<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 Rule 14a-11(c) or Rule 14a-12
THE WET SEAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE WET SEAL, INC.
26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610
October 7, 1998
Dear Stockholder:
There will be a Special Meeting (the "Special Meeting") of Stockholders of
The Wet Seal, Inc. (the "Company") held at the offices of the Company, at 10:00
a.m., on October 26, 1998. During the Special Meeting the matters described in
the accompanying Proxy Statement will be considered.
You are urged to sign and return the enclosed proxy card in the envelope
provided in order to make certain that your shares will be represented at the
Special Meeting.
Sincerely,
/s/ Irving Teitelbaum
--------------------------------------
IRVING TEITELBAUM
CHAIRMAN OF THE BOARD
<PAGE>
THE WET SEAL, INC.
26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 26, 1998
10:00 A.M.
------------------------
Notice is hereby given that the Special Meeting (the "Special Meeting") of
Stockholders of The Wet Seal, Inc. (the "Company") will be held at the offices
of the Company on October 26, 1998 at 10:00 a.m. to consider and vote upon the
following:
1. the approval of the amendment to The Wet Seal, Inc.'s 1996 Long-Term
Incentive Plan (the "Plan") to increase the number of Shares to provide
for additional grants to eligible individuals under the Plan; and
2. such other business as may properly come before the Special Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on October 5, 1998 as
the record date for determination of stockholders entitled to notice of and to
vote at the Special Meeting. A list of such stockholders will be available for
examination by any stockholder for any purpose germane to the Special Meeting,
during normal business hours, at the office of the Company for a period of ten
days prior to the Special Meeting.
To assure that your shares will be represented at the Special Meeting,
please sign and promptly return the accompanying proxy card in the enclosed
envelope. You may revoke your proxy at any time before it is voted.
By Order of the Board of Directors
/s/ Stephen Gross
--------------------------------------
Stephen Gross
SECRETARY
Dated: October 7, 1998
<PAGE>
THE WET SEAL, INC.
26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 92610
------------------------
PROXY STATEMENT
OCTOBER 7, 1998
------------------------
This Proxy Statement and the enclosed form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of The Wet
Seal, Inc., a Delaware corporation (the "Company"), for use at the Special
Meeting of Stockholders to be held on October 26, 1998 and at any adjournments
thereof. At the Special Meeting, Stockholders will consider and vote upon the
approval of the amendment to the Company's 1996 Long-Term Incentive Plan (the
"Plan") to increase the number of Shares to provide for additional grants to
eligible individuals under the Plan, and any other business as may properly come
before the Special Meeting or any adjournment thereof. This Proxy Statement and
the accompanying proxy are being sent to stockholders on or about October 7,
1998.
VOTING BY STOCKHOLDERS
Only holders of record of the Company's Common Stock, at the close of
business on October 5, 1998, are entitled to receive notice of and to vote at
the Special Meeting. On that date, there were 9,359,078 shares of the Company's
Class A Common Stock, $.10 par value, and 2,912,665 shares of the Company's
Class B Common Stock, $.10 par value, issued, outstanding and entitled to vote.
Class A Common Stock is entitled to one vote per share and, while both the Class
A Common Stock and Class B Common Stock vote together as a single class, the
Class B Common Stock is entitled to two votes per share. According to the
Company's Restated Certificate of Incorporation, stockholders may not cumulate
their voting rights. Thus, the ratification of the proposed amendment to the
Plan will require the affirmative vote of holders of a majority of the Common
Stock entitled to vote thereon present in person or by proxy at the Special
Meeting.
The shares represented by each properly executed unrevoked proxy received in
time for the Special Meeting will be voted in accordance with the instruction
specified therein, or, in the absence of instructions, FOR the proposal and will
be voted in accordance with the discretion of the proxies upon all other matters
which may come before the Meeting. Any proxy received by the Company may be
subsequently revoked by the stockholder any time before it is voted at the
meeting either by delivering a subsequent proxy or other written notice of
revocation to the Company at its above address or by attending the meeting and
voting in person. Pursuant to Delaware law, abstentions are treated as present
and entitled to vote and thus have the effect of a vote against the matter. A
broker non-vote on a matter is considered not entitled to vote on that matter
and thus is not counted in determining whether a matter requiring approval of a
majority of the shares present and entitled to vote has been approved or whether
a majority of the vote of the shares present and entitled to vote has been cast.
PROPOSAL
APPROVAL OF THE FIRST AMENDMENT TO THE COMPANY'S 1996 LONG-TERM INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES TO PROVIDE FOR ADDITIONAL GRANTS TO ELIGIBLE
INDIVIDUALS UNDER THE PLAN
1
<PAGE>
The Company is proposing, subject to shareholder approval, to amend the
Plan. The Option Committee (the "Committee") of the Company has determined that
there are few or no available Shares (as defined in the Plan) under the Plan for
the grant of further awards and options under the Plan and, accordingly, the
Committee has determined that it is necessary and desirable to increase the
number of Shares by nine hundred and fifty thousand (950,000) to provide for
additional grants to eligible individuals under the Plan. Certain of the
additional grants may be made to directors and/or executive officers of the
Company.
The Board unanimously recommends a vote "For" approval of the First
Amendment to the Plan.
DESCRIPTION OF THE PLAN
The Company adopted The Wet Seal, Inc. 1996 Long-Term Incentive Plan (the
"Plan") and the Plan was approved by shareholders at the 1997 Annual Meeting.
The Plan is administered by the Option Committee and is intended to serve as a
qualified performance-based compensation program under Section 162(m) of the
Internal Revenue Code (the "Code").
PURPOSE AND ELIGIBILITY
The purpose of the Plan is to strengthen the Company by providing employees
and others added incentive for high levels of performance and for extraordinary
efforts to increase the earnings and long-term growth of the Company. The Plan
seeks to accomplish this purpose by enabling Participants to purchase or acquire
shares of the Company's Class A Common Stock ("Shares"), stock appreciation
rights or other equity-based rights, thereby increasing their proprietary
interest in the Company's success and encouraging them to remain in the employ
or service of the Company. The Plan contemplates the issuance of incentive stock
options within the meaning of Section 422 of the Code, as well as non-statutory
stock options, stock appreciation rights, restricted or nonrestricted awards of
shares, performance grants, certain limited rights issued in tandem with stock
options, or any combination of the foregoing ("Awards"). Employees, officers,
directors, consultants and independent contractors (including dealers,
distributors and other business entities or persons providing services) of the
Company and its subsidiaries ("Participants") are eligible for Awards under the
Plan. The approximate number of persons eligible to participate is 4,700. The
Company authorized 700,000 Shares, with an aggregate market value of $14,087,500
as of February 1, 1997, for issuance under the Plan. With the adoption of the
First Amendment, the Company will authorize an additional 950,000 Shares with an
aggregate market value of $15,021,875 as of October 5, 1998, for issuance under
the Plan.
ADMINISTRATION
The Option Committee, in its sole discretion, has the authority, among other
things, to determine the terms of all Awards granted under the Plan, including
any purchase or exercise price for an Award; to determine which employees,
outside consultants and independent contractors will be granted Awards, and the
time or times at which Awards will be granted, exercised and become forfeitable;
to determine the number of Shares covered by an Award; to interpret the Plan;
and to make all other determinations deemed advisable for the administration of
the Plan.
OPTIONS
The Option Committee may from time to time grant incentive stock options
("Incentive Options") and non-statutory options ("Non-Qualified Options", and
together with Incentive Options, "Options") to any Participant. The terms of
Options granted under the Plan will be set out in agreements between the Company
and Participants which will contain such provisions as the Option Committee from
time to time deems appropriate, including the exercise price and expiration date
of such Options. Option agreements will specify whether or not an Option is an
Incentive Option.
2
<PAGE>
In no event will the exercise price of an Incentive Option or Non-Qualified
Option be less than one hundred percent (100%) of the fair market value of the
Shares subject to such Option on the date of grant. The term of Incentive
Options cannot exceed ten years from the date of grant and generally cannot
extend beyond a Participant's employment or relationship with the Company. The
aggregate fair market value, determined as of the time the Incentive Option is
granted, of the Common Stock which may become exercisable for the first time by
any employee during any calendar year cannot exceed $100,000. No Incentive
Option will be granted to an employee, who, at the time of grant, owns (within
the meaning of Section 424(d) of the Code) stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, its parent or subsidiaries, unless the exercise price of the Incentive
Option is at least one hundred and ten percent (110%) of the fair market value,
at the time of grant, of the Shares subject to the Option, and the Option by its
terms is not exercisable more than five years from the date of grant.
The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, will be determined by the Option
Committee and may consist of promissory notes, other Shares or such other
consideration and method of payment for the Shares as may be permitted under
applicable federal and state laws.
If a Participant ceases to be employed by, or ceases to have a relationship
with, the Company for any reason other than disability, cause, retirement or
death, such Participant's Options, to the extent exercisable at the time of
termination, may be exercised for a period of three months thereafter or the
date of expiration of the option by its terms, whichever is earlier. In the
event of a Participant's disability or death, such Participant's Options will
become fully vested and exercisable and will expire not later than one year
thereafter or the date of expiration of the option by its terms, whichever is
earlier. When a Participant retires, such Participant's Options will become
fully vested and exercisable and will expire not later than two years thereafter
or the date of expiration of the option by its terms, whichever is earlier. The
decision as to whether a termination is by reason of retirement will be made by
the Option Committee, whose decision will be final and conclusive. If a
Participant's employment or relationship with the Company is terminated for
cause, such Participant's Options will expire immediately; provided, however,
that the Option Committee may waive expiration and permit the Participant to
exercise Options, to the extent exercisable at the time of termination, for a
period of three months from the date of notice of such waiver.
STOCK APPRECIATION RIGHTS
The Option Committee from time to time may grant stock appreciation rights
("SARs") to any Participant either at the time of grant of an Option or
thereafter by amendment to an Option. The exercise of an Option will result in
an immediate cancellation of its corresponding SAR, and vice versa. SARs will
expire at the same time as the related Option expires, and will be exercisable
and transferable when, to the extent and on the condition that the related
Option is exercisable or transferable. No SAR may be exercised unless the fair
market value per Share on the date of exercise exceeds the exercise price of the
related Option. Upon the exercise of an SAR, a Participant will be entitled to
receive an amount equal to the difference between the fair market value per
Share on the date of exercise and the exercise price of the Option to which the
SAR corresponds. Such payment may be satisfied by the Company in cash, in
Shares, or in a combination thereof, as determined by the Option Committee.
All SARs will be exercised automatically, to the extent the corresponding
Option is then exercisable, (A) on the last business day prior to the expiration
date of the related Option at the end of its stated term or (B) following (i)
the death, disability or retirement of a Participant or (ii) the termination of
a Participant's employment or relationship with the Company for any reason other
than cause; provided the fair market value per Share of the underlying Shares on
that date exceeds the exercise price of the related Option.
3
<PAGE>
LIMITED RIGHTS
The Option Committee may grant limited rights ("Limited Rights") with
respect to all or some of the Shares covered by an Option at the time the Option
is granted or by amendment to a previously granted Option. A Limited Right will
be exercisable (A) during the 60 day period commencing on any date after the
effective date of the Plan on which a person or group, whose beneficial
ownership of Shares exceeds the aggregate beneficial ownership of the officers
and directors of the Company (excluding Shares owned by a director or officer
who is the person or a member of the group), becomes the direct or indirect
beneficial owner of twenty percent (20%) or more of the Company's outstanding
Shares, and (B) if stated in the Limited Right grant, upon the occurrence of an
event pursuant to which the outstanding Shares of the Company are increased,
decreased, changed into, or exchanged for a different number or kind of shares
or securities, without receipt of consideration by the Company, through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the exercise
of a Limited Right, a Participant will be entitled to receive from the Company,
in cash, an amount equal to the difference between the fair market value per
Share of the Shares on the exercise and the grant dates. Upon the exercise or
termination of an Option, any related Limited Right shall terminate.
PERFORMANCE GRANTS
The Option Committee may award performance grants ("Performance Grants") to
Participants at any time, and it has sole discretion in determining the size and
composition of, the period over which performance is to be measured for, and the
performance goals and obligations for, Performance Grants. Performance Grants
under the Plan may include specific dollar-value target grants, performance
units and/or performance shares. The value of each Performance Grant may be
fixed or it may be permitted to fluctuate based on performance factors selected
by the Option Committee. The earned portion of a Performance Grant may be paid
in restricted or nonrestricted shares, cash or a combination of both, as
determined in the sole discretion of the Option Committee.
A Participant must be an employee of the Company at the end of the
performance cycle in order to be entitled to payment of a Performance Grant
issued in respect of such cycle; provided, however, that a Participant may earn
a partial Performance Grant based upon the elapsed portion of the cycle and the
Company's performance during such portion of the cycle, if the Participant
ceases to be an employee of the Company as a result of his death, disability or
retirement. In the event of a change of control, a Participant will earn no less
than the portion of the Performance Grant that the participant would have earned
if the performance cycle had terminated as of the date of the change in control.
RESTRICTED AND NONRESTRICTED SHARE AWARDS
The Option Committee may at any time from time award Shares to such
Participants and in such amounts as it determines. Each award of Shares will
specify the applicable restrictions, if any, on such Shares, the duration of
such restrictions, and the time or times at which such restrictions shall lapse.
Restricted Shares may be issued at the time of award subject to forfeiture
in the event the applicable restrictions do not lapse, or upon lapse of such
restrictions. If Restricted Shares are issued at the time of award, the
Participant will be required to deposit certificates representing such
Restricted Shares with the Company during the period of any restriction and to
execute a blank stock power therefor. Except as otherwise provided by the Option
Committee, during the period of any restriction, the Participant will have all
rights and privileges of a stockholder with respect to Restricted Shares awarded
to him, including the right to receive dividends and to vote.
Unless otherwise provided by the Option Committee, all restrictions on
Restricted Shares will lapse upon termination of a Participant's employment or
relationship with the Company due to death, disability, retirement or a change
of control during a period of restriction. If a Participant's employment or
4
<PAGE>
relationship with the Company is terminated for any other reason, all Restricted
Shares awarded to such Participant will be forfeited to the Company.
WITHHOLDING
With respect to any payments made to Participants under the Plan, the
Company will have the right to withhold any taxes required by law to be withheld
because of such payments.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
If any change is made to the Shares by reason of an event pursuant to which
the outstanding Shares of the Company are increased, decreased or changed into,
or exchanged for a different number or kind of shares or securities, without
receipt of consideration by the Company, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise, appropriate adjustments will be made
by the Option Committee to the kind and maximum number of shares subject to the
Plan and the kind and number of Shares and price per Share of stock subject to
each outstanding Award.
LIMITATION ON BENEFITS
No option, SAR or Limited Right may be exercised, no share award will vest
and no Performance Grant will be paid to the extent such exercise, vesting or
payment will create an "excess parachute payment" as defined in Section 280G of
the Code.
TRANSFERABILITY OF AWARDS
No grant of Options, SARs, Limited Rights, Performance Grants or other
rights granted under the Plan is assignable or transferable except by will or
the laws of descent and distribution. During the lifetime of a Participant,
Awards are exercisable only by the Participant.
TERMINATION OR AMENDMENT
The Option Committee may at any time discontinue granting Awards under the
Plan or otherwise suspend, amend or terminate the Plan, and may, with the
consent of the optionee or grantee, make such modification of the terms and
conditions of an Award as it shall deem advisable. Amendments or modifications
to the Plan or any Award are deemed adopted as of the date of the action of the
Option Committee effecting such amendment or modification and are effective
immediately, unless otherwise provided therein, subject to approval thereof (i)
within twelve (12) months before or after the effective date by shareholders of
the Corporation voting in person or by proxy at a duly held shareholders'
meeting when required to maintain or satisfy the requirements of Section 422 of
the Code with respect to Incentive Options, or Section 162(m) of the Code with
respect to performance-based compensation, (ii) by an appropriate governmental
agency, or (iii) when required by a securities exchange or automated quotation
system. No Option may be granted during any suspension or after termination of
the Plan.
MARKET VALUE OF THE SECURITIES UNDERLYING OPTIONS, SARS AND OTHER AWARDS
As of October 5, 1998, the closing price of Class A Common Stock as reported
on the Nasdaq Stock Market was $15.8125 per share.
PLAN BENEFITS
In as much as Awards to all Participants under the Plan will be granted at
the sole discretion of the Option Committee the benefits which will be received
by or allocated to Participants under the Plan are not presently determinable.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth compensation (cash and non cash) for the
Chief Executive Officer and the four other most highly compensated officers who
earned in excess of $100,000 per annum during the Company's last three completed
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
--------------------------------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------------------- RESTRICTED UNDERLYING
NAME AND FISCAL OTHER ANNUAL STOCK STOCK LTIP
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) OPTIONS(#) PAYOUTS($)
- -------------------- ------ --------- --------- ------------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Kathy Bronstein..... 1997 682,418 1,271,375(3) -- 59,982 120,000 --
Vice Chairman and 1996 633,171 917,560(4) -- 42,303 -- --
Chief Executive 1995 433,135 348,180(5) -- 20,680 -- --
Officer
Edmond Thomas....... 1997 563,627 726,500(3) -- 49,806 120,000 --
President and 1996 566,853 524,320(4) -- 37,010 -- --
Chief
Operating Officer 1995 362,272 198,960(5) -- 18,800 -- --
Sharon Hughes....... 1997 181,730 90,813(3) -- 17,614 10,000 --
Vice President of 1996 138,768 20,000(4) -- 9,700 -- --
Merchandising 1995 127,610 -- -- 5,170 -- --
Barbara Bachman..... 1997 176,423 40,000(3) -- 16,381 10,000 --
Vice President 1996 166,211 20,000(4) -- 12,276 -- --
1995 152,654 5,000 -- 6,204 -- --
of Store Operations
Ann Cadier Kim...... 1997 150,000 30,000(3) -- 13,210 10,000 --
Vice President of 1996 140,951 20,000(4) -- 9,881 -- --
Finance 1995 109,389 10,000 -- 5,266 10,000 --
<CAPTION>
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION($)
- -------------------- ---------------
<S> <C>
Kathy Bronstein..... 222,555(6)
Vice Chairman and --
Chief Executive --
Officer
Edmond Thomas....... 49,062(6)
President and --
Chief
Operating Officer --
Sharon Hughes....... --
Vice President of --
Merchandising --
Barbara Bachman..... --
Vice President --
--
of Store Operations
Ann Cadier Kim...... --
Vice President of --
Finance --
</TABLE>
- ------------------------------
(1) While the named executive officers enjoy certain perquisites, for fiscal
years 1995, 1996 and 1997 these did not exceed the lesser of $50,000 or 10%
of each officer's salary and bonus.
(2) The Company has a stock bonus plan whereby certain employees of the Company
receive Class A Common Stock in proportion to their salary. The amount of
the award is also dependent on the Company's earnings before tax and the
stock price on the date of grant. The bonus shares vest at a rate of 33.33%
per year on each anniversary of the grant date, and a participant's right to
non issued shares is subject to forfeiture if the participant's employment
is terminated. Dividends are not paid on stock grant awards until such time
as the stock is vested and issued to the executive. Shares granted under the
plan held by executives at January 31, 1998 are as follows: Ms.
Bronstein--6,865; Mr. Thomas--7,429; Ms. Hughes--3,566; Ms. Bachman--1,986;
and Ms. Cadier Kim--3,030. The aggregate market value at January 31, 1998 of
these shares is as follows: Ms. Bronstein--$210,241; Mr. Thomas--$227,513;
Ms. Hughes--$109,209; Ms. Bachman-- $60,821; and Ms. Cadier Kim--$92,794.
(3) Bonus amounts earned in fiscal 1997 were paid to the executives in fiscal
1998.
(4) Bonus amounts earned in fiscal 1996 were paid to the executives in fiscal
1997.
(5) Bonus amounts earned in fiscal 1995 were paid to the executives in fiscal
1996.
(6) Amount represents pay in lieu of vacation for fiscal 1997 and prior fiscal
years back to original date of hire for Ms. Bronstein, fiscal 1985, and for
Mr. Thomas, fiscal 1992.
6
<PAGE>
OPTION GRANTS
The following table sets forth information regarding options granted in 1997
to each of the named executive officers pursuant to the Company's 1996 Long-Term
Incentive Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN EXERCISE OR TERM(2)
GRANTED FISCAL YEAR BASE PRICE ($ EXPIRATION ------------------------
NAME (SHARES)(1) 1997 PER SHARE) DATE 5%($) 10%($)
- ----------------------------------- ----------- --------------- ------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Kathy Bronstein.................... 120,000 20% 20.0 8/20/07 1,509,348 3,824,976
Edmond Thomas...................... 120,000 20% 20.0 8/20/07 1,509,348 3,824,976
Sharon Hughes...................... 10,000 2% 20.0 8/20/07 125,779 318,748
Barbara Bachman.................... 10,000 2% 20.0 8/20/07 125,779 318,748
Ann Cadier Kim..................... 10,000 2% 20.0 8/20/07 125,779 318,748
</TABLE>
- ------------------------
(1) The options granted to Ms. Bronstein and Mr. Thomas vest at the rate of
33 1/3% per year beginning in August 1999. The options granted to Ms.
Hughes, Ms. Bachman and Ms. Cadier Kim vest at the rate of 20% per year for
the next five years.
(2) Potential realizable value is based on the assumption that the stock price
of the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price performance.
OPTION EXERCISE AND FISCAL YEAR-END VALUES
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND OPTION VALUES AT JANUARY 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT "IN-THE-MONEY" OPTIONS AT
SHARES JANUARY 31, 1998(#) JANUARY 31, 1998($)(1)
ACQUIRED ON VALUE -------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ------------- ----------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kathy Bronstein................. -- -- 40,000 200,000 1,060,000 3,395,000
Edmond Thomas................... -- -- 40,000 200,000 1,060,000 3,395,000
Sharon Hughes................... 2,000 51,750 500 14,000 13,250 212,250
Barbara Bachman................. -- -- 6,000 14,000 155,250 209,750
Ann Cadier Kim.................. 3,000 71,500 2,000 20,000 45,250 348,000
</TABLE>
- ------------------------
(1) Represents the market value of shares underlying "in-the-money" options on
January 31, 1998 less the option exercise price. Options are "in-the-money"
at the fiscal year end if the fair market value of the underlying securities
on such date exceeds the exercise or base price of the option.
7
<PAGE>
RETIREMENT PLAN
Irving Teitelbaum, Kathy Bronstein and Edmond Thomas are participants in The
Wet Seal, Inc. Supplemental Executive Retirement Plan ("SERP"), an unfunded,
nonqualified retirement plan. According to the terms of the SERP, a
participant's "Annual Accrued Benefit" shall be $250,000 which may be increased
upward, if applicable, based on the "Pre-Tax Profit Percentage" (as defined in
the SERP) for the three full fiscal years of the Company preceding the date the
participant's service with the Company is terminated, as follows:
<TABLE>
<CAPTION>
ANNUAL ACCRUED
3-YEAR AVERAGE PRE-TAX PROFIT PERCENTAGE BENEFIT
- ----------------------------------------------------------------------- ---------------------
<S> <C>
if 4.25% or greater but less than 4.75%................................ $ 300,000
if 4.75% or greater but less than 5.25%................................ $ 350,000
if 5.25% or greater but less than 5.75%................................ $ 400,000
if 5.75% or greater but less than 7.00%................................ $ 450,000
if 7.00% or greater.................................................... $ 500,000
</TABLE>
A participant is entitled to receive benefits under the SERP upon his or her
Normal Retirement Date (the first day of the month following the date the
participant's service with the Company as an officer or executive has
terminated, and which occurs at or after the date the participant has attained
22.5 years of service with the Company). A participant may receive an early
retirement benefit equal to his or her Annual Accrued Benefit reduced by 1/2 of
1% per month for the number of months his or her retirement precedes his or her
Normal Retirement Date. The normal form of benefit is a straight life annuity,
ending in the month in which the participant dies. The Annual Accrued Benefit is
payable in 12 equal monthly installments a year. The participant may choose to
receive the benefit in the form of a 50% joint and survivor annuity. Benefits
under the SERP are forfeitable upon a termination of employment for Cause (as
defined in the SERP). Benefits under the SERP are provided by the Company on a
noncontributory basis.
DIRECTOR COMPENSATION
All directors who are not directly affiliated with the Company as well as
one director who is affiliated receive a fee of $5,000 for each board meeting
attended, with a minimum yearly fee of $20,000. All directors are reimbursed for
expenses connected with attendance at the meetings of the Board of Directors. An
additional fee of $1,000 is paid to non-employee directors for each Audit
committee meeting attended.
All directors who are not directly affiliated with the Company as well as
one director who is affiliated were granted stock options of 5,000 shares each
in fiscal 1997 pursuant to the Company's 1996 Long-Term Incentive Plan. The
options vest at the rate of 20% per year for the next five years.
All directors, except one, who are not directly affiliated with the Company
as well as one director who is affiliated were granted stock options of 10,000
shares each in fiscal 1994 pursuant to the Company's 1994 Long-Term Incentive
Plan. One independent director was granted 15,000 options in fiscal 1996. The
options vest at the rate of 20% per year for the next five years.
EMPLOYMENT AGREEMENTS
KATHY BRONSTEIN
Kathy Bronstein has served as the Chief Executive Officer of the Company
since March 1992. On December 30, 1988, in her former position of Executive Vice
President and General Merchandise Manager, Ms. Bronstein entered into an
employment agreement with the Company. Under this agreement, as amended, Ms.
Bronstein is entitled to a base salary of $550,000 per annum, adjusted annually
by 0.5% ( 1/2 of 1%) of the pre-tax profits of the Company for the preceding
fiscal year to the extent this amount exceeds the aggregate cash dividends Ms.
Bronstein is eligible to receive on her holdings of the
8
<PAGE>
Company's capital stock referable to the same fiscal year. This adjustment is
not cumulative and is in lieu of any salary review or cost of living
adjustments. Ms. Bronstein also receives an incentive bonus of 3.5% of the
pre-tax profits of the Company (as defined in the agreement) for each fiscal
year.
In January 1995, Ms. Bronstein's employment agreement was amended to provide
automatic extensions to the term of her employment agreement as well as
termination benefits upon the occurrence of certain trigger events. In the event
of a trigger event, the employment agreement is terminated and Ms. Bronstein is
entitled to receive an immediate payment approximately equal to three years of
Ms. Bronstein's current base salary and bonus during the last three fiscal
years. Trigger events include a "change in control" AND either (i) Ms.
Bronstein's election to resign within 90 days of a material change in Ms.
Bronstein's rights and duties or (ii) Ms. Bronstein's termination by the Company
without cause. A "change in control" means (i) the disposition or conversion by
a Class B stockholder (other than Ms. Bronstein) of a majority of that
stockholder's Class B shares or (ii) the acquisition of more than 50% of the
voting power in a Class B stockholder or the ability to control the disposition
or voting of a Class B stockholder's shares AND a majority of the Board of
Directors of the Company ceases to be those in office two years prior to the
change in control ("Continuing Directors") or those elected by a majority of
other Continuing Directors. In addition, upon a change in control (regardless of
the termination of the employment agreement), Ms. Bronstein's stock options
become immediately exercisable. In the event that the total payments made to Ms.
Bronstein upon the occurrence of a trigger event result in "excess parachute
payments" under the Internal Revenue Code of 1986, as amended, the Company would
be obligated to pay the excise tax due on such amount and any income tax
obligations arising from reimbursement of any such excise taxes.
Ms. Bronstein's agreement expires on January 30, 2003. The agreement
automatically extends for an additional year on the first day of each fiscal
year for up to five years. These automatic extensions may be terminated by
either party at any time upon prior written notice. She has agreed not to
compete with the Company during the term of her employment and for a period of
two (2) years thereafter. She is provided with a car by the Company.
The Company has obtained "key man" life insurance in the amount of $5.0
million payable to the Company in the event of Ms. Bronstein's death while
employed by the Company.
EDMOND THOMAS
Edmond Thomas has served as the Company's President and Chief Operating
Officer since March 17, 1994. On June 22, 1992, in his former position of
Executive Vice President and Chief Operating Officer, he entered into an
employment agreement with the Company. Under this agreement, as amended, Mr.
Thomas is entitled to a base salary of $500,000 per annum plus an annual
adjustment of .25% ( 1/4 of 1%) of the pre-tax profits of the Company for the
preceding fiscal year to the extent this amount exceeds the aggregate cash
dividends Mr. Thomas is eligible to receive on his holdings of the Company's
capital stock referable to the same fiscal year. This adjustment is non
cumulative and is in lieu of any salary review or cost of living adjustments.
Mr. Thomas also receives an incentive bonus of 2% of the pre-tax profits of the
Company (as defined in the agreement) for each fiscal year.
In January 1995, Mr. Thomas' employment agreement was amended to provide
automatic extensions to the term of his employment agreement as well as
termination benefits upon the occurrence of certain trigger events. In the event
of a trigger event, the employment agreement is terminated and Mr. Thomas is
entitled to receive an immediate payment approximately equal to three years of
Mr. Thomas' current base salary and bonus during the last three fiscal years.
Trigger events include a "change in control" AND either (i) Mr. Thomas' election
to resign within 90 days of a material change in Mr. Thomas' rights and duties
or (ii) Mr. Thomas' termination by the Company without cause. A "change in
control" means (i) the disposition or conversion by a Class B stockholder (other
than Ms. Bronstein) of a majority of that stockholder's Class B shares or (ii)
the acquisition of more than 50% of the voting power in a Class B
9
<PAGE>
stockholder or the ability to control the disposition or voting of a Class B
stockholder's shares ANDa majority of the Board of Directors of the Company
ceases to be those in office two years prior to the change in control
("Continuing Directors") or those elected by a majority of other Continuing
Directors. In addition, upon a change in control (regardless of the termination
of the employment agreement), Mr. Thomas' stock options become immediately
exercisable. In the event that the total payments made to Mr. Thomas upon the
occurrence of a trigger event result in "excess parachute payments" under the
Internal Revenue Code of 1986, as amended, the Company would be obligated to pay
the excise tax due on such amount and any income tax obligations arising from
reimbursement of any such excise taxes.
Mr. Thomas' agreement expires on January 30, 2003. The agreement
automatically extends for an additional year on the first day of each fiscal
year for up to five years. These automatic extensions may be terminated by
either party at any time upon prior written notice. He has agreed not to compete
with the Company during the term of his employment and for a period of two (2)
years thereafter. He is provided with a car by the Company.
The Company has obtained "key man" life insurance in the amount of $5.0
million payable to the Company in the event of Mr. Thomas' death while employed
by the Company.
BUSINESS RELATIONSHIPS
MANAGEMENT SERVICES
In each of the fiscal years ended January 31, 1998, February 1, 1997, and
February 3, 1996, a fee of $250,000 was paid to First Canada Management, Inc., a
company controlled by Irving Teitelbaum, for the services of Irving Teitelbaum,
Chairman of the Board of the Company, and Stephen Gross, Corporate Secretary of
the Company, respectively.
First Canada Management, Inc. was granted stock options of 200,000 shares in
fiscal 1997 pursuant to the Company's 1996 Long-Term Incentive Plan. The options
vest at the rate of 20% per year for the next five years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Irving Teitelbaum, Wilfred Posluns and Stephen Gross serve as members of the
Compensation Committee. Mr. Teitelbaum also serves as Chairman of the Board of
the Company and Mr. Gross also serves as the Secretary of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The primary duties of the Compensation Committee include: (i) reviewing the
compensation levels of the Company's primary executive officers and certain
other members of senior management, (ii) consulting with and making
recommendations to the Company's Option Committee regarding the Company's
overall policy of granting options and awards under the Company's long-term
incentive plans, (iii) monitoring the performance of senior management, and (iv)
related matters. A decision to employ any person with an annual compensation of
$150,000 or more (or any increase in annual compensation to $150,000 or more)
must be approved by the Compensation Committee. The Compensation Committee is
comprised entirely of non-employee Directors.
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are based upon the recognition
that The Wet Seal, Inc. competes in a creative industry in which it is critical
to stay current with rapidly changing trends and styles. Competition is intense
for talented executives who can successfully guide a company in this type of
competitive environment. Therefore, the Company's compensation programs are
designed to provide
10
<PAGE>
total compensation packages that will both attract talented individuals to the
Company as well as provide rewards based upon the Company's long-term success.
With these principles in mind, the Compensation Committee has set forth the
following guidelines:
1. Provide base salaries which are competitive in the retail clothing
industry to attract and retain talented individuals;
2. Provide annual bonuses that are tied to the Company's short-term
performance to align the interests of the Company's executives with those of
its stockholders; and
3. Provide long-term incentive benefits which will reward long-term
commitment to the Company.
COMPENSATION OF EXECUTIVE OFFICERS
Base salaries for executive officers are established with a view to the
responsibilities of the position and the experience of the individual. Salary
levels are also fixed with reference to comparable companies in retail and
related trades. The salaries of key executive officers and the incentive plans
in which they participate are reviewed annually by the Compensation Committee in
light of the Committee's assessment of individual performance, contribution to
the Company and level of responsibility.
The Chief Executive Officer (the "CEO") and the President and Chief
Operating Officer are eligible pursuant to their employment agreements to
receive annual cash bonuses of 3.5% and 2%, respectively, of the Company's
pre-tax profit. The Compensation Committee believes that tying annual cash
bonuses to the Company's profitability aligns the interests of management with
stockholders and encourages intensive efforts to attain and increase
profitability. The CEO and the President and Chief Operating Officer of the
Company earned cash bonuses in fiscal 1997 in the amounts of $1,271,375 and
$726,500, respectively, which were paid in fiscal 1998.
The Company also maintains an employee stock bonus plan in which the top
executives of the Company are eligible to participate. Awards under this plan to
executives are calculated by multiplying the Company's fiscal year-end pre-tax
profit as a percentage of sales by the executive's base salary and dividing such
amount by the price of the Company's Class A Common Stock as of the end of the
fiscal year. Grants under the stock bonus plan vest over a period of three
years.
Stock options are granted to executive officers and other key employees
whose contributions are considered important to the long-term success of the
Company pursuant to the Company's long-term incentive plans. Stock options have
historically been granted by the Option Committee on a case-by-case basis based
upon the Board's evaluation of an individual's past contributions and potential
future contributions to the Company. In granting stock options, the Option
Committee takes into consideration the anticipated long-term contributions of an
individual to the potential growth and success of the Company, as well as the
number of options previously granted to the individual.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Since March 1992, Kathy Bronstein has served as CEO of the Company. Ms.
Bronstein received a base salary of $375,000 in fiscal 1995. In December 1995,
Ms. Bronstein's employment agreement was amended to increase her base salary to
$550,000. The Compensation Committee deemed this increase appropriate in light
of the Company's recent performance and the successful acquisition of the
Contempo Casuals chain, which substantially increased the size of the Company.
As the Company continues to adapt to a changed environment in the women's retail
apparel industry, the Compensation Committee believes that Ms. Bronstein's
experience and capabilities will be critical in enabling the Company to remain
competitive and profitable. Ms. Bronstein is eligible to receive a
non-cumulative annual adjustment (in lieu of a cost of living adjustment) to her
base salary of 0.5% of the pre-tax profits of the Company for the
11
<PAGE>
preceding fiscal year to the extent this amount exceeds the aggregate cash
dividends Ms. Bronstein is eligible to receive on her holdings of Company common
stock for the same fiscal year. Ms. Bronstein received such an adjustment in
fiscal 1997. See "Executive Compensation and Other Information-- Employment
Agreements." Ms. Bronstein is also eligible to receive an annual cash bonus
pursuant to her employment agreement of 3.5% of the pre-tax profits of the
Company for each fiscal year. Under this formula, Ms. Bronstein earned a cash
bonus in fiscal 1997 in the amount of $1,271,375, which was paid in fiscal 1998.
The Compensation Committee
Irving Teitelbaum
Wilfred Posluns
Stephen Gross
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Performance Graph compares the cumulative stockholder return on the
Company's common stock with the return on the Total Return Index for the Nasdaq
Stock Market (US) and the Nasdaq Retail Trade Stocks. The Performance Graph
assumes $100 invested on January 29, 1993 in the stock of The Wet Seal, Inc.,
the Nasdaq Stock Market (US) and the Nasdaq Retail Trade Stocks. It also assumes
that all dividends are reinvested.
PERFORMANCE GRAPH
FOR THE WET SEAL COMMON STOCK
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
THE WET SEAL, INC. NASDAQ STOCK MARKET (US) NASDAQ RETAIL TRADE STOCKS
<S> <C> <C> <C>
1/29/93* $100 $100 $100
1/28/94* 46 114 106
1/27/95* 57 110 95
2/2/96* 105 157 107
1/31/97* 288 203 131
1/30/98* 438 240 154
</TABLE>
<TABLE>
<CAPTION>
JANUARY 29, JANUARY 28, JANUARY 27, FEBRUARY 2, JANUARY 31,
1993* 1994* 1995* 1996* 1997*
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
The Wet Seal, Inc.................. 100 46 57 105 288
Nasdaq Stock Market (US)........... 100 114 110 157 203
Nasdaq Retail Trade Stocks......... 100 106 95 107 131
<CAPTION>
JANUARY 30,
1998*
---------------
<S> <C>
The Wet Seal, Inc.................. 438
Nasdaq Stock Market (US)........... 240
Nasdaq Retail Trade Stocks......... 154
</TABLE>
- ------------------------
* Date closest to the Company's fiscal year end.
The historical stock performance shown on the graph is not necessarily
indicative of future price performance.
13
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of September 30, 1998, for (i) each
person known to the Company to have beneficial ownership of more than 5% of each
class of the Company's capital stock; (ii) each of the Company's directors;
(iii) each of the Company's executive officers designated in the Summary
Compensation Table; and (iv) all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
% %
BENEFICIAL BENEFICIAL % BENEFICIAL PERCENT OF
NUMBER OF OWNERSHIP NUMBER OF OWNERSHIP OWNERSHIP OF VOTE OF ALL
SHARES OF OF SHARES SHARES OF OF SHARES ALL CLASSES OF CLASSES OF
NAME CLASS A OF CLASS A CLASS B OF CLASS B STOCK STOCK
- -------------------------------------- ----------- ----------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles Express Fashions, Inc.
(Suzy Shier Equities, Inc.
Subsidiary) (1)..................... -- -- 1,300,000 44.7% 10.6% 17.1%
1604 St. Regis Blvd. Dorval, Quebec,
Canada H9P1H6
3254127 Canada, Inc. (GTHI Subsidiary)
(1)................................. -- -- 815,573 28.0% 6.7% 10.7%
1604 St. Regis Blvd. Dorval, Quebec,
Canada H9P1H6
Suzy Shier Equities, Inc. (Suzy Shier
Ltd. Subsidiary) (1)................ 104,000 1.1% 175,000 6.0% 2.3% 3.0%
1604 St. Regis Blvd. Dorval, Quebec,
Canada H9P1H6
La Senza, Inc. (Suzy Shier Ltd.
Subsidiary) (1)..................... 244,500 2.6% 155,000 5.3% 3.3% 3.7%
1604 St. Regis Blvd. Dorval, Quebec,
Canada H9P1H6
First Canada Management Co. (1)....... 40,000 0.4% -- -- 0.3% 0.3%
1710 St. Regis Blvd. Dorval, Quebec,
Canada H9P1H6
Kathy Bronstein (2)................... 81,636 * 467,092 16.0% 4.5% 6.7%
Ed Thomas (3)......................... 86,143 * -- -- * *
Sharon Hughes (4)..................... 6,937 * -- -- * *
Barbara Bachman (4)................... 8,000 * -- -- * *
Ann Cadier Kim (4).................... 7,269 * -- -- * *
George Benter (4)..................... 10,500 * -- -- * *
Walter F. Loeb (4).................... 10,400 * -- -- * *
Wilfred Posluns (4)................... 7,000 * -- -- * *
Gerald Randolph (4)................... 2,000 * -- -- * *
Alan Siegel (4)....................... 4,000 * -- -- * *
Scudder Kemper Investments, Inc. (5).. 691,900 7.4% -- -- 5.6% 4.6%
345 Park Avenue New York, New York
10154
Delaware Management Holdings, Inc.
(6)................................. 663,400 7.1% -- -- 5.4% 4.4%
2005 Market St. Philadelphia,
Pennsylvania 19103
Lone Pine Capital LLC (7)............. 555,200 5.9% -- -- 4.5% 3.7%
2 Greenwich Plaza, Greenwich,
Connecticut 06830
All directors and officers as a group
(13 individuals).................... 271,885 2.9% 2,912,665 100.0% 26.0% 40.2%
</TABLE>
- ------------------------------
* Less than 1%
14
<PAGE>
(1) Los Angeles Express Fashions, Inc., 3254127 Canada, Inc., Suzy Shier
Equities, Inc., La Senza, Inc. and First Canada Management Company are
directly or indirectly controlled by Irving Teitelbaum, Chairman of the
Board, and Stephen Gross, Secretary and a director of the Company. These
stockholders beneficially own shares which in the aggregate represent
approximately 34.8% of the total voting power with respect to the Company.
Shares held by First Canada Management Company include options representing
the immediate right to purchase 40,000 shares of Class A Common Stock.
(2) Ms. Bronstein has sole voting and dispositive power with respect to all of
the stated holdings of Class A and Class B Common Stock. Shares held include
options representing the immediate right to purchase 80,000 shares of Class
A Common Stock. Ms. Bronstein also holds options to purchase an additional
160,000 shares of Class A Common Stock which become exercisable over the
next four years.
(3) Mr. Thomas has sole voting and dispositive power with respect to all of the
stated holdings of Class A Common Stock. Shares held include options
representing the immediate right to purchase 80,000 shares of Class A Common
Stock. Mr. Thomas also holds options to purchase an additional 160,000
shares of Class A Common Stock which become exercisable over the next four
years.
(4) Shares held include options representing the immediate right to purchase the
following shares of Class A Common Stock: Ms. Hughes--4,500; Ms.
Bachman--4,000; Ms. Cadier Kim--6,000; Messrs. Benter and Loeb--9,000 each;
Mr. Posluns--7,000; Mr. Siegel--4,000; and Mr. Randolph--1,000.
(5) As reported in a Schedule 13G dated February 12, 1998, Scudder Kemper
Investments, Inc. ("Scudder") beneficially owns 691,900 shares of the Class
A Common Stock of the Company. Scudder has sole voting power with respect to
354,400 shares and sole dispositive power with respect to 512,400 shares.
Scudder has shared voting power with respect to 228,700 shares and shared
dispositive power with respect to 179,500 shares.
(6) As reported in a Schedule 13G dated February 3, 1997, Delaware Management
Holdings, Inc. ("DMHI") is the parent holding company of Delaware Management
Company, Inc. ("DMCI"). DMHI has sole voting power with respect to 17,850
shares and sole dispositive power with respect to 663,400 shares.
(7) As reported in a Schedule 13G dated September 24, 1998, Lone Pine Capital
LLC and Lone Pine Associates in aggregate have shared voting power and share
dispositive power with respect to 555,200 shares. The companies are related
through the same Managing Member.
OTHER MATTERS
The Board of Directors knows of no other business to come before the Special
Meeting. However, if any other matters are properly brought before the Special
Meeting, the persons named in the accompanying form of proxy or their
substitutes will vote in their discretion on such matters.
The cost of this solicitation or proxy will be borne by the Company.
Arrangements may be made with brokerage houses, custodians, nominees and
fiduciaries to send proxies and materials to their principals and, upon request,
the Company will reimburse them for their expenses in so doing.
STOCKHOLDER PROPOSALS FOR PRESENTATION AT 1999 ANNUAL MEETING
If a Stockholder of the Company wishes to present a proposal for
consideration at the next Annual Meeting of Stockholders, the proposal must be
received at the executive offices of the Company no later than January 8, 1999
to be considered for inclusion in the Company's Proxy Statement and form of
proxy for that Annual Meeting. Any notice of a shareholder proposal submitted
outside the processes of Rule 14a-8 of the Securities Exchange of 1934, as
amended, will be considered untimely if not received by March 24, 1999.
15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------- -----
<C> <S> <C>
A FIRST AMENDMENT OF THE WET SEAL, INC. 1996 LONG-TERM INCENTIVE PLAN.............................. A-1
</TABLE>
<PAGE>
EXHIBIT A
FIRST AMENDMENT OF THE WET SEAL, INC.
1996 LONG-TERM INCENTIVE PLAN
Section 5.1 is amended to delete the following words each time they appear
therein "seven hundred thousand (700,000)" and to replace the deleted words with
"one million six hundred and fifty thousand (1,650,000)".
A-1
<PAGE>
- Please Detach and Mail in the Envelope Provided -
- --------------------------------------------------------------------------------
PROXY THE WET SEAL, INC. PROXY -- SPECIAL MEETING PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OCTOBER 26, 1998
The undersigned, a stockholder of The Wet Seal, Inc., a Delaware
corporation, appoints Kathy Bronstein and Edmond Thomas, or either of them,
his true and lawful agents and proxies, each with full power of substitution,
to vote all shares of stock then the undersigned would be entitled to vote if
personally present at the Special Meeting of Stockholders of The Wet Seal,
Inc. to be held at the offices of the Company, 26972 Burbank Foothill Ranch,
CA 92610 on October 26, 1998, at 10:00 a.m. and any adjournment thereof, with
respect to the following matters which are more fully explained in the Proxy
Statement of the Company dated October 7, 1998 receipt of which is acknowledged
by the undersigned:
NEW ADDRESS:
-------------------------
Check here for / /
address change -------------------------------------
-------------------------------------
-------------------------------------
(Continued and to be signed and
dated on reverse side)
<PAGE>
- Please Detach and Mail in the Envelope Provided -
- --------------------------------------------------------------------------------
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE.
1. TO ADOPT THE FIRST AMENDMENT TO THE WET SEAL INC. 1996 LONG-TERM INCENTIVE
PLAN TO INCREASE THE NUMBER OF SHARES FROM 700,000 SHARES TO 1,650,000
SHARES TO PROVIDE FOR ADDITIONAL GRANTS TO ELIGIBLE INDIVIDUALS:
/ / FOR / / AGAINST / / ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
When properly executed, the proxy will be voted in the manner directed
herein by the undersigned. If you wish to vote in accordance with the Board
of Directors' recommendations, just sign below. You need not mark any boxes.
If no specification is made, the proxies intend to vote "FOR" the Proposal
and in their discretion for any other matters coming before the Special
Meeting. The Board of Directors unanimously recommends a vote FOR the
Proposal.
The undersigned acknowledges receipt of the Notice of Special Meeting of
Stockholders to be held on October 26, 1998 and the Proxy Statement dated
October 7, 1998. Please sign exactly as your name appears hereon. Joint
owners should each sign. When signing as attorney, executor, trustee or
guardian, please give full title as such.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Signature: Date:
---------------------------- ----------------------
