<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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ASHWORTH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ASHWORTH, INC.
2791 Loker Avenue West
Carlsbad, California 92008
(760) 438-6610
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY MARCH 26, 1999
The annual meeting of stockholders of Ashworth, Inc., a Delaware corporation
(the Company), will be held at the Westin South Coast Plaza Hotel, 686 Anton
Boulevard, Costa Mesa, California, on Friday, March 26, 1999, at 2:00 p.m. local
time, to consider and act upon the following matters:
1. To elect a director of the Company to serve for the ensuing three years;
and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on February 1, 1999 will be
entitled to vote at the meeting or any adjournment thereof. A proxy statement
is enclosed; please read it carefully. Proxies are being solicited by the Board
of Directors of the Company.
All stockholders, whether or not they expect to attend the meeting in
person, are urged to sign and date the enclosed proxy and return it promptly in
the enclosed postage-paid envelope in order to ensure representation of your
shares. No postage need be affixed if the proxy is mailed in the United States.
The giving of a proxy will not affect your right to vote in person if you attend
the meeting.
By the order of the Board of Directors
/s/ HALINA BALYS
Halina Balys
Secretary
Carlsbad, California
February 19, 1999
<PAGE>
ASHWORTH, INC.
2791 Loker Avenue West
Carlsbad, California 92008
(760) 438-6610
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY MARCH 26, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Ashworth, Inc., a Delaware corporation (the
Company), for use at the annual meeting of stockholders to be held at the Westin
South Coast Plaza Hotel, 686 Anton Boulevard, Costa Mesa, California, on Friday
March 26, 1999, at 2:00 p.m., local time and at any adjournments thereof (the
Annual Meeting). All proxies will be voted in accordance with the stockholders'
instructions contained therein. If no choice is specified, proxies will be
voted in favor of the election of the nominee named in this proxy statement.
The Company anticipates that it will mail this proxy statement and the
accompanying proxy to the Company's stockholders on or about February 19, 1999.
Any stockholder signing and returning the enclosed proxy may revoke it at
any time before it is voted at the Annual Meeting by: (i) giving a later dated
written revocation of proxy to the Secretary of the Company, (ii) providing a
later dated amended proxy to the Secretary of the Company, or (iii) voting in
person at the Annual Meeting. The expense of soliciting proxies, including the
cost of preparing, assembling, and mailing this proxy material to stockholders,
will be borne by the Company. The Company may use the services of its
directors, officers and employees to solicit proxies personally or by telephone,
without additional salary or compensation to them. The Company will reimburse
brokerage houses, custodians, nominees, and fiduciaries for the cost of
forwarding proxy soliciting materials to the beneficial owners of the Company's
shares held of record by such persons.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.001 par value common stock. Only stockholders of record at the close of
business on February 1, 1999 (the record date), are entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof. On the record date, the
Company had 14,079,773 shares of common stock outstanding, each share of which
is entitled to one vote on all matters to be voted upon at the Annual Meeting,
including the election of a director.
VOTES REQUIRED
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting and entitled to vote on the
election of directors. Only those votes cast "FOR" the election of a director
or "WITHHELD" will be counted for purposes of determining the number of votes
required to elect the director. If a broker holding stock in "street name"
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and voting at the Annual Meeting with respect to the
matter (a "broker non-vote"). Abstentions and broker non-votes will not be
counted in the election of a director but will be counted for the purpose of
establishing a quorum.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of common stock of the Company as of December 31, 1998 by: (i) each
person known by the Company to own beneficially more than 5% of the Company's
outstanding shares of common stock, (ii) each director of the Company, (iii) the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers, and (iv) all directors and executive officers of
the Company as a group. Each person listed below has sole voting power and sole
investment powers with respect to shares shown as owned by him or her.
Information as to beneficial ownership is based upon statements furnished to the
Company by such persons.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Shares Beneficially Owned
- ----------------------------------------------------------------------------------------------------------------
Percent
Name Shares Options (1) Total Owned (2)
- ---- ------------- ------------- -------------- ------------
(#) (#) (#) (%)
<S> <C> <C> <C> <C>
Stephen Bartolin, Jr. 1,100 7,500 8,600 *
Andre P. Gambucci 22,000 45,000 67,000 *
Paul Gilbert 0 12,334 12,334 *
John M. Hanson, Jr. 3,500 50,000 53,500 *
Randall L. Herrel, Sr. 4,000 326,094 330,094 2.3
Gerald W. Montiel (3) 25,840 255,625 281,465 2.0
Mary Montiel (4) 0 29,168 29,168 *
James W. Nantz, III 29,000 100,000 129,000 *
John Newman 0 46,668 46,668 *
All executive officers and
directors as a group (9 persons) 85,440 872,389 957,829 6.4
Fred Couples 368,000 850,000 1,218,000 8.2
1851 Alexander Bell Drive, Suite 410
Reston, VA 22091
Mellon Bank Corporation (5) 800,246 0 800,246 5.7
1 Mellon Bank Center
500 Grant Street
Pittsburgh, PA 15258
J.P. Morgan & Co. Incorporated (6) 1,670,700 0 1,670,700 11.9
60 Wall Street
New York, NY 10260
Dimensional Fund Advisors, Inc. (7) 730,200 0 730,200 5.2
1299 Ocean Avenue
Santa Monica, CA 90401
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than one percent.
(1) Represents shares of common stock which may be acquired pursuant to
presently exercisable stock options, including stock options exercisable
within 60 days of December 31, 1998. All of these options have exercise
prices which are higher than the market price of the Company's common stock
on December 31, 1998 ($5.53).
2
<PAGE>
(2) Applicable percentage of ownership is based on approximately 14,079,733
shares of common stock outstanding as of December 31, 1998, together with
applicable stock options for such stockholder. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes voting and investment power with respect to shares.
Shares of common stock subject to options currently exercisable or
exercisable within 60 days after December 31, 1998, are deemed outstanding
for computing the percentage of ownership of the person holding such stock
options, but are not deemed outstanding for computing the percentage of any
other person.
(3) Mr. Montiel resigned as an officer and director of the Company effective
December 31, 1998. The options for 255,625 shares include options for
30,000 shares transferred by Mr. Montiel to a member of his family in 1997.
(4) Ms. Montiel resigned her employment with the Company effective January 22,
1999.
(5) Mellon Bank Corporation has sole voting power over 792,546 shares and sole
power to dispose 800,246 shares.
(6) J.P. Morgan & Co. Incorporated has sole voting power over 1,424,900 shares
and sole power to dispose 1,670,700 shares.
(7) Dimensional Fund Advisors has sole voting and investment discretion over
730,200 shares and, as a company registered under the Investment Advisors
Act of 1940, disclaims beneficial ownership of these shares.
ELECTION OF DIRECTOR
The Company's Board of Directors is divided into three classes with
staggered three-year terms. The Company's certificate of incorporation provides
for two Class I directors, two Class II directors, and two Class III directors,
whose terms will expire, respectively, at the 2000, 2001, and 1999 annual
meetings of stockholders (in all cases subject to the election and qualification
of their successors and their earlier death, resignation, or removal). At each
annual meeting of stockholders, directors are elected for a term of three years
to succeed those directors whose terms then expire. The Class III director to
be elected at the 1999 annual meeting of stockholders will be elected to serve
until the 2002 annual meeting of stockholders (subject to the election and
qualification of a successor and to his earlier death, resignation, or removal).
THE PERSONS NAMED IN THE ENCLOSED PROXY WILL VOTE TO ELECT STEPHEN
BARTOLIN, JR. AS A CLASS III DIRECTOR, UNLESS THE AUTHORITY TO VOTE FOR HIS
ELECTION IS WITHHELD BY MARKING THE PROXY TO THAT EFFECT. Mr. Bartolin is
currently a Class III director and has indicated his willingness to serve if
elected. However, if he is unable or unwilling to stand for election, proxies
may be voted for a substitute nominee designated by the board of directors.
There is currently a vacancy in Class III, created by the retirement of Gerald
W. Montiel as Chairman, director and officer of the Company effective December
31, 1998. The board intends to fill this vacancy when an appropriate successor
can be found. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
The table on the following page sets forth, for the Class III nominee and
for each director of the Company whose term continues after the Annual Meeting,
his name and age, his positions and offices with the Company, his principal
occupations and business experience for the past five years, the names of any
other public companies for which he is a director, the year his services as a
director of the Company began, and the year his term as a director of the
Company will expire.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS OF THE COMPANY:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
NAME, AGE, DIRECTOR TERM
BUSINESS EXPERIENCE AND DIRECTORSHIPS SINCE EXPIRES
- ------------------------------------------------------------------------------------------------------------
Nominee for Class III Director:
<S> <C> <C>
Stephen Bartolin, Jr., age 48 1998 1999
Mr. Bartolin has been President & CEO of the Five-Star, Five-Diamond
Broadmoor Hotel in Colorado Springs, Colorado from 1991 to the present. He
is also President & CEO of the Manitou and Pikes Peak Railway Company, the
Cog Land and Development Company, and the Broadmoor Golf Club, Inc.
CONTINUING DIRECTORS:
CLASS I DIRECTORS
John M. Hanson, Jr., age 58 1994 2000
Mr. Hanson is a certified public accountant has been a stockholder and
officer of John M. Hanson & Company, a professional corporation practicing
accounting, from 1968 to the present.
Randall L. Herrel, Sr., age 48 1996 2000
Mr. Herrel has been a director, president, and the Chief Executive Officer of
the Company since December 1996. For the two years prior to this, Mr.
Herrel served as president and chief operating officer of Quiksilver, Inc.,
a sports apparel company in Costa Mesa, California. Mr. Herrel joined
Quiksilver in June 1989 and also served at various times as chief financial
officer, treasurer and secretary.
CLASS II DIRECTORS
Andre Gambucci, age 70 1991 2001
Mr. Gambucci was a senior vice president and director of marketing of Acordia
of Colorado, a general insurance agency and insurance brokerage firm in
Colorado Springs, Colorado, from 1982 until December 31, 1995, when he
retired. He is now a consultant for Acordia National.
James W. Nantz, III., age 39 1998 2001
Mr. Nantz has been a television broadcaster for the past five years, most
recently serving as anchor of CBS's Golf Coverage, the NFL Today and college
basketball's Final Four.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The audit committee oversees the accounting controls for the Company, and is
composed of Messrs. Gambucci, Hanson, and Bartolin. The compensation committee
recommends to the board of directors the compensation for executive officers and
has the authority to administer the Company's Stock Option Plans. This
committee is composed of Messrs. Gambucci, Hanson, Bartolin, and Nantz. The
board of directors met in person five times and held two telephone conference
meetings, the audit committee met once, and the compensation committee took
action once by written consent in lieu of a meeting.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company each receive annual
compensation of $12,000 plus $1,000 and expenses for attendance at each board
meeting. Such directors also receive an annual grant of stock options to
purchase shares of the Company's common stock for each quarter during which they
serve as directors and for each committee on which they serve for a quarter.
All directors receive an annual $1,000 apparel allowance for Ashworth clothing.
No other arrangement exists pursuant to which any director of the Company was
compensated during the Company's last fiscal year for any service provided as a
director.
EXECUTIVE OFFICERS:
Set forth below are the names of the persons who served as executive officers
of the Company during fiscal 1998, other than Randall L. Herrel, Sr., whose
position and business background are described above.
Gerald W. Montiel, age 52, former Chairman
Mr. Montiel founded the Company and had been its chairman of the board of
directors since the inception of the Company in 1987. He resigned as an
officer and director of the Company effective December 31, 1998. He is the
brother of Mary Montiel.
John Newman, age 62, Vice President - Finance
Mr. Newman has served as vice president-finance, treasurer, and chief
financial officer since December 1991 and chief accounting officer since
January 1990.
Mary Montiel, age 46, former Senior Vice President - Manufacturing
Ms. Montiel served in various manufacturing and production capacities with the
Company since 1991, most recently as vice-president - manufacturing and
design. She resigned her position with the Company effective January 22,
1999. She is the sister of Gerald W. Montiel.
Paul Gilbert, age 40, General Manager - Ashworth U.K., Ltd.
Mr. Gilbert has been the director of sales and marketing for Ashworth U.K.,
Ltd., since the subsidiary was founded in September 1993, and general manager
since November 1996.
5
<PAGE>
EXECUTIVE COMPENSATION
The following information sets forth the executive compensation for the
Company's Chief Executive Officer during fiscal 1998, and for each of the four
most highly compensated executive officers other than the CEO during fiscal
1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------- ----------------------------------
AWARDS PAYOUTS
SECURITIES LONG-TERM
NAME UNDERLYING INCENTIVE PLAN ALL OTHER
AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PAYOUTS COMPENSATION(4)
- ----------------------------- ---- ---------- ------ --------------- ---------------- -------------------
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Randall L. Herrel, 1998 338,000 0 60,000 0 2,100
Chief Executive Officer 1997 276,000 0 106,094 50,000 0
1996 0(1) 0 300,000 0 75,000
Gerald W. Montiel, 1998 118,077 0 60,000 0 12,119
Chairman (2) 1997 282,474 0 5,625 0 5,405
1996 314,483 0 450,000 0 5,722
John Newman, 1998 160,000 0 20,000 0 4,296
Vice President- 1997 148,924 0 3,000 0 2,729
Finance 1996 161,230 0 45,000 0 2,551
Mary Montiel, 1998 170,000 0 20,000 0 4,010
Sr. Vice President- 1997 148,924 0 3,000 0 2,440
Manufacturing (3) 1996 146,904 0 60,000 0 1,043
Paul Gilbert, 1998 146,578 15,231 10,000 0 0
General Manger 1997 139,188 56,669 0 0 0
Ashworth U.K. Ltd. 1996 154,380 24,045 9,000 0 0
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Herrel joined the Company on December 9, 1996 and did not begin to
receive a salary until 1997.
(2) Mr. Montiel resigned as an officer and director of the Company effective
December 31, 1998.
(3) Ms. Montiel resigned her position with the Company effective January 22,
1999.
(4) Total amount shown in this column for the last fiscal year consists of the
following: (i) Mr. Herrel: $2,100 - premium payment made for life insurance;
(ii) Mr. Montiel: $2,839 - Company contributions and other allocations to
defined contribution plans and related benefit plans; $9,280 - premium
payments made for disability and life insurance; (iii) Mr. Newman: $4,296 -
Company contributions and other allocations to defined contribution plans
and related benefit plans; and (iv) Ms. Montiel: $4,010 - Company
contributions and other allocations to defined contribution plans and
related benefit plans.
6
<PAGE>
FISCAL 1998 STOCK OPTION GRANTS
The following table provides information regarding stock options granted
under the Company's stock option plans for fiscal 1998 to the executive officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANT POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATE OF
STOCK PRICE APPRECIATION
FOR OPTION TERM
- --------------------------------------------------------------------------------------------- ---------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED FISCAL YEAR BASE PRICE DATE(1) 5% 10%
- ------ ------------ ----------------- ------------ ------------- ---------- -------------
(#) ($/sh)
<S> <C> <C> <C> <C> <C> <C>
Gerald W. Montiel 60,000 12.0 10.1875 12/31/03 168,877 373,174
Randall L.Herrel, Sr. 20,000 10.1875 11/10/03 56,292 124,391
20,000 10.1875 11/10/04 69,294 157,206
20,000 12.0 10.1875 11/10/05 82,947 193,301
John Newman 6,666 10.1875 11/10/03 18,762 41,460
6,666 10.1875 11/10/04 23,096 52,397
6,668 4.0 10.1875 11/10/05 27,654 64,447
Mary Montiel 6,666 10.1875 11/10/03 18,762 41,460
6,666 10.1875 11/10/04 23,096 52,397
6,668 4.0 10.1875 11/10/05 27,654 64,447
Paul Gilbert 3,333 10.1875 11/10/03 9,381 20,730
3,333 10.1875 11/10/04 11,548 26,198
3,334 2.0 10.1875 11/10/05 13,827 32,223
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options expiring on 11/10/03 vest and become exercisable on 11/11/98;
options expiring on 11/10/04 vest and become exercisable on 11/11/99;
options expiring on 11/10/05 vest and become exercisable on 11/11/00;
options expiring on 12/31/03 vested and became exercisable on 12/31/98.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors, and persons who beneficially own more than 10% of the
Company's equity securities to file initial reports of ownership and reports of
changes in ownership of the Company's equity securities with the Securities and
Exchange Commission. Specific due dates for these reports have been
established, and the Company is required to disclose in this proxy statement any
late filings during the fiscal year ended October 31, 1998. To the Company's
knowledge, based solely on its review of the copies of such reports required to
be furnished to the Company during the fiscal year ended October 31, 1998, all
of these reports were timely filed except the following: on two occasions Mary
Montiel failed to timely file a Form 4 - reporting in aggregate 10 transactions;
on four occasions Gerald W. Montiel failed to timely file a Form 4 - reporting
in aggregate 42 transactions; on two occasions Fred Couples failed to timely
file a Form 4 - reporting in aggregate three transactions; and on one occasion
Randall L. Herrel failed to timely file a Form 5 - reporting in aggregate four
transactions.
7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FY-END IN-THE-MONEY OPTION
ACQUIRED VALUE EXERCISABLE/ AT FY-END EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- -------------- ------------------- ----------- ----------------------- ------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Gerald W. Montiel 640,000 5,133,439 195,625/60,000 0/0
Randall L. Herrel, Sr. 0 0 106,094/360,000 0/0
John Newman 38,000 371,382 40,000/20,000 0/0
Mary Montiel 61,000 571,746 22,500/20,000 0/0
Paul Gilbert 0 0 9,000/10,000 0/0
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
In fiscal year 1998, the Company had executive employment agreements with
Gerald W. Montiel and Randall L. Herrel, Sr.
Agreement with Mr. Montiel
Mr. Montiel resigned as chairman and director effective December 31, 1998.
Mr. Montiel's employment agreement contains a non-competition provision covering
the term of employment and the ten-year post-termination period and provides
that, as consideration for Montiel's non-compete agreement, the Company shall
pay Montiel compensation equal to: (i) 100% of his then current salary plus,
(ii) nine times an amount equal to 40% of his then current salary, provided,
however, such compensation shall not be less than $1,437,500. At the time of
his resignation, Mr. Montiel entered into a personal services agreement to
provide consulting services to the Company for a maximum of 30 days a year
during the term of the personal services agreement.
Agreement with Mr. Herrel
The agreement with Mr. Herrel provides for a base salary of $325,000 and
bonuses to be determined periodically at the discretion of the Board of
Directors on the basis of merit and the Company's financial success and
progress. A $50,000 bonus was awarded to Mr. Herrel in 1998, based on the
Company's improved earnings per share in fiscal year 1997, and no bonus was paid
to him for fiscal year 1998. The agreement with Mr. Herrel includes severance
payments upon termination of employment under specific circumstances, such
payments ranging from one-half to two times his then annual base salary. The
Company maintains a life insurance policy for $1,000,000, the beneficiary of
which may be named by Mr. Herrel.
8
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder returns on the Company's common stock over a five
year period with the cumulative total return of the Nasdaq Stock Market (U. S.
Companies) and the stocks of companies in the same Standard Industrial
Classification as the Company (SIC 2300-2399).
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
COMPANY 1993 1994 1995 1996 1997 1998
- -------------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ashworth, Inc. 100.00 90.32 58.06 55.91 85.48 54.84
Industry Index 100.00 79.32 77.84 84.12 89.29 74.77
Broad Market 100.00 106.32 126.11 148.10 194.09 219.46
- -------------- ------- ------ ------- ------- ------- -------
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The compensation committee of the Board of Directors is composed of Messrs.
Gambucci, Hanson, Bartolin, and Nantz, and has the authority to administer the
Company's executive compensation programs, including the Company's stock
incentive plans. The Company's executive compensation program is designed to
provide competitive levels of base compensation in order to attract, retain and
motivate high quality employees, tie individual total compensation to individual
performance and success of the Company, and align the interests of the Company's
executive officers with those of its stockholders.
9
<PAGE>
Executive Compensation Programs
The Company's executive compensation program consists of three principal
elements: base salary, cash bonus, and stock options. The Board of Directors
sets the annual base salary for executives after consideration of the
recommendations of the Compensation Committee. Prior to making its
recommendations, the Compensation Committee reviews historical compensation
levels of the executives, evaluates past performance, and assesses expected
future contributions of the executives. In making the determinations regarding
base salaries, the Company considers generally available information regarding
the salaries prevailing in the industry, but does not tie salaries to any
particular indices.
The Company maintains incentive plans under which executive officers may be
paid cash bonuses at the end of each fiscal year. The bonuses under these
incentive plans may depend upon individual performance and the achievement by
the Company of certain financial targets established by the Board of Directors
prior to the start of each fiscal year.
Total compensation for executive officers also includes long-term
incentives offered in the form of stock options, which are generally provided
through initial stock option grants at the date of hire and periodic additional
stock options grants. Stock options align the interests of the executive
officer with the interests of stockholders due to the fact that the executive
can realize a gain only if the Company's stock appreciates in value. In
determining the amount of such grants, the Compensation Committee considers the
contributions of each executive to the overall success of the Company in the
past fiscal year, the responsibilities to be assumed in the upcoming fiscal
year, appropriate incentives for the promotion of the long-term growth of the
Company, and grants to other executives in the industry holding comparable
positions as well as the executive's position within the Company. It has been
the Company's practice to fix the price of the options at the Company's common
stock fair market value on the date of the grant, thereby making the executive's
value realized tied directly to gains realized by the stockholders.
Chief Executive Officer Compensation
The Compensation Committee reviewed Mr. Herrel's performance and adjusted
his compensation in accordance with the factors discussed above. For fiscal
1998, Mr. Herrel's salary increased from $325,000 to $338,000. Because fiscal
1998 earnings per share were lower than target figures, Mr. Herrel was not
awarded a cash bonus. The Compensation Committee recommended, and the board
approved, a grant of options to purchase 60,000 shares of the Company's common
stock. During fiscal 1997, the Compensation Committee awarded Mr. Herrel with
options to purchase 106,094 shares of the Company's common stock. The board
granted fewer options to Mr. Herrel in fiscal 1998 because of lower earnings per
share. Despite the lower earnings, the Compensation Committee and the board
felt that it was important to reward Mr. Herrel for his significant
contributions to the Company and to increase his equity in the Company, further
aligning his interests with those of the Company's stockholders.
This report was furnished by
Messrs. Gambucci, Hanson, Bartolin, and Nantz.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michelle Zafiropoulos, daughter of Gerald Montiel, resigned as an employee
of the Company in August 1998. In fiscal 1998, she earned a salary of $76,067
and exercised options for 12,500 shares of Ashworth common stock for which she
received a benefit of $50,938. Ms. Zafiropoulos had been an employee of the
Company since March 1991, except for a brief period from April 1995 to January
1996.
Laura Gambucci, daughter of Andre Gambucci, resigned as an employee of the
Company in May 1998. In fiscal 1998, she earned a salary of $56,975 and
exercised options for 19,075 shares of Ashworth common stock for which she
received a benefit of $177,252.
The Company has a promotion agreement with Fred Couples who owns of record
or beneficially more than 5% of the Company's common stock. The agreement
requires Mr. Couples' exclusive endorsement and promotion of Ashworth products
during his lifetime. The Company has agreed to compensate Mr. Couples for these
services in the form of an annual payment of $657,000 until November 1, 2004, at
which time the Company will pay Mr. Couples $500,000 annually until August 31,
2011. In addition, Mr. Couples has the right to receive options to purchase
shares of the Company's common stock upon his performance of specified services.
The exercise price of the options will be the fair market value of the Company's
common stock at the time the options are granted, and the options will be
exercisable for a period of seven years. The Company has also made certain
price guaranties with respect to the options.
SELECTION OF INDEPENDENT AUDITORS
The independent public accounting firm of KPMG LLP audited the financial
statements of the Company for the period ended October 31, 1998. The Board of
Directors has appointed KPMG LLP as the Company's independent public accounting
firm to audit the financial statements for the period ending October 31, 1999.
A representative of KPMG LLP is expected to be present at the stockholders'
Annual Meeting and available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this proxy statement, management of the Company was not
aware of any other matter to be presented at the Annual Meeting other than as
set forth herein. However, if any other matters are properly brought before the
Annual Meeting, the shares represented by valid proxies will be voted with
respect to such matters in accordance with the judgment of the persons voting
them. An affirmative vote of a majority of shares present in person or
represented by proxy at the Annual Meeting is necessary to approve any such
matters.
11
<PAGE>
ANNUAL REPORT
The Company's annual report to stockholders for the fiscal year ended
October 31, 1998, including audited financial statements, accompanies this proxy
statement. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED OCTOBER 31, 1998 AND THE EXHIBITS THERETO ARE AVAILABLE FROM THE
COMPANY WITHOUT CHARGE UPON WRITTEN REQUEST OF A STOCKHOLDER. Copies of the
Form 10-K are also available on-line through the Securities and Exchange
Commission at www.sec.gov.
-----------
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN MARCH 2000
Any stockholders intending to present a proposal at the Company's annual
meeting of stockholders to be held in March 2000, must deliver the proposal to
the Secretary of the Company no later than October 20, 1999, in order to have
the proposal considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
By the order of the Board of Directors
/s/ HALINA BALYS
-------------------------------
Halina Balys
Secretary
Carlsbad, California
February 19, 1999
12
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PROXY ASHWORTH, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Randall L. Herrel, Sr. and John Newman as
proxies with the power to appoint their substitutes and hereby authorizes them
to represent and vote, as designated below, all of the shares of common stock
of Ashworth, Inc., held by the undersigned on February 1, 1999, at the annual
meeting of stockholders to be held on Friday March 26, 1999, or any adjournment
thereof, with like effect as if the undersigned were personally present and
voting upon the following matters.
1. ELECT A DIRECTOR to serve until the annual meeting of stockholders to be
held in the year 2002 and until a successor has been duly elected and
qualified.
[_] FOR STEPHEN BARTOLIN, JR. [_] WITHHOLD AUTHORITY TO VOTE
FOR STEPHEN BARTOLIN, JR.
2. TRANSACT such other business as may properly come before the meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF STEPHEN BARTOLIN, JR. AS A DIRECTOR.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY WITH RESPECT TO MATTERS NOT KNOWN
OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS TO THE UNDERSIGNED.
The undersigned hereby
acknowledges receipt of the
Notice of Annual Meeting of
Stockholders and Proxy Statement
furnished herewith.
Dated: , 1999
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Signature(s) of Stockholder(s)
Signature should agree with the
name(s) printed hereon.
Executors, administrators,
trustees, guardians and attorneys
should so indicate when signing.
Attorneys should submit powers of
attorney.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. THE
GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND
THE ANNUAL MEETING, OR TO SUBMIT A LATER DATED REVOCATION OR AMENDMENT TO THIS
PROXY ON ANY OF THE ISSUES SET FORTH ABOVE.
