<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:
- --------------------------------------------------------------------------------
<PAGE> 2
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
April 24, 1996
TO THE STOCKHOLDERS:
The Board of Directors and Officers of The Timberland Company invite you to
attend the 1996 Annual Meeting of Stockholders to be held on Thursday, May 16,
1996, 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,
/S/ Sidney W. Swartz
---------------------
SIDNEY W. SWARTZ
Chairman and Chief Executive Officer
<PAGE> 3
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 1996
The 1996 Annual Meeting of Stockholders of The Timberland Company will be
held on Thursday, May 16, 1996, 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 seven for the coming year,
subject to further action by the Board of Directors as provided in the
Company's By-Laws, and to elect seven directors to hold office until their
successors shall have been duly elected and qualified; and
2. 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 five 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 Wednesday, March
20, 1996, 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,
/S/ John E. Beard
------------------
JOHN E. BEARD
Secretary
April 24, 1996
<PAGE> 4
THE TIMBERLAND COMPANY
200 DOMAIN DRIVE
STRATHAM, NEW HAMPSHIRE 03885
PROXY STATEMENT
APRIL 24, 1996
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 1996 Annual Meeting of Stockholders of the Company to be
held on May 16, 1996, 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 March 20, 1996,
are entitled to vote at the Annual Meeting and any adjournments thereof. As of
March 20, 1996, 8,312,002 shares of the Company's Class A Common Stock, $.01 par
value ("Class A Common Stock"), and 2,734,451 shares of the Company's Class B
Common Stock, $.01 par value ("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 24, 1996.
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 to fix the number of directors at seven and to
elect the seven nominees named in this Proxy Statement. Should any person named
as a nominee for director be unable to serve as a director, the persons
appointed as proxy for the Annual Meeting may, in their discretion, vote for
such other person as director, or may vote to fix the number of directors at
such number less than seven, 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 the Company 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 proxy to vote on such
matters in accordance with their judgment.
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
<PAGE> 5
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, Mr. Brennan and Dr.
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 five 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 seven 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. 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. Such
shares, however, will not constitute votes cast at the Annual Meeting and, thus,
will have no effect on the outcome.
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, 1996, 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 1996
Annual Meeting to fix the number of directors at seven and to elect the seven
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 1995 Annual Meeting of Stockholders held on May 18, 1995. Mr.
Brennan and Dr. Zaleznik were elected by the holders of Class A Common Stock
voting separately as a class, and Messrs. Sidney Swartz, Jeffrey Swartz and
Agate were elected by the holders of Class A Common Stock and the holders of
Class B Common Stock voting together as a single class.
2
<PAGE> 6
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).......... 60 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)......... 36 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)........... 63 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).......... 72 Since 1990, Dr. 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. Dr. Zaleznik is also a director of
the following companies: King Ranch, Inc. (for which
he serves as Chairman), 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)........... 60 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>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND YEAR BUSINESS EXPERIENCE AND
FIRST ELECTED DIRECTOR AGE DIRECTORSHIPS OF OTHER PUBLIC COMPANIES
- --------------------------------- ---- ----------------------------------------------------
<S> <C> <C>
Ian W. Diery..................... 46 Since November 1995, Mr. Diery has served as
President and Chief Executive Officer and as a
Director of AST Research, Inc.; prior to joining AST
Research, Inc., Mr. Diery served at Apple Computer
in a variety of positions, including: Executive Vice
President and General Manager for the Personal
Computer Division from July 1993 to November 1995;
Executive Vice President, Worldwide Sales and
Marketing from July 1992 to July 1993, and Senior
Vice President and President of Apple Pacific
Division from October 1989 to July 1992.
John A. Fitzsimmons.............. 52 Since January 1987, Mr. Fitzsimmons has served as
Senior Vice President - Administration of Circuit
City Stores, Inc.
</TABLE>
COMMITTEES OF THE BOARD
Messrs. Agate and Brennan and Dr. 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 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 and Brennan and Dr. 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 1995, the Board of Directors held six meetings. The Compensation
Committee held two meetings and the Audit Committee held three meetings during
1995. Each of the nominees attended all of the meetings of the Board of
Directors and all committees on which he served.
DIRECTORS' COMPENSATION
The Company compensates each director who is 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 of Directors 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
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, on the anniversary of the initial grant to each
eligible director, option grants are made to purchase up to 1,250 shares of
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
22, 1995, Mr. Brennan and Dr. Zaleznik, and on November 13, 1995, Mr. Agate,
were each granted options to purchase up to 1,250 shares of 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."
4
<PAGE> 8
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, 1995 (hereafter all the foregoing persons are together referred to
as the "Named Executive Officers"), for the fiscal years ended December 31,
1995, 1994 and 1993.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------- ----------------------------
(A) (B) (C) (D) (E) (G) (H) (I)
OTHER
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION(1)($) OPTIONS(2)(#) PAYOUTS(3)($) SATION(4)($)
- --------------------------- ---- --------- -------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz(5)........ 1995 450,502 -- -- -- -- 3,540
President and Chief 1994 450,504 -- -- -- -- 3,540
Executive Officer 1993 441,369 95,630 -- -- 132,734 5,037
---- --------- -------- ------------ ------------- ------------- ------
Jeffrey B. Swartz.......... 1995 291,486 -- -- 42,526 -- 3,540
Executive Vice President 1994 291,489 -- -- 70,000 -- 3,540
and Chief Operating Officer 1993 274,922 59,629 -- 50,000 55,177 540
---- --------- -------- ------------ ------------- ------------- ------
Keith D. Monda(6).......... 1995 260,192 -- 28,341 42,692 -- 3,540
Senior Vice President -- 1994 250,000 -- 257,980 60,000 -- 540
Finance and Administration 1993 14,423 -- -- 30,000 -- --
and Chief Financial Officer
---- --------- -------- ------------ ------------- ------------- ------
Gregory W. VanWormer(7).... 1995 226,727 -- -- 31,484 -- 3,540
Senior Vice President -- 1994 144,923 -- -- 42,000 -- 528
General Manager 1993 -- -- -- -- -- --
Apparel/Retail
---- --------- -------- ------------ ------------- ------------- ------
Edmund J. Feeley(8)........ 1995 212,212 -- -- 4,070 -- 3,528
Senior Vice President -- 1994 185,000 -- -- 61,000 -- 2,798
General Manager Footwear 1993 168,173 40,837 45,243 25,000 -- 396
---- --------- -------- ------------ ------------- ------------- ------
</TABLE>
5
<PAGE> 9
- ---------------
<TABLE>
(1) The amounts indicated for Mr. Monda reflect an auto allowance of $7,200 and
relocation expenses of $21,141 paid during 1995, and an auto allowance of
$7,200 and relocation expenses of $250,780 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.
(2) 1995 amounts include replacement options issued in exchange for options
granted previously, as follows: Mr. Jeffrey Swartz, 42,526 shares; Mr.
Monda, 37,192 shares; and Mr. VanWormer, 29,134 shares. See "Ten-Year
Option Repricing."
(3) These amounts reflect incentive payments for the three-year period ended
December 31, 1993 paid during 1994.
(4) The Company paid group term life insurance premiums and made contributions
to the Company's 401(k) Plan, respectively, as follows:
<CAPTION>
GROUP TERM LIFE INSURANCE
PREMIUMS CONTRIBUTIONS TO 401(K) PLAN
-------------------------- -----------------------------
NAME 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz.................... 540 540 540 3,000 3,000 4,497
Jeffrey B. Swartz................... 540 540 540 3,000 3,000 --
Keith D. Monda...................... 540 540 -- 3,000 -- --
Gregory W. VanWormer................ 540 528 -- 3,000 -- --
Edmund J. Feeley.................... 528 444 396 3,000 2,354 --
<FN>
- ---------------
(5) 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.
(6) Mr. Monda joined the Company on December 20, 1993.
(7) Mr. VanWormer joined the Company on May 13, 1994 as Senior Vice
President-Retail. Effective January 1, 1995, Mr. VanWormer became Senior
Vice President-General Manager Apparel/Retail.
(8) Mr. Feeley joined the Company on January 1, 1993 and became Senior Vice
President-General Manager Footwear effective January 1, 1995. Mr. Feeley
resigned from the Company effective January 1, 1996.
</TABLE>
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding grants of stock
options (if any) to the Named Executive Officers during the fiscal year ended
December 31, 1995. All options listed in this table represent replacement
options granted to the Named Executive Officers on December 19, 1995, in
exchange for previously granted options, except as discussed in note (2) below.
See "Ten-Year Option Repricing."
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK
PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM(1)
- ----------------------------------------------------------------------------------------- ------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($) DATE 5%($) 10%($)
- --------------------------------- ---------- ----------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Sidney W. Swartz................. -- -- -- -- -- --
Jeffrey B. Swartz................ 10,244 1.94 20.50 02/18/03 87,911 205,803
9,102 1.73 20.50 11/11/03 87,692 209,434
5,580 1.06 20.50 03/04/04 56,342 135,730
17,600 3.34 20.50 09/09/04 191,487 468,020
Keith D. Monda................... 5,500(2) 1.04 25.50 09/10/96 10,679 21,618
4,422 0.08 20.50 09/10/97 3,281 6,520
11,790 2.24 20.50 12/19/03 115,399 276,400
5,580 1.06 20.50 03/04/04 56,342 135,730
15,400 2.92 20.50 09/09/04 167,551 409,518
Gregory W. Van Wormer............ 2,350(2) 0.44 25.50 09/10/96 4,563 9,237
1,889 0.36 20.50 09/10/97 1,402 2,785
5,380 1.02 20.50 05/19/04 56,003 135,699
14,385 2.73 20.50 12/21/04 162,705 400,812
7,480 1.42 20.50 09/09/04 81,382 198,909
Edmund J. Feeley................. 4,070(2) 0.77 25.50 09/10/96 7,903 15,998
</TABLE>
- ---------------
(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 price of Class A
Common Stock.
(2) These non-qualified options were granted on March 10, 1995, pursuant to The
Timberland Company 1987 Stock Option Plan, as amended. As originally
granted, these options are exercisable between March 10, 1996 and September
10, 1996. Mr. Monda and Mr. VanWormer elected to exchange these options for
replacement options, exercisable between March 10, 1997 and September 10,
1997, for 4,422 and 1,889 shares, respectively, of Class A Common Stock at
a per share exercise price of $20.50. The replacement options are reflected
in this table. The options granted to Mr. Feeley were not exchanged. See
"Compensation Committee Report on Executive Compensation" for a discussion
of the replacement options and of the terms under which options are granted
under The Timberland Company 1987 Stock Option Plan, as amended.
7
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each of the Named Executive
Officers as to the total number of exercised and unexercised stock options (if
any) held at December 31, 1995 and the value of unexercised "in-the-money" stock
options (if any) held at December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT "IN-THE-MONEY" OPTIONS
ACQUIRED ON VALUE FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)
- ----------------------- ----------- ----------- ---------------------------- ----------------------------
(A) (B) (C) (D) (E)
<S> <C> <C> <C> <C>
Sidney W. Swartz....... -- -- -/- -/-
Jeffrey B. Swartz...... -- -- 48,750/63,776 416,719/29,531
Keith D. Monda......... -- -- 3,750/48,442 -/-
Gregory W. VanWormer... -- -- -/29,134 -/-
Edmund J. Feeley....... -- -- 27,750/62,320 -/-
</TABLE>
- ---------------
(1) Shares issuable upon the exercise of repriced stock options which have
vested but which are not exercisable until after December 19, 1996 are
treated in this table as unexercisable, as follows: Mr. Jeffrey Swartz,
15,467; Mr. Monda, 8,192; and Mr. VanWormer, 6,811.
(2) Stock options are "in-the-money" at 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 29,
1995 ($19.875), and the exercise price of those options which are
"in-the-money," multiplied by the applicable number of underlying
securities.
TEN-YEAR OPTION REPRICING
On August 3, 1989, the per share exercise price of all outstanding options
to purchase up to 226,050 shares of Class A Common Stock at per share exercise
prices in excess of $10.625 (except for options held by members of the
Compensation Committee) was reduced to $10.625, the fair market value of Class A
Common Stock on such date. On December 7, 1990, all outstanding options to
purchase up to 229,948 shares of Class A Common Stock at per share exercise
prices in excess of $8.85 (except for options held by members of the
Compensation Committee), including the options repriced on August 3, 1989, were
regranted at a per share exercise price of $6.375, i.e., the fair market value
of Class A Common Stock on such date, with vesting begun anew.
On December 19, 1995, the Company offered employees the right to elect to
exchange options to purchase shares of Class A Common Stock at original per
share exercise prices ranging from $21.38 to $83.25 (except for options held by
members of the Compensation Committee) for options to purchase fewer shares of
Class A Common Stock at a lower per share exercise price of $20.50, i.e., the
fair market value of Class A Common Stock on such date. The reduction in the
number of shares underlying the new stock options was based on the ratio of
$20.50, i.e., the exercise price per share of the new stock option, to the
exercise price per share of the original stock option. Options to purchase up to
609,050 shares of Class A Common Stock (based on the original grant) were
exchanged, resulting in the grant of options to purchase up to 322,120 shares of
Class A Common Stock. The new options will expire on the same date as the
original options that were canceled. However, the new options may not be
exercised prior to December 19, 1996, and each vesting date for the unvested
portion of the new options was delayed by one year. See "Compensation Committee
Report on Executive Compensation" for a more detailed discussion of this
exchange.
8
<PAGE> 12
<TABLE>
The following table sets forth information regarding repricings of options
made to any of the Named Executive Officers since May 26, 1987.
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE EXERCISE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT PRICE AT OPTION TERM
OPTIONS TIME OF TIME OF NEW REMAINING AT DATE
REPRICED OR REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
NAME AND TITLE DATE AMENDED(1)(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
-------------- ---- ------------- ------------ ------------ -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
(A) (B) (C) (D) (E) (F) (G)
Jeffrey B. Swartz......... 08/03/89 4,818 10.63 12.00 10.63 7 years 296 days
Executive Vice President 08/03/89 5,182 10.63 13.63 10.63 8 years 198 days
and Chief Operating 12/07/90 20,000 6.38 10.63 6.38 8 years 239 days
Officer 12/19/95 10,244 20.50 26.00 20.50 7 years 61 days
12/19/95 9,102 20.50 83.25 20.50 7 years 327 days
12/19/95 5,580 20.50 36.75 20.50 8 years 76 days
12/19/95 17,600 20.50 46.63 20.50 8 years 265 days
Keith D. Monda............ 12/19/95 11,790 20.50 52.13 20.50 8 years
Senior Vice President -- 12/19/95 5,580 20.50 36.75 20.50 8 years 76 days
Finance and Administration 12/19/95 15,400 20.50 46.63 20.50 8 years 265 days
and Chief Financial 12/19/95 4,422 20.50 25.50 20.50 266 days
Officer
Gregory W. VanWormer...... 12/19/95 5,380 20.50 38.13 20.50 8 years 152 days
Senior Vice President -- 12/19/95 7,480 20.50 46.63 20.50 8 years 265 days
General Manager 12/19/95 14,385 20.50 21.38 20.50 9 years 2 days
Apparel/Retail 12/19/95 1,889 20.50 25.50 20.50 266 days
<FN>
- ---------------
(1) The number of shares underlying the original stock options which were
exchanged on December 19, 1995 for each Named Executive Officer are as
follows: Mr. Swartz - 13,000 shares, 37,000 shares, 10,000 shares and
40,000 shares; Mr. Monda - 30,000 shares, 10,000 shares, 35,000 shares and
5,500 shares; Mr. VanWormer - 10,000 shares, 17,000 shares, 15,000 shares
and 2,350 shares. The number of shares underlying the original stock
options which were repriced in 1989 and 1990 did not change as a result of
such repricings.
</TABLE>
9
<PAGE> 13
PERFORMANCE GRAPH
<TABLE>
Set forth below is a graph showing the five-year cumulative total return
of 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 revenues derived from sales of footwear and from
apparel and accessories, respectively, for each year.
<CAPTION>
Weighted Av-
erage of 2
Measurement Period S&P 500 In- S&P Industry
(Fiscal Year Covered) Timberland dex Groups
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 155.32 130.47 198.44
1992 331.91 140.41 213.74
1993 908.51 154.56 151.84
1994 372.34 156.60 195.35
1995 338.30 215.45 247.35
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of Abraham Zaleznik, Chairman, and Robert M. Agate and John
F. Brennan. All members of the Compensation Committee are independent directors.
The Compensation 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 Compensation Committee also administers the Company's stock benefit
plans, including the Company's 1987 Stock Option Plan, as amended (the "1987
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 Compensation Committee attempts to set annual salary levels for its
senior executives at the competitive mid-point of the salaries set for
comparable executives of similar companies and of other companies in the
Company's geographic region, and to set annual bonuses and long-term incentives
at levels
10
<PAGE> 14
that, when combined with annual salaries and assuming that performance goals are
achieved, will equal the seventy-fifth percentile of the total compensation set
for comparable executives of similar companies.
In 1995, the Company engaged an independent, nationally recognized
compensation consulting firm to review the Company's executive and non-executive
compensation programs, and to assist the Compensation 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 and performance criteria and
relative weightings thereof for awarding incentive compensation.
Annual salaries for executives are based on survey data provided to the
Company by independent compensation consulting firms. 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 1987 Option Plan
at the discretion of the Compensation Committee.
Pursuant to the Annual Bonus Plan, the Compensation 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 exceed 100% (but may not exceed 150%) of the bonus award goals
established for the relevant performance period when actual Company performance
exceeds targeted results.
For 1995, 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 1995 based on Company performance.
The Company makes stock 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 1987 Option Plan, the Company makes
annual stock option grants to certain employees, based on their individual
performance and potential. The Compensation 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. Stock options become exercisable at such times as the Compensation
Committee prescribes. All stock options granted under the 1987 Option Plan have
been granted at fair market value as of the date of grant and vest in equal
installments on each of the first four anniversaries of the date of grant,
except for stock options granted in March 1995 to certain employees in lieu of
bonus awards for 1994 which fully vest after one year and which expire six
months after the date of full vesting.
On May 18, 1995, the Company's stockholders approved a proposal by the
Company's Board of Directors to increase the number of shares of Class A Common
Stock reserved for issuance under the 1987 Option Plan from 1,600,000 to
2,100,000. The Board had proposed this increase to provide the Company with
sufficient 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.
11
<PAGE> 15
On December 19, 1995, the Compensation Committee authorized the Company to
offer to exchange certain outstanding non-qualified stock options granted under
the 1987 Option Plan for stock options to purchase fewer shares of Class A
Common Stock (such reduction based on a formula described in the paragraph
below) at a per share exercise price of $20.50, the fair market value of Class A
Common Stock on such date. The Compensation Committee determined that the
decline in the market value of Class A Common Stock since the dates the original
stock options were granted had diminished the effectiveness of the 1987 Option
Plan to attract and retain employees and to provide them incentives to work to
achieve the Company's success. At the time of the repricing, over 77% of the
shares underlying all stock options granted under the 1987 Option Plan had a per
share exercise price higher than $20.50.
The Company offered the new stock options to holders of original stock
options exercisable for up to 924,635 shares of Class A Common Stock at original
per share exercise prices ranging from $21.38 to $83.25. Optionholders elected
either to retain stock options originally granted or to exchange their original
stock options for new stock options to purchase fewer shares of Class A Common
Stock. The Compensation Committee based the reduction in the number of shares
underlying the new stock options on the ratio of $20.50, the exercise price per
share of the new stock option, to the exercise price per share of the original
stock option, so that the higher the exercise price of the original stock
option, the lower the number of shares underlying the new stock option offered
in exchange. In each case, the new stock option will expire on the same date as
the original stock option that was canceled. The portion of the original stock
options that was vested and exercisable on December 19, 1995 will be
exercisable, for the number of underlying shares as reduced by the ratio
discussed above, after December 19, 1996. In addition, each vesting date for any
portion of the stock options which had not vested as of December 19, 1995 was
delayed by one year. Pursuant to this offer, optionholders exchanged original
stock options to purchase up to 609,050 shares of Class A Common Stock (based on
the original grant) for new stock options to purchase up to 322,120 shares of
Class A Common Stock, thereby making 285,807 shares of Class A Common Stock
available for future grants under the 1987 Option Plan.
Section 162(m) of the Internal Revenue Code of 1986, as amended, 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, compensation in the form of options is not
subject to the deduction limit if certain requirements are satisfied, including,
among other things, stockholder approval of the material terms of the plan
pursuant to which such options are granted. On May 18, 1995, the Company's
stockholders and Board of Directors approved an amendment to the 1987 Option
Plan, designed to continue to exempt compensation in the form of options from
the provisions of Section 162(m), which limits to 150,000 the number of shares
of Class A Common Stock for which options may be granted under the 1987 Option
Plan to any participant in any year. All compensation to the Company's executive
officers in 1995 was fully deductible under Section 162(m). It is anticipated
that all such compensation in 1996 will again be fully deductible under Section
162(m).
COMPENSATION COMMITTEE
Abraham Zaleznik, Chairman
Robert M. Agate
John F. Brennan
12
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the close of
business on March 20, 1996, regarding Class A Common Stock and Class B Common
Stock beneficially owned by (i) persons known to the Company to be beneficial
owners of 5% or more 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:
<TABLE>
<CAPTION>
SHARES OWNED BENEFICIALLY
--------------------------------------------------
CLASS A CLASS B
------------------------ ---------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER(2) PERCENT(3) NUMBER PERCENT
- ------------------------------------------------- --------- ---------- --------- -------
<S> <C> <C> <C> <C>
Sidney W. Swartz................................. 20,100 (4) 2,693,946(5) 98.5
Judith H. Swartz and John E. Beard, as Trustees
of The Sidney W. Swartz 1982 Family Trust...... 3,442,654 41.4 -- --
Jeffrey B. Swartz................................ 59,314 (4) 25,397 (4)
John F. Brennan.................................. 23,623 (4) -- --
Abraham Zaleznik................................. 20,623(6) (4) -- --
Robert M. Agate.................................. 6,076 (4) -- --
Ian W. Diery..................................... -- -- -- --
John A. Fitzsimmons.............................. -- -- -- --
Keith D. Monda................................... 6,547 (4) -- --
Gregory W. VanWormer............................. 740 (4) -- --
Edmund J. Feeley................................. 29,230 (4) -- --
All executive officers and directors as a group
(10 persons)................................... 175,432 2.1 2,719,343 99.4
</TABLE>
- ---------------
(1) Address: c/o The Timberland Company, 200 Domain Drive, Stratham, NH 03885.
(2) 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: Mr. Jeffrey Swartz, 51,250; Mr. Monda, 3,750; Mr. VanWormer, 0;
Mr. Feeley, 27,750; Mr. Brennan, 20,623; Dr. Zaleznik, 20,623; Mr. Agate,
4,686; and all executive officers and directors as a group, 96,307.
Excludes shares issuable upon the exercise of repriced stock options which
have vested but which are not exercisable until after December 19, 1996, as
follows: Mr. Jeffrey Swartz, 15,467; Mr. Monda, 8,192; Mr. VanWormer, 6,811
and all executive offers and directors as a group, 35,325.
(3) 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 March 20, 1996, pursuant to options, warrants, conversion
privileges or other rights.
(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 Mr. Sidney Swartz, a trustee, disclaims
beneficial ownership.
(6) Includes 11,200 shares issuable upon the exercise of stock options currently
exercisable which are assigned to Dr. Zaleznik's children and
grandchildren. Dr. Zaleznik disclaims beneficial ownership of these shares.
13
<PAGE> 17
Sidney Swartz, his sons and daughter, and The Swartz Family Charitable
Trust (the "Charitable Trust"), of which Sidney 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 Class A
Common Stock. As of March 20, 1996, Sidney Swartz, the Charitable Trust and the
Family Trust hold approximately 85% of the combined voting power of the
Company's capital stock in the aggregate, and the Family Trust holds
approximately 41% of Class A Common Stock, enabling Sidney Swartz to control the
Company's affairs and enabling the Family Trust to influence the election of the
two directors entitled to be elected by the holders of 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, as amended.
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.
David Swartz serves as a member of the Company's Product Development
Department and is the son of Sidney Swartz. The 1995 total compensation of David
Swartz was approximately $76,412.
The Company has loaned $80,000 to Edmund J. Feeley, formerly the Senior
Vice President-General Manager Footwear, pursuant to a Promissory Note dated May
6, 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 under
this note during 1995 was $83,900 and the amount outstanding under this note as
of February 29, 1996 was $82,367, including interest.
FINANCIAL INFORMATION
The Company's 1995 Annual Report to security holders, which includes
audited financial statements and other business information, was mailed to
security holders of the Company on or about March 28, 1996, and is incorporated
herein by reference.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, 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 Class A Common
Stock are required to report their ownership of 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
14
<PAGE> 18
respect to fiscal year 1995, except that Kenneth A. Snyder, a former executive
officer, failed to file with the Securities and Exchange Commission on a timely
basis one report on Form 4 relating to one transaction. 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 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
Annual Meeting. If any additional matters should properly come before the Annual
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 1997 Proxy
Statement and proxy relating to the 1997 Annual Meeting of Stockholders,
provided they are received by the Secretary of the Company no later than
December 25, 1996 and are otherwise in compliance with applicable Securities and
Exchange Commission regulations.
15
<PAGE> 19
THE TIMBERLAND COMPANY
ANNUAL MEETING OF STOCKHOLDERS - MAY 16, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned hereby appoints Sidney W. Swartz and Jeffrey B. Swartz,
R and each of them, as attorneys and proxies, with the power of substitution,
O to represent and vote, as designated on the reverse side hereof, all shares
X of the Class A Common Stock of The Timberland Company at the Annual Meeting
Y 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 16, 1996, 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 March 20, 1996 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 March 20, 1996 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, Mr. Brennan and
Dr. Zalaznik, 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 five nominees for director, Messrs. Sidney Swartz, Jeffrey
Swartz, Agate, Diary and Fitzsimmons.
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 TO FIX THE NUMBER OF DIRECTORS AT SEVEN AND TO ELECT THE SEVEN
NOMINEES 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
-----------
<PAGE> 20
Please mark your
/ X / votes as in
this example.
The Board of Directors recommends a vote FOR the election of all Nominees.
1. To fix the number of directors at seven 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, John F. Brennan, Abraham Zalesnik, Robert M.
Agate, Ian W. Diary and John A. Fitzsimmons.
FOR WITHHELD
/ / / /
/ /
- -------------------------------------- MARK HERE
For all nominees except as noted above 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:
------------- --------- ------------- ---------
