the table. According to such Schedule 13G, Lincoln has sole power
to vote or direct the vote of 1,204,400 shares of Common Stock, and sole
power to dispose or direct the disposition of 2,712,100 shares of Common
Stock.
CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS
Pursuant to the Company's Amended and Restated 1988 Employee Stock Purchase
Plan, through 1991, the individuals discussed below acquired shares of the
Company's Common Stock in exchange for notes payable to the Company. In the case
of Messrs. Finkelstein and Silverstein, such notes were full recourse and, in
the case of Mrs. Wachner, such notes were non-recourse and non-interest-bearing.
The largest aggregate amount of indebtedness outstanding during fiscal 1996 was
$15,230 for Mr. Silverstein and $5,971,430 for Mrs. Wachner. The aggregate
amount of indebtedness outstanding as of March 31, 1997 was $5,971,430 for Mrs.
Wachner.
In 1990, the Company sold substantially all of the assets of its Activewear
Division to Authentic Fitness. Pursuant to such transaction, the Company
acquired and, through March 10, 1995, owned common stock representing
approximately 3% of Authentic Fitness' fully diluted equity. The Company sold
its investment in Authentic Fitness pursuant to the terms of the Authentic
Fitness Corporation Amended and Restated Stockholders' Agreement for $5 million
on March 10, 1995. Mrs. Wachner is the Chairman of the Board, Chief Executive
Officer and a significant stockholder, and Messrs. Califano and Finkelstein are
directors, of Authentic Fitness. From time to time, the Company and Authentic
Fitness jointly negotiate certain contracts and agreements with vendors and
suppliers. Throughout the fiscal year, Authentic Fitness purchases certain
services from the Company. Such services include occupancy services related to
leased facilities, transportation services, laboratory testing, contract
production and other services, all of which were charged at the Company's cost.
The total amount charged to Authentic Fitness by the Company for such services
during fiscal 1996 was approximately $5.4 million. The Company sold certain
inventory to Authentic Fitness for sale in Authentic Fitness' stores, which
totaled approximately $0.3 million in fiscal 1996. The Company purchases certain
design and occupancy services from Authentic Fitness. All services are charged
at Authentic Fitness' cost. Charges for design and occupancy services were
approximately $1.2 million in fiscal 1996. The Company purchases inventory from
Authentic Fitness for sale in the Company's retail outlet stores, which totaled
approximately $15.5 million in fiscal 1996. In July 1996, Authentic Fitness
announced that it was exiting the outlet store business. Pursuant to an
agreement, leases related to four outlet stores were assigned to the Company and
the Company purchased the existing outlet store inventory for its net book value
of approximately $2 million. Such purchases are included in total inventory
purchased from Authentic Fitness, as noted above.
8
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In June 1995, the Company and Authentic Fitness entered into a sub-license
agreement whereby the Company secured rights to design, manufacture and
distribute certain intimate apparel using the Speedo label. Royalty expense
under this agreement was approximately $0.5 million in fiscal 1996.
Joseph H. Flom is a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP, which firm provides legal services to the Company from time
to time.
The Company believes that the terms of the relationships and transactions
described above are at least as favorable to the Company as could have been
obtained from an unaffiliated third party.
DIRECTOR AND OFFICER SECURITIES REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of the Company's Common Stock, to file reports of ownership and
changes in ownership on Forms 3, 4, and 5 with the SEC and the NYSE. Executive
officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all such Section 16(a)
forms that they file.
Based solely on review of the copies of such forms furnished to the Company
and written representations that no other forms were required when applicable,
the Company believes that, during the fiscal year ended January 4, 1997, all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and more than ten percent shareholders were complied with.
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COMPENSATION OF EXECUTIVE OFFICERS
Set forth below are tables prescribed by the proxy rules of the SEC which
present compensation information for the Company's chief executive officer and
the four other most highly compensated executive officers whose aggregate salary
and bonus exceeded $100,000 in 1996 (the 'Named Executives'). The Company had no
executive officers other than the Named Executives in fiscal 1996.
SUMMARY COMPENSATION TABLE
The following table discloses compensation paid or to be paid to the Named
Executives with respect to each of the three fiscal years ended January 7, 1995,
January 6, 1996 and January 4, 1997.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ------------------------- -------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
YEAR SALARY BONUS SATION AWARD(e) SARS PAYOUTS SATION
---- ---------- ---------- ---------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Linda J. Wachner .............. 1996 $2,549,918 $1,300,000 $1,022,235(c) $4,407,975(f) 1,000,000 -- $1,350(h)
Chairman, President & Chief 1995 2,475,156 1,300,000 361,805(c) 6,050,000(g) 1,000,000 -- --
Executive Officer 1994 2,423,729 2,800,000 (d) -- -- -- --
William S. Finkelstein ........ 1996 373,913 404,200 (d) $ 380,250(f) 150,000 -- $ 900(h)
Senior Vice President, Chief 1995 341,750 155,963 (d) 308,000(g) 150,000 -- --
Financial Officer 1994 245,431 451,532 (d) -- -- -- --
Stanley P. Silverstein ........ 1996 322,743 352,128 (d) $ 298,350(f) 150,000 -- --
Vice President, General 1995 267,512 122,124 (d) 154,000(g) 100,000 -- --
Counsel and Secretary 1994 221,229 262,448 (d) -- -- -- --
Wallis H. Brooks(a) ........... 1996 182,500 98,641 (d) -- 10,000 -- $1,350(h)
Vice President and Corporate 1995 127,324 29,092 (d) -- 20,000 -- --
Controller
Carl J. Deddens(b)............. 1996 233,974 126,463 (d) -- 35,000 -- $ 225(h)
</TABLE>
- ------------
(a) Mr. Brooks was appointed to the position of Vice President and Corporate
Controller on May 11, 1995 and resigned as Vice President and Corporate
Controller on February 19, 1997.
(b) Mr. Deddens was appointed to the position of Vice President and Treasurer
on March 15, 1996.
(c) Includes $350,000 in reimbursement for certain expenses incurred in
connection with the Company's business.
(d) Other Annual Compensation was less than $50,000 or 10% of such officer's
annual salary and bonus for such year.
(e) Total holdings of restricted shares and fair market value for each of the
named participants as of January 4, 1997, were 430,900 shares and
$12,603,825 for Mrs. Wachner, 27,000 shares and $789,750 for Mr.
Finkelstein and 16,700 shares and $488,475 for Mr. Silverstein.
(f) Twenty-five percent of such shares vest on May 6, 1997, the remaining 75%
of such shares vest 25% per year until fully vested on May 6, 2000.
Participants are entitled to receive dividends attributable to the
restricted shares.
(footnotes continued on next page)
10
<PAGE>
<PAGE>
(footnotes continued from previous page)
(g) Twenty-five percent of such shares vested on August 9, 1996, the remaining
75% of such shares vest 25% per year until fully vested on August 9, 1999.
Participants are entitled to receive dividends attributable to the
restricted shares.
(h) Represents employer matching contribution under the Company's Employee
Savings Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1996 to
the Named Executives.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTIONS TERM(c)
--------------------------------------------------------- -----------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS/
SECURITIES SARS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES OR BASE
OPTIONS/SARS IN FISCAL PRICE EXPIRATION
GRANTED (#) YEAR ($/SHARE) DATE 0%(d) 5% 10%
------------ -------------- --------- ------------- ----- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Linda J. Wachner(a).......... 1,000,000 51.0% $24.375 Jan. 17, 2006 0 $15,330,000 $38,800,000
William S. Finkelstein(b).... 150,000 7.6% $24.375 Jan. 17, 2006 0 $ 2,300,000 $ 5,830,000
Stanley P. Silverstein(b).... 150,000 7.6% $24.375 Jan. 17, 2006 0 $ 2,300,000 $ 5,830,000
Wallis H. Brooks(b).......... 10,000 0.5% $24.375 Jan. 17, 2006 0 $ 150,000 $ 390,000
Carl J. Deddens(b)........... 35,000 1.8% $24.375 Jan. 17, 2006 0 $ 540,000 $ 1,360,000
</TABLE>
- ------------
(a) All of such options vested on January 17, 1997. Such options have
stock-for-stock exercise and tax withholding features, which allow the
holders, in lieu of paying cash for the exercise price and any withholding,
to have the Company commensurately reduce the number of shares of Common
Stock to which they would otherwise be entitled upon exercise of such
options. Optionee's may receive a reload option if shares are delivered in
respect of the exercise of the option.
(b) Twenty-five percent of such options vested on January 17, 1997. The
remaining 75% of such options vest 25% per year until fully vested on
January 17, 2000. Such options have stock-for-stock exercise and tax
withholding features, which allow the holders, in lieu of paying cash for
the exercise price and any tax withholding, to have the Company
commensurately reduce the number of shares of Common Stock to which they
would otherwise be entitled upon exercise of such options. Optionee's may
receive a reload option if shares are delivered in respect of the exercise
of the option.
(c) The dollar amounts under these columns are the result of calculations at 0%
and at the 5% and 10% rates prescribed by the SEC and, therefore, are not
intended to forecast possible future appreciation, if any, of the Company's
stock price.
(d) No gain to the optionee is possible without an increase in stock price
appreciation, which will benefit all shareholders commensurately. A zero
percent gain in stock price appreciation will result in zero dollars for
the optionee.
11
<PAGE>
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on option/SAR exercises in fiscal
1996 by the Named Executives and the values of such officers' unexercised
options at January 4, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FISCAL YEAR-END OPTIONS/SARS AT
(#) FISCAL YEAR-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
--------------- ------------ --------------- ----------------------
<S> <C> <C> <C> <C>
Linda J. Wachner......................... 0 0 3,900,000/0 $42,031,000/$0
William S. Finkelstein................... 0 0 148,500/349,500 $1,858,000/$3,343,000
Stanley P. Silverstein................... 0 0 82,000/274,000 $1,032,000/$2,387,000
Wallis H. Brooks......................... 0 0 5,000/25,000 $64,000/$239,000
Carl J. Deddens.......................... 0 0 0/35,000 $0/$171,000
</TABLE>
PENSION PLAN
The following table sets forth the annual pension benefits payable at age
65 pursuant to the Company's Employee Retirement Plan which provides such
pension benefits to all qualified personnel based on the average of the highest
seven (increasing to ten years by the year 1999 and fifteen years by the year
2004) consecutive calendar years' compensation multiplied by the years of
credited service. Such benefits payable are expressed as straight-life annuity
amounts and are not subject to reduction for social security or other offset.
The credited years of service as of January 4, 1997, for the Named Executives
are: Mrs. Wachner, ten years, eight months; Mr. Finkelstein, eight years, ten
months; Mr. Silverstein, twelve years, nine months; Mr. Brooks, six years, six
months; and Mr. Deddens, eleven months. The current remuneration covered by the
Company's Employee Retirement Plan for each such individual is $160,000. Such
amounts are included in the Summary Compensation Table under 'Salary' and
'Bonus.'
ANNUAL BENEFITS PAYABLE AT AGE 65
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE COMPENSATION --------------------------------------------------------------
(BEST 8 YEARS) 5 10 15 20 25 30
- ------------------------------------------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000.............................................. $ 7,121 $14,242 $21,363 $28,484 $35,604 42,725
$150,000.............................................. 11,121 22,242 33,363 44,484 55,604 66,725
$200,000.............................................. 11,921 23,842 35,763 47,684 59,604 71,525
$250,000.............................................. 11,921 23,842 35,763 47,684 59,604 71,525
$300,000.............................................. 11,921 23,842 35,763 47,684 59,604 71,525
</TABLE>
EMPLOYMENT AGREEMENT
In 1991, the Company entered into an employment agreement with Mrs. Wachner
(the 'Employment Agreement'), which sets forth the terms and conditions of Mrs.
Wachner's employment. The Employment Agreement, which will terminate on January
6, 2001, unless extended, provides for Mrs. Wachner's
12
<PAGE>
<PAGE>
employment as Chairman, President and Chief Executive Officer at an annual base
salary, which was initially established at $1.8 million per year (subject to
adjustment for changes in the cost of living) as well as certain other benefits
and reimbursement of expenses. The contract provides for increases in the rate
of base salary from time to time, as determined by the Company. In accordance
with this provision, Mrs. Wachner's base salary for 1996 was $2.549 million. Her
base salary in prior years was as set forth in the table on page 10. The
contract also provides that Mrs. Wachner will receive an annual bonus based upon
the Company's achievement of an annually increasing minimum EBITDA (earnings
before interest, taxes, depreciation and amortization). Under this bonus
arrangement, Mrs. Wachner is entitled to receive a bonus in the amount by which
EBITDA exceeds the threshold EBITDA for such year, subject to a maximum bonus
amount of $1.3 million. Threshold EBITDAs were established at the time the
contract was entered into and increase annually from the initial date of the
arrangement; for 1996 the threshold was $164.1 million and for 1997 the
threshold is $202.0 million. The Employment Agreement also provides for
supplemental bonuses in the Company's discretion. The Employment Agreement
specifically permits Mrs. Wachner to spend reasonable time managing her own
affairs as well as the business of Authentic Fitness Corporation, a public
company, which purchased substantially all of the assets of the Company's
Activewear Division in 1990 and of which Mrs. Wachner is the Chairman of the
Board and Chief Executive Officer.
Under the Employment Agreement, Mrs. Wachner will be entitled to certain
severance benefits if the Company terminates her employment other than for
'cause' or if Mrs. Wachner terminates her employment for 'good reason.' The
definition of good reason may include a change of control of the Company. If the
Company terminates Mrs. Wachner's employment without cause or if Mrs. Wachner
terminates her employment for good reason, she would be entitled to receive a
lump sum payment equal to five times the sum of her highest annual base salary
and the highest annual bonus paid to her. In the event that any amount of
benefit paid to Mrs. Wachner becomes subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code, the Company will pay to Mrs. Wachner
an additional amount such that after the payment of all income and excise taxes,
she will be in the same after-tax position as if no excise tax had been imposed.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
administering the executive compensation plans and programs of the Company and
for making recommendations to the Board of Directors regarding the compensation
of and benefits provided to the Chief Executive Officer and the Named
Executives. The names of the Committee members are set forth below.
GENERAL POLICIES REGARDING COMPENSATION OF EXECUTIVE OFFICERS
In establishing compensation and benefit levels for executive officers, the
Committee seeks to (1) attract and retain individuals of superior ability and
managerial talent, (2) motivate executive officers to increase Company
performance primarily for the benefit of its stockholders but also for the
benefit of its customers and other constituencies, and (3) reward executives for
exceptional individual contributions to the achievement of the Company's
business objectives. To these ends, the Company's executive compensation package
consists of salary, variable annual cash compensation (bonus) and stock-based
long-term incentive awards.
Base Salary. Salary levels generally are determined based on the
Committee's subjective assessment of prevailing levels among the Company's
competitors. The Company's competitors for this purpose include certain of the
companies included in the industry peer group index used for comparison with the
Company's performance in the performance graph following this report, as well as
other companies with which, in the
13
<PAGE>
<PAGE>
Committee's view, the Company competes for executive talent. These companies may
include non-public companies and companies in related industries such as
retailing or general apparel manufacturing.
In general, the Committee attempts to set base salaries at levels that will
attract and retain highly qualified individuals. In selected cases, the
Committee may feel that excellent executive talent may only be attracted and
retained by compensation in excess of prevailing levels among the Company's
competitors. As the Company has only five executive officers, and in view of the
considerations enumerated below under '1996 Compensation' and 'Compensation of
the Chief Executive Officer,' the Committee believes that base salaries at the
high end of the range for the competitor group for all executive officers, and
Mrs. Wachner in particular, are appropriate.
In making such judgments regarding the appropriate level for any particular
officer, as well as in determining which companies should form the competitor
group for this purpose, the Committee from time to time may consult with
independent compensation consultants. However, the Committee ultimately reviews
the case of each executive officer individually, relying heavily on the
recommendations of the Chief Executive Officer as well as on their own
subjective judgment. The Committee did not engage outside consultants during
1996.
Annual Bonus. The Committee generally believes that, at higher executive
levels, a greater percentage of an individual's total annual cash compensation
opportunity should consist of variable compensation tied to the Company's
performance. Mrs. Wachner has a bonus opportunity under her Employment Agreement
that is approximately 51% of base salary and is based on earnings before
interest, taxes, depreciation and amortization ('EBITDA'), as described below.
See also 'Employment Agreement' on page 12. Annual bonus opportunities for other
executive officers range from 0% to 125% of base salary.
The Committee's practice with regard to awarding annual bonuses to
executive officers has been to review the Company's performance after the close
of the fiscal year, taking into account various measures of performance the
Committee has determined in its sole discretion to be appropriate under the
circumstances, and assigning such weight to any such factors as it determines to
be appropriate. The Committee focuses particularly on such factors as growth in
earnings (measured by earnings before interest and taxes ('EBIT') or EBITDA),
cash flow and inventory management in determining whether or not bonuses are
paid. The Committee also pays bonuses to selected individuals on an ad hoc basis
in connection with or in recognition of special events or projects such as major
acquisitions, financing and licensing arrangements. In making all such
determinations, the Committee takes into consideration and gives significant
weight to the recommendations of the Chief Executive Officer with respect to
bonuses of executive officers other than herself.
For fiscal 1997, the Committee intends to maintain its customary approach
to determining annual bonuses as described above.
In 1994, the Committee recommended and the stockholders approved a
supplemental incentive compensation plan for all executive officers and other
senior management. The supplemental plan provides a formula-based arrangement
that is prospective in operation and rewards executive officers and selected
senior managers for the achievement of a return on equity to Company investors
that exceeds the industry median. The supplemental plan is designed to ensure
that amounts payable thereunder are fully deductible under Section 162(m) of the
Internal Revenue Code, as discussed below.
Long-Term Incentive Compensation. Stock-based incentives, consisting of
stock options granted at 100% of the stock's fair market value on the grant date
and restricted stock awards, constitute the long-term portion of the Company's
executive compensation package. Stock options provide an incentive for
executives to increase the Company's stock price and therefore, the return to
the Company's stockholders. The Committee
14
<PAGE>
<PAGE>
has not heretofore granted stock appreciation rights ('SARs') or other
stock-based awards, except for certain restricted stock awards granted in fiscal
1995 and fiscal 1996, although it has the authority to do so under the Company's
stock option plans. The Committee reserves the discretion to consider any
factors it considers appropriate under the circumstances then prevailing in
reaching its determination regarding the size and timing of option grants.
Limitations on Deductibility of Executive Compensation. Section 162(m) of
the Internal Revenue Code, enacted as part of the Revenue Reconciliation Act of
1993, limits the deductibility of compensation paid to certain executive
officers of the Company beginning with the Company's taxable year 1994. To
qualify for deductibility under Section 162(m), compensation in excess of
$1,000,000 per year paid to the Chief Executive Officer and the four other most
highly compensated executive officers at the end of such fiscal year generally
must be either (1) paid pursuant to a written binding contract in effect on
February 17, 1993 or (2) 'performance-based' compensation as determined under
Section 162(m). In order to be considered 'performance-based,' for this purpose,
compensation must be paid solely on account of the attainment of one or more
preestablished performance goals established by a committee of two or more
'outside directors,' pursuant to an arrangement that has been disclosed to and
approved by stockholders. Also, in order for an arrangement to give rise to
fully deductible 'performance-based' compensation, the terms of the arrangement
must preclude the exercise of any discretion in the administration of the plan
that would have the effect of increasing compensation paid thereunder.
The Committee generally intends to comply with the requirements for full
deductibility of executive compensation under Section 162(m). However, the
Committee will balance the costs and burdens involved in such compliance against
the value of the tax benefits to be obtained by the Company thereby, and may, in
certain instances, pay compensation that is not fully deductible if in its
determination such costs and burdens outweigh such benefits.
1996 COMPENSATION
The Committee increased base salaries for Mr. Finkelstein, Mr. Silverstein
and Mr. Brooks by approximately 6-18% in 1996. In exercising its subjective
discretion to authorize such increases, the Committee considered salary levels
of its competitors, as described above, as well as the Company's strong
financial performance, as evidenced by continuing improvement in revenues, which
increased by 16.2% in 1996, and earnings per share from continuing operations
before non-recurring expenses and extraordinary items, which increased 25.4%
over the previous year.
The amounts shown as 1996 restricted stock awards in the Summary
Compensation Table for Mrs. Wachner, Mr. Finkelstein and Mr. Silverstein reflect
amounts awarded in 1996, pursuant to the supplemental incentive compensation
plan described above, based on the Company's financial results and continuing
solid performance.
In awarding the options granted to the Named Executives as shown in the
table labelled 'Option/SAR Grants in last Fiscal Year', the Committee considered
the number of options shares available for grant under the Company's stock
option plans and the stockholder dilution represented by the total number of
options authorized and outstanding under all such plans. The Committee then
determined, in its discretion, the number of options it wished to grant during
fiscal 1996 and allocated the options available for grant among the executive
officers based on its subjective assessment of individual performance, seniority
and relative position level. In making such assessments, the Committee reviewed
the number of options held by each executive officer. In making these
determinations and allocations, the Committee also relied on the recommendations
of the Chief Executive Officer with respect to option grants to executives other
than herself.
15
<PAGE>
<PAGE>
The amounts shown as 1996 bonus in the Summary Compensation table for the
four executive officers, other than Mrs. Wachner, reflect amounts earned under
the Company's bonus plan for fiscal 1996.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mrs. Wachner's annual base salary and annual bonus are governed by the
Employment Agreement with the Company, described on page 12. Pursuant to the
Employment Agreement, Mrs. Wachner's base salary was adjusted in 1996 to reflect
changes in the cost of living.
The amount shown as 1996 bonus in the Summary Compensation Table reflects
$1.3 million Mrs. Wachner is entitled to receive pursuant to the bonus
arrangement in the Employment Agreement.
Joseph A. Califano, Jr.
Andrew G. Galef
Stewart A. Resnick
16
<PAGE>
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Company's Common Stock commenced trading on the NYSE on October 11,
1991. The Stock Price Performance Graph below compares cumulative total return
through January 4, 1997, assuming reinvestment of dividends, by an investor who
invested $100.00 on January 4, 1992 in each of (i) the Common Stock, (ii) the
S&P 500 Index and (iii) a comparable industry index selected by the Company as
described below. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
[GRAPH]
<TABLE>
<CAPTION>
Fiscal Year Ending
1/4/92 1/2/93 1/8/94 1/7/95 1/6/96 1/4/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
The Company........................................... 100 161 120 129 178 240
Industry Index........................................ 100 122 86 86 101 135
S&P 500 Index......................................... 100 107 119 120 164 204
</TABLE>
The Peer Group is made up of the following companies:
<TABLE>
<S> <C>
Fruit of the Loom Inc. Oxford Industries
Kellwood Co. Russell Corp.
Liz Claiborne Inc. VF Corp.
Nautica Enterprises Inc.
</TABLE>
17
<PAGE>
<PAGE>
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended January 4, 1997
is being mailed to all stockholders of record as of the close of business on
March 31, 1997 with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998 annual
meeting of stockholders must be received by the Company by December 9, 1997.
APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed and designated Price
Waterhouse LLP to audit the consolidated financial statements of the Company for
the fiscal year ending January 3, 1998.
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting and will be afforded the opportunity to make a statement if they
desire to do so, and such representatives are expected to be available to
respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters which may come before the Annual
Meeting. However, if other matters properly come before the Annual Meeting, the
persons named as proxies intend to vote the shares they represent in accordance
with their best judgment.
18
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
PROXY
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Linda J. Wachner, William S. Finkelstein
and Stanley P. Silverstein, and each of them acting solely, proxies with full
power of substitution and with all powers the undersigned would possess if
personally present, to represent and to vote at the Annual Meeting of
stockholders to be held on May 9, 1997 and at any adjournments or postponements
thereof, as designated on the reverse side hereof and in their discretion with
respect to any matters incident to the conduct of the meeting and other matters
as may properly come before such meeting, all of the shares of Class A Common
Stock of The Warnaco Group, Inc. held of record by the undersigned as of the
close of business on March 31, 1997. All proxies previously given with respect
to the shares covered hereby are hereby revoked.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
<PAGE>
<PAGE>
Please mark
your vote [X]
as this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1.
1. ELECTION OF DIRECTORS
Proposal to elect Mrs. Linda J. Wachner, Mr. William R. Fields and Mr. Andrew
G. Galef as directors of The Warnaco Group, Inc. for terms expiring in 2000
and until their successors are duly elected and qualified. (Instruction: to
withhold authority to vote for either individual nominee, strike out his/her
name)
FOR [ ] WITHHELD [ ]
2. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments or postponements thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder and at the discretion of the proxyholders as to
any other matters that may properly come before the meeting. If no direction is
made, this Proxy will be voted FOR Proposal 1 and at the discretion of the
proxyholders as to any other matters that may properly come before the meeting.
Signature(s)_____________________________________ Date_________________________
Please sign exactly as name appears. When shares are held by joint tenants, both
should sign. When signing as attorney-in-fact, executor, administrator, trustee
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as .................'r'
