Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Candie's, 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)(1) 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:
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(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CANDIE'S, INC.
2975 Westchester Avenue
Purchase, New York 10577
December 2, 1999
Dear Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on Wednesday, December 29, 1999, at 9:30 A.M., at the offices
of the Company, 2975 Westchester Avenue, Purchase, New York 10577.
The Notice of Annual Meeting and Proxy Statement, which follow, describe
the business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, please complete, sign, date and return your
proxy card in the envelope provided. If the address on the accompanying material
is incorrect, please advise our Transfer Agent, Continental Stock Transfer &
Trust Company, in writing, at 2 Broadway, New York, New York 10004.
Your vote is very important, and we will appreciate a prompt return of your
signed proxy card. We hope to see you at the meeting.
Cordially,
Neil Cole
Chairman of the Board,
President and
Chief Executive Officer
<PAGE>
CANDIE'S, INC.
2975 Westchester Avenue
Purchase, New York 10577
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 29, 1999
--------------------
To the Stockholders of CANDIE'S, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Candie's,
Inc. (the "Company") will be held on Wednesday, December 29, 1999, at 9:30 A.M.
at the Company's offices at 2975 Westchester Avenue, Purchase, New York 10577,
for the following purposes:
1. To elect four directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors have been duly
elected and qualified as; and
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on November 23, 1999
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Neil Cole
Chairman of the Board, President
and Chief Executive Officer
December 2, 1999
- ------------------------------------------------------------------------------
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE
PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND
EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
- ------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
CANDIE'S, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 29, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CANDIE'S, INC. (the "Company") for use at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on December
29, 1999, including any adjournment or adjournments thereof, for the purposes
set forth in the accompanying Notice of Meeting.
Management intends to mail this proxy statement and the accompanying form
of proxy to stockholders on or about December 3, 1999.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the meeting and voting in person.
The address and telephone number of the principal executive offices of the
Company are:
2975 Westchester Avenue
Purchase, New York 10577
Telephone No.: (914) 694-8600
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on November 23, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the Record Date, there were issued and outstanding 17,897,166 shares of
the Company's common stock, $.001 par value per share (the "Common Stock"), the
Company's only class of voting securities. Each share of Common Stock entitles
the holder to one vote on each matter submitted to a vote at the Annual Meeting.
<PAGE>
VOTING PROCEDURES
The directors will be elected by the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting, provided a quorum is present. All other matters at
the meeting will be decided by the affirmative vote of the holders of a majority
of the shares of Common Stock present in person or represented by proxy at the
Annual Meeting, provided a quorum is present. A quorum is present if at least a
majority of the shares of Common Stock outstanding as of the Record Date are
present in person or represented by proxy at the Annual Meeting. Votes will be
counted and certified by one or more Inspectors of Election who are expected to
be employees of the Company. In accordance with Delaware law, abstentions and
"broker non-votes" (i.e. proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other person
entitled to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote) will be treated as present for
purposes of determining the presence of a quorum. For purposes of determining
approval of a matter presented at the meeting, abstentions will be deemed
present and entitled to vote and will, therefore, have the same legal effect as
a vote "against" a matter presented at the meeting. Broker non-votes will be
deemed not entitled to vote on the subject matter as to which the non-vote is
indicated and will, therefore, have no legal effect on the vote on that
particular matter.
Proxies will be voted in accordance with the instructions thereon. Unless
otherwise stated, all shares represented by a proxy will be voted as instructed.
Proxies may be revoked as noted above.
-2-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, four (4) directors will be elected to hold office
for a term expiring at the 2000 Annual Meeting of Stockholders. Each director
will be elected to serve until a successor is elected and qualified or until the
director's earlier resignation or removal.
At the Annual Meeting, proxies granted by stockholders will be voted
individually for the election, as directors of the Company, of the persons
listed below, unless a proxy specifies that it is not to be voted in favor of a
nominee for director. In the event any of the nominees listed below is unable to
serve, it is intended that the proxy will be voted for such other nominees as
are designated by the Board of Directors. Each of the persons named below has
indicated to the Board of Directors of the Company that he will be available to
serve.
Name Age Position
---- --- --------
Neil Cole 42 Chairman of the Board, President and
Chief Executive Officer
Barry Emanuel 57 Director
Mark Tucker 52 Director
Steven Mendelow 55 Director
Neil Cole has been Chairman of the Board, President and Chief Executive
Officer of the Company since February 23, 1993. From February through April
1992, Mr. Cole served as director and as acting President of the Company. Mr.
Cole also served as Chairman of the Board, President, Treasurer and a director
of New Retail Concepts, Inc. ("NRC"), a public company engaged in the
manufacture, distribution and sales of various fashion items and the licensing
and sublicensing of certain fashion trademarks, since its inception in April
1985 until August 1998 when it was merged into the Company.
Barry Emanuel has been a director of the Company since May 1993. For more
than the past five years, Mr. Emanuel has served as President of Copen
Associates, Inc., a textile manufacturer located in New York, New York. Mr.
Emanuel received a B.A. degree from the University of Rhode Island.
Mark Tucker has been a director of the Company since May 1996. From August
1993 to the present, Mr. Tucker has been a principal of Mark Tucker, Inc., a
family owned business engaged in the design and import of shoes. From December
1992 to August 1993, he was an independent consultant to the shoe industry. From
July 1992 to December 1992, Mr. Tucker was employed as Director of Far East Shoe
Wholesale Operations for United States Shoe
-3-
<PAGE>
Far East Limited, a subsidiary of U.S. Shoe Corp. For more than five years prior
to July 1992, Mr. Tucker was a principal of Mocambo Ltd., a family owned shoe
design and import company.
Steven Mendelow has been a principal with the accounting firm of Konigsberg
Wolf & Co. located in New York, New York for more than the past five years. Mr.
Mendelow was a director of NRC from April 1, 1992 until NRC merged into the
Company in August 1998. In 1994, Mr. Mendelow reached a settlement with the
Securities and Exchange Commission (the "SEC") pursuant to which he, without
admitting or denying the allegations, agreed to be enjoined from violating
Section 7 of the Investment Company Act of 1940 and Section 5 of the Securities
Act of 1933 and to pay a fine of $50,000.
Mr. Lawrence O'Shaughnessy has not been nominated for re-election to the
Company's Board of Directors and his term on the Company's Board of Directors
shall expire on December 29, 1999.
During the fiscal year ended January 31, 1999 ("Fiscal 1999"), the Board of
Directors held five meetings, which meetings were attended by all of the
directors, either in person or by telephone conference call. In addition, the
Board took action by unanimous written consent in lieu of meetings. The Company
does not have standing nominating or compensation committees of the Board of
Directors or committees performing similar functions. The Company has an audit
committee of the Board of Directors consisting of Messrs. Emanuel and Tucker.
The Audit Committee held two meetings during Fiscal 1999.
Compensation of Directors
Each director received cash compensation of $2,500 for each meeting of the
Board attended during Fiscal 1999. Under the Company's 1997 Stock Option Plan
(the "1997 Plan"), non-employee directors are eligible to be granted
non-qualified stock options and employee directors are eligible to be granted
incentive stock options or non-qualified stock options.
The Board of Directors or the Stock Option Committee of the 1997 Plan, if
one is appointed, has discretion to determine the number of shares subject to
each nonqualified option (subject to the number of shares available for grant
under the 1997 Plan), the exercise price thereof (provided such price is not
less than the par value of the underlying shares of Common Stock), the term
thereof (but not in excess of 10 years from the date of grant, subject to
earlier termination in certain circumstances), and the manner in which the
option becomes exercisable (amounts, intervals and other conditions).
Non-qualified options to purchase 20,000 shares of Common Stock were granted to
non-employee directors under the 1997 Plan during Fiscal 1999.
-4-
<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. Cole, Mr. Frank Marcinowski and Deborah Sorell Stehr serve as
executive officers of the Company. Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.
Frank Marcinowski has been the Vice President and Chief Financial Officer
of the Company since June 1999 and Vice President and Controller of the Company
since September 1998. From 1995 to 1998, Mr. Marcinowski was Vice President and
Chief Financial Officer at Triad Capital Management, Inc., a private investment
company. From 1994 to 1995, Mr. Marcinowski was Vice President and Controller
for Ameridata Technologies, Inc., a public computer products company.
Deborah Sorell Stehr has been the Vice President and General Counsel of the
Company since December 1998 and in November 1999 was promoted to Senior Vice
President and General Counsel. From September 1996 to December 1998, Ms. Sorell
Stehr was Associate General Counsel with Nine West Group Inc. ("Nine West"), a
women's' footwear corporation, where Ms. Sorell Stehr was primarily responsible
for the overseeing legal affairs relating to domestic and international
contracts, intellectual property, licensing, general corporate matters,
litigation and claims. Prior to joining Nine West, Ms. Sorell Stehr practiced
law for nine years at private law firms in New York City and Chicago in the
areas of corporate law and commercial litigation. From May 1991 to September
1996, Ms. Sorell Stehr worked at the firm of Kronish Lieb Weiner and Hellman
LLP, in New York, and from 1989 to 1991, at the firm of O'Sullivan Graev &
Karabell in New York.
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and greater
than 10 percent owners are required by certain SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it, the Company believes that during Fiscal 1999, filing requirements
applicable to its officers, directors and 10% holders of Common Stock were
complied with, except that Mr. David Golden, the Company's former Chief
Financial Officer, failed to timely file a Form 3 report in March 1998 to
reflect his employment as an executive officer of the Company and Ms. Sorell
Stehr, Vice President and General Counsel of the Company, failed to timely file
a Form 3 report in December 1998 to reflect her employment as an executive
officer of the Company.
-5-
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses for Fiscal 1999 and the fiscal years ended
January 31, 1998 ("Fiscal 1998") and 1997, compensation for the person that
served as Chief Executive Officer during Fiscal 1999 and for those other persons
that served as executive officers of the Company during Fiscal 1999 whose
salaries exceeded $100,000 (collectively, the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Compensation -------------
----------------------------------------------------- Securities
Name and Principal Other Annual Underlying
Position Year Salary($) Bonus($)(1) Compensation $(2) Options(#)(3)
------------------ ---- --------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Neil Cole, Chairman 1999 445,833 -- -- 1,506,124(4)
President and Chief 1998 395,833 308,909(5) 5,000 400,000
Executive Officer 1997 346,000 6,800 2,500 10,000
Lawrence O'Shaughnessy(6) 1999 308,333 -- -- 370,125(7)
Executive Vice President and 1998 291,667 92,672(5) 5,000 100,000
Chief Operating Officer 1997 246,000 2,000(2) 2,500 10,000
Frank Marcinowski, 1999 62,500 -- -- 30,000
Vice President and Chief
Financial Officer
Deborah Sorell Stehr, 1999 24,167 -- -- 30,000
Senior Vice President and
General Counsel
David Golden 1999 206,250 -- -- 125,000
Former Vice President and
Chief Financial Officer(8)
</TABLE>
- -----------------
(1) Represents bonuses accrued under employment agreements.
(2) Represents amounts earned as director's fees.
(3) On December 11, 1998, certain options were repriced to $3.50. See the
Option Grants in Fiscal 1999 year on the following page and Note 7 to the
Company's Audited Financial Statements contained in the Company's Annual
Report on Form 10-K for the year ending January 31, 1999.
-6-
<PAGE>
(4) 446,124 options of the Company's Common Stock were granted to the named
executive for compensation for services provided to New Retail Concepts,
Inc. prior to the merger with the Company. Also includes 10,000 options to
purchase shares earned as directors fees.
(5) Based on the restatement of Fiscal 1998 results of operations $105,500 of
Mr. Cole's bonus and $31,660 of Mr. O'Shaughnessy's bonus reflected above
will be repaid.
(6) Effective September 17, 1999, Mr. O'Shaughnessy ceased acting in the
capacity as Executive Vice President and Chief Operating Officer of the
Company.
(7) 40,125 options of Candie's Common Stock were granted to the named executive
for compensation for services provided to NRC prior to the merger with the
Company. Also includes 10,000 options to purchase shares earned as
directors fees.
(8) Mr. Golden's employment with the Company was terminated on June 10, 1999.
The following table provides information with respect to individual stock
options granted during Fiscal 1999 to each of the Named Executives:
Option Grants in Fiscal 1999
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------------- Potential Realizable
Shares % of Total Value at Assumed
Underlying Options Granted to Exercise Annual Rates of Stock
Options Employees in Price Expiration Price Appreciation for
Name Granted(#)(1) Fiscal Year ($/sh) Date Option Term
---- ------------- ----------- ------ ---- --------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Neil Cole 400,000 15.9% $3.50(2) 9/11/08 $880,460 $2,236,220
650,000 25.8 3.50(2) 10/14/08 1,430,748 3,633,858
10,125 0.4 0.4938 01/13/00 3,144 7,986
10,125 0.4 0.5432 06/20/00 3,459 8,785
10,125 0.4 2.3148 06/30/02 6,475 14,309
162,000 6.4 0.8642 07/07/00 38,680 85,472
253,749 10.1 3.50(2) 03/09/08 558,533 1,415,383
10,000 0.4 3.50 12/11/08 22,012 55,906
Lawrence O'Shaughnessy 100,000 4.0 3.50(2) 9/11/08 220,115 559,055
200,000 7.9 3.50(2) 10/14/08 440,230 1,118,110
10,125 0.4 2.3148 6/30/02 6,475 14,309
30,000 1.2 3.50(2) 3/09/08 66,036 167,718
10,000 0.4 3.50 12/11/08 22,012 55,906
-7-
<PAGE>
David Golden 125,000 5.0 3.50(2) 2/05/03 120,873 267,098
Frank Marcinowski 30,000 1.2 3.50(2) 12/07/08 66,036 167,718
Deborah Sorell Stehr 30,000 1.2 3.50(2) 12/08/08 66,036 167,718
</TABLE>
- --------------------
(1) The stock options were granted under the Company's 1997 Stock Option Plan.
(2) The exercise prices reflect the Company's repricing of options to $3.50 on
December 11, 1998.
The following table sets forth information at January 31, 1999 respecting
exercised and unexercised stock options held by the Named Executives. None of
the Named Executives exercised any stock options during the Fiscal 1999. On
November 10, 1998, 200,000 options owned by Neil Cole expired.
Aggregated Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at January 31, 1999 at January 31, 1999(1)
--------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
Neil Cole 2,482,375 253,750 $2,222,102 $ -0-
Lawrence
O'Shaughnessy 550,091 163,334 530,186 -0-
David Golden 75,000 50,000 -0- -0-
Frank
Marcinowski -0- 30,000 -0- -0-
Deborah Sorell
Stehr 10,000 20,000 -0- -0-
- -------------
-8-
<PAGE>
(1) An option is "in-the-money" if the year-end market value of the Common Stock
exceeds the exercise price of such option. At January 31, 1999, the closing sale
price per share of the Common Stock as reported by NASDAQ was $3.4375.
Report on Option Repricing
During Fiscal 1999, the Board of Directors determined to reduce the
exercise price of options previously granted to the Named Executives to purchase
an aggregate of 2,193,749 shares of Common Stock to $3.50 per share, which
represented the market price of the Common Stock at the time of repricing. The
Board believed that the purpose underlying the original grant of options,
namely, to attract and retain senior management by granting potential additional
compensation based upon the performance of the Company's Common Stock, would be
undermined due to the erosion in the market price of the Common Stock. The Board
decided that the repricing of the options would serve to accomplish the Board's
goals without the use of cash resources.
Neil Cole
Lawrence O'Shaughnessy
Mark Tucker
Barry Emanuel
Employment Contracts and Termination and Change-in-Control Arrangements
The Company has entered into an amended employment agreement with Neil Cole
for a term expiring on February 28, 2000 at an annual base salary of $400,000
for the 12 months ending February 28, 1998, $450,000 for the 12 months ending
February 28, 1999 and $500,000 for the 12 months ending February 28, 2000,
subject to annual increases at the discretion of the Company's Board of
Directors. Pursuant to the amended employment agreement, Mr. Cole serves as
President and Chief Executive Officer of the Company, devoting a majority of his
business time to the Company and the remainder of his business time to other
business activities. Under the amended agreement, Mr. Cole (i) is entitled to
receive a portion of an annual bonus pool equal to 5% of the Company's annual
pre-tax profits, if any, divided among the Company's executive officers, as
determined by the Board of Directors; and (ii) is entitled to customary
benefits, including participation in management incentive and benefit plans,
reimbursement for automobile, reasonable travel and entertainment expenses and a
life insurance policy in the amount of $1,000,000. Mr. Cole is also entitled to
receive any additional bonuses as the Board of Directors may determine. If Mr.
Cole terminates his employment with the Company for "good reason" (as defined in
the amended agreement) or the Company terminates Mr. Cole's employment without
"cause" (as defined in the amended agreement), including by reason of a
"change-in-control" of the Company (as defined in the employment agreement), the
Company is obligated to pay Mr. Cole his full salary (at the annual base salary
rate then in effect) through the date of termination plus full base salary for
one year or the balance of the term of the agreement, whichever is greater.
-9-
<PAGE>
The Company has entered into an amended employment agreement with Mr.
O'Shaughnessy for a term expiring on March 31, 2000 at an annual base salary of
$300,000 for the 12 months ending March 31, 1998 and $350,000 thereafter,
subject to annual increases at the discretion of the Company's Board of
Directors. The employment agreement was further amended on September 17, 1999.
Pursuant to the amended agreement, Mr. O'Shaughnessy ceased acting in the
capacity as Executive Vice President and Chief Operating Officer and assumed the
position of special advisor to Unzipped Apparel LLC, the Company's joint venture
operation with Sweet Sportswear Inc. No other terms and conditions of Mr.
O'Shaughnessy's employment agreement were amended. Under the amended agreement,
Mr. O'Shaughnessy (i) will be entitled to receive an annual bonus equal to 1.5%
of the Company's annual pre-tax profits, if any; and (ii) is entitled to
customary benefits, including participation in management incentive and benefit
plans, reimbursement for automobile, reasonable travel and entertainment
expenses and a life insurance policy in an amount equal to his annual base
salary.
The Company had entered into an employment agreement, effective March 1,
1998 with David Golden which provided for his employment as Senior Vice
President-Chief Financial Officer at an annual salary of $225,000 for the twelve
months ending March 1, 1999 and $250,000 for the twelve months ending March 1,
2000. Under the agreement, Mr. Golden was entitled to receive an annual bonus
equal to 0.5% of the Company's annual pre-tax profits, if any, and is entitled
to customary benefits including participation in management incentive and
benefit plans, and reimbursement for automobile expenses, and reasonable travel
and entertainment expenses. In addition, Mr. Golden was granted options to
purchase an aggregate of 125,000 shares of the Company's Common Stock at $5.00,
which options vested with respect to one-fifth of the aggregate number on the
date of grant and thereafter will vest with respect to an additional two fifths
of the aggregate number on the first anniversary of the date of grant and an
additional one fifth of the aggregate number upon each anniversary of the date
of grant until March 1, 2001. Under the agreement, if Mr. Golden terminated his
employment with the Company for "good reason" (as defined in the agreement) or
the Company terminated Mr. Golden's employment without "cause" (as defined in
the agreement) the Company is obligated to pay Mr. Golden (i) his full salary
(at the annual base salary rate then in effect) through the date of termination
and the share of his bonus for such year pro rated for that year through the
date of termination; (ii) any accrued vacation amounts through the date of
termination and (iii) a severance payment (based upon the annual base salary
rate then in effect) for the unexpired portion of the two year term, but in no
event less than six months, and all unvested options shall be accelerated and
shall vest upon the date of termination. In the event that Mr. Golden terminated
his employment with the Company by reason of a change of control of the Company,
Mr. Golden was entitled to receive the payments specified in items (i) and (ii)
in the preceding sentence and an amount equal to twelve months of Mr. Golden's
base salary (at the annual base salary rate in effect) and all unvested options
shall be accelerated and shall vest upon the date of termination. Mr. Golden's
employment with the Company was terminated on June 10, 1999 and the Company's
obligations under Mr. Golden's employment agreement terminated.
The Company has entered into an employment arrangement with Frank
Marcinowski at an annual base salary of $140,000. Mr. Marcinowski is entitled to
receive a bonus at the discretion of the Board. Mr. Marcinowski is also entitled
to customary benefits, including participation in
-10-
<PAGE>
management incentive and benefit plans, reimbursement for automobile expenses
and a life insurance policy in an amount equal to his annual base salary.
The Company has entered into an employment arrangement with Deborah Sorell
Stehr for a term expiring on January 31, 2001 at an annual base salary of
$145,000 for the period ended January 31, 2000, and $160,000 for the period
ended January 31, 2001. Ms. Sorell Stehr is entitled to receive a bonus in the
amount of $25,000 for each of the two years that she is employed. Ms. Sorell
Stehr is also entitled to customary benefits, including participation in
management incentive and benefit plans, reimbursement for automobile expenses,
reasonable travel and entertainment expenses and a life insurance policy in an
amount equal to her annual base salary. If Ms. Sorell Stehr terminates her
employment with the Company for "good reason" (as defined in the agreement) or
the Company terminates Ms. Sorell Stehr's employment without "cause" (as defined
in the agreement), the Company is obligated to pay Ms. Sorell Stehr through the
term, but in no event for a period less than six months. In the event of a
"change in control" (as defined in the agreement), the Company shall pay Ms.
Sorell Stehr through the term, plus an amount to one year base salary in effect
at the time of the change.
Stock Performance Graph
The following line graph compares from February 1, 1994 to January 31,
1999, the cumulative total return among the Company, companies comprising the
NASDAQ Market Index, and the stock of a Peer group assuming reinvestment of all
dividends, if any, paid on such securities. The Company has not paid any cash
dividends and, therefore, the cumulative total return calculation for the
Company is based solely upon stock price appreciation and not upon reinvestment
of cash dividends. The Peer Group consists of K. Swiss, Inc. Penobscot Shoe
Company, Stride Rite Corporation and Track N' Trail, Inc. which is based upon
companies classified under the Footwear, except Rubber, Standard Industrial
Classification number. Historic stock price is not necessarily indicative of
future stock price performance.
<TABLE>
<CAPTION>
---------------------------------FISCAL YEAR ENDING--------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 1/31/1994 1/31/1995 1/31/1996 1/31/1997 1/30/1998 1/29/1999
Candie's, Inc. 100.00 40.91 81.82 186.64 179.55 125.00
SIC Code Index 100.00 70.65 74.04 108.68 107.89 101.67
NASDAQ Market Index 100.00 94.51 132.32 174.14 205.11 320.12
</TABLE>
Report on Executive Compensation
During Fiscal 1999, the Company did not have a compensation committee of
its Board of Directors or other equivalent committee of the Board of Directors
performing equivalent functions. Compensation of the Company's executive
officers for the Fiscal 1999 was determined by the Company's Board of Directors
based upon recommendation by Neil Cole and
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<PAGE>
Lawrence O'Shaughnessy. There is no formal compensation policy of the Company's
executive officers.
During Fiscal 1999, the Company did not have a stock option committee.
Grants of stock options made under the Company's 1989 and 1997 stock option
plans were made by the Company's Board of Directors.
Total compensation for executive officers of the Company consists of a
combination of salaries, bonuses when applicable, and stock option awards. The
base salary of the executive officers are fixed annually pursuant to the terms
of their respective employment agreements with the Company. Bonus compensation
for Messrs. Cole, O'Shaughnessy and Golden were also governed by the terms of
their respective employment agreements and were based upon the Company's
financial performance. Pursuant to the terms of such employment agreements
Messrs. Cole and O'Shaughnessy were not entitled to any bonus compensation for
Fiscal 1999.
Stock option awards are intended to attract and retain senior management
personnel by offering them an opportunity to receive additional compensation
based upon the performance of the Company's Common Stock. No stock options were
granted to the executive officers of Candie's during Fiscal 1999, except for
options set forth herein. See table - Option Grants in Fiscal 1999 above.
During Fiscal 1999, Candie's had a net loss of $641,000 on revenues of
approximately $114,696,000, compared to earnings of approximately $3,405,000 on
revenues of approximately $89,297,000 during Fiscal 1998.
Neil Cole
Lawrence O'Shaughnessy
Mark Tucker
Barry Emanuel
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<PAGE>
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date,
based on information obtained from the persons named below, with respect to the
beneficial ownership of shares of Common Stock by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock; (ii) each of the Named Executives; (iii) each of the Company's
directors; and (iv) all executive officers and directors as a group:
Amount and Nature Percentage
Name and Address of of Beneficial of Beneficial
Beneficial Owner (1) Ownership (2) Ownership
- -------------------- ------------- ---------
Neil Cole 3,362,020(3) 16.4%
Claudio Trust dated February 2, 1990 1,886,597 10.5
2925 Mountain Maple Lane
Jackson, WY 83001
Michael Caruso 1,886,597(4) 10.5
Kennedy Capital Management Inc. 1,268,000 7.1
10829 Olive Blvd.
St. Louis, MO 63141
Redwood Shoe Corp. 825,000(5) 4.6
8F, 137 Hua Mei West Street
SEC.1, Taichung, Taiwan, R.O.C.
Mark Tucker 835,000(6) 4.7
Lawrence O'Shaughnessy 769,908(7) 4.2
David Golden 75,000(8) *
Barry Emanuel 40,000(9) *
Frank Marcinowski 20,000(10) *
Deborah Sorell Stehr 35,000(11) *
All executive officers and directors 5,061,928(3) 23.9
as a group (six persons) (6)(7)(9)(10)(11)
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<PAGE>
- ------------
Less than 1%
(1) Unless otherwise indicated, each beneficial owner has an address c/o the
Company at 2975 Westchester Avenue, Purchase, New York 10577.
(2) A person is deemed to have beneficial ownership of securities that can be
acquired by such person within 60 days of the Record Date upon exercise of
warrants or options. Consequently, each beneficial owner's percentage
ownership is determined by assuming that warrants or options held by such
person (but not those held by any other person) and which are exercisable
within 60 days from the Record Date have been exercised. Unless otherwise
noted, the Company believes that all persons referred to in the table have
sole voting and investment power with respect to all shares of Common Stock
reflected as beneficially owned by them.
(3) Includes 2,566,958 shares of Common Stock issuable upon exercise of options
owned by Neil Cole. Also includes 72,978 shares held by a charitable
foundation, of which Mr. Cole and his wife are co-trustees. Mr. Cole
disclaims beneficial ownership of the shares held by such charitable
foundation.
(4) Represents shares held by Claudio Trust dated February 2, 1990 of which Mr.
Caruso is the trustee.
(5) Represents shares of Common Stock, which shares were issued pursuant to an
agreement between the Company and Redwood Shoe Corp. ("Redwood") pertaining
to the settlement of certain indebtedness of the Company to Redwood. Mr.
Tucker is affiliated with Redwood.
(6) Includes 10,000 shares of Common Stock issuable upon exercise of options,
and 825,000 shares held by Redwood Shoe Corp. with which Mr. Tucker is
affiliated.
(7) Includes 626,758 shares of Common Stock issuable upon exercise of options.
Also includes 51,566 shares of Common Stock owned by Mr. O'Shaughnessy's
minor children.
(8) Represents shares of Common Stock issuable upon exercise of options. Mr.
Golden's employment with the Company terminated on June 10, 1999.
(9) Includes 35,000 shares of Common Stock issuable upon exercise of options.
(10) Represents shares of Common Stock issuable upon exercise of options.
(11) Represents shares of Common Stock issuable upon exercise of options.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1996, the Company entered into an agreement with Redwood to satisfy in
full certain trade payables amounting to $1,680,000. Under the terms of the
agreement, the Company issued Redwood 1,050,000 shares of Common Stock and an
option to purchase 75,000 shares of Common Stock at an exercise price of $1.75
and made a cash payment to Redwood of $50,000. For Fiscal 1999, Redwood, as
buying agent for the Company, initiated the manufacture of approximately 80.1%,
of the Company's total footwear purchases. At November 30, 1999, the Company had
placed $2,886,565 of open purchase commitments with Redwood. In Fiscal 1999 and
Fiscal 1998, the Company purchased approximately $68 million and $48 million,
respectively of footwear products through Redwood. At January 31, 1999 and 1998,
the payable to Redwood totaled approximately $943,000 and $868,000,
respectively.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman LLP has audited and reported upon the financial statements of
the Company for Fiscal 1999. The Company has not yet selected the auditor to
examine and report upon the financial statements of the Company for the fiscal
year ending January 31, 2000. A representative of BDO Seidman LLP is expected to
be present at the Annual Meeting with the opportunity to make a statement if he
or she desires to do so and is expected to be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
It is currently anticipated that the Annual Meeting of Stockholders to be
held in the Year 2000 will be held during the fiscal quarter ending July 31,
2000. Therefore, stockholders who wish to present proposals appropriate for
consideration at the Company's 2000 Annual Meeting of Stockholders to be held in
the Year 2000 must submit the proposal to the Company at its address set forth
on the first page of this Proxy Statement in the proper form and in accordance
with applicable regulations of the SEC not later than April 30, 2000 in order
for the proposition to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such annual meeting. Any such proposals,
as well as any questions related thereto, should be directed to the Secretary of
the Company.
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<PAGE>
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED JANUARY 31,
1999 ON FORM 10-K THERETO IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF
RECORD AS OF THE CLOSE OF BUSINESS ON NOVEMBER 23, 1999. ADDITIONAL COPIES OF
SUCH ANNUAL REPORT WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO
:
CANDIE'S, INC.
2975 WESTCHESTER AVENUE
PURCHASE, NEW YORK 10577
ATTENTION: MS. ALLISON C. MALKIN
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of
Directors,
Neil Cole,
Chairman of the Board,
President and Chief Executive
Officer
December 2, 1999
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<PAGE>
CANDIE'S, INC.
2975 Westchester Avenue
Purchase, New York 10577
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 29, 1999.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints NEIL COLE and DEBORAH SORELL STEHR, and
each of them, Proxies, with full power of substitution in each of them, in the
name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Candie's, Inc. (the "Company") on Wednesday, December 29, 1999,
at the offices of the Company, 2975 Westchester Avenue, Purchase, New York 10577
or at any adjournment or adjournments thereof, according to the number of votes
that the undersigned would be entitled to vote if personally present, upon the
following matters:
1. ELECTION OF DIRECTORS:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all
nominees listed
below.
Neil Cole, Barry Emanuel , Mark Tucker and Steven Mendelow
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
<PAGE>
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THOSE NOMINEES AND THE
PROPOSALS LISTED ABOVE.
DATED: ________________________________, 1999
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
Please mark, sign, date and return this proxy card
promptly using the enclosed envelope.
