<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 (S) 240.14a-11(c) or (S) 240.14a-12
Global Sports, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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<PAGE>
[LETTERHEAD OF GLOBAL SPORTS, INC.]
May 17, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Global Sports, Inc. ("Global" or the "Company") which will be held on June
9, 1999 at 10:00 a.m. (Eastern Standard Time) at the office of Global, 555 S.
Henderson Road, King of Prussia, PA 19406. The official notice of the Annual
Meeting together with a proxy statement and form of proxy are enclosed. Please
give this information your careful attention. At the meeting, shareholders of
Global are being asked to elect three directors of Global.
Whether or not you expect to attend the meeting in person it is important
that your shares be voted at the meeting. I urge you to specify your choices
by marking the enclosed proxy and returning it promptly.
Sincerely,
/s/ Michael G. Rubin
Michael G. Rubin
Chairman of the Board and
Chief Executive Officer
<PAGE>
Global Sports, Inc.
555 S. Henderson Road
King of Prussia, PA 19406
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held June 9, 1999
----------------
TO OUR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of GLOBAL SPORTS, INC. ("Global" or the "Company") will be held on
June 9, 1999 at 10:00 a.m. (Eastern Standard Time), at the office of Global,
555 S. Henderson Road, King of Prussia, PA 19406 for the following purposes:
1. To elect three directors named herein to serve for terms described in
the accompanying Proxy Statement and until their successors are elected and
qualified, as more fully described in the accompanying Proxy Statement; and
2. To act upon such other business as may properly come before this
meeting or any postponement or adjournment thereof.
The Board of Directors is not aware of any other business to come before the
Annual Meeting.
The Board has fixed May 14, 1999 as the record date for the determination of
shareholders entitled to vote at the Annual Meeting. Only shareholders of
record at the close of business on that date will be entitled to notice of,
and to vote at, the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
/s/ Steven A. Wolf
Steven A. Wolf
Secretary
King of Prussia, Pennsylvania
May 17, 1999
<PAGE>
Global Sports, Inc.
555 S. Henderson Road
King of Prussia, PA 19406
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Global Sports, Inc. ("Global" or the "Company") for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held on June 9,
1999 at 10:00 a.m. (Eastern Standard Time) at the office of Global, 555 S.
Henderson Road, King of Prussia, PA 19406 and at any postponement or
adjournment thereof. The approximate date on which this proxy statement and
the accompanying form of proxy will first be sent or given to shareholders is
May 17, 1999.
Sending in a signed proxy will not affect the shareholder's right to attend
the annual meeting and vote in person since the proxy is revocable. Any
shareholder giving a proxy has the power to revoke it by, among other methods,
delivering a later dated proxy or giving written notice to the Secretary of
Global at any time before the proxy is exercised.
The expense of the proxy solicitation will be borne by Global. In addition
to solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or teletype by directors, officers or employees of Global and its
subsidiaries without additional compensation. Upon request by brokers,
dealers, banks or voting trustees, or their nominees who are record holders of
the Company's common stock, par value $0.01 per share (the "Common Stock"),
Global is required to pay the reasonable expenses incurred by such record
holders for mailing proxy materials and annual shareholder reports to any
beneficial owners of the Common Stock.
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Common Stock for election of all nominees for director hereinafter named.
The Company had 12,063,303 shares of Common Stock outstanding at the close
of business on May 14, 1999 (the "Record Date"). In order for a quorum to be
present at the Annual Meeting, a majority of the outstanding shares of the
Company's Common Stock as of the close of business on the Record Date must be
present in person or represented by proxy at the Annual Meeting. All such
shares that are present in person or represented by proxy at the Annual
Meeting will be counted in determining whether a quorum is present, including
abstentions and broker non-votes.
Each share of Common Stock outstanding is entitled to one vote on each
matter which may be brought before the Annual Meeting. The election of
directors will be determined by a plurality vote. The affirmative vote of a
majority of the shares present or represented by proxy is required to approve
any other business matters properly brought before the Annual Meeting. Under
the Delaware General Corporation Law, an abstention, withholding of authority
to vote or broker non-vote on any proposal, other than the election of
directors, will have the same legal effect as an "against" vote.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 27, 1999, the beneficial
ownership of the Company's Common Stock: (i) by each person known by the
Company to be the beneficial owner of five percent or more of the Company's
outstanding Common Stock, (ii) by each director and nominee for director of
the Company, (iii) by the Company's chief executive officer and four most
highly paid executive officers during fiscal 1998 (the "Named Officers"), and
(iv) by the directors, director nominees and executive officers of the Company
as a group. Unless otherwise specified, all persons listed below have sole
voting and investment power with respect to their shares. The business address
of the officers of Global is that of the Company.
<TABLE>
<CAPTION>
Name, Position and Address Number of Shares Percentage
of Beneficial Owner Beneficially Owned(1) of Class
-------------------------- --------------------- ----------
<S> <C> <C>
Michael G. Rubin.............................. 8,039,086 66.6%
Chairman of the Board and Chief Executive
Officer of Global
James J. Salter............................... 570,200(2) 4.7%
Chief Executive Officer of Off-Price and
Action Sports Division
David B. Newcombe............................. 14,167(3) *
Vice President of Sales
Steven A. Wolf................................ 25,625(4) *
Chief Financial Officer
Guy A. Grubel................................. 5,000(5) *
Vice President/General Manager of Yukon
Kenneth J. Adelberg........................... 119,500(6) 1.0%
Director
Harvey Lamm................................... 80,000(7) *
Director
All executive officers and directors as a 8,855,078 72.3%
group (11 persons)...........................
</TABLE>
- --------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC. Accordingly they may include securities owned by
or for, among others, the wife and/or minor children or the individual and
any other relative who has the same home as such individual, as well as
other securities as to which the individual has or shares voting or
investment power or has the right to acquire under outstanding stock
options within 60 days after the date of this table. Beneficial ownership
may be disclaimed as to certain of the securities.
(2) Includes options to purchase 20,000 shares of Common Stock awarded to Mr.
Salter pursuant to the Company's 1996 Equity Incentive Plan which are
exercisable within 60 days of the date of this table. Does not include
options to purchase 80,000 shares of Common Stock which are not
exercisable within 60 days of the date of this table.
(3) Includes options to purchase 5,334 shares of Common Stock awarded to Mr.
Newcombe pursuant to the Company's 1996 Equity Incentive Plan which are
currently exercisable. Does not include options to purchase 26,332 shares
of Common Stock which are not exercisable within 60 days of the date of
this table.
(4) Includes options to purchase 25,625 shares of Common Stock awarded to Mr.
Wolf pursuant to the Company's 1996 Equity Incentive Plan, all of which
are currently exercisable. Does not include options to purchase 24,375
shares of Common Stock which are not exercisable within 60 days of the
date of this table.
(5) Includes options to purchase 5,000 shares of Common Stock awarded to Mr.
Grubel pursuant to the Company's 1996 Equity Incentive Plan, all of which
are currently exercisable. Does not include options to purchase 15,000
shares of Common Stock which are not exercisable within 60 days of the
date of this table.
(6) Includes options to purchase 46,250 shares of Common Stock awarded to Mr.
Adelberg pursuant to the Company's 1996 Equity Incentive Plan, all of
which are currently exercisable. Does not include options to purchase
10,000 shares of Common Stock which are not exercisable within 60 days of
the date of this table.
(7) Includes options to purchase 80,000 shares of Common Stock awarded to Mr.
Lamm pursuant to the Company's 1996 Equity Incentive Plan, all of which
are currently exercisable. Does not include options to purchase 70,000
shares of Common Stock which are not exercisable within 60 days of the
date of this table.
* Less than one percent.
2
<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
The Company's Bylaws, as amended, currently provide that the number of
directors shall be as established by the Board. The Board has set the number
of directors at three or until their successors are elected and qualified. The
following table sets forth certain information, as of April 27, 1999,
regarding the Company's nominees for election to the Board of Directors to
serve for one-year terms until the 2000 Annual Meeting and until their
respective successors are elected and qualified.
<TABLE>
<CAPTION>
Position(s) Held Director Term to
Name Age(1) in the Company Since Expire
---- ------ ---------------- -------- -------
<S> <C> <C> <C> <C>
Michael G. Rubin............ 26 Chairman of the Board and 1995 2000
Chief Executive Officer
Kenneth J. Adelberg......... 46 Director 1995 2000
Harvey Lamm................. 63 Director 1998 2000
</TABLE>
- --------
(1) As of April 27, 1999.
The principal occupation of each director of the Company is set forth below.
Michael G. Rubin has served as Chairman of the Board and Chief Executive
Officer of the Company since July 31, 1995 and as President and Director of
KPR Sports International, Inc., Apex Sports International, Inc. and MR
Management, Inc. (the "KPR Companies") since their formation in 1990. Mr.
Rubin received the 1995 Entrepreneur of the Year Award for the Delaware Valley
Region, which is sponsored by Inc. magazine and Ernst & Young. Mr. Rubin
attended Villanova University, Villanova, Pennsylvania.
Kenneth J. Adelberg has served as President and Chief Executive Officer of
HiFi House Group of Companies, a privately-held company based in Broomall,
Pennsylvania, since 1987. Mr. Adelberg is a director and founding stockholder
of US Wats, Inc., a publicly-traded company specializing in business
telecommunications services, located in Bala Cynwyd, Pennsylvania, which was
established in 1989. Mr. Adelberg is a founding stockholder and director of
Republic Bank, Philadelphia, Pennsylvania, a publicly-traded bank which has
been in operation since 1989. Mr. Adelberg holds Bachelor of Science degrees
in Biophysics and Physiological Psychology from Pennsylvania State University
and attended the MBA program at Drexel University, Philadelphia, Pennsylvania.
Harvey Lamm is a founding partner of Subaru of America, Inc., a wholly-owned
subsidiary of Fuji Heavy Industries Ltd., and served as its Chairman of the
Board, Chief Executive Officer, President and Chief Operating Officer since
its inception in 1968. Until its acquisition by Fuji Heavy Industries Ltd. in
August 1990, Subaru of America, Inc. was the exclusive importer of Subaru
brand vehicles in the United States and was a publicly traded company listed
on the Nasdaq National Market. Mr. Lamm holds degrees from Pennsylvania State
University and Drexel University.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES FOR
DIRECTOR.
Board, Committees and Attendance at Meetings
The Board of Directors of the Company held three meetings during the fiscal
year ended December 31, 1998. During fiscal 1998, no director attended fewer
than 75% of the aggregate of the total number of Board meetings and the total
number of meetings held by committees of the Board of Directors on which he
served. The following is a description of each of the committees of the Board
of Directors of the Company.
Audit Committee. The members of the Audit Committee are Messrs. Lamm and
Adelberg. The Audit Committee reviews the Company's audited financial
statements and makes recommendations to the Board concerning the Company's
accounting practices and policies and the selection of independent
accountants. The Audit Committee did not meet during the year ended December
31, 1998.
3
<PAGE>
Compensation Committee. The members of the Compensation Committee are
Messrs. Rubin and Adelberg. The Compensation Committee is responsible for
establishing salaries, bonuses and other compensation for the executive
officers and administers the Company's stock option plans. The Compensation
Committee did not meet during the year ended December 31, 1998.
Compensation of Directors
Non-employee directors of the Company received options to purchase an
aggregate of 150,000 shares of the Company's Common Stock during fiscal 1998.
Thus far during fiscal 1999, non-employee directors have received options to
purchase an aggregate of 50,000 shares of the Company's Common Stock. The
directors do not receive any cash compensation for their services on behalf of
the Company but are reimbursed for reasonable travel and lodging expenses
incurred in attending meetings of the Board of Directors and any Committee.
Mr. Rubin, the only director who is also an officer of the Company, does not
receive any separate fee for acting in his capacity as a director.
EXECUTIVE COMPENSATION
Compensation Committee Report
The Company's Compensation Committee of the Board of Directors is comprised
of Messrs. Rubin and Adelberg. For 1998, the Board of Directors reviewed the
compensation of executive officers, made decisions regarding executive
compensation and administered the Company's employee stock option plans.
The Company's compensation policies for executive officers are to (i)
provide compensation packages, so as to attract, motivate and retain
executives, (ii) link a significant portion of compensation to financial
results, so as to reward successful performance, and (iii) provide long-term
equity based compensation, so as to further align the interests of executives
with those of the shareholders and further reward success and performance. The
principal components of the Company's executive compensation are base salary,
incentive compensation and stock options.
In determining compensation levels, the Company considers compensation
packages offered by similar sized companies within the athletic footwear
industry. Compensation levels for individual executive officers may be more or
less than those offered by such other companies, depending on a subjective
assessment of individual factors, such as the executive's position, skills,
achievements, tenure with the Company and historical compensation levels.
The Company has employment agreements with the following Named Officers:
Michael G. Rubin as Chief Executive Officer, James J. Salter as Chief
Executive Officer of the Company's Off-Price and Action Sports Division, David
B. Newcombe as Vice President of Sales, and Steven A. Wolf as Chief Financial
Officer. Pursuant to the agreements, total compensation is divided into three
primary components: base salary, bonus and stock options. The award of bonuses
and stock options serve as incentives for superior performance and are based
upon both the performance of the executives and the Company. Compensation of
the Named Officers for fiscal 1998 was determined in accordance with the
employment agreements as described herein.
Under the stock option plans established by the Company, stock options are
periodically granted to employees at the discretion of the Board of Directors
or Compensation Committee. It is contemplated that executives of the Company
will be eligible to receive stock option grants, subject to individual
performance and the performance of the Company as a whole.
4
<PAGE>
During 1998, the Company's Named Officers were granted a total of 135,000
options to purchase Common Stock at exercise prices ranging from $2.88 to
$6.88 per share.
Section 162(m) of the Internal Revenue Code generally denies deduction to
any publicly held company such as the Company for certain compensation
exceeding $1,000,000 paid to the chief executive officer and the four other
highest paid executive officers, excluding among other things certain
performance-based compensation. The Company has been advised that stock
options granted before the adoption of Section 162(m) are not subject to the
limit on deductions and that its general stock option grants will qualify for
the performance based exclusion. The Company has not yet recommended any
change to the Company's executive compensation policies and plans as a result
of Section 162(m), but the Compensation Committee will continue to evaluate
the impact of recently finalized tax regulations to ensure that the Company's
executive compensation plans most effectively serve the interests of the
Company and its shareholders.
Michael G. Rubin
Kenneth J. Adelberg
5
<PAGE>
Summary Compensation Table
The following table sets forth information regarding compensation paid by
the Company and its subsidiaries to each Named Officer.
<TABLE>
<CAPTION>
Long Term
Annual Compensation(1) Compensation Awards
------------------------------------------- ------------------------------------
Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options/ All Other
Principal Position Year Salary Bonus Compensation(1) Award(s) SARS (#) Compensation
------------------ ------ -------- -------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael G. Rubin........ 1998 $398,269 -- -- -- -- --
Chairman of the Board
and 1997 297,115(2) -- -- -- -- --
Chief Executive Officer
of Global 1996 593,924(2) -- -- -- -- --
James J. Salter(9)...... 1998 140,625 $100,000 -- -- 100,000(3) --
Chief Executive Officer
of Off- 1997 -- -- -- -- -- --
Price and Action Sports
Division 1996 -- -- -- -- -- --
David B. Newcombe(10)... 1998 130,058 -- -- -- 30,000(4) --
Vice President of Sales 1997 -- -- -- -- -- --
1996 -- -- -- -- -- --
Steven A. Wolf.......... 1998 124,481 20,000 -- -- -- --
Chief Financial Officer 1997 112,178 25,000 -- -- 50,000(5) --
1996 101,563 -- -- -- 7,500(6) --
Guy A. Grubel(11)....... 1998 113,808 1,500 -- -- 5,000(7) --
Vice President/General 1997 31,519(2) -- -- -- 15,000(8) --
Manager of Yukon 1996 -- -- -- -- -- --
</TABLE>
- --------
(1) Excludes perquisites and other personal benefits that do not exceed
$50,000 or 10% of each officer's total salary and bonus.
(2) Includes amounts paid by the KPR Companies until December 15, 1997, the
date of the Company's reorganization, and paid by the Company thereafter.
(3) Represents an option to purchase 100,000 shares of Common Stock granted
to Mr. Salter in fiscal 1998 at an exercise price of $6.875 per share.
Such option will vest at a rate of 20% per year over a five year period
with the first portion vesting on May 12, 1999, the first anniversary of
the date of grant.
(4) Represents options to purchase 20,000 shares and 10,000 shares of Common
Stock granted to Mr. Newcombe in fiscal 1998 at exercise prices of $2.88
per share and $3.20 per share, respectively. Such options will vest at a
rate of 25% per year over four year periods with the first portions
vesting on January 2, 1999 and October 19, 1999, the first anniversaries
of the respective dates of grant.
(5) Represents an option to purchase 32,500 shares of Common Stock granted to
Mr. Wolf in fiscal 1997 at an exercise price of $3.20 per share and
options to purchase 7,500 shares and 10,000 shares of Common Stock
granted to Mr. Wolf in prior periods which were repriced from $4.00 and
$9.375, respectively, to $3.20 in fiscal 1997. Such options vest at a
rate of 20%, 20% and 33 1/3%, respectively, over five, five and three
year periods.
(6) Represents an option to purchase 7,500 shares of Common Stock granted to
Mr. Wolf in fiscal 1996 at an exercise price of $4.00 per share. Such
option was subsequently repriced in fiscal 1997.
(7) Represents an option to purchase 5,000 shares of Common Stock granted to
Mr. Grubel in fiscal 1998 at an exercise price of $5.375 per share. Such
option will vest at a rate of 33 1/3% per year over a three year period
with the first portion vesting on November 4, 1999, the first anniversary
of the date of grant
(8) Represents an option to purchase 15,000 shares of Common Stock granted to
Mr. Grubel in fiscal 1997 at an exercise price of $3.20 per share. Such
option will vest at a rate of 33 1/3% per year over a three year period
with the first portion having vested on December 15, 1998, the first
anniversary of the date of grant.
(9) Mr. Salter joined the Company on May 12, 1998.
(10) Mr. Newcombe joined the Company on January 2, 1998.
(11) Mr. Grubel joined the Company on September 22, 1997.
6
<PAGE>
Stock Option Plans
1996 Equity Incentive Plan
In March 1996, the Board of Directors adopted and in July 1996 the Company's
shareholders approved the Company's 1996 Equity Incentive Plan (the "Incentive
Plan"). The purposes of the Incentive Plan are to attract and retain key
employees and certain other persons who are in a position to make significant
contributions to the success of the Company, to reward these employees and
other persons for their contributions, to provide additional incentive to
these employees and other persons to continue making similar contributions and
to further align the interests of these employees and other persons with those
of the Company's shareholders. To achieve these purposes, the Incentive Plan
permits grants of incentive stock options ("ISO's"), options not intended to
qualify as incentive stock options ("Non-ISO's"), stock appreciation rights
("SAR's"), restricted and unrestricted stock awards, performance awards,
loans, and supplemental cash awards and combinations of the foregoing (all
referred to as "Awards").
The Incentive Plan originally permitted Awards to be granted for a total of
100,000 shares of the Company's common stock. On September 24, 1996, the Board
of Directors approved an amendment to the Incentive Plan that increased the
maximum number of shares issuable under the Incentive Plan to 1,000,000
shares. This amendment was approved by the shareholders at a vote held in
connection with the Company's annual shareholders meeting on December 4, 1997.
Shares issuable under Awards that terminate unexercised, shares issuable under
Awards that are payable in stock or cash but are paid in cash and shares
issued but later forfeited will be available for future Awards under the
Incentive Plan.
All current and future employees of the Company, and other persons who, in
the opinion of the Board of Directors, are in a position to make significant
contributions to the success of the Company, such as consultants and non-
employee directors, are eligible to receive Awards under the Incentive Plan.
The Incentive Plan is administered by the Board of Directors, which
determines, among other things and subject to certain conditions, the persons
eligible to receive Awards, the persons who actually receive Awards, the type
of each Award, the number of shares of common stock subject to each Award, the
date of grant, exercise schedule, vesting schedule and other terms and
conditions of each Award, whether to accelerate the exercise or vesting
schedule or waive any other terms or conditions of each Award, whether to
amend or cancel an Award and the form of any instrument used under the
Incentive Plan. The Board of Directors has the right to adopt rules for the
administration of the Incentive Plan, settle all controversies regarding the
Incentive Plan or any Award, and construe and correct defects and omissions in
the Incentive Plan or any Award. The Incentive Plan may be amended, suspended
or terminated by the Board of Directors, subject to certain conditions,
provided that shareholder approval will be required whenever necessary for the
Incentive Plan to continue to satisfy the requirements of certain securities
and tax laws, rules and regulations.
Recipients of stock options under the Incentive Plan will have the right to
purchase shares of common stock at an exercise price, during a period of time
and on such other terms and conditions as are determined by the Board of
Directors. For ISO's, the recipient must be an employee, the exercise price
must be at least 100% (110% if issued to a 10% or greater shareholder of the
Company) of the fair market value of the Company's common stock on the date of
grant and the term cannot exceed ten years (five years if issued to a 10% or
greater shareholder of the Company) from date of grant. If permitted by the
Board of Directors and subject to certain conditions, an option exercise price
may be paid by delivery of shares of the Company's common stock that have been
outstanding, a promissory note, a broker's undertaking to promptly deliver the
necessary funds or by a combination of those methods. If permitted by the
Board of Directors, options (other than those granted in tandem with SAR's)
may be settled by the Company paying to the recipient, in cash or shares of
common stock (valued at the then fair market value of the Company's common
stock), an amount equal to such fair market value minus the exercise price of
the option shares.
SAR's may be granted under the Incentive Plan either alone or in tandem with
stock options. Generally, recipients of SAR's are entitled to receive upon
exercise, cash or shares of common stock (valued at the then
7
<PAGE>
fair market value of the Company's common stock) equal to such fair market
value on the date of exercise minus such fair market value on the date of
grant of the shares subject to the SAR, although certain other measurements
also may be used. A SAR granted in tandem with a stock option is exercisable
only if and to the extent that the option is exercised.
The Incentive Plan provides for restricted and unrestricted stock awards.
Stock awards allow the recipient to acquire shares of the Company's common
stock for their par value or any higher price determined by the Board of
Directors. In the case of restricted stock awards, the shares acquired are
subject to a vesting schedule and other possible conditions determined by the
Board of Directors.
The Incentive Plan provides for performance awards entitling the recipient
to receive stock options, stock awards or other types of Awards conditional
upon achieving performance goals determined by the Board of Directors.
Performance goals may involve overall corporate performance, operating group
or business unit performance, personal performance or any other category of
performance determined by the Board of Directors. Financial performance may be
measured by revenue, operating income, net income, earnings per share, common
stock price, price-earnings multiple or other financial factors determined by
the Board of Directors.
Under the Incentive Plan, loans or supplemental cash awards may be granted
to recipients of Awards to help defray taxes due as a result of the Awards.
The terms and conditions of loans and supplemental cash awards, including the
interest rate, which may be zero, and whether any loan will be forgiven, are
determined by the Board of Directors.
Generally, upon termination of a recipient's employment or other
relationship with the Company, stock options and SAR's remain exercisable for
a period of three months (one year if termination is due to death or
disability) to the extent that they were exercisable at the time of
termination, except as otherwise agreed between the employee and the Company,
unvested shares under outstanding restricted stock awards vest immediately
except in the case of a voluntary resignation or termination for cause (as
defined in the Incentive Plan). Stock options, SAR's and other Awards that are
not exercisable at the time of termination automatically terminate, and
payments or benefits under deferred stock awards, performance awards and
supplemental cash awards that are not irrevocably due at the time of
termination are forfeited.
In addition to the 1996 Equity Incentive Plan, which is discussed above, the
Company has adopted the following seven separate stock option plans (the
"Plans"): the 1987 Stock Option Plan, the 1988 Stock Option Plan, the 1990
Stock Option Plan, the 1992 Stock Option Plan, the 1993 Stock Option Plan, the
1995 Stock Option Plan, and the 1995 Non-Employee Directors' Stock Option
Plan. The following terms and conditions are virtually identical for each of
the Plans, except for the 1995 Non-Employee Directors' Stock Option Plan which
is separately summarized below. Pursuant to the Plans, options may be granted
with respect to 31,321, 17,500, 37,500, 43,750, 45,000, 75,000 and 12,500
shares of common stock, respectively.
Options under the Plans may be granted as incentive stock options intended
to qualify under Section 422 of the Code or as options not intended to so
qualify. In the case of both incentive stock options and non-qualified stock
options, the option price must be equal to at least 100% of the fair market
value of the Company's common stock on the date of grant. There is no limit on
the number of shares for which options may be granted to any single employee
under a Plan, except that incentive stock options first exercisable by a
recipient in any one year under a Plan may not exceed $100,000 in value
(determined at the time of grant). In addition, an incentive option granted to
any person who owns 10% or more of the shares of voting stock of Global must
have had an option price of not less than 110% of the fair market value of the
shares at the time of grant and the option must expire not more than five
years after its grant.
Payment of the option exercise price may be made in cash, shares of common
stock or a combination of cash and common stock. Except with respect to the
1995 Stock Option Plan, all officers, directors and key employees of the
Company or any current or future parent or subsidiary of the Company are
eligible to receive options under the Plans. Under the 1995 Stock Option Plan,
non-employee members of the Board of Directors
8
<PAGE>
of the Company are not eligible to receive options. The Plans are administered
by the Board of Directors which selects the optionee, determines the number of
shares subject to each option and prescribes other terms and conditions of
each option.
1995 Directors' Plan
On September 19, 1995, the Board of Directors adopted, and on November 15,
1995, the shareholders approved, the 1995 Non-Employee Directors' Stock Option
Plan (the "Directors' Plan"). Pursuant to the Directors' Plan, options may be
granted with respect to an aggregate of 12,500 shares of common stock.
Options granted under the Directors' Plan are nonstatutory stock options
which do not qualify under Section 422 of the Code. Only non-employee
directors of Global or any subsidiary of Global ("Non-Employee Director") are
eligible to participate in the Directors' Plan.
While grants of stock options under the Directors' Plan are automatic and
non-discretionary, all questions of interpretation of the Directors' Plan are
determined by the Executive Committee of the Board of Directors. The
Directors' Plan provides that commencing January 1, 1996 and annually on
January 1 of each year thereafter, an option to purchase 1,250 shares of
Global common stock will be granted to each Non-Employee Director. The option
exercise price for each option granted under the Directors' Plan is the fair
market value on the date the option is granted. All options granted under the
Directors' Plan vest at the rate of 25% per calendar quarter after the date of
grant (or earlier in event of the death or disability of the Non-Employee
Director or sale of Global). Upon departure from the Board of Directors by
reason of death or disability, all options held by a Non-Employee Director may
be exercised by him or her or by his or her executor or administrator, or by
the person or persons to whom the option is transferred by will or the
applicable laws of descent and distribution, only during the one-year period
after such departure. If a Non-Employee Directors' service with Global
terminates for any other reason, all options held by the Non-Employee Director
that are not then exercisable will terminate and options that are exercisable
on the date of termination will continue to be exercisable for the original
option exercise period. Upon sale of Global, all options held by Non-Employee
Directors will terminate. In all other events, options granted under the
Directors' Plan remain exercisable until the fifth anniversary of the date of
grant. No option may be transferred other than by will or by the laws of
descent and distribution.
9
<PAGE>
The following table sets forth information regarding options exercised by
the Named Officers during fiscal 1998 under the Stock Option Plan and the
option values of options held by such individuals at fiscal year end.
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/ SARs at Options/SARs at
Fiscal Year End Fiscal Year End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable(1)
---- --------------- ----------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Michael G. Rubin........ -- -- -- --
Chairman of the Board
and Chief Executive
Officer of Global
James J. Salter......... -- -- --/100,000 --/$100,000(2)
Chief Executive Officer
of Off-Price and Action
Sports Division
David B. Newcombe....... -- -- --/ 31,666 --/$150,440(3)
Vice President of Sales
Steven A. Wolf.......... -- -- 25,625/ 24,375 $119,796/$113,953(4)
Chief Financial Officer
Guy A. Grubel........... -- -- 5,000/ 15,000 $ 23,375/ $59,250(5)
Vice President/General
Manager of Yukon
</TABLE>
- --------
(1) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the options granted based upon the closing
sales price per share of $7.875 on December 31, 1998.
(2) The exercise price of an option to purchase 100,000 shares held by Mr.
Salter is $6.875 per share. Such option vests at a rate of 20% of the
initial award per year over a five year period commencing on May 12, 1999.
(3) The exercise prices of options to purchase 20,000 shares and 10,000 shares
held by Mr. Newcombe are $2.88 per share and $3.20 per share,
respectively. Such options vest at a rate of 25% and 20%, respectively, of
the initial awards per year over four and five year periods commencing on
January 2, 1999, and October 19, 1999, respectively.
(4) The exercise price of options to purchase 32,500 shares, 7,500 shares and
10,000 shares held by Mr. Wolf are $3.20 per share. Such options vest at
rates of 20%, 20% and 33 1/3%, respectively, of the initial awards per
year over five, five and three year periods commencing on December 15,
1998.
(5) The exercise prices of options to purchase 5,000 shares and 15,000 shares
held by Mr. Grubel are $5.375 per share and $3.20 per share, respectively.
Such options vest at a rate of 33 1/3% of the initial award per year over
a three year period commencing on November 4, 1999, and December 15, 1998,
respectively.
10
<PAGE>
The following table sets forth information regarding options to purchase
shares of Common Stock granted to the Named Officers during fiscal 1998. The
Stock Option Plan does not provide for the grant of stock appreciation rights
("SARs").
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Potential Realized Value at
Number of % of Total Assumed Annual Rates of
Securities Options/SARs Exercise Stock Price Appreciation for
Underlying Granted to or Base Option Term
Options/SARs Employees in Price Expiration ------------------------------
Name Granted (#) Fiscal Year ($/sh) Date 5% ($) 10% ($)
---- ------------ ------------ -------- ---------- 0% ($) --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael G. Rubin........ -- -- -- -- -- -- --
Chairman of the Board
and Chief Executive
Officer of Global
James J. Salter......... 100,000(1) 14.6% $6.875 5/13/08 -- $ 432,365 $ 1,095,697
Chief Executive Officer
of Off-Price and Action
Sports Division
David B. Newcombe....... 20,000(2) 2.9% $2.88 1/02/08 -- $ 35,553 $90,731
Vice President of Sales 10,000(3) 1.5% $3.20 10/19/08 $13,000 $41,300 $84,718
Steven A. Wolf.......... -- -- -- -- -- -- --
Chief Financial Officer
Guy A. Grubel........... 5,000(4) 0.7% $5.375 11/04/08 -- $ 16,902 $ 42,832
Vice President/General
Manager of Yukon
</TABLE>
- --------
(1) Such options vest at a rate of 20% of the initial award per year over a
five year period commencing May 12, 1999.
(2) Such options vest at a rate of 25% of the initial award per year over a
four year period commencing January 2, 1999.
(3) Such options vest at a rate of 20% of the initial award per year over a
five year period commencing October 19, 1999.
(4) Such options vest at a rate of 33 1/3% of the initial award per year over
a three year period commencing November 4, 1999.
Employment Agreements
Michael G. Rubin. On September 25, 1996, the Company entered into an
agreement with Mr. Rubin for an initial term of five years commencing on
December 15, 1997, subject to automatic annual extensions, to serve as the
Company's Chairman and Chief Executive Officer. Pursuant to the terms of the
employment agreement, Mr. Rubin is entitled to receive (i) an annual base
salary of $450,000 during the fiscal year ending December 31, 1999 increasing
$50,800 effective January 1, 2000 and $49,280 effective January 1, 2001, (ii)
an annual bonus based upon the achievements of Mr. Rubin and the results of
operations of the Company, (iii) other benefits similar to those provided to
Global's other officers. The agreement was entered into in anticipation of the
Company completing a reorganization on or about January 1, 1997, which
reorganization did not occur until December 15, 1997. The terms of the
agreement specified that in the event that the reorganization did not occur
prior to June 30, 1997, the agreement would become null and void. On the date
of the reorganization, the employment agreement was amended such that the
terms of the original agreement were adopted.
Mr. Rubin's employment agreement may be terminated by Global with cause,
which is defined to include, among other things, the willful failure or
refusal by Mr. Rubin to comply with explicit directions of the Board of
Directors or Executive Committee or to render the services required by the
employment agreement, willful breach or habitual neglect in the performance of
his duties, conviction of a felony or fraud or embezzlement involving assets
of Global. In the event of termination by Global for any other reason, Mr.
Rubin will be entitled
11
<PAGE>
to receive any unpaid salary and benefits through the date of termination.
Under the employment agreement, for a period of one year following his
termination, Mr. Rubin is prohibited from engaging in the planning, research,
development, production, manufacturing, marketing, sales or distribution of
athletic footwear, rugged outdoor footwear, sportswear, licensed products,
related products, equipment or services or any other line of business engaged
in or under demonstrable development by the Company. In addition, Mr. Rubin is
prohibited from enticing, inducing or encouraging other employees of the
Company to engage in any other activity which done by them would violate any
provision of the contract.
James J. Salter. On May 12, 1998, the Company entered into an employment
agreement with James J. Salter, Chief Executive Officer of the Company's Off-
Price and Action Sports Division, for an initial term of four years, subject
to automatic annual extensions. Mr. Salter's compensation is comprised of the
following: (i) an annual base salary of $315,000 during the first year of the
agreement increasing not less than 5% each following year, (ii) stock option
grants, (iii) incentive compensation of up to $100,000 based upon the sales
and profit levels of the Company's Off-Price Division, and (iv) other benefits
similar to those provided to Global's other officers.
David B. Newcombe. On January 1, 1998, the Company entered into an
employment agreement with David B. Newcombe, Vice President of Sales of
Global, for an initial term of four years, subject to automatic annual
extensions. Mr. Newcombe's compensation is comprised of the following: (i) an
annual base salary of $150,000 during the fiscal year ending December 31, 1999
increasing $12,500 effective January 1, 2000, (ii) stock option grants, (iii)
incentive compensation up to 40% of Mr. Newcombe's base salary based upon the
achievements of Mr. Newcombe and the results of operations of the Company, and
(iv) other benefits similar to those provided to Global's other officers.
Steven A. Wolf. On August 1, 1995, the Company entered into an employment
agreement with Steven A. Wolf, Chief Financial Officer of Global, for an
initial term of three years, subject to automatic annual extensions. Mr.
Wolf's compensation is comprised of the following: (i) an annual base salary
of $137,500 during the fiscal year ending December 31, 1999 increasing $12,500
effective January 1, 2000; $5,000 effective January 1, 2001 and $5,000
effective January 1, 2002, (ii) stock option grants, (iii) incentive
compensation up to 30% of Mr. Wolf's base salary based upon the achievements
of Mr. Wolf and the results of operations of the Company, and (iv) other
benefits similar to those provided to Global's other officers.
Each of Mr. Salter's, Mr. Wolf's and Mr. Newcombe's employment agreements
may be terminated by Global with cause, which is defined the same as in Mr.
Rubin's agreement. In the event of termination by Global for any other reason,
they would also be entitled to receive any unpaid salary and benefits through
their respective dates of termination. All of their employment agreements
contain three year restrictive covenants similar to the one in Mr. Rubin's
agreement.
12
<PAGE>
Stock Performance Graph
The following graph shows a comparison of the cumulative total return for
the Company's Common Stock, the NASDAQ Stock Market and the Peer Group Index
(defined below), assuming an investment of $100 in each on January 1, 1994,
and the reinvestment of all dividends. The data points used for the
performance graph are listed below.
The Peer Group Index reflects the performance of the following publicly
traded companies in industries similar to that of the Company: K-Swiss Inc.,
Rocky Shoes & Boots, Inc., Saucony, Inc., The Timberland Company and Wolverine
World Wide, Inc.
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31//95 12/31/96 12/31/97 12/31/98
Performance Graph Data Points -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Global.................. $100.00 105.88 94.12 107.94 62.06 170.10
NASDAQ.................. $100.00 65.65 81.48 122.70 162.65 116.27
Peer Group Index........ $100.00 104.99 136.18 169.23 207.00 291.96
</TABLE>
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company does not have any formal policy concerning the direct or
indirect pecuniary interest of any of its officers, directors, security
holders or affiliates in any investment to be acquired or disposed of by the
Company or in any transaction to which the Company is a party or has an
interest. The Company will not enter into any such transactions unless
approved by a majority of the entire Board of Directors, not including any
interested director.
The Company's main executive offices and warehouse are located in King of
Prussia, Pennsylvania in a 75,000 square foot facility leased from Mr. Rubin.
Pursuant to the lease, the Company pays approximately $29,000 per month, plus
maintenance and utilities, for use of these facilities. The lease expires on
September 30, 2009.
As of December 31, 1998, the Company owed Mr. Rubin $1,829,935, including
accrued interest, in connection with a loan by Mr. Rubin to the Company.
Interest accrues on the loan at the Company's choice of prime plus 1/4% or
LIBOR (Adjusted Eurodollar Rate) plus two hundred seventy-five basis points.
The loan is subordinated to the Company's line of credit from its principal
lending bank.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors, executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that none of
such officers, directors or greater than 10% beneficial owners, other than Mr.
Rubin, filed a Form 3 or Form 5.
SHAREHOLDER PROPOSALS
Pursuant to recent amendments to the proxy rules under the Exchange Act, the
Company's shareholders are notified that the deadline for providing the
Company timely notice of any shareholder proposal to be submitted outside of
the Rule 14a-8 process for consideration at the Company's 2000 Annual Meeting
of Shareholders (the "2000 Meeting") will be March 19, 2000. As to all such
matters which the Company does not have notice on or prior to March 19, 2000,
discretionary authority shall be granted to the persons designated in the
Company's proxy related to the 2000 Meeting to vote on such proposal. This
change in procedure does not affect the Rule 14a-8 requirements applicable to
inclusion of shareholder proposals in the Company's proxy materials related to
the 2000 Meeting. A shareholder proposal regarding the 2000 Meeting must be
submitted to the Company at its office located at 555 S. Henderson Road, King
of Prussia, Pennsylvania, 19406, by January 3, 2000 to receive consideration
for inclusion in the Company's 2000 proxy materials. Any such proposal must
also comply with the proxy rules under the Exchange Act, including Rule 14a-8.
INDEPENDENT PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, the Board of Directors
has selected Deloitte & Touche LLP to be the Company's independent certified
public accountants for fiscal 1999. A representative of
14
<PAGE>
Deloitte & Touche LLP is expected to be present at the Annual Meeting to have
the opportunity to make a statement if he or she desires to do so and to be
available to respond to appropriate questions.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no other
business that will be presented for consideration at the Annual Meeting (other
than procedural matters). However, the enclosed proxy confers discretionary
authority to vote with respect to any and all of the following matters that
may come before the meeting: (i) matters that the Company's Board of Directors
does not know, a reasonable time before proxy solicitation, are to be
presented for approval at the meeting; (ii) approval of the minutes of a prior
meeting of shareholders, if such approval does not constitute ratification of
the action at the meeting; (iii) the election of any person to any office for
which a bona fide nominee is unable to serve or for good cause will not serve;
(iv) any proposal omitted from this Proxy Statement and the form of proxy
pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of 1934, as
amended; and (v) matters incident to the conduct of the meeting. If any such
matters come before the meeting, the proxy agents named in the accompanying
proxy card will vote in accordance with their judgment.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to Shareholders for
the year ended December 31, 1998 (the "Annual Report"). The Annual Report
contains the Company's audited financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 REQUIRED TO BE
FILED WITH THE SEC WITHOUT CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, BY
SENDING A WRITTEN REQUEST THEREFOR TO:
Steven A. Wolf
Chief Financial Officer and Secretary
555 S. Henderson Road
King of Prussia, PA 19406
By Order of the Board of Directors,
Steven A. Wolf,
Secretary
15
<PAGE>
GLOBAL SPORTS, INC.
1999 Annual Meeting of Shareholders -- June 9, 1999
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED
BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven A. Wolf and Arthur Carver to act as
attorneys and proxies for the undersigned, with full powers of substitution, to
appear at the Annual Meeting of Shareholders of Global Sports, Inc. (the
"Company") to be held on the 9th day of June, 1999 at the office of the Company,
555 S. Henderson Road, King of Prussia, Pennsylvania 19406 and at any
postponement or adjournment thereof, and to vote all of the shares of the
Company that the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present. The undersigned
hereby directs that this proxy be voted as follows:
[_] FOR the election of Michael G. Rubin, Kenneth J. Adelberg and Harvey
Lamm to serve as directors for one-year terms.
To withhold authority to vote for all the directors, please check this
box. [_]
To withhold authority to vote for any individual nominee, write that
nominee's name in the space provided below.
-------------------------------------------------------------
THE PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE AFOREMENTIONED NOMINEES AS
DIRECTORS. A MAJORITY OF THE PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY
THEIR SUBSTITUTES (OR IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY
EXERCISE ALL THE POWERS CONFERRED HEREBY. DISCRETIONARY AUTHORITY IS CONFERRED
HEREBY AS TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The Board of Directors recommends a vote "FOR" the election
of the nominees listed above.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the shareholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
Receipt of the Company's 1998 Annual Report to Shareholders and the Notice
of the 1999 Annual Meeting and Proxy Statement relating thereto is hereby
acknowledged.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Date: , 1999
---------------------------------
(Please date this Proxy)
---------------------------------------
---------------------------------------
(Signature(s) of Shareholder(s))
Please sign exactly as your name(s)
appear(s) to the left. When signing
as attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
