<PAGE>
<PAGE>
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:
.......................................................
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
------------------------
To the Stockholders of
THE WARNACO GROUP, INC.:
NOTICE IS HEREBY GIVEN that the 1998 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 8, 1998, at 10:00
a.m., local time, or at any adjournments or postponements thereof (the 'Annual
Meeting') for the following purposes:
1. To elect three directors to serve until the Company's annual
meeting in 2001 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, 1998 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 9, 1998
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
------------------------
INTRODUCTION
This proxy statement and the accompanying proxy card are 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'), for use at the 1998 Annual Meeting of Stockholders to be held
at The Four Seasons Hotel, 57 East 57th Street, New York, New York 10022, on
Friday, May 8, 1998, at 10:00 a.m., local time, or at any adjournments or
postponements thereof (the 'Annual Meeting'), for the purposes set forth in the
accompanying Notice of Annual Meeting. The Notice of Annual Meeting, this proxy
statement and the accompanying proxy are first being mailed on or about April 9,
1998 to stockholders of record as of the close of business on March 31, 1998.
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 at the Annual
Meeting by notifying the Company's Transfer Agent, The Bank of New York, 101
Barclay Street, Floor 12W, New York, NY 10286 in writing, or by providing the
Company with a subsequently executed proxy, which revokes your previously
executed proxy. A stockholder's presence at the Annual Meeting does not by
itself revoke the proxy.
The Company's principal executive offices are located at 90 Park Avenue,
New York, New York 10016.
VOTING OF PROXIES
All duly executed proxies received prior to the meeting will be voted in
accordance with the instructions specified thereon. As to any matter for which
no choice has been specified in a duly executed proxy, the shares represented
thereby will be voted FOR the election as directors of the nominees listed
herein and in the discretion of the persons named in the proxy in connection
with any other business that may properly come 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, it is intended
that the persons named in the proxy 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.
<PAGE>
<PAGE>
At the Annual Meeting, the Company's stockholders will be asked (1) to elect
the following persons as directors of the Company until the Company's annual
meeting in 2001 and until such directors' successors are duly elected and shall
have qualified: William S. Finkelstein, Walter F. Loeb and Stewart A. Resnick;
and (2) to transact such other business as may properly come before the Annual
Meeting.
OUTSTANDING VOTING SECURITIES
As of March 31, 1998, the record date for determining stockholders entitled
to vote at the Annual Meeting, there were outstanding and entitled to vote
63,048,069 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,
1998 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
MacKenzie Partners, Inc. 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 forward proxy material to their
principals, and the Company will reimburse them for their reasonable expenses
incurred in connection therewith. 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 2001 annual meeting of the stockholders. The nominees for these
positions are Mr. William S. Finkelstein, Mr. Walter F. Loeb and Mr. Stewart A.
Resnick. Information regarding the Board's nominees for directors are set forth
on page 3. Information regarding the five continuing directors whose terms
expire in 1999 and 2000 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, 1998), principal occupation for the last five
years, position with the Company, if any, 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
<PAGE>
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR A THREE-YEAR TERM
TO EXPIRE AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
Mr. William S. Finkelstein, 49, 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, 73, is President and Publisher of the Loeb Retail
Letter and is serving 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, Hudson's Bay Company, InterTAN, Inc.,
Mothers Work, 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.
Mr. Stewart A. Resnick, 61, 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.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE;
TERMS TO EXPIRE AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Mr. Joseph A. Califano, Jr., 66, 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, HealthPlan Services, Inc., Kmart Corporation and Travelers Group
Inc. Mr. Califano is a Trustee of New York University and the Twentieth Century
Fund and a Governor of The New York and Presbyterian Hospital. He is Founding
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 is a
member 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, 74, 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 America-Israel Friendship League. He is a Trustee of the
New York University Medical Health System and Hospital Center and is a Trustee
of
3
<PAGE>
<PAGE>
the Petrie Stores Liquidating Trust. Mr. Flom also serves as Chairman of the
Board of Trustees of the Woodrow Wilson International Center for Scholars.
Mr. James R. Jones, 59, has been President of the International Division of
the Company since July 1997. Prior to joining the Company, Mr. Jones served as
U.S. Ambassador to Mexico from 1993-1997. From 1989 to 1993, Mr. Jones served as
Chairman and Chief Executive Officer of the American Stock Exchange. Mr. Jones
has also held numerous government positions, including as a member of the U.S.
House of Representatives representing Oklahoma from 1973 to 1987 (where he
served as Chairman of the House Budget Committee) and Special Assistant to
President Lyndon Johnson from 1965 to 1969. Mr. Jones currently serves on the
Boards of Grupo Modelo/Anheuser Busch companies and Kansas City Southern
Industries.
TERMS TO EXPIRE AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Mrs. Linda J. Wachner, 52, 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., The New York Stock Exchange,
Applied Graphics Technologies, Inc. and Authentic Fitness Corporation.
Mr. Andrew G. Galef, 65, 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 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. Mr. Galef serves as a
director of Petco Animal Supplies, a retail animal food and supplies company,
since 1988.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors held twelve meetings in the fiscal year ended
January 3, 1998 ('fiscal 1997'). 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 1997.
The Board of Directors has the following standing committees:
AUDIT COMMITTEE
The Audit Committee, which met four times in 1997, 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 evaluates the proposed audit plans
of the internal and external auditors, audit fee proposals, the Company's
financial statements and other documents submitted to stockholders and
regulators and reviews the internal control policies and procedures of the
Company.
4
<PAGE>
<PAGE>
During fiscal 1997, the members of the Audit Committee were Mr. Califano,
Mr. Flom and Mr. Resnick.
PENSION COMMITTEE
The Pension Committee, which met four times in 1997, 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 1997, the members of the Pension Committee were Mr.
Finkelstein (until May 1997), Mr. Galef (beginning in May 1997), Mr. Resnick and
Mrs. Wachner.
COMPENSATION COMMITTEE
The Compensation Committee, which met four times in 1997, reviews and
approves, or in some cases recommends to the Board the remuneration arrangements
for the officers and directors of the Company, including the granting of equity
incentives and reviews and recommends new executive compensation or stock plans
in which the officers and/or directors are eligible to participate.
During fiscal 1997, the members of the Compensation Committee were Mr.
Califano, Mr. Galef (until May 1997), Mr. Loeb and Mr. Resnick, all of whom are
non-employee directors.
NOMINATING COMMITTEE
The Nominating Committee, which met once in 1997, was organized in 1997 to
review and make recommendations concerning new directors of the Company.
During fiscal 1997, the members of the Nominating Committee were Mr.
Califano, Mr. Galef and Mr. Resnick.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, during fiscal 1997, Messrs. Califano, Galef, Loeb and
Resnick served as members of the Compensation Committee.
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
1999. 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 1997
aggregated $500,000.
Mr. Califano and Mr. Finkelstein are Directors, and Mrs. Wachner is the
Chairman and 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. During fiscal 1997, Authentic Fitness purchased certain occupancy
services related to leased facilities, computer services, laboratory testing,
transportation and contract production services from the Company. The total
amount charged to Authentic Fitness by the Company for such services during
fiscal 1997 was approximately $5.6 million. The Company purchases certain design
and
5
<PAGE>
<PAGE>
occupancy services from Authentic Fitness. Charges for design and occupancy
services purchased from Authentic Fitness were approximately $1.3 million during
fiscal 1997. The Company purchases inventory from Authentic Fitness for sale in
the Company's outlet stores. Inventory purchases from Authentic Fitness were
approximately $16.2 million during fiscal 1997. In fiscal 1997, the Company and
Authentic Fitness settled outstanding balances of $2.9 million resulting in an
additional payment by the Company.
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 $0.3 million in fiscal 1997.
The Company believes that the terms of the relationships and transactions
described above are at least as favorable to the Company as those which would
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 of the Company. For purposes of directors' compensation,
Mr. Galef is deemed an employee of the Company. In fiscal 1997, directors of the
Company who are not employees received an annual retainer fee of $50,000 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 1997, each of the non-employee directors, Messrs. Califano,
Flom, Loeb and Resnick, were 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.
6
<PAGE>
<PAGE>
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, 1998, 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(a)(b)................................................. 9,630,039 14.0%
William S. Finkelstein(a).............................................. 502,040 *
Stanley P. Silverstein(a).............................................. 292,812 *
Carl J. Deddens(a)..................................................... 17,500 *
Joseph A. Califano, Jr.(c)............................................. 72,000 *
Joseph H. Flom(d)...................................................... 40,000 *
Andrew G. Galef........................................................ 461,000 *
James R. Jones......................................................... -- --
Walter F. Loeb(d)...................................................... 40,200 *
Stewart A. Resnick(c).................................................. 130,000 *
All directors and executive officers as a group (10 persons)........... 11,185,591 16.2%
OTHER 5% STOCKHOLDERS
Loomis, Sayles & Company, L.P.(e) ..................................... 5,899,200 9.4%
One Financial Center
Boston, MA 02111
</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: 5,058,490; Mr.
Finkelstein: 373,629; Mr. Silverstein: 236,539; and Mr. Deddens: 17,500.
(b) Includes 7,468 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 7,468 shares.
(c) Includes vested but unexercised options to purchase 70,000 shares of Common
Stock granted pursuant to the Director Stock Plan.
(d) Includes vested but unexercised options to purchase 40,000 shares of Common
Stock granted pursuant to the Director Stock Plan.
(e) Information based on a Schedule 13G, dated February 13, 1998, filed with
the Securities and Exchange Commission (the 'SEC') by Loomis, Sayles &
Company, L.P. ('Loomis'), 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, Loomis has sole power to vote or direct the vote of
3,041,000 shares of Common Stock, does not have shared voting power or sole
dispositive power for any of the shares. Loomis has shared power to dispose
or direct the disposition of 5,899,200 shares.
7
<PAGE>
<PAGE>
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 Mr. 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 1997 was $21,948 for
Mr. Silverstein and $5,971,430 for Mrs. Wachner. The aggregate amount of
indebtedness outstanding as of March 31, 1998 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 and 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, computer services, transportation services, laboratory testing,
contract production and other services. The total amount charged to Authentic
Fitness by the Company for such services during fiscal 1997 was approximately
$5.6 million. The Company purchases certain design and occupancy services from
Authentic Fitness. Charges for design and occupancy services were approximately
$1.3 million in fiscal 1997. The Company purchases inventory from Authentic
Fitness for sale in the Company's retail outlet stores, which totaled
approximately $16.2 million in fiscal 1997. In fiscal 1997, the Company and
Authentic Fitness settled outstanding balances of $2.9 million resulting in an
additional payment by the Company.
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 $0.3 million in fiscal 1997.
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 those which would
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 with the SEC and the NYSE. Executive officers, directors
and greater than ten percent stockholders are required by SEC regulations to
furnish the Company with copies of all such Section 16(a) forms that they file.
Based solely on a review of the copies of such reports 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 3,
1998, all Section 16(a) filing requirements applicable to the Company's
executive officers and directors and more than ten percent shareholders were
complied with.
8
<PAGE>
<PAGE>
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 1997 (the 'Named Executives').
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 6, 1996,
January 4, 1997 and January 3, 1998.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------
---------------------------------------- SECURITIES
OTHER UNDERLYING PAYOUTS ALL
ANNUAL RESTRICTED OPTIONS/ ------- OTHER
COMPEN- STOCK SARS LTIP COMPEN-
YEAR SALARY BONUS SATION AWARDS(e) (SHARES) PAYOUTS SATION
---- ---------- ---------- ---------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Linda J. Wachner ........... 1997 $2,624,695 $5,000,000 $ 364,155(c) $3,488,125(f) 1,000,000 $ -- $ 690 (i)
Chairman, President and 1996 2,549,918 1,300,000 1,022,235(c) 4,560,075(g) 1,000,000 -- 1,350 (i)
Chief Executive Officer 1995 2,475,156 1,300,000 361,805(c) 6,050,000(h) 1,000,000 -- --
William S. Finkelstein ..... 1997 398,862 829,200 (d) 130,375(f) 150,000 -- 960 (i)
Senior Vice President and 1996 373,913 404,200 (d) 380,250(g) 150,000 -- 900 (i)
Chief Financial Officer 1995 341,750 155,963 (d) 308,000(h) 150,000 -- --
Stanley P. Silverstein ..... 1997 348,766 777,128 (d) 65,875(f) 150,000 -- --
Vice President, General 1996 322,743 352,128 (d) 298,350(g) 150,000 -- --
Counsel and Secretary 1995 267,512 122,124 (d) 154,000(h) 100,000 -- --
Carl J. Deddens(a) ......... 1997 257,500 141,463 (d) -- -- -- 1,863 (i)
Vice President and 1996 233,974 126,463 (d) -- 35,000 -- 225 (i)
Treasurer
Wallis H. Brooks(b) ........ 1997 23,837 98,641 (d) -- -- -- 278 (i)
Vice President and 1996 182,500 96,641 (d) -- 10,000 -- 1,350 (i)
Corporate Controller 1995 127,324 29,092 (d) -- 20,000 -- --
</TABLE>
- ------------
(a) Mr. Deddens was appointed to the position of Vice President and Treasurer
on March 15, 1996.
(b) Mr. Brooks resigned as Vice President and Corporate Controller on February
19, 1997.
(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 3, 1998, were 514,002 shares and
$16,062,563 for Mrs. Wachner, 29,868 shares and $933,375 for Mr.
Finkelstein and 14,906 shares and $465,813 for Mr. Silverstein.
(footnotes continued on next page)
9
<PAGE>
<PAGE>
(footnotes continued from previous page)
(f) Twenty-five percent of such shares vest on May 9, 1998, the remaining 75%
of such shares vest 25% per year until fully vested on May 9, 2001.
Participants are entitled to receive dividends attributable to the
restricted shares.
(g) Twenty-five percent of such shares vested 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.
(h) Fifty percent of such shares were vested as of August 9, 1997, the
remaining 50% 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.
(i) 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 1997 to
the Named Executives.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL OPTIONS/ ASSUMED ANNUAL RATES OF STOCK
NUMBER OF SARS PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR OPTIONS
UNDERLYING EMPLOYEES OR BASE TERM(C)
OPTIONS/SARS IN FISCAL PRICE EXPIRATION -------------------------------
GRANTED (SHARES) YEAR PER SHARE DATE 0%(D) 5% 10%
---------------- -------------- --------- ------------- ----- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Linda J. Wachner(a)............ 1,000,000 50.3% $ 30.375 Feb. 20, 2007 0 $19,020,000 $48,210,000
William S. Finkelstein(b)...... 150,000 7.5% $ 30.375 Feb. 20, 2007 0 $ 2,853,000 $ 7,231,500
Stanley P. Silverstein(b)...... 150,000 7.5% $ 30.375 Feb. 20, 2007 0 $ 2,853,000 $ 7,231,500
31,462(e) 1.6% $ 30.375 Aug. 12, 2003 0 $ 598,400 $ 1,516,800
11,682(e) 0.6% $ 30.375 Feb. 14, 2002 0 $ 222,200 $ 563,200
4,866(e) 0.2% $ 31.50 Feb. 11, 2003 0 $ 92,600 $ 234,600
6,193(e) 0.3% $ 31.50 Feb. 11, 2003 0 $ 117,700 $ 298,600
10,072(e) 0.5% $ 33.1875 Aug. 12, 2003 0 $ 191,600 $ 485,600
10,781(e) 0.5% $ 33.1875 Feb. 11, 2003 0 $ 205,000 $ 519,700
</TABLE>
- ------------
(a) All of such options vested on February 20, 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. Optionees 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 February 20, 1998. The
remaining 75% of such options vest 25% per year until fully vested on
February 20, 2001. 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. Optionees may
receive a reload option if shares are delivered in respect of the exercise
of the option.
(footnotes continued on next page)
10
<PAGE>
<PAGE>
(footnotes continued from previous page)
(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.
(e) Reflects restoration options granted under the provisions of the Amended &
Restated 1993 Stock Plan upon the exercise of stock options; such
restoration options have an exercise price equal to the fair market value
of the Common Stock on the date of exercise of the original options, and
expire on the expiration date of the original options. The restoration
option feature, approved by stockholders in 1993, entitles the holder to
purchase a number of shares equal to the sum of (i) the number of shares
delivered by the optionee upon exercise of the original option in payment
of the aggregate option exercise price and (ii) the number of shares, if
any, tendered by the optionee to the Company to satisfy any withholding tax
liability arising in connection with the exercise of the original option.
Optionees, therefore, do not reduce their proportional interest in the
Company because of the need to sell shares to pay for the exercise of an
option. This restoration feature fosters continued stock ownership in the
Company but does not result in any net increase in an individual's
beneficial equity position.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on option/SAR exercises in fiscal
1997 by the Named Executives and the values of such officers' unexercised
options at January 3, 1998.
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 4,900,000/0 $50,206,250/$0
William S. Finkelstein................... 0 0 310,500/337,500 $4,233,063/$2,020,313
Stanley P. Silverstein................... 106,000 1,545,875 162,556/312,500 $1,001,563/$1,648,438
Carl J. Deddens.......................... 0 0 17,500/17,500 $60,156/$180,469
Wallis H. Brooks......................... 0 0 12,500/17,500 $165,938/$200,313
</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
nine (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
11
<PAGE>
<PAGE>
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
3, 1998 for the Named Executives are: Mrs. Wachner, eleven years, eight months;
Mr. Finkelstein, nine years, ten months; Mr. Silverstein, thirteen years, nine
months; and Mr. Deddens, one year, 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 9 YEARS) 5 10 15 20 25 30
- ------------------------------------------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000.............................................. $ 7,066 $14,132 $21,198 $28,265 $35,331 $42,397
$150,000.............................................. 11,066 22,132 33,198 44,265 55,331 66,397
$200,000.............................................. 11,866 23,732 35,598 47,465 59,331 71,197
$250,000.............................................. 11,866 23,732 35,598 47,465 59,331 71,197
$300,000.............................................. 11,866 23,732 35,598 47,465 59,331 71,197
</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, 2002, unless extended, provides for Mrs. Wachner's 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 1997 was $2.625 million. Her base
salary in prior years was as set forth in the table on page 9. 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 1997
the threshold was $202.0 million and for 1998 the threshold is $297.6 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
12
<PAGE>
<PAGE>
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.
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 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 four executive officers, and in view of the
considerations enumerated below under '1997 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
1997.
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 49% 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.
13
<PAGE>
<PAGE>
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 1998, 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 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 has not heretofore granted stock
appreciation rights ('SARs') or other stock-based awards, except for certain
restricted stock awards granted in fiscal 1995 through fiscal 1997, 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
14
<PAGE>
<PAGE>
certain instances, pay compensation that is not fully deductible if in its
determination such costs and burdens outweigh such benefits.
1997 COMPENSATION
The Committee increased base salaries for Mr. Finkelstein, Mr. Silverstein
and Mr. Deddens by approximately 6.8% in 1997. 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 net revenues,
which increased by 35.0% in 1997, and earnings per share from continuing
operations before non-recurring expenses and extraordinary items, which
increased 23.8% over the previous year.
The amounts shown as 1997 restricted stock awards in the Summary
Compensation Table for Mrs. Wachner, Mr. Finkelstein and Mr. Silverstein reflect
amounts awarded in 1997, 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 labeled '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 1997 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.
The amounts shown as 1997 bonus in the Summary Compensation table for the
three executive officers, other than Mrs. Wachner, reflect amounts earned under
the Company's bonus plan for fiscal 1997 as well as special bonuses awarded by
the Board of Directors in recognition of the Company's successful acquisition of
Designer Holdings Ltd. in fiscal 1997.
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 1997 solely to
reflect changes in the cost of living. Other than cost of living increases, Mrs.
Wachner has not received a base salary increase since 1992.
The amount shown as 1997 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, a cash payment of $1.2 million awarded
in 1997 pursuant to the supplemental incentive compensation plan described above
and a special bonus awarded by the Board of Directors in recognition of the
Company's successful acquisition of Designer Holdings Ltd. in fiscal 1997.
Joseph A. Califano, Jr.
Walter F. Loeb
Stewart A. Resnick
15
<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 3, 1998, assuming reinvestment of dividends, by an investor who
invested $100.00 on January 2, 1993 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.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Fiscal Year Ending
1/2/93 1/8/94 1/7/95 1/6/96 1/4/97 1/3/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
The Company........................................... 100 75 81 111 149 162
Industry Index........................................ 100 71 70 83 111 122
S&P 500 Index......................................... 100 111 112 154 190 253
</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>
16
<PAGE>
<PAGE>
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended January 3, 1998
is being mailed to all stockholders of record as of the close of business on or
about April 8, 1998 with this proxy statement. The Annual Report is not a part
of the proxy solicitation material.
STOCKHOLDER PROPOSALS
In order to be included in the Company's proxy material for its 1999 annual
meeting of stockholders, eligible proposals of stockholders intended to be
presented at the annual meeting must be received by the Company on or before
December 9, 1998 (directed to the Corporate Secretary of the Company at the
address indicated on the first page of this Proxy Statement).
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 2, 1999.
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 other than the matters referred to in the accompanying Notice of Annual
Meeting. However, if other matters properly come before the Annual Meeting, it
is intended that the persons named as proxies in the accompanying proxy card
vote the shares represented thereon in accordance with their best judgment.
17
<PAGE>
<PAGE>
PROXY
APPENDIX 1
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 8, 1998 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, 1998. All proxies previously given with respect
to the shares covered hereby are hereby revoked.
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.
THE WARNACO GROUP, INC.
P.O. BOX 11306
NEW YORK, N.Y. 10203-0306
(Continued, and to be dated and signed on reverse side.)
<PAGE>
<PAGE>
DETACH PROXY CARD HERE
- -----------------------------------------------------------------------------
[ ]
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1.
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
Proposal to elect Mr. William listed below [X] for all nominees listed below [X] [X]
S. Finkelstein, Mr. Walter F.
Loeb and Mr. Stewart A. Resnick
as directors of The Warnaco
Group, Inc. for terms expiring
in 2001 and until their
successors are duly elected and
qualified.
</TABLE>
Nominees: Mr. William S. Finkelstein, Mr. Walter F. Loeb and Mr. Stewart A.
Resnick
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED
BELOW).
*Exceptions
-------------------------------------------------------------------
2. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments or postponements thereof.
Change of Address and
or Comments Mark Here [X]
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 of
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Date
---------------------------------
-------------------------------------
Signature(s)
-------------------------------------
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. [ ]
PLEASE SIGN, DATE AND RETURN THE PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
