<PAGE>
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 Section 240.14a-11(c) or
Section 240.14a-12
Lillian Vernon Corporation
...............................................................................
.
(Name of Registrant as Specified In Its Charter)
Alan M. Rashes, Esq., Salon, Marrow & Dyckman - Counsel to Registrant
...............................................................................
.
(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(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 4a-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:(1)
.......................................................................
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
4) Proposed maximum aggregate value of transaction:
.......................................................................
[ ] 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:
October 19, 1995
<PAGE>
[LILLIAN VERNON]
October 20, 1995
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of
Stockholders, to be held at 10:00 a.m. on Monday, November 20,
1995 in the Board Room of the American Stock Exchange, 86 Trinity
Place in New York City. The agenda of the Annual Meeting includes
the election of directors and the approval of auditors. Management
will also report on the Company, its activities and plans for the
future. We hope you will be able to join us.
Since your vote is very important, please fill out, sign and date
your proxy card, and return it as soon as possible if you are
unable to attend the meeting.
I look forward to seeing you.
Faithfully yours,
/s/ Lillian Vernon
--------------------------
Lillian Vernon
Chairman of the Board
Chief Executive Officer
LILLIAN VERNON CORPORATION
543 Main Street, New Rochelle, New York 10801/Phone: 914-576-6400/Fax:
914-637-5740
<PAGE>
LILLIAN VERNON CORPORATION
543 MAIN STREET
NEW ROCHELLE, NEW YORK 10801
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lillian
Vernon Corporation will be held at the American Stock Exchange, 86 Trinity
Place, New York City on November 20, 1995 at 10:00 a.m. for the following
purposes:
1. To elect two (2) directors for the term expiring at the 1998 annual
meeting of stockholders and until the due election and qualification of their
successors;
2. To consider and act upon a proposal to ratify the appointment of
Coopers & Lybrand, L.L.P. as independent auditors for the fiscal year of the
Company ending February 24, 1996; and
3. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders of Lillian Vernon Corporation of record at the close of
business on October 17, 1995 are entitled to vote at the annual meeting and
any adjournments thereof. All stockholders are encouraged to attend the
meeting or to vote by proxy.
If you do not expect to attend the meeting, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope in order that
your stock may be voted in accordance with the terms of the Proxy Statement.
By Order of the Board of Directors
Susan N. Cortazzo
Secretary
New Rochelle, New York
October 20, 1995
<PAGE>
LILLIAN VERNON CORPORATION
543 MAIN STREET
NEW ROCHELLE, NEW YORK 10801
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished to the stockholders of Lillian Vernon
Corporation (herein, called the "Company") in connection with the Board of
Directors' solicitation of proxies to be used at the Annual Meeting of
Stockholders on November 20, 1995 at the American Stock Exchange, 86 Trinity
Place, New York City, 10:00 a.m. or any adjournments thereof. The date of
first distribution of this Proxy Statement will be on or about October 20,
1995.
VOTING AT THE MEETING
Only holders of Common Stock of record on the books of the Company at the
close of business on October 17, 1995 will be entitled to notice of and to
vote at the meeting. On that date, there were 9,748,838 shares of Common
Stock, par value $.01 per share, outstanding. Each holder of record of Common
Stock of the Company as of the record date will be entitled to one vote for
each share of stock registered in his or her name. A majority of the shares
having voting power at the meeting will constitute a quorum for the
transaction of business.
Shares entitled to vote, represented by each properly executed proxy in
the accompanying form received by the Company in time to permit its use at
the meeting or any adjournments thereof, will be voted in accordance with
instructions indicated in such proxy. If no instructions are indicated, such
shares will be voted as recommended by the Board. A stockholder who has given
a proxy may revoke it by voting in person at the meeting, or by giving
written notice of revocation or a later-dated proxy to the Secretary of the
Company at any time before the voting.
Directors are elected by a plurality of the votes cast in the election.
The affirmative vote of the holders of a majority of the shares voted with
respect to any other proposal presented at the meeting is required to approve
such other proposal.
An automated system administered by the Company's transfer agent counts
the votes. The Company's Certificate of Incorporation and By-Laws do not
contain any provisions concerning the treatment of abstentions and broker
nonvotes. Delaware law treats abstentions as votes which are not cast in
favor of a proposal or nominee. Delaware law does not address the treatment
of broker nonvotes. Broker nonvotes will be included in the determination of
the presence of a quorum, but will not be counted for purposes of determining
whether a proposal or nominee has been approved.
EXPENSES OF SOLICITATION
It is expected that the solicitation of proxies will be primarily by mail.
Proxies may also be solicited personally and by telephone by officers and
directors of the Company. The total expense of preparing,
<PAGE>
assembling and mailing the proxy statement, accompanying notice and form of
proxy will be borne by the Company. Such expense may also include
reimbursement for out-of-pocket disbursements incurred by brokerage houses
and custodians, nominees or other fiduciaries, for forwarding such documents
to stockholders.
1. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors of the Company presently consists of seven members
divided into three classes. At the Annual Meeting, two Directors are to be
elected to hold office for three year terms until the 1998 Annual Meeting.
Subsequent to the meeting, the Board will consist of six members divided into
three classes. If no instructions are indicated to the contrary, the proxy
will be voted for election of the two Directors named in the following table,
whose election has been proposed and recommended by the Board of Directors.
If any nominee shall, prior to the meeting, become unavailable for election
as a Director, which is not expected, the persons named in the accompanying
form of proxy will vote for such nominee, if any, in their discretion as may
be recommended by the Board of Directors.
In addition to information regarding the nominees and directors, the
following table and footnotes show the amount and percent of equity
securities of the Company beneficially owned, directly or indirectly, by each
nominee or director, including stock options which are presently exercisable
or which will become exercisable within 60 days of the date hereof, held by
such individuals.
<TABLE>
<CAPTION>
SHARES OF
NAME, PRINCIPAL OCCUPATION COMMON STOCK
AND SELECTED OTHER BENEFICIALLY PERCENT OF
INFORMATION CONCERNING OWNED AS OF CLASS (IF
NOMINEES AND DIRECTORS OCTOBER 9, 1995 OVER 1%)
- -------------------------- ---------------------- --------------- ------------
<S> <C> <C> <C>
NOMINEES FOR THREE YEAR TERM EXPIRING IN 1998
William E. Phillips (b) Management Consultant; 19,000(g) --
Age-65 Director since 1991.
</TABLE>
After being a brand manager at Procter & Gamble, Mr. Phillips spent thirty
years with Ogilvy & Mather, serving as Chairman and Chief Executive Officer
Worldwide from 1982 to 1988. In 1989, he taught at the Johnson Graduate
School, Cornell University, where he also serves as a Trustee. Since then,
Mr. Phillips has operated Osprey Consulting, advising companies and serving
on boards. Mr. Phillips is a director of Sun Glass Hut International and
serves on the Boards of Directors of three small private companies. Mr.
Phillips also serves on the boards of several not-for-profit organizations.
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Bert W. Wasserman (b)(c) Formerly Executive Vice President 5,000 --
Age-62 and Chief Financial Officer of
Time Warner, Inc.; Director since
1995
</TABLE>
Mr. Wasserman served as Executive Vice President and Chief Financial Officer
of Time Warner, Inc. from 1990 through 1994, having served on the Board of
Directors of Time Warner, Inc. and its predecessor company from 1981 to 1993.
He joined Warner Communications in 1966 and had been an officer of that
company since 1970. Mr. Wasserman is a director of several investment
companies in the Dreyfus Family of Funds. He serves as a member of the
National Advisory Board of Chemical Bank and a director of The New Germany
Fund. Mr. Wasserman is a director of Mountasia Entertainment International,
Inc. and Winstar Communications, Inc. He also serves as a trustee of
Recording for the Blind & Dyslexic. Mr. Wasserman is a trustee of Baruch
College of the City University of New York. Mr. Wasserman is a Certified
Public Accountant. Mr. Wasserman replaced J. Paul Bergmoser, who retired as a
director in August 1994, after serving eight years on the Board.
Fred P. Hochberg, whose term as a director is expiring, has declined to stand
for reelection as a director.
DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE IN 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
David C. Hochberg(a) Vice President - 1,377,000(f) 13.1%
Age-38 Public Affairs;
Director since
1978.
</TABLE>
Mr. Hochberg has held the above position since 1986. He joined the Company in
1978 and was subsequently promoted to Director-Public Affairs.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lilyan H. Affinito (b)(c) Former Director and 21,050(g) --
Age-64 Vice Chairman of the
Board of Directors of
Maxxam Group, Inc.;
Director since 1987.
</TABLE>
Ms. Affinito was formerly a Director and Vice Chairman of the Board of Maxxam
Group, Inc. She had been associated with Maxxam Group, Inc. since 1968 in
various capacities including President and Chief Operating Officer. She
serves on the Boards of Directors of Tambrands, Jostens, Caterpillar,
Chrysler Corporation, New York Telephone and K Mart Corporation. She also
serves on the boards of several not-for-profit organizations.
3
<PAGE>
DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE IN 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lillian Vernon (a) Chairman of the Board and 3,098,430(d)(e) 29.5%
Age-68 Chief Executive Officer;
Director since inception.
</TABLE>
Lillian Vernon is the founder of the Company and has served as its Chairman
of the Board and Chief Executive Officer since the Company's inception. She
served as President from inception until July 1989. Lillian Vernon is the
mother of David Hochberg and Fred Hochberg.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Leo Salon (c) Partner - Salon, Marrow 713,350(d)(g) 6.8%
Age-75 & Dyckman, LLP; Director
since 1988.
</TABLE>
Mr. Salon is a senior partner of the law firm of Salon, Marrow & Dyckman,
LLP, which firm acts as general and securities counsel to the Company.
- ---------------
(a) Member of Executive Committee
(b) Member of Compensation Committee
(c) Member of Audit Committee
(d) Includes 697,100 shares of common stock held by the Lillian Menasche
Vernon Foundation, Inc. (the "Foundation"). Lillian Vernon and Leo Salon
are two of the directors of the Foundation.
(e) Includes options to purchase 286,667 shares which are presently
exercisable or which become exercisable within 60 days hereof.
(f) Includes 85,000 shares of common stock held by the David Hochberg
Foundation. David Hochberg is the trustee of the David Hochberg
Foundation. Also includes 60,000 options which are presently exercisable
or which become exercisable within 60 days hereof.
(g) Includes options to purchase 14,000 shares which are presently
exercisable or which become exercisable within 60 days hereof.
MEETINGS OF BOARD OF DIRECTORS AND COMMITTEES
During fiscal 1995, the Board of Directors held seven meetings. All
Directors attended all of the Company's Board meetings. The Company believes
that attendance at meetings is one means by which Directors can contribute to
the effective management of the Company and that the contributions of all
Directors have been substantial and highly valued.
The Compensation Committee, which administers the Company's employee
compensation plans, met four times in fiscal 1995. The Audit Committee, which
reviews and makes recommendations to the Board
4
<PAGE>
of Directors with respect to the Report of the Independent Accountants and
reviews the accounting systems and controls of the Company on a continuous
basis, met two times in fiscal 1995.
The Company does not have a nominating committee.
EXECUTIVE OFFICERS
The following table sets forth the name, age and position of the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------- ----- ---------------------------------------------
<S> <C> <C>
Lillian Vernon .. 68 Chairman of the Board and Chief Executive
Officer
Larry R. Blum ... 47 Executive Vice President
Laura L. Zambano 43 Senior Vice President-General Merchandise
Manager
John V. Fermelia 57 Vice President-Operations
David C. Hochberg 38 Vice President-Public Affairs and Director
Paul C. Pecorin . 56 Vice President-Chief Information Officer
Susan N. Cortazzo 34 Vice President, Corporate
Controller/Secretary
</TABLE>
Stephen S. Marks, President and Chief Operating Officer, terminated his
employment with the Company effective May 29, 1995.
Andrew Gregor, Vice President-Chief Financial Officer, terminated his
employment with the Company effective September 29, 1995.
Larry R. Blum was promoted to Executive Vice President in March 1995. From
January 1993 until his promotion, he served as Senior Vice
President-Administration. Mr. Blum served as Vice President- Human Resources
from August 1990, when he joined the Company, until his promotion in January
1993. From September 1986 until he joined the Company, Mr. Blum was Director,
Human Resources for Crazy Eddie, Inc., an electronics retailer. Prior to
joining Crazy Eddie, Inc., Mr. Blum was President of LRB Inc., a consulting
company, and President of Betlar Realty, Inc., a real estate company. Prior
to his association with LRB Inc. and Betlar Realty, Inc., Mr. Blum was
employed by various corporations in the human relations area.
Laura L. Zambano has served as Senior Vice President-General Merchandise
Manager since July 1989. From 1983 until her promotion in 1989, she was Vice
President of Merchandising. Ms. Zambano joined the Company in 1978 as a
catalog coordinator; she became Associate Vice President in 1982. Prior to
joining the Company, Ms. Zambano was employed as an advertising production
manager by H.O. Gerngross & Co.
5
<PAGE>
John V. Fermelia has served as Vice President-Operations since joining the
Company in January 1988. From June 1987 until he joined the Company, Mr.
Fermelia was a Vice-President of The Sharper Image, a direct mail catalog and
retail company. From August 1986 through May 1987, Mr. Fermelia was Vice
President of Operations of Newark Electronics, a repair part distribution
company. From 1973 to January 1986, Mr. Fermelia held various positions for
Spiegel Inc., a direct mail catalog company, including Vice
President-Operations from February 1983 until he left that Company in January
1986.
Paul C. Pecorin has served as Vice President-Chief Information Officer
since joining the Company in 1984. From 1982 until he joined the Company, Mr.
Pecorin was Vice President-Systems of Lands' End, Inc., a direct mail catalog
company marketing clothes and related products. Prior to his employment at
Lands' End, Inc., Mr. Pecorin was manager, systems development for Pratt &
Whitney Aircraft Co.
Susan N. Cortazzo joined the Company in April 1989 as Corporate Controller
and Secretary. She was promoted to Vice President in July 1994. From 1982 to
April 1989, Ms. Cortazzo was employed by Coopers & Lybrand, Certified Public
Accountants, in various capacities, the last position being as audit manager.
Ms. Cortazzo is a certified public accountant.
6
<PAGE>
PRINCIPAL STOCKHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
The following chart reflects, as of October 9, 1995, the beneficial
ownership of the Company's Shares by (i) persons who are believed to
beneficially own more than 5% of the Shares of the Company; (ii) the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company; (iii) the directors; and (iv) all executive officers
and directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
OUTSTANDING
AND OPTIONS
NAME AND ADDRESS AMOUNT OF SHARES EXERCISABLE
OF BENEFICIAL OWNER BENEFICIALLY OWNED WITHIN 60 DAYS
- ----------------------------------------------------------- ------------------ --------------
<S> <C> <C>
Lillian Vernon (1) ......................................... 3,098,430(2)(3) 29.5%
David C. Hochberg (1) ...................................... 1,377,000(4)(5) 13.1%
Fred P. Hochberg (6) ....................................... 1,241,331(2)(7)(8) 11.8%
Lilyan H. Affinito (9) ..................................... 21,050(10) *
Leo Salon (11) ............................................. 713,350(2)(10) 6.8%
William E. Phillips (12) ................................... 19,000(10) *
Bert W. Wasserman (13) ..................................... 5,000 *
Andrew Gregor (1)(14) ...................................... 50,000(15) *
Laura L. Zambano (1) ....................................... 52,537(15) *
Stephen S. Marks (1)(16) ................................... 0 *
Larry R. Blum (1) .......................................... 52,500(17) *
Lillian Menasche Vernon Foundation, Inc. (18) .............. 697,100(2) 6.6%
Blackhill Capital, Inc. (19) ............................... 638,400(20) 6.1%
All Executive Officers and Directors as a group
(12 persons) .............................................. 5,343,528(21) 50.8%
</TABLE>
---------------
* Less than 1%.
(1) The address of the stockholders is 543 Main Street, New Rochelle, New
York 10801.
(2) Includes 697,100 shares owned by the Lillian Menasche Vernon Foundation
(the "Foundation"). Lillian Vernon, Leo Salon and Fred Hochberg are three
of the directors of the Foundation.
(3) Includes options to purchase 286,667 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(4) Includes 85,000 shares of common stock held by the David Hochberg
Foundation. David Hochberg is the sole trustee of the David Hochberg
Foundation.
7
<PAGE>
(5) Includes options to purchase 60,000 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(6) The address of Fred P. Hochberg is c/o Lillian Vernon Corporation,
543 Main Street, New Rochelle, New York 10801.
(7) Includes 35,000 shares of common stock held by the Heyday Foundation.
Fred Hochberg is the sole trustee of the Heyday Foundation.
(8) Includes options to purchase 5,000 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(9) The address of Lilyan H. Affinito is c/o Lillian Vernon Corporation,
543 Main Street, New Rochelle, New York 10801.
(10) Includes options to purchase 14,000 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(11) The address of Leo Salon is c/o Lillian Vernon Corporation, 543 Main
Street, New Rochelle, New York 10801.
(12) The address of William E. Phillips is c/o Lillian Vernon Corporation,
543 Main Street, New Rochelle, New York 10801.
(13) The address of Bert W. Wasserman is c/o Lillian Vernon Corporation,
543 Main Street, New Rochelle, New York 10801.
(14) Andrew Gregor terminated his employment with the Company effective
September 29, 1995. Shares owned by Andrew Gregor are not included in
references to shares owned by Directors and Executive Officers in
this Proxy Statement.
(15) Includes options to purchase 45,000 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(16) Stephen S. Marks terminated his employment with the Company effective
May 29, 1995.
(17) Includes options to purchase 40,000 shares which are presently
exercisable or which become exercisable within 60 days of the date
hereof.
(18) The address of the Foundation is c/o Salon, Marrow & Dyckman, LLP,
685 Third Avenue, New York, New York 10017.
(19) The address of Blackhill Capital, Inc. is 161 Madison Avenue,
Morristown, New Jersey 07960.
(20) Number of shares is based upon a Schedule 13G filed by Blackhill
Capital, Inc. as of January 9, 1995.
(21) Includes 697,100 shares owned by the Lillian Menasche Vernon
Foundation, of which Lillian Vernon, Fred Hochberg, and Leo Salon are
directors. Includes 85,000 shares owned by the David Hochberg
Foundation, of which David Hochberg is the trustee. Includes 35,000
shares owned by the Heyday Foundation, of which Fred Hochberg is the
trustee. Includes options to purchase 598,667 shares which are
presently exercisable or which become exercisable within 60 days of
date hereof. Shares owned by Jane Ries, who resigned as Senior Vice
President-New Catalog Development on April 7, 1995, are not included
in references to shares owned by Directors and Executive Officers in
this Proxy Statement.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company, to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined as of February 25, 1995) (the
"Named Executive Officers") for the Company's last three fiscal years:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------
FISCAL
NAME AND PRINCIPAL YEAR OTHER ANNUAL
POSITION ENDED SALARY(1) BONUS COMPENSATION(2)
- -------------------------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
Lillian Vernon 2/25/95 $520,000 $200,000 $ 0
Chairman of the Board and 2/26/94 520,000 375,000 0
Chief Executive Officer 2/27/93 518,846 260,000 26,923 (6)
Stephen S. Marks (7) 2/25/95 $350,888 $ 65,000 $ 0
President and 2/26/94 181,731 100,000 0
Chief Operating Officer 2/27/93 N/A N/A N/A
Andrew Gregor (9) 2/25/95 $225,854 $ 65,000 $ 0
Vice President-Chief 2/26/94 219,255 115,000 0
Financial Officer 2/27/93 193,846 78,000 0
Laura L. Zambano 2/25/95 $206,690 $ 40,000 $ 0
Senior Vice President- 2/26/94 196,686 92,000 0
General Merchandise 2/27/93 188,142 74,800 0
Manager
Larry R. Blum (11) 2/25/95 $173,143 $ 65,000 $ 0
Executive Vice President 2/26/94 168,645 80,000 0
2/27/93 144,544 66,000 0
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------
AWARDS PAYOUTS
-------------------------------------------
RESTRICTED LONG TERM
NAME AND PRINCIPAL STOCK NUMBER OF INCENTIVE PLAN ALL OTHER
POSITION AWARD(S)(3) OPTIONS PAYOUTS(4) COMPENSATION(5)
- -------------------------- -------------- --------- -------------- ---------------
<S> <C> <C> <C> <C>
Lillian Vernon $ 0 50,000 $ 0 $181,515
Chairman of the Board and 0 0 0 145,960
Chief Executive Officer 0 90,000 0 117,076
Stephen S. Marks (7) $ 0 30,000 $ 0 $ 8,641
President and $68,150 (8) 75,000 0 0
Chief Operating Officer N/A N/A N/A N/A
Andrew Gregor (9) $ 0 15,000 $ 0 $ 9,127
Vice President-Chief 0 15,000 0 8,210
Financial Officer $78,750 (10) 30,000 0 0
Laura L. Zambano $ 0 15,000 $ 0 $ 10,541
Senior Vice President- 0 30,000 48,713 9,373
General Merchandise 0 0 57,619 6,956
Manager
Larry R. Blum (11) $ 0 15,000 $ 0 $ 9,127
Executive Vice President $68,150 (12) 15,000 0 7,856
0 15,000 0 4,166
<FN>
- ---------------
(1) Consists of base salaries. No amounts were deferred at the election of
the executive officers.
(2) Perquisites to any executive officer did not exceed, for such individual,
the lesser of $50,000 or 10% of compensation.
(3) The value of each restricted stock award reflects the closing price of
the stock on the date of grant. Dividends on shares of restricted stock
are paid at the same time and at the same rate as dividends on the
Company's unrestricted common stock.
(4) Compensatory value of restricted shares that vested, and were not
previously reported in this Table as an award of restricted stock. Fiscal
1994 and Fiscal 1993 amounts were calculated using $13.00 and $15.38,
respectively, as the closing market prices at vest dates.
</TABLE>
9
<PAGE>
(5) All Other Compensation consists of employer contributions pursuant to the
Company's Profit Sharing Plan, compensation related to split-dollar life
insurance premiums, and above-market earnings on deferred compensation,
in the following amounts:
<TABLE>
<CAPTION>
401(K)
PROFIT SHARING MATCHING SPLIT-DOLLAR ABOVE-MARKET
CONTRIBUTION CONTRIBUTION LIFE INSURANCE EARNINGS
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Lillian
Vernon ...... 2/25/95 0 0 16,790 164,726
2/26/94 0 0 15,426 130,534
2/27/93 0 0 14,180 102,896
Stephen S.
Marks ....... 2/25/95 4,627 4,014 0 0
2/26/94 0 0 0 0
2/27/93 0 0 0 0
Andrew Gregor 2/25/95 4,627 4,500 0 0
2/26/94 6,691 1,519 0 0
2/27/93 0 0 0 0
Laura L.
Zambano ..... 2/25/95 4,627 4,500 1,414 0
2/26/94 6,691 1,364 1,318 0
2/27/93 5,726 0 1,230 0
Larry R. Blum 2/25/95 4,627 4,500 0 0
2/26/94 6,691 1,165 0 0
2/27/93 4,166 0 0 0
</TABLE>
(6) Consists of amount paid out under deferred compensation agreement, a
portion of which represents above-market interest.
(7) Fiscal 1994 amount reflects compensation from the date Mr. Marks
commenced employment with the Company, August 16, 1993. Mr. Marks'
employment contract, which had an initial term of three years, provided
for an annual base salary of $350,000. Effective May 29, 1995, Mr. Marks
resigned as President and Chief Operating Officer. Pursuant to a
Resignation and General Release Agreement dated June 9, 1995 (the
"Resignation Agreement"), Mr. Marks received $314,500; additionally,
options previously granted to Mr. Marks to purchase 80,000 shares of
common stock were cancelled.
(8) The 5,000 shares of restricted stock were issued on August 16, 1993, when
the value of such shares, based on the stock's closing price of $13.63,
was $68,150. The stock vested August 1994, when the value of such shares,
based on the stock's closing price of $18.13, was $90,650.
(9) Mr. Gregor resigned as Vice President-Chief Financial Officer effective
September 29, 1995.
(10) The 5,000 shares of restricted stock were issued on March 23, 1992, when
the value of such shares, based on the stock's closing price of $15.75,
was $78,750. The stock vested March 1993, when the value of such shares,
based on the stock's closing price of $12.75, was $63,750.
(11) The Company has entered into an employment contract with Mr. Blum. Mr.
Blum's employment contract, which has an initial term of three years,
provides for an annual base salary of $250,000. The Board may award Mr.
Blum an annual bonus of up to 50% of his annual base salary.
(12) The 5,000 shares of restricted stock were issued on March 11, 1993, when
the value of such shares, based on the stock's closing price of $13.63,
was $68,150. The stock vested February 1994, when the value of such
shares, based on the stock's closing price of $17.13, was $85,650.
10
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options to the Named Executive Officers during the Company's fiscal year
ended February 25, 1995:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS GRANTED FOR OPTION TERM (1)
NUMBER OF OPTIONS TO EMPLOYEES EXERCISE PRICE -------------------------------------------
NAME GRANTED (2) IN FISCAL YEAR PER SHARE EXPIRATION DATE 5% 10%
- ---------------- ----------------- --------------- -------------- --------------- ---------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lillian Vernon 50,000 17.99% $18.13 July 20, 2004 $570,934 $1,449,839
Stephen S. Marks 30,000(3) 10.79% $18.13 July 20, 2004 $342,579 $ 870,020
Andrew Gregor 15,000(4) 5.40% $18.13 July 20, 2004 $171,280 $ 434,952
Laura L. Zambano 15,000 5.40% $18.13 July 20, 2004 $171,280 $ 434,952
Larry R. Blum 15,000 5.40% $18.13 July 20, 2004 $171,280 $ 434,952
</TABLE>
- ---------------
(1) In accordance with SEC rules, these columns show gains that might exist
for the respective options over a period of ten years. This valuation is
hypothetical; if the stock price does not increase above the exercise
price, compensation to the Named Executive Officers will be zero. There
is no guarantee that if and when the options are exercised, they will
have these values.
(2) One third of the options are exercisable on July 20, 1995, 1996, and
1997, respectively.
(3) These options were cancelled pursuant to the Resignation Agreement
between Mr. Marks and the Company.
(4) 10,000 of these options were cancelled, as they had not vested as of the
effective date of Mr. Gregor's resignation, September 29, 1995.
11
<PAGE>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise of
options by the Named Executive Officers during the Company's fiscal year
ended February 25, 1995, and the value of unexercised options held by the
Named Executive Officers as of the end of the fiscal year.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME OF INDIVIDUAL ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------ --------------- ---------- ----------------- -----------------
<S> <C> <C> <C> <C>
Lillian Vernon 52,500 $206,850
Exercisable 345,000 $2,181,600
Unexercisable 80,000 $ 112,500
Stephen S. Marks 0 --
Exercisable 25,000 $ 103,000
Unexercisable 80,000 (2) $ 206,000
Andrew Gregor 0 --
Exercisable 25,000 $ 53,650
Unexercisable 35,000 (3) $ 66,200
Laura L. Zambano 22,500 $18,000
Exercisable 30,000 $ 240,000
Unexercisable 35,000 $ 90,000
Larry R. Blum 0 --
Exercisable 32,500 $ 189,975
Unexercisable 30,000 $ 71,250
</TABLE>
- ---------------
(1) Calculated using the fair market value of shares at the close of the
market on February 25, 1995, of $17.75.
(2) These options were cancelled pursuant to the Resignation Agreement
between Mr. Marks and the Company.
(3) 15,000 of these options were cancelled, as they had not vested as of the
effective date of Mr. Gregor's resignation, September 29, 1995.
12
<PAGE>
DIRECTOR COMPENSATION
The Company pays non-employee Directors an annual retainer of $18,000 plus
$1,000 (plus expenses) per Board meeting attended and $500 (plus expenses)
per Committee meeting attended, if such Committee meeting is held on a day
different than a Board meeting.
The Company has a Stock Option Plan for Non-Employee Directors, which
provides that as of the date of each Annual Meeting that occurs while this
plan is in effect, each individual who is a non-employee director be granted
an option to purchase 2,500 shares of Common Stock of the Company at an
exercise price equal to 100% of the fair market value per share of Common
Stock on the day the option is granted.
In fiscal 1995, Messrs. Bergmoser, Phillips, Salon, Fred P. Hochberg and
Ms. Affinito each received options to purchase 2,500 shares at an exercise
price of $18.00. The options received by Mr. Bergmoser at that time were
forfeited when he retired as a director in August 1994.
CERTAIN TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
In August 1982, Fred P. and David C. Hochberg (the "Hochbergs") financed
the acquisition and renovation of the Company's former New Rochelle Customer
Communications Center with the assistance of the City of New Rochelle
Industrial Development Agency (the "Agency"), which issued a $1,200,000
Industrial Development Bond to Bankers Trust Company (the "Bond"). The
Hochbergs subleased the New Rochelle Customer Communications Center to the
Company (the "1982 Sublease"). The 1982 Sublease (and a subsequent amendment)
provided for the payment of an annual net rent of $263,939 through July 31,
1992. Effective August 1, 1992, the annual net rent would increase to match
any increase in the Consumer Price Index between June 1, 1982 and June 1,
1992. The sublease expiration date was July 31, 1998. As a net lease, it
required the Company to also pay all real estate taxes, insurance and other
expenses associated with the operation and maintenance of the premises,
including structural repairs.
On October 16, 1992, the Hochbergs refinanced the Bond and entered into a
new lease with the Agency, in connection with the renovation of the New
Rochelle facility to serve as the Company's corporate headquarters. The
Hochbergs entered into a new sublease with the Company which is on the same
terms and conditions as the 1982 Sublease except that the net annual rental
is $429,788. This rental reflects the increase pursuant to the Consumer Price
Index as discussed above and additional space sublet to the Company. The
sublease expires on July 30, 1998.
Pursuant to a consulting agreement entered into between Fred P. Hochberg
and the Company, Mr. Hochberg received $94,800 in fiscal 1995. The
aforementioned consulting agreement expired on February 25, 1995.
Effective February 27, 1985, Fred P. Hochberg entered into a deferred
compensation agreement with the Company that provided for deferred
compensation of four years commencing in fiscal 1986. This agreement, which
was amended on March 11, 1993, provides that his retirement benefit is
$5,525,000, payable over a 10 year period commencing 2017, and that his death
benefit calculated as of February 25,
13
<PAGE>
1995 was $1,496,055. The agreement further provides that these payments are
due Mr. Hochberg or his beneficiaries whether or not he is employed by the
Company.
Effective February 27, 1985, David C. Hochberg entered into a deferred
compensation agreement with the Company that provided for deferred
compensation for four years commencing in fiscal 1986. This agreement, which
was amended on September 28, 1993, provides that his retirement benefit is
$3,540,000, payable over a 10 year period commencing 2022, and that his death
benefit calculated as of February 25, 1995 was $747,706. The agreement
further provides that these payments are due Mr. Hochberg or his
beneficiaries whether or not he is employed by the Company.
J. Paul Bergmoser, who resigned as a director in August 1994, received
$100,000, excluding reimbursement of expenses, in fiscal year 1995, for
consulting services rendered to the Company.
Leo Salon is senior partner of Salon, Marrow & Dyckman, LLP, which firm
provides legal services to the Company.
Effective May 29, 1995, Stephen S. Marks resigned as President and Chief
Operating Officer. Pursuant to the Resignation Agreement, the Company paid
Mr. Marks $314,500. In addition, options previously granted to Mr. Marks to
purchase 80,000 shares of common stock, at various prices, were cancelled.
The Company has made loans to Larry Blum, Executive Vice President,
aggregating $136,729. The loans, which principally mature on November 1,
1996, were made to Mr. Blum to enable him to exercise stock options which
were expiring and to enable him to pay the required taxes due upon the
vesting of certain restricted stock.
REPORT OF THE COMPENSATION COMMITTEE
The Report of the Compensation Committee and the Performance Graph on page
18 shall not be incorporated by reference into any filing, notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934 that might incorporate future filings in whole or in part, including
this Proxy Statement.
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent, non-employee directors. The Committee is
responsible for setting and administering the Company's employee compensation
plans, subject to the approval of the Board of Directors. The Committee
applies a philosophy based on the premise that the achievements of the
Company result from the coordinated efforts of all individuals working toward
common objectives.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward competent executives who contribute to the long-term
success of the Company.
14
<PAGE>
o The Company pays competitively. The Company is committed to
providing a compensation program that helps attract and retain highly
competent executive officers. To ensure that pay is competitive, the
Company regularly compares its pay practices with those of other leading
companies in the retail and direct mail catalog industries.
o The Company pays for sustained and improved performance. Executive
officers are rewarded based upon corporate performance and individual and
team goals. Each year the Committee approves an incentive compensation
plan (Performance Unit Plan) which establishes a dollar bonus pool and
specific bonus payment targets based upon per share earnings. One-half of
the bonus pool is set aside for corporate goals and one-half is set aside
for individual and team goals. Individual performance is evaluated by
reviewing the individual's performance against both quantitative and
qualitative objectives. Team performance is evaluated against quantitative
goals.
o The Company encourages stock ownership by management. The Company
believes stock ownership by management fosters an interest in the
enhancement of stockholder value and thus aligns management's interest
with that of the stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Lillian Vernon, the Chairman of the Board and Chief Executive Officer,
founded the Company forty-four years ago. She has played and continues to
play a pivotal role in the Company and its development. She is involved in
all aspects of the Company's business. In determining Miss Vernon's total
compensation, the Committee considered her leadership and contributions to
the Company's success during fiscal 1995. In 1992, the Company extended Miss
Vernon's employment agreement for five years (expiring on February 28, 1997).
Miss Vernon currently receives a base salary of $520,000 per annum. Her
salary is reviewed annually by the Committee and may be increased at the
Board of Directors' discretion. In reviewing Miss Vernon's base salary, the
Board of Directors considers the base salaries paid to the chief executive
officers of other companies in the retail and direct mail catalog industry.
In addition, the Board of Directors, upon the recommendation of the
Committee, may award a bonus to Miss Vernon. The employment agreement also
provides for the full payment of salary to Lillian Vernon for a two year
period should she become disabled and unable to perform her duties.
Miss Vernon's compensation is tied to the performance of the Company,
specifically earnings per share. In fiscal 1995, while the Company achieved
record sales and earnings per share in a difficult retail environment, it did
not meet the specific goals previously established by the Board of Directors.
Accordingly, the Compensation Committee, with the approval of the Board of
Directors, awarded Miss Vernon a reduced bonus of $200,000. This bonus
compares to a bonus of $375,000 for fiscal 1994.
In addition to receiving a bonus, Miss Vernon participates in the
Company's stock option program and other benefit plans, as do all other
executives of the Company.
Effective February 27, 1985, Lillian Vernon entered into a deferred
compensation agreement with the Company which provided for deferred
compensation for four years commencing in fiscal 1986. Lillian
15
<PAGE>
Vernon's Deferred Compensation Agreement, which was amended on April 30,
1992, provides that her retirement benefit is $4,634,500 payable over a ten
year period commencing 1997, and that her death benefit calculated as of
February 25, 1995 was $3,218,353.
COMPENSATION VEHICLES
The Company uses a total compensation program that consists of cash and
equity based compensation.
Cash Based Compensation
Salary
Individual salary determinations of the Company's executive officers are
based on experience, sustained performance and comparison to peers inside and
outside the Company.
Bonus-Performance Unit Plan
As previously discussed, under the Company's Performance Unit Plan, the
Committee establishes a dollar bonus pool and specific bonus payment targets
based upon per share earnings. Corporate vice presidents, department
directors and managers participate in the Performance Unit Plan. Payments are
based in part upon the achievement of corporate goals and in part upon
achievement of individual and team goals. In fiscal 1995, the bonuses paid to
the Company's executive officers took into account the financial performance
of the Company, which reflected a record year in both revenues and earnings
per share, but did not meet the specific goals previously established by the
Board of Directors. Bonus compensation may be paid in cash or in shares of
the Company's common stock, at the Company's option.
Profit-Sharing Plan
The Company maintains a profit-sharing plan for the benefit of all
employees, including its executive officers, who have met certain minimum
service requirements. The Company's annual contribution is discretionary, as
determined by the Board of Directors.
Effective October 1, 1993, the Company amended its profit-sharing plan to
include an employee contribution and employer matching contribution (401(k))
feature. Under the 401(k) feature of the plan, eligible employees may make
pre-tax contributions up to 10% of their annual compensation. Employee
contributions of up to 6% of compensation are currently matched by the
Company at a rate of 50%. The matching contribution has been made with
Company stock.
16
<PAGE>
Equity Based Compensation
Restricted Stock and Stock Options
The purpose of these programs is to provide additional incentives to
employees to work to maximize stockholder value. The restricted stock and
stock option plans are administered by the Committee, which has the authority
to determine the individuals to whom, the times at which options and/or
restricted stock may be granted or awarded and the number of shares to be
covered by each such grant or award. The Company may grant stock options and
restricted stock awards to the Company's management - the officers and
departmental directors. Stock options are granted to executive officers in
amounts based upon levels of organization within the Company. The programs
also utilize vesting periods, which are determined by the Committee, to
encourage key employees to continue in the employ of the Company.
The Compensation Committee:
William E. Phillips
Lilyan H. Affinito
Bert W. Wasserman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J. Paul Bergmoser, who was a member of the Company's Compensation
Committee until his retirement as a director in August 1994, served as a
consultant to the Company and was paid $100,000, excluding reimbursement of
expenses, in fiscal year 1995.
17
<PAGE>
PERFORMANCE GRAPH
Set forth below is a performance graph that shows the cumulative total return
(assuming dividend reinvestment) on the Company's Common Stock compared with
the cumulative total return of the Standard & Poor's 500 Stock Index and the
Standard & Poor's Specialty Retail Index for the period of the Company's last
five fiscal years (February 1990 = 100):
5 YEAR CUMULATIVE TOTAL RETURN SUMMARY
[Performance Graph Plot Points]
<TABLE>
<CAPTION>
STARTING
BASIS
DESCRIPTION 1990 1991 1992 1993 1994 1995
- ---------------------------------- -------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
LILLIAN VERNON (%) -22.73 54.12 -21.73 39.45 7.27
LILLIAN VERNON ($) $100.00 $77.27 $119.09 $93.22 $129.99 $139.43
S & P 500 (%) 14.67 15.99 10.65 8.34 7.36
S & P 500 ($) $100.00 $114.67 $133.00 $147.17 $159.44 $171.18
S & P Retail Stores - Specialty (%) 15.09 36.74 21.53 1.57 -5.10
S & P Retail Stores - Specialty ($) $100.00 $115.09 $157.37 $191.25 $194.25 $184.35
</TABLE>
The Board of Directors recognize that the market price of stock is influenced
by many factors, only one of which is company performance. The stock price
performance shown on the graph is not necessarily indicative of future price
performance.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Board of Directors has appointed
the firm of Coopers & Lybrand, L.L.P. as independent auditors for the fiscal
year ending February 24, 1996. Coopers & Lybrand, L.L.P. has audited the
accounts of the Company since fiscal year 1985. If the stockholders do not
ratify this appointment, other certified public accountants will be
considered by the Board.
A representative of Coopers & Lybrand, L.L.P. is expected to be present at
the Annual Meeting and will be available to respond to questions.
18
<PAGE>
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the 1995 Annual Meeting and entitled
to vote is required to ratify the appointment of Coopers & Lybrand, L.L.P. as
independent auditors for the fiscal year ended February 24, 1996.
The Board of Directors recommends a vote "FOR" ratifying the appointment
of Coopers & Lybrand, L.L.P.
3. STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING
TO BE HELD IN 1996
Stockholders are entitled to present proposals for action and to nominate
directors at a forthcoming stockholders' meeting if they comply with the
requirements of the proxy rules. Proposals of stockholders and nominations of
directors intended to be presented at the Annual Meeting to be held in 1996,
must be received by the Company by February 13, 1996 in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to such meeting. Such proposals should be sent to the Secretary of
the Company at 543 Main Street, New Rochelle, New York 10801.
4. OTHER BUSINESS
So far as the Board of Directors is aware, no matters will be presented at
the Meeting for action on the part of the stockholders other than those
stated in the notice of this meeting.
A copy of the Company's annual report to the Securities and Exchange
Commission on Form 10-K for the year ended February 25, 1995, may be obtained
without charge, by calling or writing David C. Hochberg, Lillian Vernon
Corporation, 543 Main Street, New Rochelle, New York 10801, (914) 637-5624.
By Order of the Board of Directors
Susan N. Cortazzo
Secretary
October 20, 1995
19
<PAGE>
LILLIAN VERNON CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON NOVEMBER 20, 1995 AT
THE AMERICAN STOCK EXCHANGE, 86 TRINITY PLACE,
NEW YORK CITY, 10:00 A.M.
The undersigned hereby appoints Lillian Vernon and Susan N. Cortazzo and
each of them, the attorneys and proxies of the undersigned, with full powers
of substitution, to vote all shares of stock of Lillian Vernon Corporation
which the undersigned is entitled to vote at the Annual Meeting of
Stockholders thereof, to be held on November 20, 1995 and any adjournments
thereof, with all powers the undersigned would have if present, upon the
proposals set forth on the reverse side and in their discretion on all other
matters properly coming before the meeting, including those described in the
Notice of Meeting of Stockholders and Proxy Statement therefor, receipt of
which is acknowledged.
This Proxy will be voted as directed, or where no direction is given, will
be voted "FOR" Proposals Nos. 1 and 2. If any nominee for the Board of
Directors named in the Proxy Statement is unavailable to serve, this Proxy
will be voted for such substitute nominee as may be recommended by the Board
of Directors. The Board of Directors is not aware of other matters to come
before the meeting.
(CONTINUED, AND TO BE VOTED, SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
LILLIAN VERNON CORPORATION
The Board of Directors recommends a vote "FOR" Proposals 1 and 2.
1. Election of William E. Phillips and Bert W. Wasserman to serve as
directors for a term expiring in 1998.
<TABLE>
<CAPTION>
FOR ALL NOMINEES LISTED
ABOVE (except as marked to WITHHOLD AUTHORITY FOR
the Contrary below) ALL NOMINEES LISTED ABOVE
- ------------------------------ ----------------------
<S> <C>
[ ] [ ]
</TABLE>
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below).
-------------------------------------------------------------------------
2. Proposal to approve the appointment of Coopers & Lybrand, L.L.P. as
the independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Dated: , 1995
---------------------------------------------------
---------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
(PLEASE SIGN EXACTLY AS NAME APPEARS HEREIN. WHEN
SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN OR ATTORNEY, PLEASE GIVE FULL TITLE AS
SUCH. FOR JOINT ACCOUNTS OR CO-FIDUCIARIES, ALL
JOINT OR CO-FIDUCIARIES SHOULD SIGN.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
P
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