<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
THE TIMBERLAND COMPANY
(Name of Registrant as Specified In Its Charter)
THE TIMBERLAND COMPANY
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
April 19, 1995
TO THE STOCKHOLDERS:
The Board of Directors and Officers of The Timberland Company invite you to
attend the 1995 Annual Meeting of Stockholders to be held on Thursday, May 18,
1995, at 9:30 a.m. at the Company's headquarters located at 200 Domain Drive,
Stratham, New Hampshire.
A copy of the Proxy Statement and the proxy are enclosed.
IF YOU CANNOT BE PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED ENVELOPE.
Cordially,
SIDNEY W. SWARTZ
Chairman, Chief Executive Officer
and President
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THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1995
The 1995 Annual Meeting of Stockholders of The Timberland Company will be
held on Thursday, May 18, 1995, at 9:30 a.m. at the Company's headquarters
located at 200 Domain Drive, Stratham, New Hampshire, for the following
purposes:
1. To fix the number of directors at five for the coming year, subject
to further action by the Board of Directors as provided in the By-Laws, and
to elect five directors to hold office until their successors shall have
been duly elected and qualified;
2. To increase the number of shares reserved for issuance under the
Company's 1987 Stock Option Plan from 1,600,000 to 2,100,000 and to set the
maximum number of shares for which options may be granted thereunder in any
year to any participant at 150,000;
3. To increase the number of shares reserved for issuance under the
Company's 1991 Employee Stock Purchase Plan from 100,000 to 200,000; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Two of the directors will be elected by the holders of Class A Common Stock
voting separately as a class. The remaining three directors will be elected by
the holders of Class A Common Stock and the holders of Class B Common Stock
voting together as a single class.
The Board of Directors has fixed the close of business on Monday, April 3,
1995, as the record date for the determination of stockholders entitled to
notice of and to vote and act at the Annual Meeting. Only stockholders of record
at the close of business on that date are entitled to notice of and to vote and
act at the Annual Meeting.
By Order of the Board of Directors,
JOHN E. BEARD
Secretary
April 19, 1995
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THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
PROXY STATEMENT
APRIL 19, 1995
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by the Board of Directors of The Timberland
Company, a Delaware corporation ("Timberland" or the "Company"), for use in
connection with the 1995 Annual Meeting of Stockholders of the Company to be
held on May 18, 1995, and any adjourned sessions thereof. The complete mailing
address of the executive offices of the Company is 200 Domain Drive, Stratham,
New Hampshire 03885, and the Company's telephone number is (603) 772-9500. The
matters to be acted upon at the Annual Meeting are stated in the accompanying
Notice of Annual Meeting.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of record as of the close of business on April 3, 1995,
are entitled to vote at the Annual Meeting and any adjournments thereof. As of
April 3, 1995, 8,219,150 shares of the Company's Class A Common Stock and
2,735,381 shares of the Company's Class B Common Stock were outstanding.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by mail or telegram, proxies may be
solicited personally or by telephone by directors, officers and regular
employees of the Company, none of whom will be specially compensated for such
solicitation. The expected date of the first mailing of this Proxy Statement and
the enclosed proxy is April 19, 1995.
If the enclosed proxy is properly signed and returned and not revoked, the
shares represented thereby will be voted at the Annual Meeting. If the
stockholder specifies in the proxy how the shares are to be voted, they will be
voted accordingly. If the stockholder does not specify how the shares are to be
voted, then they will be voted: (i) to fix the number of directors at five and
to elect the five nominees named in this Proxy Statement; (ii) to increase the
number of shares reserved for issuance under the Company's 1987 Stock Option
Plan from 1,600,000 to 2,100,000 and to limit the maximum number of shares for
which options may be granted thereunder in any year to any participant at
150,000; and (iii) to increase the number of shares reserved for issuance under
the Company's 1991 Employee Stock Purchase Plan from 100,000 to 200,000. Should
any person named as a nominee for director be unable to serve as a director,
each person appointed as proxy for the Annual Meeting may, in his discretion,
vote for such other person as director or may vote to fix the number of
directors at such number less than five, as the Board of Directors may
recommend. The Company has no reason to believe that any of the nominees will
not be available for election. Any stockholder has the right to revoke his, her
or its proxy at any time before it is voted by attending the Annual Meeting and
voting in person, by filing with the Secretary of Timberland an instrument in
writing revoking the proxy or by delivering to the Secretary a newly executed
proxy bearing a later date.
The Board of Directors knows of no other matters to be presented at the
Annual Meeting. If any additional matters should properly come before the Annual
Meeting, it is the intention of the persons appointed as proxies to vote on such
matters in accordance with their judgment.
<PAGE> 5
QUORUM, REQUIRED VOTES AND METHOD OF TABULATION
Consistent with Delaware law and under the Company's By-Laws, a majority of
the voting power of shares entitled to be cast on a particular matter, present
in person or represented by proxy, constitutes a quorum as to such matter. Votes
cast by proxy or in person at the Annual Meeting will be counted by persons
appointed by the Company to act as election inspectors for the Annual Meeting.
Each share of Class A Common Stock entitles the holder of record thereof to
one vote, and each share of Class B Common Stock entitles the holder of record
thereof to ten votes. The holders of Class A Common Stock will vote separately
as a class with respect to the election of two nominees, Messrs. Brennan and
Zaleznik. The holders of Class A Common Stock and the holders of Class B Common
Stock will vote together as a single class with respect to the election of the
other three nominees. The holders of Class A Common Stock and the holders of
Class B Common Stock will vote together as a single class on any other matters
to be voted on at the Annual Meeting.
The five nominees for election as directors who receive the greatest number
of votes properly cast for the election of directors at the Annual Meeting shall
be elected. Approval of the matters relating to the amendments to the Company's
1987 Stock Option Plan and the Company's 1991 Employee Stock Purchase Plan
requires the affirmative vote of a majority of the voting power of shares
present or represented and entitled to be cast on such matters at the Annual
Meeting. Shares represented by proxies that withhold authority to vote for a
nominee for director or indicate an abstention or a "broker non-vote" (i.e.,
shares represented at the Annual Meeting held by brokers or shareholder nominees
as to which (i) instructions have not been received from the beneficial owners
thereof or persons entitled to vote such shares and (ii) the broker or nominee
does not have the discretionary voting power on a particular matter with respect
to such shares) will count as shares present and entitled to vote for purposes
of determining the presence of a quorum. Shares represented by proxies that
indicate a "broker non-vote," however, will not constitute shares entitled to be
cast at the Annual Meeting on matters relating to the amendments to the
Company's 1987 Stock Option Plan and the Company's 1991 Employee Stock Purchase
Plan and, thus, will have no effect on the outcome of such matters.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP has been selected as the Company's independent
accountants to audit the consolidated financial statements of the Company for
the year ended December 31, 1995, and to report the results of their audit to
the Audit Committee of the Board of Directors. A representative of Deloitte &
Touche LLP is expected to be present at the Annual Meeting. Such representative
will have the opportunity to make a statement if he or she desires and is
expected to be available to respond to appropriate questions.
ITEM 1. ELECTION OF DIRECTORS
The directors are elected at each Annual Meeting of Stockholders to serve
for the ensuing year and until their respective successors have been duly
elected and qualified. The By-Laws of the Company specify that the number of
directors of the Company may be determined by the Board of Directors or by the
stockholders. Proxies, unless marked to the contrary, will be voted at the 1995
Annual Meeting to fix the number of directors at five and to elect the five
nominees named in this Proxy Statement. The number of directors fixed at the
Annual Meeting is subject to later increase by action of the stockholders or by
a majority of the directors. Any vacancy arising on the Board of Directors may
be filled by the stockholders or by a majority of the members of the Board of
Directors.
The current Board consists of five members, all of whom were elected
directors at the 1994 Annual Meeting of Stockholders held on May 19, 1994. Mr.
Brennan was elected by the holders of Class A Common
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Stock voting separately as a class and Messrs. Agate, Jeffrey Swartz, Sidney
Swartz and Zaleznik were elected by the holders of Class A Common Stock and the
holders of Class B Common Stock voting together as a single class. Thomas R.
Schwarz, who was elected as a director at the 1994 Annual Meeting of
Stockholders held on May 19, 1994, resigned as a director effective July 14,
1994.
INFORMATION WITH RESPECT TO NOMINEES
The names, ages, principal occupations for at least the last five years and
certain other information with respect to the nominees for election are as
follows:
<TABLE>
<CAPTION>
NAME AND YEAR BUSINESS EXPERIENCE AND
FIRST ELECTED DIRECTOR AGE DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
- --------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Sidney W. Swartz (1978).......... 59 Since June 1986, Mr. Swartz has served the Company as
Chairman of the Board, Chief Executive Officer and
President; from 1978 until June 1986, he was
Treasurer of Timberland.
Jeffrey B. Swartz (1990)......... 35 Since May 1991, Mr. Swartz has served the Company as
Chief Operating Officer; he has also served as
Executive Vice President since March 1990. From June
1986 to February 1990, Mr. Swartz served the Company
in a variety of positions, including: Senior Vice
President of International Operations; Vice
President-Operations/Manufacturing; Vice
President-International; and General Manager of
International Business. Jeffrey Swartz is the son of
Sidney Swartz.
John F. Brennan (1987)........... 62 Since August 1991, Mr. Brennan has served as Dean of
the School of Management of Suffolk University; from
1984 until July 1991, he was the F. William Harder
Professor of Management at Skidmore College. Mr.
Brennan is also a director of Aerovox Incorporated
and Data Storage Corporation.
Abraham Zaleznik (1987).......... 71 Since 1990, Mr. Zaleznik has served as Professor
Emeritus of Harvard University and a self-employed
consultant; from 1983 until 1990, he was Konosuke
Matsushita Professor of Leadership at the Harvard
Business School. Mr. Zaleznik is also a director of
the following companies: Ogden Corporation (for which
he serves as Vice Chairman), Le Chateau Stores, Ltd.,
American Greetings, Inc. and The TJX Companies, Inc.
(where he also serves on the Compensation Committee).
Robert M. Agate (1992)........... 59 Since January 1992, Mr. Agate has served as Senior
Executive Vice President and Chief Financial Officer
of Colgate-Palmolive Company; from October 1987 to
January 1992, he was Executive Vice President and
Chief Financial Officer of Colgate-Palmolive Company.
</TABLE>
COMMITTEES OF THE BOARD
Messrs. Agate, Brennan and Zaleznik are the members of the Company's
Compensation Committee, whose functions include setting the compensation and
benefits for the Company's directors, Chief Executive Officer and Chief
Operating Officer and reviewing the compensation proposed by management for all
other
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executive officers of the Company. The Committee also administers the Company's
stock benefit plans, other than the Company's 1991 Stock Option Plan for
Non-Employee Directors.
Messrs. Agate, Brennan and Zaleznik are also members of the Company's Audit
Committee, whose functions include recommending to the Board of Directors the
appointment of the Company's independent accountants, reviewing the independence
of the accountants, meeting with the accountants to review the Company's
financial statements and reviewing the Company's accounting procedures and
internal controls.
The Company does not have a nominating or similar committee.
During 1994, the Board of Directors held five meetings. In addition, the
Compensation Committee and the Audit Committee each held three meetings during
1994. Each of the nominees attended at least 75% of the total number of meetings
of the Board and all committees on which he served.
DIRECTORS' COMPENSATION
The Company compensates each director who was not an officer of the Company
in cash as follows: (i) an annual retainer of $10,000; (ii) a fee of $1,000 for
each meeting of the Board attended; and (iii) a fee of $500 for each meeting of
a Committee of the Board attended. The Timberland Company 1991 Stock Option Plan
for Non-Employee Directors provides for an initial option grant to each newly
elected, eligible director to purchase up to 5,000 shares of the Company's Class
A Common Stock, at a price equal to the fair market value on the date of grant
(i.e., the date of initial election as director). Thereafter, for each
additional full year of service, option grants are made on the anniversary of
the initial grant to each eligible director to purchase up to 1,250 shares of
the Company's Class A Common Stock, at a price equal to the fair market value on
the date of grant. Rights to exercise these options vest at a rate of 25% of the
total underlying shares on each of the first four anniversaries of the date of
grant for so long as the holder remains a director of the Company. Accordingly,
on May 18, 1994, Messrs. Brennan and Zaleznik, and on November 11, 1994, Mr.
Agate, were each granted options to purchase up to 1,250 shares of the Company's
Class A Common Stock at a price equal to the fair market value of such shares on
the respective grant dates.
Information as to ownership of Company securities by nominees for director
is included under the heading, "Security Ownership of Certain Beneficial Owners
and Management."
ITEM 2. APPROVAL OF INCREASE IN THE NUMBER OF SHARES RESERVED UNDER THE
TIMBERLAND COMPANY 1987 STOCK OPTION PLAN AND OF LIMIT ON THE MAXIMUM NUMBER OF
SHARES FOR WHICH OPTIONS MAY BE GRANTED THEREUNDER IN ANY YEAR TO ANY
PARTICIPANT
A total of 1,600,000 shares of Class A Common Stock are currently reserved
under The Timberland Company 1987 Stock Option Plan (the "Option Plan"), subject
to adjustment for stock splits and similar events. As of March 1, 1995, there
were options to purchase 1,174,403 shares of Class A Common Stock outstanding
under the Option Plan. Participants in the Option Plan are such employees of the
Company or its subsidiaries as may be selected from time to time by the Board.
The Board believes that it is important to continue to have options available
for grant in order to attract and retain key employees who contribute to and are
responsible for the long-term growth of the Company. As a result, on April 2,
1995, the Board approved, and is submitting for stockholder approval, a proposal
to increase the number of shares of Class A Common Stock reserved for issuance
under the Option Plan from 1,600,000 shares to a total of 2,100,000 shares. If
this increase is approved, the Option Plan must be amended to establish a limit
on the number of shares which may be granted to certain executive officers under
the Option Plan in any year, to comply with Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"). See
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"Federal Tax Effects" discussed below. Accordingly, also submitted for
stockholder approval is a proposal to limit to 150,000 the maximum number of
shares of Class A Common Stock for which options may be granted under the Option
Plan to any participant in any year. For this purpose, the replacement or
repricing of options will constitute a new grant. As of January 1, 1995, there
were approximately 575 employees eligible to participate in the Option Plan.
GENERAL DESCRIPTION OF THE OPTION PLAN
The Option Plan was adopted by the Board of Directors on February 3, 1987
and approved by the stockholders on May 13, 1987. On May 20, 1993, the
stockholders approved an increase in the number of shares of Class A Common
Stock reserved for issuance under the Option Plan from 900,000 to 1,600,000
shares.
The exercise value of "incentive stock options" ("ISOs") granted under the
Option Plan may not be less than the fair market value of the Class A Common
Stock on the date of grant (or 110% of such fair market value, in the case of a
ten percent stockholder)(1) while the exercise price of "non-statutory" or "
non-qualified" stock options granted under the Option Plan may not be less than
50% of the fair market value of the Class A Common Stock on the date of grant.
The fair market value of the Class A Common Stock on March 1, 1995 was $24.50
per share. The Option Plan also provides for the grant of replacement options to
employees of acquired companies.
The period within which each option may be exercised cannot exceed ten
years from the date of grant (five years, in the case of an ISO granted to a ten
percent stockholder), and no option can be granted under the Option Plan after
February 3, 1997. Each option is exercisable in full or in installments, as
provided by the terms of such option. The exercise price may be paid in cash or,
if the option so provides by its terms, in shares of the Company's Class A
Common Stock or by the employee's issuance of a promissory note or a combination
thereof.
In the event of the death of an optionee, all options become immediately
exercisable and remain exercisable for one year thereafter, subject to the
stated term of the option. If an optionee terminates employment for any other
reason, his or her options may be exercised, to the extent then exercisable, for
three months following the date of termination, unless such termination was for
cause which, in the opinion of the Compensation Committee, justified immediate
termination of the options.
In the event of any merger or consolidation involving the Company, any sale
of substantially all of the Company's assets or any other transaction or series
of related transactions, as a result of which a single person or entity or
several persons or entities acting in concert own a majority of the Company's
then outstanding voting Common Stock, all outstanding options shall become
exercisable immediately prior to the consummation of the transaction. Upon
consummation of the transaction, all outstanding options terminate and cease to
be exercisable. Certain transactions, in which control of the Company does not
change, are excluded from the foregoing provisions.
In lieu of requiring immediate exercisability, if there is an acquiring or
surviving entity, the Board may, by vote of a majority of the members of the
Board who are not affiliated with the acquiring entity, arrange to have such
acquiring or surviving entity or an affiliate thereof grant to employees holding
outstanding options
- ---------------
(1) A ten percent stockholder is any employee who at the time of grant owns
directly, or is deemed to own by reason of the attribution rules set forth
in section 424(d) of the Internal Revenue Code, stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company or of any of its parent or subsidiary corporations.
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replacement options which, in the case of ISOs, satisfy, in the determination of
the Board, the requirements for ISOs established by the Internal Revenue Code.
The Option Plan is administered by the Compensation Committee of the Board
of Directors, the members of which are not eligible to participate in the Option
Plan. Subject to the terms of the Option Plan, the Compensation Committee has
the authority to select optionees and to determine the number of shares covered
by each option, its exercise price and certain of its other terms.
The Compensation Committee has, from time to time, granted stock options
intended to qualify as ISOs under the provisions of Section 422 of the Internal
Revenue Code, as well as "non-statutory" or "non-qualified" stock options not
intended so to qualify.
As of March 1, 1995, Timberland had ISOs outstanding under the Option Plan
to purchase an aggregate of 77,284 shares of Class A Common Stock at an average
per share exercise price of $6.60. These ISOs, held by 51 employees, will, if
not exercised, expire no later than May 16, 2001. As of March 1, 1995,
Timberland had non-qualified stock options outstanding under the Option Plan to
purchase an aggregate of 1,097,119 shares of Class A Common Stock at an average
per share exercise price of $37.20. The non-qualified options, held by 372
employees, will, if not exercised, expire no later than December 21, 2004.
OTHER CHANGE IN CONTROL ARRANGEMENTS
The Board has approved certain change in control arrangements for certain
executive officers, vice presidents and the treasurer (each, a "Covered
Officer") as expressly approved by the Board. In the event (i) Sidney W. Swartz,
his lineal descendants or trusts established for his or their benefit cease to
hold the voting power to elect a majority of the Board and (ii) the Covered
Officer is subject to termination of employment other than for cause, or is
subject to a change in responsibilities, reduction in compensation or other
benefits, relocation or certain other adverse events, then the Covered Officer
would be entitled, in certain circumstances and subject to certain limitations,
to a minimum of 12 months of severance and benefits (after six months of
service) up to a maximum of 24 months of severance and benefits (after eight
years of service) and any stock options or plan benefits granted to the Covered
Officer would vest immediately. The Covered Officer would agree not to hire key
employees away from the Company for a one-year period and would provide advisory
services for up to three months after such change in control. The Company would
also indemnify such Covered Officer for certain attorney's fees and expenses in
enforcing his or her rights under these arrangements.
FEDERAL TAX EFFECTS
The following discussion summarizes certain Federal income tax consequences
of the grant and exercise of options under the Option Plan, based on the Federal
income tax laws in effect on the date of this Proxy Statement. The summary does
not purport to be a complete description of Federal tax consequences that may be
associated with the Option Plan, nor does it cover state, local or non-U.S.
taxes.
Incentive Stock Options. In general, an optionee realizes no taxable
income upon the grant or exercise of an ISO. However, the exercise of an ISO may
result in an alternative minimum tax liability to the optionee. With certain
exceptions, if a disposition of shares purchased under an ISO occurs within two
years from the date of grant or within one year after exercise, the disposition
results in ordinary income to the optionee (and a deduction to the Company)
equal to the value of the shares at the time of exercise less the exercise
price. Any additional gain recognized in the disposition is treated as a capital
gain for which the Company is not entitled to a deduction. If the optionee does
not dispose of the shares until after the expiration of these one- and two-year
holding periods, any gain or loss recognized upon a subsequent sale is treated
as a long-term capital gain or loss to the optionee for which the Company is not
entitled to a deduction.
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Non-Statutory Options. In general, an optionee realizes no taxable income
upon the grant of a non-statutory option, but realizes ordinary income in
connection with the exercise of the option in an amount equal to the excess (at
the time of exercise) of the fair market value of the shares acquired upon
exercise over the exercise price. A corresponding deduction is available to the
Company. Upon a subsequent sale or exchange of the shares, gain or loss after
the date of exercise is treated as a capital gain or loss for which the Company
is not entitled to a deduction.
ISOs granted after 1986 are treated as non-statutory stock options to the
extent they first become exercisable by an individual in any calendar year for
shares having an aggregate fair market value (determined as of the date of
grant) in excess of $100,000.
Under the so-called "golden parachute" provisions of the Internal Revenue
Code, options that vest in connection with a change in control of the Company
may be required to be valued and taken into account in determining whether the
participant has received payments in the nature of compensation that are
contingent on the change in control ("Parachute Payments") equal to or greater
than three times the participant's average compensation for the five years ended
prior to the year in which the change in control occurs. If this limit is
exceeded, the excess of the participant's Parachute Payments over one times the
five-year average base amount may be subject to an additional 20% Federal income
tax and may be nondeductible to the Company.
Section 162(m) of the Internal Revenue Code limits to $1 million the
deduction a public corporation may claim for annual remuneration to any of its
top five officers. There are a number of exceptions to this limitation,
including an exception for certain performance-based compensation. Stock options
awarded under the Option Plan are intended to qualify for the performance-based
compensation exeception, although final regulations under Section 162(m) have
not been issued.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ITEM 2. AN
AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTING POWER OF SHARES PRESENT OR
REPRESENTED AND ENTITLED TO BE CAST AT THE MEETING IS REQUIRED FOR APPROVAL.
ITEM 3. APPROVAL OF INCREASE IN THE NUMBER OF SHARES RESERVED UNDER THE
TIMBERLAND COMPANY 1991 EMPLOYEE STOCK PURCHASE PLAN
A total of 100,000 shares of Class A Common Stock are currently reserved
under the 1991 Employee Stock Purchase Plan ("1991 Plan"), subject to adjustment
for stock splits and similar events. The 1991 Plan encourages employee stock
ownership and increases the employees' proprietary interest in the Company's
success by providing an opportunity for eligible employees to purchase shares of
Class A Common Stock at a reduced price. As of January 1, 1995, there were
18,498 shares of Class A Common Stock available for issuance under the 1991
Plan. The Company expects that such 18,498 shares will be issued during 1995.
The Board believes that it is important to continue to encourage employee stock
ownership in the Company. As a result, on April 2, 1995, the Board approved, and
is submitting for stockholder approval, a proposal to increase the number of
shares of Class A Common Stock reserved for issuance under the 1991 Plan from
100,000 shares to 200,000 shares.
GENERAL DESCRIPTION OF THE 1991 PLAN
The 1991 Plan was adopted by the Board of Directors on February 22, 1991
and approved by the stockholders on May 16, 1991. Under the 1991 Plan, each
employee of the Company or one of its participating subsidiaries who has at
least six months of continuous service on the date options are granted under the
1991 Plan and whose customary employment is in excess of 20 hours in each week
and in excess of five months in each calendar year is eligible to participate in
the 1991 Plan, except for any employee who, immediately after
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the grant of an option, would be deemed under the Internal Revenue Code to own
5% or more of the Class A Common Stock. As of January 1, 1995, there were
approximately 1,300 employees eligible to participate in the 1991 Plan.
Options are granted twice yearly, on January 1 and July 1, and are
exercisable on the succeeding June 30 or December 31. Options are exercisable
through accumulations of payroll deductions (of not less than 2% nor more than
10% of base compensation), for the number of whole shares determined by dividing
the balance in the employee's withholding account on the last day of the option
period by the purchase price per share for the stock determined under the 1991
Plan. Such purchase price will be 85% of the fair market value of the Class A
Common Stock at the time of grant or at the time of exercise, whichever is
lower.
No employee will be granted an option under the 1991 Plan which would
permit his right to purchase shares to accrue at a rate which exceeds $25,000 in
fair market value of Class A Common Stock (determined at the date of grant) for
any calendar year.
An employee may, at any time prior to exercise, cancel his option and, upon
such cancellation, payments by the employee shall be returned to him without
interest. Each employee's rights in an option will be exercisable during his
lifetime only by him and may not be sold, pledged, assigned or otherwise
transferred. Nothing in the 1991 Plan is to be construed so as to give an
employee the right to be retained in the service of the Company.
In the event there is a change in the outstanding stock of the Company due
to a stock dividend, stock split, combination of shares, recapitalization,
merger or other capital change, the aggregate number of shares available under
the 1991 Plan and under the outstanding options, the option price and other
relevant provisions will be appropriately adjusted.
The 1991 Plan provides that shares purchased by an employee are subject to
a right of repurchase by the Company if an employee desires to make a sale of
such shares prior to the expiration of six months following the termination of
the option period.
The 1991 Plan is administered by an Administrative Committee, composed of
three management employees, which Committee is chosen by the Board of Directors.
The Administrative Committee is responsible for the day-to-day administration of
the 1991 Plan, including determinations of eligibility under the 1991 Plan,
determinations as to the first and last day of a participation period when such
day does not fall on a business day where trading in the Class A Common Stock
occurred, decisions with respect to a request for a leave of absence by a
participating employee as such request relates to the employee's participation
in the 1991 Plan, and other questions which may arise under the 1991 Plan. Only
the Board of Directors, however, has the power to amend the 1991 Plan (other
than to increase the number of shares to be issued under the Plan, which is
subject to stockholder approval) or to terminate the 1991 Plan. In the event
that the number of shares of Class A Common Stock receivable by all participants
(calculated by dividing the total amount of all payroll deductions during the
option period by the purchase price) exceeds the number of shares then available
under the 1991 Plan, then the Administrative Committee shall reduce, on a
substantially proportionate basis, the number of shares to be so issued.
FEDERAL TAX EFFECTS
The following discussion summarizes certain Federal income tax consequences
of the grant and exercise of options under the 1991 Plan, based on the Federal
income tax laws in effect on the date of this Proxy Statement. The summary does
not purport to be a complete description of Federal tax consequences that may be
associated with the 1991 Plan, nor does it cover state, local or non-U.S. taxes.
8
<PAGE> 12
For United States Federal income tax purposes, neither the grant of an
option to an employee under the 1991 Plan nor the exercise of such an option
will produce ordinary income to the employee or a deduction to the Company.
In general, an employee who purchases stock under the 1991 Plan pursuant to
the exercise of an option and who disposes of such shares within two years after
the date the option was granted will recognize ordinary income on the difference
between the price paid for the shares and their fair market value on the date of
exercise.
In addition to any ordinary income, an employee who sells shares within the
two-year period described above will recognize a capital gain or loss on the
difference between the amount realized on the sale and the employee's basis in
the shares (i.e., the exercise price paid by the employee plus any ordinary
income recognized by reason of the sale).
If an employee disposes of shares purchased under the 1991 Plan more than
two years after the date the applicable option was granted, or dies at any time
while holding such shares, ordinary income will be recognized equal to the
lesser of (i) the excess of the fair market value of the shares at the time of
disposition or death over the exercise price or (ii) 15% of the fair market
value of the shares on the date the option was granted. The Company will not be
entitled to a deduction for this amount. In addition to ordinary income, capital
gain will be recognized on the excess, if any, of the amount realized on a sale
or exchange over the employee's basis in the shares (i.e., the exercise price
paid by the employee plus any ordinary income recognized by reason of the sale).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ITEM 3. AN
AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTING POWER OF SHARES PRESENT OR
REPRESENTED AND ENTITLED TO BE CAST AT THE MEETING IS REQUIRED FOR APPROVAL.
9
<PAGE> 13
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to compensation
awarded to, earned by or paid to the Chief Executive Officer and the four other
most highly compensated executive officers of the Company who served as such at
December 31, 1994 (hereafter all the foregoing persons are together referred to
as the "Named Executive Officers"), for the fiscal years ended December 31,
1994, 1993 and 1992.
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ------------------------
------------------------------------- AWARDS PAYOUTS
(A) (B) (C) (D) (E) (G) (H) (I)
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- UNDERLYING LTIP COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($)(1) OPTIONS(#) PAYOUTS($)(2) SATION($)(3)
- ------------------------- ---- --------- -------- ------------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz (4)........ 1994 450,504 -- -- -- -- 3,540
President and Chief 1993 441,369 95,630 -- -- 132,734 5,037
Executive Officer 1992 425,022 127,507 -- -- -- 4,804
---- ------- ------- ------- ------ ------- -----
Jeffrey B. Swartz........... 1994 291,489 -- -- 70,000 -- 3,540
Executive Vice President 1993 274,922 59,629 -- 50,000 55,177 540
and Chief Operating Officer 1992 215,000 64,500 -- 25,000 -- 440
---- ------- ------- ------- ------ ------- -----
Keith D. Monda (5).......... 1994 250,000 -- 257,980 60,000 -- 540
Senior Vice President -- 1993 14,423 -- -- 30,000 -- --
Finance and Administration 1992 -- -- -- -- -- --
and Chief Financial Officer
---- ------- ------- ------- ------ ------- -----
Edmund J. Feeley (6)........ 1994 185,000 -- -- 61,000 -- 2,798
Senior Vice President -- 1993 168,173 40,837 45,243 25,000 -- 396
General Manager Footwear 1992 -- -- -- -- -- --
---- ------- ------- ------- ------ ------- -----
Kenneth A. Snyder........... 1994 200,000 -- -- 16,000 -- 3,480
Senior Vice President -- 1993 207,692 46,500 -- 10,000 41,640 4,078
Footwear Sales 1992 190,006 51,302 50,260 10,000 -- 2,318
---- ------- ------- ------- ------ ------- -----
- ---------------
<FN>
(1) The amount indicated for Mr. Monda reflects an auto allowance of $7,200,
relocation expenses of $250,562 and spousal travel expenses of $218 paid
during 1994. The amount for Mr. Feeley reflects an auto allowance of
$6,115, relocation expenses of $38,128 and $1,000 for tax and financial
planning advice paid during 1993. The amount for Mr. Snyder reflects an
auto allowance of $7,500 and relocation expenses of $42,760 paid during
1992.
(2) These amounts represent incentive payments for the three-year period ended
December 31, 1993. These amounts were paid during 1994.
(3) In 1994, the Company paid group term life insurance premiums and made
contributions to the Company's 401(k) Plan, respectively, as follows: Mr.
Sidney Swartz $540 and $3,000; Mr. Jeffrey Swartz $540 and $3,000; Mr.
Monda $540 and $0; Mr. Feeley $444 and $2,354; and Mr. Snyder $480 and
$3,000. In 1993, the Company paid group term life insurance premiums and
made contributions to the Company's 401(k) Plan, respectively, as follows:
Mr. Sidney Swartz $540 and $4,497; Mr. Jeffrey Swartz $540 and $0; Mr.
Monda $0 and $0; Mr. Feeley $396 and $0; and Mr. Snyder $480 and $3,598. In
1992, the Company paid group term life insurance premiums and made
contributions to the Company's 401(k) Plan, respectively, as follows: Mr.
Sidney Swartz $440 and $4,364; Mr. Jeffrey Swartz $440 and $0; and Mr.
Snyder $418 and $1,900.
</TABLE>
10
<PAGE> 14
(4) Reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in this Proxy Statement for certain
benefits payable upon the death of Sidney Swartz.
(5) Mr. Monda joined the Company on December 20, 1993 as Senior Vice
President-Finance and Administration and Chief Financial Officer.
(6) Mr. Feeley joined the Company on January 1, 1993. He was elected Senior Vice
President-Manufacturing and Operations of the Company by the Board of
Directors on February 19, 1993. Effective January 1, 1995, Mr. Feeley
became Senior Vice President-General Manager Footwear.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding grants of stock
options, if any, made to the Named Executive Officers during the fiscal year
ended December 31, 1994.
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(1)
- ----------------------------------------------------------------------------------- ------------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF
SECURITIES % OF
UNDERLYING TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR(2) ($/SH) DATE 5%($) 10%($)
----- ---------- -------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz....... -- -- -- -- -- --
Jeffrey B. Swartz...... 10,000 1.44% 36.75 03/04/04 231,119 585,700
40,000(3) 5.78% 46.63 09/09/04 1,172,888 2,972,330
20,000 2.89% 21.38 12/21/04 268,852 681,325
Keith D. Monda......... 10,000 1.44% 36.75 03/04/04 231,119 585,700
35,000(3) 5.06% 46.63 09/09/04 1,026,277 2,600,788
15,000 2.17% 21.38 12/21/04 201,639 510,994
Edmund J. Feeley....... 8,000 1.16% 36.75 03/04/04 184,895 468,560
3,000 .43% 38.13 05/19/04 71,930 182,284
35,000(3) 5.06% 46.63 09/09/04 1,026,277 2,600,788
15,000 2.17% 21.38 12/21/04 201,639 510,994
Kenneth A. Snyder...... 4,000 .58% 36.75 03/04/04 92,448 234,280
12,000(3) 1.73% 46.63 09/09/04 351,867 891,699
<FN>
- ---------------
(1) Based on the exercise price on the date of grant and annual appreciation of
such price through the expiration date of such options at the stated
annualized rate. The dollar amounts in these columns are not intended to
forecast possible future appreciation, if any, of the Company's Class A
Common Stock price.
(2) All options granted to the Named Executive Officers during 1994 were
non-statutory options granted pursuant to the Option Plan. Under the terms
of the Option Plan, options are made exercisable at such time or times as
the Compensation Committee may prescribe. As of December 31, 1994, all
options granted under the Option Plan have been granted at fair market
value on the date of grant, vest in equal annual installments of 25% on the
first four anniversaries of the date of grant and are exercisable for up to
ten years, except for options granted under the Company's Long-Term
Incentive Guidelines, which may vest in less than four years, if the
Company achieves certain performance goals prior to the expiration of the
measurement period. See "Long-Term Incentive Plans-Awards in Last Fiscal
Year." In the event of
</TABLE>
11
<PAGE> 15
death of an optionee, all options become immediately exercisable and may be
exercised for one year thereafter, but in no event longer than the stated
term of the option. If an optionee's employment terminates for any other
reason, his or her option may be exercised to the extent then exercisable
for three months following the date of termination. In the event the
Company is acquired under certain prescribed circumstances, all outstanding
options shall become exercisable immediately prior to the acquisition and
shall terminate upon consummation of the acquisition.
(3) Options awarded under the Company's Long-Term Incentive Guidelines. See
"Long-Term Incentive Plans-Awards in Last Fiscal Year."
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END VALUES
The following table sets forth information for each of the Named Executive
Officers as to the total number of exercised and unexercised stock options, if
any, held at December 31, 1994 and the value of unexercised "in-the-money" stock
options, if any, held at December 31, 1994.
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz......... -- -- -- -- -- --
Jeffrey B. Swartz........ -- -- 48,750 121,250 445,156 111,094
Keith D. Monda........... -- -- 7,500 82,500 -- 7,500
Edmund J. Feeley......... -- -- 6,250 79,750 -- 7,500
Kenneth A. Snyder........ -- -- 31,250 29,750 395,219 51,156
<FN>
- ---------------
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The amounts shown in column (e) represent the difference between
the closing price of the Company's Class A Common Stock on December 30,
1994 ($21.875) and the exercise price of those options which are
"in-the-money," multiplied by the applicable number of underlying options.
</TABLE>
12
<PAGE> 16
<TABLE>
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
The following table sets forth information with respect to long-term stock
option awards made during 1994 to the Named Executive Officers under the
Company's Long-Term Incentive Guidelines (the "LTIG").
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS (2)
------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER OF PERFORMANCE OR OTHER PERIOD
SHARES, UNITS OR UNTIL MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
NAME OTHER RIGHTS (#) (1) (#) (#) (#)
- --------------------- ---------------- ----------------------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
Sidney Swartz........ -- Four-year performance period -- -- --
ending December 31, 1997
Jeffrey B. Swartz.... 40,000 Four-year performance period 40,000 40,000 40,000
ending December 31, 1997
Keith D. Monda....... 35,000 Four-year performance period 35,000 35,000 35,000
ending December 31, 1997
Edmund J. Feeley..... 35,000 Four-year performance period 35,000 35,000 35,000
ending December 31, 1997
Kenneth A. Snyder.... 12,000 Four-year performance period 12,000 12,000 12,000
ending December 31, 1997
<FN>
- ---------------
(1) The LTIG provide for target awards in the form of stock options based on the
Company's achievement of a targeted four-year cumulative earnings per share
goal, as established by the Company's Compensation Committee. The number of
stock options to be granted are based on the achievement of individual
performance ratings at respective seniority levels of the participants. All
stock option grants under the LTIG will be awarded in accordance with all
terms and conditions of the Option Plan. For the four-year performance
period ending December 31, 1997, stock options were awarded in accordance
with the LTIG and vest in four equal annual installments of 25% each,
beginning with the first anniversary of the date of grant. In the event the
Company's four-year cumulative earnings per share target is attained prior
to the end of the four-year vesting period: (i) full vesting will occur
upon attainment of such target and (ii) the Company's Compensation
Committee may consider the grant of additional stock options to
participants. A targeted award was not established for the Chief Executive
Officer because he has a sizable equity position in the Company.
(2) The LTIG provide for a threshold, target and maximum number of shares to be
awarded based on the individual performance of the respective participant.
The awards under the LTIG for 1994 were established at the time of grant.
Thus, the threshold, target and maximum number of shares as shown under
Estimated Future Payouts Under Non-Stock Price-Based Plans are the same.
</TABLE>
13
<PAGE> 17
<TABLE>
PERFORMANCE GRAPH
Set forth below is a graph showing the five-year cumulative total return of
Timberland's Class A Common Stock as compared with Standard & Poor's 500 Stock
Index and the weighted average of the Standard & Poor's Shoe Index and the
Standard & Poor's Textile and Apparel Manufacturers Index, weighted in
proportion to the percent of the Company's business in each industry group for
each respective year.
<CAPTION>
S&P Average
Measurement Period of 2 Industry
(Fiscal Year Covered) Timberland S&P 500 Groups
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 51.09 96.89 99.06
1991 79.35 126.42 197.90
1992 169.57 136.05 213.19
1993 464.13 149.76 151.30
1994 190.22 151.74 195.26
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists of Abraham
Zaleznik, Chairman, and Robert M. Agate and John F. Brennan. All members of the
Compensation Committee are independent directors. The Committee's
responsibilities include setting the compensation of the Chief Executive Officer
and the Chief Operating Officer and reviewing the compensation proposed by
management for all other executive officers of the Company. The Committee also
administers the Company's stock benefit plans other than the non-employee
director plan, including the Option Plan and, in that capacity, grants all stock
options which are awarded by the Company to its employees.
In establishing the amounts of compensation in all forms for the Chief
Executive Officer and the Chief Operating Officer, and in reviewing the
compensation proposed by management for all other executive officers of the
Company, the Committee attempts to award amounts which are comparable with the
mid-point of the range of compensation amounts set for the equivalent officers
in similar companies and in other companies in the Company's geographic region.
It is the Company's objective to set annual salary levels for its senior
executives somewhat below the competitive mid-point of the comparable companies
and to set annual bonuses in combination with long-term incentives at levels
that will exceed the competitive mid-point if targeted results are achieved or
exceeded.
14
<PAGE> 18
The Company engaged Towers Perrin, a compensation consulting firm, in 1994
to review the Company's executive compensation program. Towers Perrin assisted
the Committee in identifying market rates for overall compensation and for the
short- and long-term portions of such compensation. The firm also helped to
identify which combination of factors the Company should use to determine
compensation appropriate to supporting the Company's short- and long-term goals.
Annual salaries for executives are based on survey data provided to the
Company by Towers Perrin and other independent compensation specialists. Annual
bonuses are payable under the Company's Annual Bonus Plan for Exempt Employees
(the "Annual Bonus Plan") and are awarded based upon the performance of both the
Company and the individual plan participant. The Annual Bonus Plan also provides
for the award of bonuses in the form of stock option grants pursuant to the
Option Plan at the discretion of the Committee.
Pursuant to the Annual Bonus Plan, the Committee annually sets performance
goals for the Company, individual goals for each Plan participant and a target
bonus for each Plan participant, expressed as a percentage of such participant's
salary. Annual bonuses are awarded based upon the achievement, in whole or in
part, of these Company and individual performance goals. The annual bonuses for
higher-level executives are more heavily influenced by Company performance than
are those for lower-level executives. The annual bonuses for the Chief Executive
Officer and Chief Operating Officer depend entirely on Company performance. The
amount of annual bonus awards under the Annual Bonus Plan may not exceed 150% of
the bonus award goals established for the relevant performance period. Amounts
are paid in excess of 100% (but not above 150%) of these established goals when
actual Company performance exceeds targeted results.
For 1994, annual bonus awards were based on the Company's achievement of an
earnings per share target. Because the target was not achieved, no bonus awards
were made for 1994 based on Company performance. Awards of cash or stock options
("1994 Bonus Options") were made in recognition of achievement of individual
goals where merited.
The Company makes option grants to certain employees at the time of hire
and at the time of promotion, based on the employees' respective levels of
responsibility. In addition, under the Option Plan, the Company makes annual
option grants to certain employees, based on their individual performance and
potential. The Committee believes that stock options are an appropriate means to
compensate the Company's officers and employees in a manner which encourages
them to identify with the long-term interests of the Company's stockholders.
Stock options are granted on the basis of competitive levels of stock options
granted to comparable employees of similar companies, except that the Company's
Chief Executive Officer has never been granted a stock option because he has a
sizable equity position in the Company. In 1994, the Chief Operating Officer was
granted two separate stock options under the Option Plan to purchase up to an
aggregate of 30,000 shares of Class A Common Stock, based on his individual
performance. Stock options become exercisable at such times as the Committee
prescribes. All stock options granted under the Option Plan have been granted at
fair market value as of the date of grant. The options vest in equal annual
installments of 25% over each of the four following years and are exercisable
for up to ten years, unless earlier terminated by death or separation from
employment by the option holder, except that the 1994 Bonus Options fully vest
after one year and expire six months after the date of full vesting, and except
that the options granted under the Company's LTIG described in the next
paragraph will vest in less than four years if the Company achieves certain
prescribed performance goals.
In 1994, the Committee approved the LTIG for senior management. The LTIG
provide for target awards in the form of stock options in addition to annual
stock option grants, based on the Company's achievement of a targeted four-year
cumulative earnings per share goal, as established by the Committee. The number
of stock options to be granted is based on the achievement of individual
performance ratings at respective seniority levels of the participants. All
stock option grants under the LTIG will be awarded in accordance with
15
<PAGE> 19
the terms and conditions of the Option Plan. The Committee believes that the
LTIG provide an appropriate means to reward those members of the Company's
senior management who contribute to the success of the Company in achieving its
financial performance targets and to focus such employees on the long-term
success of the Company.
For the 1994-1997 performance period, stock options awarded in accordance
with the LTIG will vest in four equal annual installments of 25% each, beginning
with the first anniversary of the date of the grant. In the event the Company's
four-year cumulative earnings per share target is attained prior to the end of
the four-year vesting period: (i) full vesting will occur upon attainment of
such target and (ii) the Committee may consider the grant of additional stock
options to participants. The targeted award established for the 1994-1997
performance period for the Chief Operating Officer was 40,000 shares. A targeted
award was not established for the Chief Executive Officer because he has a
sizable equity position in the Company.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to any of such companies' chief executive officer and four other highest
paid executive officers. However, qualifying performance-based compensation is
not subject to the deduction limit if certain requirements are satisfied. All
compensation to the Company's executive officers in 1994 was fully deductible
under Section 162(m). It is anticipated that all such compensation in 1995 will
again be fully deductible under Section 162(m).
COMPENSATION COMMITTEE
Abraham Zaleznik, Chairman
Robert M. Agate
John F. Brennan
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the close of
business on April 3, 1995, regarding the Class A Common Stock and Class B Common
Stock beneficially owned by (i) each person known to the Company to be a
beneficial owner of more than 5% of the outstanding shares of either Class A
Common Stock or Class B Common Stock, (ii) each director, nominee for director
and Named Executive Officer and (iii) by all directors and executive officers as
a group:
<CAPTION>
SHARES OWNED BENEFICIALLY
---------------------------------------------------
CLASS A CLASS B
---------------------- ----------------------
NAME OF BENEFICIAL OWNER NUMBER(1) PERCENT(2) NUMBER PERCENT(2)
------------------------ --------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Sidney W. Swartz (3)............................. 100 (4) 2,700,456(5) 98.7
Judith H. Swartz and John E. Beard, as Trustees
of The Sidney W. Swartz 1982 Family Trust (3).. 3,442,654 41.89% -- --
Neuberger & Berman (6)(7)........................ 472,300 5.7%
Jeffrey B. Swartz................................ 66,314 (4) 18,767 (4)
Robert M. Agate.................................. 4,202 (4) -- --
John F. Brennan.................................. 23,623 (4) -- --
Abraham Zaleznik................................. 20,623 (4) -- --
Keith D. Monda................................... 11,621 (4) -- --
Edmund J. Feeley................................. 13,982 (4) -- --
Kenneth A. Snyder................................ 45,308 (4) -- --
All current executive officers and directors as a
group (12 persons)............................. 197,077 2.35% 2,719,223 99.40%
</TABLE>
16
<PAGE> 20
- ---------------
(1) Includes shares issuable upon the exercise of stock options which are either
currently exercisable or will become exercisable within the next 60 days,
as follows: Jeffrey B. Swartz, 58,250; Keith Monda, 10,000; Edmund J.
Feeley, 12,750; Kenneth A. Snyder, 38,000; Robert M. Agate, 2,812; John F.
Brennan, 20,623; and Abraham Zaleznik, 20,623, and all current executive
officers and directors as a group, 173,258.
(2) Percentages are calculated on the basis of the amount of outstanding shares
of common stock of such class plus, for each person or group, any
securities that such person or group has the right to acquire within 60
days of April 3, 1995 pursuant to options, warrants, conversion privileges
or other rights.
(3) Address: c/o The Timberland Company, 200 Domain Drive, Stratham, NH 03885.
(4) Does not exceed 1% of the class.
(5) Includes 9,500 shares of the Class B Common Stock held by The Swartz Family
Charitable Trust, as to which Sidney Swartz, a trustee, disclaims
beneficial ownership.
(6) Address: 605 Third Avenue, New York, NY 10158-3698.
(7) Beneficial ownership based on the Schedule 13G dated February 10, 1995 filed
by Neuberger & Berman. Neuburger & Berman beneficially owns and has shared
power to dispose or to direct the disposition of 472,300 shares, sole power
to vote or to direct the vote of 20,300 shares and shared power to vote or
to direct the vote of 440,000 shares.
Sidney W. Swartz, his sons and daughter, and The Swartz Family Charitable
Trust (the "Charitable Trust"), of which Sidney W. Swartz and his wife are the
trustees, beneficially own all of the Company's outstanding Class B Common
Stock. Additionally, The Sidney W. Swartz 1982 Family Trust (the "Family
Trust"), a trust for the benefit of his family, owns 3,442,654 shares of the
Company's Class A Common Stock. Sidney Swartz, the Charitable Trust, the Family
Trust, The Sidney and Judith Swartz Remainder Unitrust and The Swartz Foundation
hold approximately 87% of the combined voting power of the Company's capital
stock in the aggregate, enabling Sidney Swartz to control the Company's affairs,
and enabling the Family Trust, which holds approximately 42% of the Class A
Common Stock, to influence the election of the two directors entitled to be
elected by the holders of the Class A Common Stock voting separately as a class.
Jeffrey Swartz, Executive Vice President and Chief Operating Officer of the
Company, is the son of Sidney Swartz and is one of the beneficiaries of the
Family Trust. Sidney Swartz, by virtue of his ownership of shares of Class B
Common Stock and by virtue of his position of influence (direct and indirect)
over the Company, may be deemed to be a "control person" of the Company within
the meaning of the rules and regulations under the Securities Act of 1933.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement between the Company and Sidney W. Swartz, the
Company will pay to his wife for the three years following his death (or, if
earlier, until her death) a monthly amount equal to Mr. Swartz's monthly salary
at the time of his death, if Mr. Swartz should die while he is an employee of
the Company.
Jeffrey Swartz, Executive Vice President and Chief Operating Officer, is
the son of Sidney Swartz. See "Executive Compensation."
David Swartz serves as a member of the Company's Product Development
Department and is the son of Sidney Swartz. The 1994 compensation of David
Swartz was $75,805.
The Company has loaned $80,000 to Edmund J. Feeley, Senior Vice
President-General Manager Footwear, pursuant to a Promissory Note dated April
29, 1994, in connection with the purchase of his primary residence. This note
bears interest at the annual rate of 6.50%. The maximum amount outstanding
during
17
<PAGE> 21
1994 and the amount outstanding as of February 6, 1995 under this note,
including interest, was $81,300 and $82,600, respectively.
FINANCIAL INFORMATION
The Company's 1994 Annual Report to Stockholders, which includes audited
financial statements and other business information, mailed to the stockholders
of the Company on or about March 30, 1995, is incorporated herein by reference.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, filed by the Company with the Securities and Exchange Commission, may
be obtained without charge by contacting the Investor Relations Department, The
Timberland Company, 200 Domain Drive, Stratham, New Hampshire 03885 (telephone:
603-773-1212).
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than 10% of the Company's
Class A Common Stock are required to report their ownership of the Company's
Class A Common Stock and any changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to report in this proxy statement any failure to
file by these dates. All of these filing requirements were satisfied by such
persons during and with respect to fiscal year 1994, except that Thomas R.
Schwarz, a former director, failed to file with the Securities and Exchange
Commission on a timely basis one report relating to three transactions. In
making these disclosures, the Company has relied solely on written
representations of its directors, its executive officers and persons holding
more than 10% of the Company's Class A Common Stock and copies of the reports
that these persons have filed with the Securities and Exchange Commission and
furnished to the Company.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
Meeting. If any additional matters should properly come before the Meeting, it
is the intention of the persons appointed as proxies in the enclosed proxy to
vote such proxy in accordance with their judgment on any such matters.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the 1996 Proxy
Statement and proxy relating to that meeting, provided they are received by the
Secretary of the Company no later than December 21, 1995 and are otherwise in
compliance with applicable Securities and Exchange Commission regulations.
18
<PAGE> 22
FILED SUPPLEMENTALLY WITH THE SECURITIES AND EXCHANGE COMMISSION ONLY
THE TIMBERLAND COMPANY
1987 STOCK OPTION PLAN
(REVISED TO REFLECT AMENDMENTS TO BE SUBMITTED FOR
APPROVAL BY SHAREHOLDERS ON MAY 18, 1995)
1. PURPOSE
The purpose of this 1987 Stock Option Plan (the "Plan") is to advance the
interests of The Timberland Company (the "Company") by enhancing the ability of
the Company (a) to attract and retain employees who are in a position to make
significant contributions to the success of the Company; (b) to reward employees
for such contributions; and (c) to encourage employees to take into account the
long-term interests of the Company through ownership of shares of the Company's
Class A Common Stock (the "Stock").
Options granted pursuant to the Plan may be incentive stock options as
defined in section 422 of the Internal Revenue Code of 1986 (as it may from time
to time be amended) (the "Code") (any option that is intended so to qualify as
an incentive stock option being referred to herein as an "incentive option"), or
options that are not incentive options, or both.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board").
The Board may, in its discretion, delegate its powers with respect to the
Plan to a committee (the "Committee"), in which event all references herein to
the Board shall be deemed to be references to the Committee, provided that the
Board may not so delegate its powers to amend or terminate the Plan in
accordance with the last sentence of Section 8 below. The Committee shall
consist of at least three Directors. A majority of the members of the Committee
shall constitute a quorum, and all determinations of the Committee shall be made
by a majority of its members. Any determination of the Committee under the Plan
may be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members. Following any registration of the Stock under
the Securities Exchange Act of 1934, all members of the Committee shall be
disinterested persons within the meaning of Rule 16b-3 under the Act.
The Board shall have authority, not inconsistent with the express
provisions of the Plan; (a) to grant options to such eligible employees as the
Committee may select; (b) to determine the time or times when options shall be
granted and the number of shares of Stock subject to each option; (c) to
determine which options are, and which options are not, incentive options; (d)
to determine the terms and conditions of each option; (e) to prescribe the form
or forms of instruments evidencing options and any other instruments required
under the Plan and to change such forms from time to time; (f) to adopt, amend
and rescind rules and regulations for the administration of the Plan; and (g) to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan. Subject to Section 8 the
Board shall also have the authority, both generally and in particular instances,
to waive compliance by an employee with any obligation to be performed by him
under an option and to waive any condition or provision of an option, except
that the Board may not, in the case of an incentive option, other than in
accordance with Section 4(c), (i) increase the total number of shares covered by
the option, (ii) extend the term of the option to more than ten years (five
years, in the case of an incentive option granted to a "ten-percent shareholder"
as defined in Section 6(b) below), or (iii) unless the optionee consents, reduce
the option exercise price per share or otherwise cause a modification, extension
or renewal (within the meaning of section 424(h) of the Code) of the option. All
such determinations and actions of the Board shall be conclusive and shall bind
all parties.
<PAGE> 23
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective upon the date on which the Plan is approved
by the shareholders of the Company. Grants of options under the Plan may be made
prior to that date (but after adoption of the Plan by the Board of Directors),
subject to approval of the Plan by such shareholders.
No option shall be granted under the Plan after the completion of ten years
from the date on which the Plan was adopted by the Board of Directors, but
options previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
(a) Number of Shares. Subject to adjustment as provided in Section 4(c),
the maximum aggregate number of shares of Stock that may be delivered upon the
exercise of options granted under the Plan shall be 2,100,000. If any option
granted under the Plan terminates without having been exercised in full, the
number of shares of stock as to which such option was not exercised shall be
available for future grants within the limits set forth in this Section 4(a).
(b) Shares to be Delivered. Shares delivered under the Plan shall be
authorized but unissued Stock or, if the Board so decides in its sole
discretion, previously issued Stock acquired by the Company and held in
treasury. No fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's capital
stock, the number and kind of shares of stock or securities of the Company
subject to options then outstanding or subsequently granted under the Plan, the
maximum number of shares or securities that may be delivered under the Plan, the
exercise price, and other relevant provisions shall be appropriately adjusted by
the Board, whose determination shall be binding on all persons.
The Board may also adjust the number of shares subject to outstanding
options, the exercise price of outstanding options and the terms of outstanding
options, to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in Section 6(i)),
acquisitions or dispositions of stock or property or any other event if it is
determined by the Board that such adjustment is appropriate to avoid distortion
in the operation of the Plan, provided that no such adjustment shall be made in
the case of an incentive option if it would constitute a modification, extension
or renewal of the option within the meaning of section 424(h) of the Code.
(d) Replacement Options. The Board may grant options under the Plan in
substitution for options held by employees of another corporation who
concurrently become employees of the Company or a subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary or the acquisition by the Company or a subsidiary of property or
stock of the employing corporation. The Board may direct that the replacement
options be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
5. ELIGIBILITY FOR OPTIONS
Employees eligible to receive options under the Plan shall be those
employees of the Company and its subsidiaries who, in the opinion of the Board,
are in a position to make a significant contribution to the success of the
Company or such subsidiaries. A subsidiary for purposes of the Plan shall be a
corporation in which the Company owns, directly or indirectly, stock possessing
50% or more of the total combined voting power of all classes of stock.
Directors who are not employees shall not be eligible to participate in the
Plan. Incentive options shall be granted only to "employees" as defined in the
provisions of the Code or regulations thereunder applicable to
<PAGE> 24
incentive stock options. Receipt of options under the Plan or of awards under
any other employee benefit plan of the Company or any of its subsidiaries shall
not preclude an employee from receiving options or additional options under the
Plan.
6. TERMS AND CONDITIONS OF OPTIONS
(a) Aggregate Value of Common Stock Subject to Incentive Stock
Options. Solely for the purposes of determining whether an option granted under
the Plan will be treated for federal income tax purposes as an incentive option
or an option that is not an incentive option, the aggregate fair market value
(determined as of the time of grant) of the Stock with respect to which
incentive options are exercisable for the first time by an employee during any
calendar year (under all plans of his employer corporation and its parent and
subsidiary corporations, as those terms are used in section 422(d) of the Code)
shall not exceed $100,000. This Section 6(a) shall be construed and applied in
accordance with section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
(b) Exercise Price. The exercise price of each option shall be determined
by the Board but in the case of an incentive option shall not be less than 100%
(110%, in the case of an incentive option granted to a ten-percent shareholder)
of the fair market value per share of the Stock at the time the incentive option
is granted; nor shall the exercise price of any option be less, in the case of
an original issue of authorized stock, than par value per share. In the case of
employees who are subject to Section 16 of the Securities Exchange Act of 1934,
the exercise price of an option shall not be less than 50% of the fair market
value of the Common Stock on the date of the grant. For this purpose, "fair
market value" in the case of incentive options shall have the same meaning as it
does in the provisions of the Code and the regulations thereunder applicable to
incentive options; and "ten-percent shareholder" shall mean any employee who at
the time of grant owns directly, or is deemed to own by reason of the
attribution rules set forth in section 424(d) of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of any of its parent or subsidiary corporations.
(c) Duration of Options. In no case shall an option be exercisable more
than ten years (five years, in the case of an incentive option granted to a
"ten-percent shareholder" as defined in (b) above) from the date the option was
granted.
(d) Exercise of Options.
(1) Each option shall be made exercisable at such time or times,
whether or not in installments, as the Board shall prescribe at the time an
option is granted.
In the case of an option not immediately exercisable in full, the
Board may at any time accelerate the time at which all or any part of the
option may be exercised.
(2) The award forms or other instruments evidencing incentive options
shall contain such provisions relating to exercise and other matters as are
required of incentive options under the applicable provisions of the Code
and the regulations thereunder, as from time to time in effect.
(3) Any exercise of an option shall be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by (a)
the option certificate and any other documents required by the Board and
(b) payment in full for the number of shares for which the option is
exercised.
(4) In the case of an option that is not an incentive option, the
Board shall have the right to require that the individual exercising the
option remit to the Company an amount sufficient to satisfy any federal,
state, or local withholding tax requirements (or make other arrangements
satisfactory to the Company with regard to such taxes) prior to the
delivery of any Stock pursuant to the exercise of the option. In the
<PAGE> 25
case of an incentive option, if at the time the option is exercised the
Board determines that under applicable law and regulations the Company
could be liable for the withholding of any federal or state tax with
respect to a disposition of the Stock received upon exercise, the Board may
require as a condition of exercise that the individual exercising the
option agree (i) to inform the Company promptly of any disposition (within
the meaning of section 424(c) of the Code and the regulations thereunder)
of Stock received upon exercise, and (ii) to give such security as the
Board deems adequate to meet the potential liability of the Company for the
withholding of tax, and to augment such security from time to time in any
amount reasonably deemed necessary by the Committee to preserve the
adequacy of such security.
(5) If an option is exercised by the executor or administrator of a
deceased employee, or by the person or persons to whom the option has been
transferred by the employee's will or the applicable laws of descent and
distribution, the Company shall be under no obligation to deliver Stock
pursuant to such exercise until the Company is satisfied as to the
authority of the person or persons exercising the option.
(e) Payment for and Delivery of Stock. Stock purchased under the Plan
shall be paid for as follows: (i) in cash or by certified check, bank draft or
money order payable to the order of the Company or (ii) if so permitted by the
terms of the option, (A) through the delivery of shares of Stock having a fair
market value on the last business day preceding the date of exercise equal to
the purchase price or (B) by a combination of cash and Stock as provided in
clauses (i) and (ii)(A) above or (iii) if so permitted by the terms of the
option, by delivery of a promissory note of the employee containing such terms
and conditions, including without limitation interest rate and maturity, as the
Board may specify in the option (except that the option may provide that the
rate of interest on the note will be such rate as is sufficient at all times to
avoid the imputation of any interest under the applicable provision of the
Code), or by a combination of cash (or cash and Stock) and such a promissory
note; provided, that if the Stock delivered upon exercise of the option is an
original issue of authorized Stock, at least so much of the exercise price as
represents the par value of such Stock shall be paid in cash, in Stock or by a
combination of cash and Stock.
An option holder shall not have the rights of a shareholder with regard to
awards under the Plan except as to Stock actually received by him under the
Plan.
The Company shall not be obligated to deliver any shares of Stock (a)
until, in the opinion of the Company's counsel, all applicable federal and state
laws and regulations have been complied with, and (b) if the outstanding Stock
is at the time listed on any stock exchange, until the shares to be delivered
have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (c) until all other legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
(f) Nontransferability of Options. No option may be transferred other than
by will or by the laws of descent and distribution, and during an employee's
lifetime an option may be exercised only by him.
(g) Death. If an employee's employment with the Company and its
subsidiaries terminates by reason of death, each option held by the employee
immediately prior to death shall become immediately exercisable by his executor
or administrator, or by the person or persons to whom the option is transferred
by will or the applicable laws of descent and distribution, at any time within
the one-year period ending with the first anniversary of the employee's death
(subject, however, to the limitations of section 6(c) regarding the maximum
exercise period for such option).
<PAGE> 26
(h) Other Termination of Employment. If an employee's employment with the
Company and its subsidiaries terminates for any reason other than death, all
options held by the employee that are not then exercisable shall terminate.
Options that are exercisable on the date of termination shall continue to be
exercisable for a period of three months (subject to Section 6(c) and the last
sentence of Section 6(g)) unless the employee was discharged for cause which in
the opinion of the Board casts such discredit on him as to justify termination
of his options. After completion of that three-month period, such options shall
terminate to the extent not previously exercised, expired or terminated. For
purposes of this Section 6(h), employment shall not be considered terminated (i)
in the case of sick leave or other bona fide leave of absence approved for
purposes of the Plan by the Board, so long as the employee's right to
reemployment is guaranteed either by statute or by contract, or (ii) in the case
of a transfer of employment between the Company and a subsidiary or between
subsidiaries, or to the employment of a corporation (or a parent or subsidiary
corporation of such corporation) issuing or assuming an option in a transaction
to which section 424(a) of the Code applies.
(i) Mergers, etc. In the event of any merger or consolidation involving
the Company, any sale of substantially all of the Company's assets or any other
transaction or series of related transactions as a result of which a single
Person (as defined below) or several Persons acting in concert own a majority of
the Company's then outstanding voting common stock (such merger, consolidation,
sale or other transaction being hereinafter referred to as a "Transaction"), all
outstanding options shall become exercisable, immediately prior to the
consummation of such Transaction. Upon consummation of the Transaction, all
outstanding options shall terminate and cease to be exercisable. There shall be
excluded from the foregoing any Transaction as a result of which (a) the holders
of Stock prior to the Transaction retain or acquire securities constituting a
majority of the outstanding voting common stock of the acquiring or surviving
corporation or other entity and (b) no single Person owns more than half of the
outstanding voting common stock of the acquiring or surviving corporation or
other entity, unless such Person was a stockholder of the Company on February 3,
1987 or is at the time an Affiliate of any such stockholder. For purposes of
this Section, voting common stock of the acquiring or surviving corporation or
other entity that is issuable upon conversion of convertible securities or upon
exercise of warrants or options shall be considered outstanding, and all
securities that vote in the election of directors (other than solely as the
result of a default in the making of any dividend or other payment) shall be
deemed to constitute that number of shares of voting common stock which is
equivalent to the number of such votes that may be cast by the holders of such
securities.
In lieu of the provisions of the immediately preceding paragraph, if there
is an acquiring or surviving corporation or entity, the Board may, by vote of a
majority of the members of the Board who are Continuing Directors (as defined
below), arrange to have such acquiring or surviving corporation or entity or an
Affiliate (as defined below) thereof grant to employees holding outstanding
options replacement options which, in the case of incentive options, satisfy, in
the determination of the Board, the requirements of Section 424(e) of the Code.
The term "Continuing Director" shall mean any director of the Company who
(i) is not an Acquiring Person or an Affiliate of an Acquiring Person and (ii)
either was (A) a member of the Board of Directors of the Company on February 3,
1987 or (B) nominated for his or her initial term of office by a majority of the
Continuing Directors in office at the time of such nomination. The term
"Acquiring Person" shall mean, with respect to any Transaction, each Person who
is a party to or a participant in such Transaction or who, as a result of such
Transaction, would (together with other Persons acting in concert) own a
majority of the Company's outstanding Common Stock; provided, however, that none
of the Company, any wholly-owned subsidiary of the Company, any employee benefit
plan of the Company, any trustee in respect thereof acting in such capacity or
any Person which was a stockholder of the Company on February 3, 1987 or is at
the time an Affiliate of any such stockholder shall, for purposes of this
Section, be deemed an "Acquiring Person". The term "Affiliate" with respect to
any Person, shall mean any other Person who is, or would be deemed to be, an
<PAGE> 27
"affiliate" or an "associate" of such Person within the respective meanings
ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, as such rule is in effect on June 1, 1986. The term
"Person" shall mean a corporation, association, partnership, joint venture,
trust, organization, business, individual or government or any governmental
agency or political subdivision thereof.
(j) Annual Limitation on Grants. The maximum number of shares of Stock for
which options may be granted under the Plan to any participant in any year is
150,000. For this purpose, the replacement or repricing of options will
constitute a new grant.
7. EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the grant of options shall confer upon
any employee any right to continued employment with the Company or any parent or
subsidiary or affect in any way the right of the Company or parent or subsidiary
to terminate the employment of an employee at any time. Except as specifically
provided by the Board in any particular case, the loss of existing or potential
profit in options granted under this Plan shall not constitute an element of
damages in the event of termination of the employment of an employee even if the
termination is in violation of an obligation of the Company to the employee by
contract or otherwise.
8. EFFECT OF DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of options to an employee shall
affect the Company's right to grant to such employee options that are not
subject to the Plan, to issue to such employees Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
employees.
The Board may at any time discontinue granting options under the Plan. With
the consent of the employee, the Board may at any time cancel an existing option
in whole or in part and grant the employee another option for such number of
shares as the Board specifies. The Board may at any time or times amend the Plan
for the purpose of satisfying the requirements of section 422 of the Code or of
any changes in applicable laws or regulations and the Board of Directors may
amend the Plan for any other purpose which may at the time be permitted by law,
or may at any time terminate the Plan as to any further grants of options,
provided that (except to the extent expressly required or permitted hereinabove)
no such amendment shall, without the approval of the shareholders of the
Company, (a) increase the maximum number of shares available under the Plan, (b)
change the group of employees eligible to receive options under the Plan, (c)
reduce the price at which incentive options may be granted, (d) extend the time
within which options may be granted, (e) alter the Plan in such a way that
incentive options already granted hereunder would not be considered incentive
stock options under section 422 of the Code, or (f) amend the provision of this
Section 8, and no such amendment shall adversely affect the rights of any
employee (without his consent) under any option previously granted.
<PAGE> 28
PROXY
THE TIMBERLAND COMPANY
ANNUAL MEETING OF STOCKHOLDERS -- MAY 18, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sidney W. Swartz and Jeffrey B. Swartz,
and each of them, as attorneys and proxies, with the power of substitution, to
represent and vote, as designated on the reverse side hereof, all shares of the
Class A Common Stock of The Timberland Company at the Annual Meeting of
Stockholders of The Timberland Company to be held at the headquarters of The
Timberland Company, 200 Domain Drive, Stratham, New Hampshire 03885 on
Thursday, May 18, 1995, at 9:30 a.m. and at any adjournments or postponements
thereof, which the undersigned could vote if present, in such manner as they,
or either of them, may determine on any matters which may properly come before
the meeting or any adjournments or postponements thereof and to vote on the
matters set forth on the reverse side hereof as hereinafter specified.
Each share of Class A Common Stock entitles the holder of record
thereof at the close of business on April 3, 1995 to one vote per share, and
each share of Class B Common Stock entitles the holder of record thereof at the
close of business on April 3, 1995 to ten votes per share. The holders of
Class A Common Stock will vote separately as a class with respect to the
election of two nominees for director, Messrs. Brennan and Zaleznik, and the
holders of Class A Common Stock and the holders of Class B Common Stock will
vote together as a single class with respect to the election of the other three
nominees for director, Messrs. Agate, Jeffrey Swartz and Sidney Swartz.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED (1) TO FIX THE NUMBER OF DIRECTORS AT FIVE AND TO ELECT THE FIVE
NOMINEES, (2) TO APPROVE THE INCREASE IN THE NUMBER OF SHARES RESERVED UNDER
THE 1987 STOCK OPTION PLAN AND THE LIMIT OF 150,000 AS THE MAXIMUM NUMBER OF
SHARES FOR WHICH OPTIONS MAY BE GRANTED THEREUNDER IN ANY YEAR TO ANY
PARTICIPANT AND (3) TO APPROVE THE INCREASE IN THE NUMBER OF SHARES RESERVED
UNDER THE 1991 EMPLOYEE STOCK PURCHASE PLAN AND, IN THEIR DISCRETION, THE
PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS NOT NOW KNOWN AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
(Continued and to be dated and signed on the reverse side)
/SEE REVERSE SIDE/
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
The Board of Directors recommends a vote FOR the election of all Nominees, FOR
the approval of the increase in shares reserved under the 1987 Stock Option
Plan and the limit of 150,000 as the maximum number of shares for which
options may be granted thereunder in any year to any participant and FOR the
approval of the increase in shares reserved under the 1991 Employee Stock
Purchase Plan.
1. To fix the number of directors at five for the coming
year, subject to further action by the Board of Directors
as provided in the By-Laws, and to elect the following
nominees: Sidney W. Swartz, Jeffrey B. Swartz, Robert
M. Agate, John F. Brennan and Abraham Zaleznik.
/ / FOR ALL NOMINEES / / AGAINST ALL NOMINEES
/ /______________________________________
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. To approve the increase in FOR AGAINST ABSTAIN
the number of shares / / / / / /
reserved under The Timberland
Company's 1987 Stock Option
Plan and the limit of 150,000 as the
maximum number of shares for which
options may be granted thereunder
in any year to any participant.
3. To approve the increase in FOR AGAINST ABSTAIN
the number of shares / / / / / /
reserved under The Timberland
Company's 1991 Employee
Stock Purchase Plan.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign here personally, exactly as your name is printed on
your stock certificate. If the stock is registered in more than
one name, each joint owner or each fiduciary should sign personally.
Only authorized officers should sign for a corporation.
Signature:_____________________________________ Date ___________
Signature:_____________________________________ Date ___________
