<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Salant Corporation
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SALANT CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1996
-------------------
To the Stockholders of Salant Corporation:
The Annual Meeting of Stockholders of Salant Corporation ("Salant") will be
held at the offices of Salant, 36th Floor, 1114 Avenue of the Americas, New
York, New York on Tuesday, May 14, 1996, at 10:00 a.m., New York City time, for
the following purposes:
(1) Electing four directors for terms ending at the 1999 Annual Meeting
of Stockholders;
(2) Approving a stock plan for 600,000 shares of Salant Common Stock;
(3) Ratifying the appointment of Deloitte & Touche LLP as independent
auditors for Salant for the fiscal year ending December 28, 1996; and
(4) Transacting such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The close of business on March 26, 1996 has been fixed as the record date
for the determination of the stockholders entitled to vote at the Annual Meeting
and any adjournments thereof.
Stockholders, whether or not they expect to attend the Annual Meeting
personally, are requested to complete, date, sign and return the enclosed proxy
in the accompanying envelope, which requires no postage. Stockholders may revoke
their proxy at any time before it is voted by filing with the Secretary of
Salant a written revocation or a proxy bearing a later date, or by attending and
voting at the Annual Meeting.
By Order of the Board of Directors,
[LOGO]
TODD KAHN
SECRETARY
New York, New York
March 29, 1996
<PAGE>
SALANT CORPORATION
1114 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
-------------------
PROXY STATEMENT
MARCH 29, 1996
-------------------
GENERAL INFORMATION
This Proxy Statement is furnished to holders of common stock, par value
$1.00 per share (the "Common Stock"), of Salant Corporation (the "Company" or
"Salant") in connection with the solicitation of proxies by the Company to be
voted at the Annual Meeting of Stockholders to be held on Tuesday, May 14, 1996
(the "Annual Meeting"), or any adjournments thereof. The cost of this
solicitation will be borne by the Company. In addition to solicitation of
proxies by mail, some of the officers, directors, and/or regular employees of
the Company, none of whom will receive additional compensation therefor, may
solicit proxies by telephone, telegraph, facsimile or in person. Proxies may
also be solicited by Chemical Bank at a cost of approximately $3,200 plus
out-of-pocket expenses. The Company will, upon request, reimburse banks and
brokers for their reasonable out-of-pocket expenses incurred in forwarding proxy
material to their principals. The Company's principal executive offices are
located at 1114 Avenue of the Americas, New York, New York 10036, and its
telephone number is (212) 221-7500. The mailing of this Proxy Statement to
stockholders of the Company will commence on or about March 29, 1996.
Each share of Common Stock is entitled to one vote on all matters to be
voted upon at the Annual Meeting. The presence in person or by proxy of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting constitutes a quorum for the transaction of business. On
matters brought before the Annual Meeting as to which a choice has been
specified by stockholders on the proxy, the shares will be voted accordingly. If
no choice is so specified, the shares will be voted (i) FOR the election of the
four nominees for directors listed in this Proxy Statement, (ii) FOR the
approval of the Salant Corporation 1996 Stock Plan (the "1996 Stock Plan"),
authorizing the issuance of stock options, stock appreciation rights and
restricted stock for up to 600,000 shares of Common Stock, and (iii) FOR the
ratification of the appointment of Deloitte & Touche LLP as independent auditors
for the Company for its fiscal year ending December 28, 1996. Other business, if
any, brought before the Annual Meeting shall be voted FOR or AGAINST by the
persons designated to vote the proxies as they, in their discretion, determine.
Stockholders giving a proxy may revoke it by notice in writing delivered to
the Secretary of the Company or by delivering a later dated proxy to the
Secretary of the Company, in either case, at any time before it is exercised.
Execution of a proxy will not in any way affect a stockholder's right to attend
the Annual Meeting and vote in person. Stockholders who wish to vote in person
at the Annual Meeting despite execution of a proxy should contact the Secretary
of the Company.
Only stockholders of record on March 26, 1996 are entitled to vote at the
Annual Meeting. At that date, Salant had outstanding and entitled to vote
14,925,314 shares of Common Stock held by 1,181 stockholders of record. For
information regarding the current ownership of Common Stock by the Company's
principal stockholders and management, see "Security Ownership of Principal
Stockholders" and "Security Ownership of Management" herein.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 30, 1995 (the "1995 fiscal year"), accompanies this Proxy Statement.
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
Prior to March 22, 1996, Salant's Board of Directors consisted of nine
members, divided into three classes, each class consisting of three members. On
March 22, 1996, the Board determined to increase its membership from nine to ten
members by adding a director to the third class. The term of office for the
first class ("Class One") will expire at the 1997 Annual Meeting; the term of
the second class ("Class Two") will expire at the 1998 Annual Meeting; and the
term of the third class ("Class Three") will expire at the 1999 Annual Meeting.
The names, principal occupations (currently and for at least the preceding
five years) and other information concerning nominees proposed for election to
the Board of Directors and continuing directors are presented below. All of the
nominees for the office of director, other than Mr. Falk, are currently
directors of Salant and each has served continuously since the year indicated.
Proxies will be voted for all such nominees, unless marked to the contrary.
Pursuant to the Company's Plan of Reorganization (the "Plan of
Reorganization"), which was consummated on September 20, 1993 (the "Consummation
Date"), the Company entered into an agreement (the "Apollo Agreement") with
Apollo Apparel Partners, L.P. ("Apollo Apparel"), which, as a result of the
consummation of the Plan of Reorganization, is the largest stockholder of the
Company. Under the Apollo Agreement, Salant must use its best efforts to cause
the Board of Directors to consist of nine members. In addition, if Salant
nominates an Apollo Apparel designee for election at the 1994 and 1995 Annual
Meetings to serve in Classes One and Two, Apollo Apparel will vote in favor of
all Salant's nominees for such classes at each such Annual Meeting. The Apollo
Agreement does not address election of directors for this Annual Meeting. For a
summary of certain terms of the Apollo Agreement and a related registration
rights agreement, see "Certain Relationships and Related Transactions" herein.
Salant believes that each nominee will serve as a director, but should any
such nominee be unable to serve as a director or withdraws from nomination,
proxies will be voted for the election of such substitute nominee as the Board
of Directors may propose.
NOMINEES FOR TERMS ENDING AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Robert H. Falk, age 57, has been a principal since April 1992 of Apollo
Advisors, L.P., which, together with an affiliate, serves as managing general
partner of Apollo Investment Fund, L.P., AIF II, L.P. and Apollo Investment Fund
III, L.P., private securities investments funds. AIF II, L.P. is the general
partner of Apollo Apparel, the largest stockholder of Salant. For more than five
years prior to 1992, Mr. Falk was a partner in the law firm of Skadden Arps,
Slate, Meagher & Flom. Mr. Falk is a director of Converse, Inc., a manufacturer
of athletic and leisure footwear; Culligan Water Technologies, Inc., a
manufacturer of water purification and treatment products; and Samsonite
Corporation, a luggage manufacturer.
Ann Dibble Jordan, age 61, has been an independent consultant for the last
five years. Ms. Dibble Jordan is a director of Johnson & Johnson Corporation, a
manufacturer and marketer of consumer healthcare products; The Travelers
Corporation, a financial services and insurance firm; The Hechinger Company, a
retailer of home improvement products; and Automatic Data Processing, Inc., a
computer services company. Ms. Dibble Jordan has served as a director of the
Company since September 1993.
Robert Katz, age 29, has been associated since 1990 with and is an officer
of Apollo Advisors, L.P., which, together with an affiliate, serves as managing
general partner of Apollo Investment Fund, L.P., AIF II, L.P. and Apollo
Investment Fund III, L.P., private securities investment funds. AIF II, L.P. is
the general partner of Apollo Apparel, the largest stockholder of Salant. During
1990, Mr. Katz was an associate with Smith Barney, Harris Upham & Co. and, prior
thereto, he was an associate with Drexel Burnham Lambert Incorporated. Mr. Katz
is a director of Aris Industries, Inc., an apparel manufacturer. Mr. Katz has
served as a director of the Company since August 1995, when he filled the Board
vacancy created as a result of the death of Stanley R. Klion.
John S. Rodgers, age 66, is an independent consultant to Salant. From
September 1993 until July 1995, Mr. Rodgers was Executive Vice President,
Secretary and Senior Counsel of Salant. Prior to that time,
2
<PAGE>
Mr. Rodgers had been Chairman of the Board of Directors of the Company since
March 1991 and previously Vice Chairman of the Board since September 1988. Prior
to June 1993, Mr. Rodgers had been General Counsel for more than the previous
five years and prior to August 1995 he had been Secretary for more than the
previous five years. Mr. Rodgers has served as a director of the Company since
1973.
CONTINUING DIRECTORS
Craig M. Cogut, age 42, is the principal of Pegasus Financial, L.L.C., an
investment firm. Mr. Cogut was one of the founding principals of Apollo
Advisors, L.P., which, together with an affiliate, acts as managing general
partner of Apollo Investment Fund, L.P. and AIF II, L.P., private securities
investment funds. AIF II, L.P. is the general partner of Apollo Apparel, the
largest stockholder of Salant. Mr. Cogut is a director of Envirotest Systems
Corp., an emission testing firm; and Gillett Holdings, Inc., an operator of
television stations. Mr. Cogut has served as a director of the Company since
September 1993.
Nicholas P. DiPaolo, age 54, has been Chairman of the Board of Directors,
President and Chief Executive Officer of Salant since September 20, 1993. He had
been President and Chief Operating Officer since September 1988 and President
and Chief Operating Officer of Manhattan Industries, Inc. ("Manhattan")
(acquired by Salant in 1988) from June 1986 to September 1988. Mr. DiPaolo has
served as a director of the Company since 1989.
Harold Leppo, age 59, has been an independent retail consultant for more
than the past five years. Mr. Leppo is a director of Bradlees Inc., an operator
of discount stores; Filene's Basement, an operator of retail clothing stores;
Napier Co., a jewelry manufacturer; and Royce Hosiery Mills, Inc., a hosiery
manufacturer. Mr. Leppo has served as a director of the Company since September
1993.
Bruce F. Roberts, age 72, has been Executive Director of the Textile
Distributors Association, a trade association, since September 1990. Between
June 1986 and September 1990, Mr. Roberts was Senior Vice President-Corporate
Relations at Spring Industries, a textile manufacturer. Mr. Roberts has served
as a director of the Company since September 1993.
Marvin Schiller, age 62, was Managing Director of A. T. Kearney, Inc., a
management consulting firm, since May 1983 until his retirement as of January
1995. Dr. Schiller is a director of Alpine Lace Brands, Inc., a manufacturer of
low fat cheese; LePercq-Istel Fund, Inc., a mutual fund; and Strategic
Agricultural Management Corp., a software developer and marketer. Dr. Schiller
has served as a director of the Company since 1983.
Edward M. Yorke, age 37, has been an officer since 1992 of Apollo Advisors,
L.P., which, together with an affiliate, serves as managing general partner of
Apollo Investment Fund, L.P., AIF II, L.P. and Apollo Investment Fund III, L.P.,
private securities investment funds. AIF II, L.P. is the general partner of
Apollo Apparel, the largest stockholder of Salant. From 1990 to 1992, Mr. Yorke
was a vice president in the high yield capital markets group of BT Securities
Corp. Prior to 1990, Mr. Yorke was a member of the mergers and acquisitions
group of Drexel Burnham Lambert Incorporated. Mr. Yorke is a director of Aris
Industries, Inc., an apparel manufacturer; Big Flower Press, Inc., a commercial
printer; and Telemundo Group, Inc., an operator of television stations. Mr.
Yorke has served as a director of the Company since September 1993.
OTHER INFORMATION REGARDING THE DIRECTORS
During the 1995 fiscal year, there were seven meetings of the Board of
Directors. Directors who are not employees of Salant are paid an annual retainer
of $13,000 and an additional fee of $600 for attendance at each meeting of the
Board or of a committee of the Board (other than the Executive Committee) as
well as $5,000 per year for service on the Executive Committee, $3,000 per year
for service on the Audit Committee, $2,000 per year for service on the
Compensation Committee, $2,000 per year for service on the Qualified Plan
Committee and $1,000 per year for service on the Nominating Committee. In
addition, the Chairman of each Committee is paid an annual fee of $1,000. During
the 1995 fiscal year, none of the directors attended fewer than 75 percent of
the aggregate number of meetings held by (i) the Board during the period that he
or she served as a director and (ii) the Committees of which he or she was a
member during the period that he or she served on these Committees.
3
<PAGE>
The Board has established five standing committees to assist it in the
discharge of its responsibilities.
The Executive Committee met two times during the 1995 fiscal year. The
members of the Committee are Messrs. Cogut, DiPaolo and Schiller. The Committee,
to the extent permitted by law, may exercise all the power of the Board during
intervals between meetings of the Board.
The Audit Committee met two times during the 1995 fiscal year. The members
of the Committee until August 15, 1995 were Messrs. Leppo, Roberts and Yorke.
Mr. Katz replaced Mr. Yorke as a member of the Committee upon joining the Board
on August 15, 1995. The Committee meets independently with the Director of the
Internal Audit Department, representatives of Salant's independent auditors and
the Company's Chief Financial Officer and reviews the general scope of the
audit, the annual financial statements of the Company and the related audit
report, the fees charged by the independent auditors and matters relating to
internal control systems. The Committee is responsible for reviewing and
monitoring the performance of non-audit services by Salant's independent
auditors and for recommending the selection of Salant's independent auditors to
the Board.
The Compensation and Stock Plan Committees met four times during the 1995
fiscal year. The members of the Committees are Messrs. Leppo, Schiller and
Yorke. The Committees are responsible for reviewing and recommending to the
Board compensation for officers and certain other management employees and for
administering and granting awards under the stock plans.
The Nominating Committee met two times during the 1995 fiscal year. The
members of the Committee are Ms. Dibble Jordan and Messrs. Cogut and Roberts.
The Committee is responsible for proposing nominees for director for election by
the stockholders at each Annual Meeting and proposing candidates to fill any
vacancies on the Board. The Committee has not determined whether it will
consider candidates proposed by stockholders for membership on the Board.
The Qualified Plan Committee met two times during the 1995 fiscal year. The
members of the Committee are Ms. Dibble Jordan and Messrs. Roberts and Rodgers.
The Committee is responsible for overseeing the administration of the Company's
pension and savings plans.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of Salant:
<TABLE>
<CAPTION>
OFFICER OF
NAME AGE POSITIONS AND OFFICES SALANT SINCE
- ----------------------------- ----------- ---------------------------------------------------------- ------------------
<S> <C> <C> <C>
Nicholas P. DiPaolo.......... 54 Chairman of the Board, President and Chief Executive September 1988
Officer
Michael A. Lubin............. 46 Executive Vice President and Chief Operating Officer October 1995
Herbert R. Aronson........... 74 Executive Vice President October 1990
Elliot M. Lavigne............ 43 Executive Vice President, Marketing; Chairman of the Perry January 1994
Ellis Division
Richard P. Randall........... 58 Senior Vice President and Chief Financial Officer December 1990
Todd Kahn.................... 32 Vice President, General Counsel and Secretary June 1993
</TABLE>
Each of the executive officers of Salant was elected at a meeting of the
Board of Directors and will serve until the next Annual Meeting of the Board or
until his successor has been duly elected and qualified.
Mr. Lubin was elected Executive Vice President and Chief Operating Officer
on October 30, 1995. Mr. Lubin is a partner of Lubin, Delano & Co. ("Lubin
Delano"), an investment banking and consulting firm for more than the last five
years. Lubin Delano is a consultant to Salant. Mr. Lubin is Chairman of the
Board of Lexington Precision Corporation.
Mr. Aronson was elected Executive Vice President of Salant on October 3,
1990. He had been President of the Manhattan Menswear Group, a division of
Salant, from May 1988 to October 1990. Previously, he was Chairman of the
Manhattan Accessories Division of Manhattan from 1970 to 1988.
4
<PAGE>
Mr. Lavigne was elected Executive Vice President, Marketing of Salant and
Chairman of the Perry Ellis Division on January 3, 1994. He had been President
of the Perry Ellis Division from June 1987 to January 1994 and an independent
consultant to the Perry Ellis Division from June 1984 until June 1987.
Mr. Randall was elected Senior Vice President, Treasurer and Chief Financial
Officer of Salant on December 30, 1990. On September 20, 1994, Mr. Randall
voluntarily relinquished the position of Treasurer, and the Company promoted
William R. Bennett from Assistant Treasurer to Treasurer. From June 1988 to
November 1990, when he joined the Company, Mr. Randall had been an independent
consultant.
Mr. Kahn was elected Vice President and General Counsel on June 1, 1993,
Assistant Secretary on September 22, 1993 and Secretary on August 15, 1995. He
had been an attorney with the law firm of Fried, Frank, Harris, Shriver &
Jacobson, outside counsel to the Company, since September 1988.
For a summary of the business experience for the past five years of Mr.
DiPaolo, see "Election of Directors" herein.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of March 15, 1996 with
respect to each person who is known to Salant to be the "beneficial owner" (as
defined in regulations of the Securities and Exchange Commission) of more than
5% of the outstanding shares of Common Stock.
BENEFICIAL OWNERS OF MORE THAN 5% OF THE
OUTSTANDING SHARES OF SALANT COMMON STOCK
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Apollo Apparel Partners, L.P.................................................... 5,924,352 40.4%(a)
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577
John S. Rodgers................................................................. 804,566(b) 5.4%(c)
1114 Avenue of the Americas
New York, New York 10036
</TABLE>
- ------------------------
(a) This percentage is calculated on the basis of 14,668,010 shares outstanding
as of March 15, 1996, excluding those shares held by or for the account of
Salant.
(b) This amount includes 466,780 shares held directly by Mr. Rodgers, 2,265
shares held through the Company's Long Term Savings and Investment Plan,
5,923 shares held by the Margaret S. Vickery Trust, of which Mr. Rodgers is
a co-trustee, 325,570 shares issuable upon the exercise of Salant B Warrants
held directly by Mr. Rodgers and 4,028 shares issuable upon the exercise of
Salant B Warrants held by the Margaret S. Vickery Trust. As to the shares
held by the Margaret S. Vickery Trust, Mr. Rodgers shares voting and
investment power with a co-trustee, and, as to the Salant B Warrants held by
the Trust, Mr. Rodgers shares investment power with a co-trustee. He
disclaims beneficial ownership with respect to the shares and the Salant B
Warrants held by the Trust.
(c) This percentage is calculated on the basis of 14,668,010 shares outstanding
as of March 15, 1996 (excluding those shares held by or for the account of
Salant) plus 329,598 shares issuable upon the exercise of Salant B Warrants.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of March 15, 1996 with
respect to the beneficial ownership of Common Stock by each of the directors and
nominees of Salant, the Chief Executive Officer and each of the four most highly
compensated other executive officers of Salant (the "Named Executive Officers")
and all directors and executive officers of Salant as a group.
BENEFICIAL OWNERSHIP OF SALANT COMMON STOCK BY
DIRECTORS AND EXECUTIVE OFFICERS OF SALANT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(A) CLASS(B)
- ------------------------------------------------------------------------------ ---------------------- -----------
<S> <C> <C>
Herbert R. Aronson............................................................ 83,333(c) *
Craig M. Cogut................................................................ 1,600(d) *
Nicholas P. DiPaolo........................................................... 425,565(e) 2.8%
Robert H. Falk................................................................ 5,924,352(f) 40.4%
Ann Dibble Jordan............................................................. 1,600(d) *
Todd Kahn..................................................................... 22,332(g) *
Robert Katz................................................................... 5,925,352(h) 40.4%
Elliot M. Lavigne............................................................. 101,295(i) *
Harold Leppo.................................................................. 1,600(d) *
Richard P. Randall............................................................ 122,070(j) *
Bruce F. Roberts.............................................................. 6,096(k) *
John S. Rodgers............................................................... 804,566(l) 5.4%
Marvin Schiller............................................................... 16,514(m) *
Edward M. Yorke............................................................... 5,925,952(n) 40.4%
All directors and executive officers as a group (15 persons).................. 7,770,673(o) 49.1%
</TABLE>
- ------------------------
* Represents less than one percent.
(a) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following March 15, 1996.
(b) As of March 15, 1996, there were 14,668,010 shares outstanding, excluding
those shares held by or for the account of Salant. For purposes of computing
the percentage of outstanding shares of Common Stock held by each person or
group of persons named above, any security which such person or persons has
the right to acquire within 60 days following March 15, 1996 is deemed to be
outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(c) This amount includes 20,000 shares held directly and 63,333 shares issuable
upon the exercise of stock options.
(d) This amount includes 1,600 shares issuable upon the exercise of stock
options.
(e) This amount includes 41,148 shares held directly (including 2,800 shares
held by members of Mr. DiPaolo's immediate family), 1,017 shares held
through the Company's Long Term Savings and Investment Plan (the "Savings
Plan"), 3,400 shares issuable upon the exercise of Salant B Warrants and
380,000 shares issuable upon the exercise of stock options.
(f) This amount includes 5,924,352 shares beneficially owned by Apollo Apparel
Partners, L.P. The general partner of Apollo Apparel Partners, L.P. is AIF
II, L.P., the managing general partner of which is Apollo Advisors, L.P. Mr.
Falk is a principal of Apollo Advisors, L.P. He disclaims beneficial
ownership of any shares of Common Stock held by Apollo Apparel Partners,
L.P. This amount does not include a stock option for 1,000 shares which,
pursuant to the Company's 1993 option plan, will be granted on, and become
exercisable from, the date of Mr. Falk's election as a director.
6
<PAGE>
(g) This amount includes 4,000 shares held directly and 18,332 shares issuable
upon the exercise of stock options.
(h) This amount includes 5,924,352 shares beneficially owned by Apollo Apparel
Partners, L.P. and 1,000 shares issuable upon the exercise of stock options.
The general partner of Apollo Apparel Partners, L.P. is AIF II, L.P., the
managing general partner of which is Apollo Advisors, L.P. Mr. Katz is an
officer with Apollo Advisors, L.P. He disclaims beneficial ownership of any
shares of Common Stock held by Apollo Apparel Partners, L.P.
(i) This amount includes 1,129 shares held through the Savings Plan and 100,166
shares issuable upon the exercise of stock options.
(j) This amount includes 2,000 shares held directly, 71 shares held through the
Savings Plan and 119,999 shares issuable upon the exercise of stock options.
(k) This amount includes 3,000 shares held directly, 1,496 shares issuable upon
the exercise of Salant B Warrants and 1,600 shares issuable upon the
exercise of stock options.
(l) This amount includes 466,780 shares held directly by Mr. Rodgers, 2,265
shares held through the Savings Plan, 5,923 shares held by the Margaret S.
Vickery Trust, of which Mr. Rodgers is a co-trustee, 325,570 shares issuable
upon the exercise of Salant B Warrants held directly by Mr. Rodgers and
4,028 shares issuable upon the exercise of Salant B Warrants held by the
Margaret S. Vickery Trust. As to the shares held by the Margaret S. Vickery
Trust, Mr. Rodgers shares voting and investment power with a co-trustee,
and, as to the Salant B Warrants held by the Trust, Mr. Rodgers shares
investment power with a co-trustee. He disclaims beneficial ownership with
respect to the shares and the Salant B Warrants held by the Trust.
(m) This amount includes 11,234 shares held directly, 680 shares issuable upon
the exercise of Salant B Warrants and 4,600 shares issuable upon the
exercise of stock options.
(n) This amount includes 5,924,352 shares beneficially owned by Apollo Apparel
Partners, L.P. and 1,600 shares issuable upon the exercise of stock options.
The general partner of Apollo Apparel Partners, L.P. is AIF II, L.P., the
managing partner of which is Apollo Advisors, L.P. Mr. Yorke is an officer
of Apollo Advisors, L.P. He disclaims beneficial ownership of any shares of
Common Stock held by Apollo Apparel Partners, L.P.
(o) The 7,770,673 shares held by all directors and executive officers of Salant
as a group counts the 5,924,352 shares held by Apollo Apparel Partners, L.P.
(discussed in notes (f), (h) and (n) above) once. Such shares include (i)
6,619,993 shares held directly by, or attributable to, directors and
executive officers, (ii) 4,482 shares held through the Savings Plan by
executive officers, (iii) 388,071 shares issuable upon the exercise of
Salant B Warrants held by, or attributable to, directors and executive
officers and (iv) 758,127 shares issuable upon the exercise of stock options
held by all directors and executive officers that are exercisable on, or may
become exercisable within sixty days of, March 15, 1996.
Section 16(a) of the Securities Exchange Act of 1934 (the "Securities
Exchange Act") requires the Company's directors and executive officers and
holders of more than 10% of the Common Stock to file with the Securities and
Exchange Commission reports of ownership and changes in beneficial ownership of
Common Stock and other equity securities of the Company on Form 3, 4 and 5.
Based on written representations of the reporting persons, the Company believes
that during the fiscal year ended December 30, 1995, such persons complied with
all applicable Section 16(a) filing requirements, with the following exception:
Mr. Katz failed to file a Form 3 within ten days of his election to the Board of
Directors.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid or accrued by Salant
for fiscal years 1993 through 1995 for services in all capacities to the Company
by the Chief Executive Officer and each of the four most highly compensated
other executive officers of Salant who were serving as executive officers at the
end of the last complete fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(A)
----------------------------------------
OTHER
ANNUAL
NAME PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) COMPENSATION
- ---------------- ---------------------------------------- ---- -------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Nicholas P. Chairman, President and Chief Executive
DiPaolo......... Officer 1995 602,885 0 0
Chairman, President and Chief Executive
Officer 1994 600,000 1,106,000(c) 0
Chairman, President and Chief Executive
Officer(b) 1993 525,000 862,500(d) 0
Herbert R. Executive Vice President
Aronson......... 1995 351,731 0 0
Executive Vice President 1994 350,000 0 0
Executive Vice President 1993 350,000 0 0
Elliot M. Executive Vice President, Marketing;
Lavigne......... Chairman of the Perry Ellis Division 1995 487,115 577,500 0
Executive Vice President, Marketing;
Chairman of the Perry Ellis Division 1994 475,000 435,000 0
President of the Perry Ellis Division 1993 400,000 1,336,406(g) 0
Richard P. Senior Vice President and Chief
Randall......... Financial Officer 1995 283,077 0 0
Senior Vice President and Chief
Financial Officer 1994 280,000 0 0
Senior Vice President, Treasurer, and
Chief Financial Officer 1993 250,000 390,000(h) 0
Todd Kahn....... Vice President, General Counsel and
Secretary 1995 167,827 0 0
Vice President, General Counsel and
Assistant Secretary 1994 158,750 0 0
Vice President, General Counsel and
Assistant Secretary(i) 1993 87,502 54,000 0
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------------
NUMBER OF
SECURITIES
RESTRICTED UNDERLYING LONG-TERM
STOCK OPTIONS INCENTIVE ALL OTHER
NAME AWARDS GRANTED PAYOUTS COMPENSATION($)
- ---------------- ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Nicholas P.
DiPaolo......... 0 0 0 22,239(e)
0 0 0 22,239
0 0 0 91,055
Herbert R.
Aronson......... 0 0 0 0
0 10,000 0 0
0 35,000 0 0
Elliot M.
Lavigne......... 0 0 0 1,800(f)
0 0 0 1,800
0 100,000 0 1,799
Richard P.
Randall......... 0 0 0 1,800(f)
0 10,000 0 1,800
0 70,000 0 1,799
Todd Kahn.......
0 15,000 0 762(f)
0 0 0 743
0 20,000 0 0
</TABLE>
- ------------------------------
(a) Includes amounts earned in fiscal year, whether or not deferred.
(b) Mr. DiPaolo was elected Chairman on September 20, 1993.
(c) Consists of the final installment of the consummation bonus, payable
pursuant to the 1993 DiPaolo Agreement (see "Employment Agreements" herein),
of $300,000 together with a cash payment of $806,000 to offset the tax
consequences of Mr. DiPaolo's consummation bonus received in 1993 and 1994.
(d) Consists of bonuses payable pursuant to the 1993 DiPaolo Agreement, of
$262,500, based on the achievement of a performance target in fiscal year
1993, and $600,000, representing the payment of two installments of the
consummation bonus, which became payable upon the consummation of the Plan
of Reorganization.
(e) Consists of (i) premiums of $20,439 under a life insurance/salary
continuation plan and (ii) matching contributions of $1,800 under the
Savings Plan.
(f) Matching contributions under the Company's Long Term Savings and Investment
Plan.
(g) Consists of bonuses payable pursuant to an employment agreement, dated May
1, 1991, and the Lavigne Agreement (see "Employment Agreements" herein), of
(i) $533,000, equal to 5% of the Pretax Income (as such term is defined in
the Lavigne Agreement) of the Perry Ellis Division and (ii) as a result of
the overachievement by 110% of the 1991, 1992 and 1993 aggregate performance
targets for the Perry Ellis Division (a) the forgiveness of a $450,000 loan,
plus $103,406 of interest and (b) a $250,000 cash payment.
(h) Consists of bonuses, payable pursuant to the Randall Agreement (see
"Employment Agreements" herein), of $90,000, based on the achievement of a
performance target in fiscal year 1993, and $300,000, which became payable
upon the consummation of the Plan of Reorganization.
(i) Mr. Kahn joined the Company and was elected Vice President and General
Counsel on June 1, 1993.
8
<PAGE>
The following table sets forth information with respect to grants to the
Named Executive Officers of options to purchase Common Stock in the last fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR(A)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
------------------------------------------------------ RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTION FOR OPTION TERM
OPTIONS GRANTED TO EXERCISE EXPIRATION ----------------------
NAME GRANTED EMPLOYEES(B) PRICE(C) DATE 5% 10%
- ---------------------------------------- ----------- --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Nicholas P. DiPaolo..................... 0 0.00% $ 0.00 -- $ 0 $ 0
Herbert R. Aronson...................... 0 0.00 0.00 -- 0 0
Elliot M. Lavigne....................... 0 0.00 0.00 -- 0 0
Richard P. Randall...................... 0 0.00 0.00 -- 0 0
Todd Kahn............................... 15,000(d) 7.41% 3.32 4/21/05 31,136 79,077
</TABLE>
- ------------------------
(a) No stock appreciation rights were granted during fiscal year 1995.
(b) This percentage is calculated on the basis of 202,500 shares granted to all
employees.
(c) Market price of the Common Stock on the date of grant.
(d) The option becomes exercisable in three equal installments on the first,
second and third anniversaries of the date of grant.
OPTION EXERCISES AND VALUES FOR FISCAL YEAR 1995
The following table sets forth as of December 30, 1995 for each of the Named
Executive Officers (i) the total number of shares of Common Stock received upon
exercise of options during fiscal year 1995, (ii) the value realized upon such
exercise, (iii) the total number of unexercised options to purchase Common Stock
(exercisable and unexercisable) held at December 30, 1995 and (iv) the value of
such options which were in-the-money at December 30, 1995 (based on the
difference between the closing price of Common Stock on December 29, 1995, the
last trading day of the fiscal year ended December 30, 1995, and the exercise
price of the option). The Company has not issued any stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
TOTAL VALUE OF
NUMBER OF SECURITIES UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS HELD AT FISCAL
NUMBER OF SHARES AT FISCAL YEAR-END YEAR-END(A)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ------------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas P. DiPaolo............. 0 $ 0 380,000 0 $ 225,000 $ 0
Herbert R. Aronson.............. 0 0 53,333 18,334 16,250 0
Elliot M. Lavigne............... 0 0 100,166 33,334 0 0
Richard P. Randall.............. 0 0 99,999 30,001 93,750 0
Todd Kahn....................... 0 0 13,332 21,668 0 8,325
</TABLE>
- ------------------------
(a) The closing price of the Common Stock on December 29, 1995, the last trading
day of the fiscal year ended December 30, 1995, was $3.88 per share.
9
<PAGE>
PERFORMANCE GRAPH
The following table compares the cumulative total shareholder return on
Salant Common Stock with the cumulative total shareholder returns of (x) the S&P
500 Textile-Apparel Manufacturers index and (y) the Wilshire 5000 index from
December 1990 to December 1995. The return on the indices is calculated assuming
the investment of $100 on December 31, 1990 and the reinvestment of dividends.
Pursuant to the Plan of Reorganization, each holder of Common Stock on the
Consummation Date received 0.68 of a Salant B Warrant for each share held. The
return on Common Stock assumes the reinvestment in Common Stock of the value on
the Consummation Date of such portion of a Salant B Warrant for each share held.
CUMULATIVE TOTAL SHAREHOLDER RETURN DECEMBER 1990 TO DECEMBER 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DATE SALANT WILSHIRE 5000 S&P TEXTILE
<S> <C> <C> <C>
December 1990 $100.00 $100.00 $100.00
December 1991 $192.31 $134.21 $160.31
December 1992 $584.62 $146.25 $170.66
December 1993 $472.27 $162.76 $129.06
December 1994 $368.21 $162.66 $126.43
December 1995 $248.14 $221.96 $141.98
</TABLE>
10
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. DiPaolo is a party to an Employment Agreement (the "1993 DiPaolo
Agreement"), dated as of September 20, 1993, which provides for his employment
as Chairman of the Board, President and Chief Executive Officer of Salant
through December 31, 1994. The 1993 DiPaolo Agreement provides for the payment
of a base salary in the amount of $600,000 from January 2, 1994 to December 31,
1994. Under the terms of the 1993 DiPaolo Agreement, Mr. DiPaolo is paid a cash
bonus equal to 20% of his then current annual salary in the event the Company
generates operating income for the year equal to at least 90% of the operating
income provided in the Company's annual business plan. If the Company's
operating income for the year equals or exceeds 95% of the annual business plan,
then he receives a cash bonus equal to 50% of his then current annual salary. At
100% of the annual business plan, he receives a cash bonus equal to 100% of his
then current annual salary. Actual operating income in excess of the annual
business plan increases Mr. DiPaolo's incentive payment by 20% of his then
current annual salary for each five percentage point increment of increased
operating income for the year. Determinations of operating income for the year
are calculated before amortization of intangibles and after any reserve for
contingencies. Pursuant to the Plan of Reorganization, the 1993 DiPaolo
Agreement provides for the payment in cash of a consummation bonus of $900,000
(the "Consummation Bonus"), payable in three equal installments after the
Consummation Date. The first two installments were paid in 1993, and the third
was paid on December 31, 1994. In addition, pursuant to the 1993 DiPaolo
Agreement, Mr. DiPaolo received, simultaneously with the payment of the final
installment of the Consummation Bonus, a cash payment of $806,000 to offset the
tax consequences resulting from his receipt of the Consummation Bonus.
Mr. DiPaolo has the right to terminate his employment for "good reason" (as
defined in the 1993 DiPaolo Agreement) and receive within thirty days of the
date of that termination a lump sum payment equal to the sum of (i) two times
his then current annual salary, plus (ii) $250,000, plus (iii) the excess of the
aggregate "Fair Market Value" (as defined in the applicable stock option plan)
on the termination date of the Common Stock subject to the stock options then
held by Mr. DiPaolo over the aggregate exercise price of those stock options.
With respect to the portion of the payment described in clause (iii), Mr.
DiPaolo may defer payment and the date for measuring Fair Market Value for up to
seven months.
Mr. DiPaolo is also party to an agreement (the "Extension Agreement"), dated
as of September 22, 1993. Pursuant to the Extension Agreement, Salant extended
Mr. DiPaolo's employment under the terms and conditions of the 1993 DiPaolo
Agreement for a period of one year, which commenced on January 1, 1995 and ends
on December 31, 1995, with an increase of $25,000 in Mr. DiPaolo's base salary
to $625,000. Mr. DiPaolo, together with other members of management, voluntarily
reduced his base salary from $625,000 to $600,000 per annum effective February
11, 1995 for the remainder of the 1995 calendar year.
Mr. DiPaolo also executed a letter agreement, dated August 31, 1995, which
extended Mr. DiPaolo's employment with the Company until December 31, 1996 under
the terms and conditions of the 1993 DiPaolo Agreement.
In addition to the foregoing, pursuant to a life insurance/salary
continuation plan adopted by Manhattan in 1977, if Mr. DiPaolo dies during his
employment by Salant and prior to retirement, his beneficiaries receive $202,957
annually for a period of 10 years. If Mr. DiPaolo remains with Salant until his
retirement, he will receive an annuity for a period of 15 years at the rate of
approximately $115,815 annually and thereafter for life at the rate of
approximately $86,584 annually. In the event that Mr. DiPaolo's employment with
Salant is terminated other than "for cause" (as defined in the 1993 DiPaolo
Agreement), Salant has agreed to assign to Mr. DiPaolo three insurance policies
on his life owned by Salant, with an aggregate current cash surrender value of
approximately $106,961.
Mr. Aronson is a party to an employment agreement, dated as of December 31,
1990, which provides for his employment as Executive Vice President through
December 31, 1992 at an annual salary of $350,000. On June 30, 1992, Salant
extended the agreement for an additional two years. On October 18, 1994, Salant
extended the agreement (the "1994 Aronson Agreement") for an additional two
years until December 31, 1996. The 1994 Aronson Agreement provides for an annual
salary of $365,000 for the 1995 fiscal year and $380,000 for the 1996 fiscal
year. Mr. Aronson is also paid a cash bonus equal to 36% of his annual salary in
11
<PAGE>
the event the Company generates operating income for the year equal to at least
90% of the operating income provided for in the Company's annual business plan.
If the Company's operating income for the year equals or exceeds 100% of the
annual business plan, then he will receive 40% of his annual salary.
Determinations of operating income for the year are calculated before
amortization of intangibles and after any reserve for contingencies. The 1994
Aronson Agreement also provides for a consulting period of five years after the
employment period at an annual fee of not less than $100,000. In the event of a
"change of control" (as defined in the 1994 Aronson Agreement) Mr. Aronson may
terminate his employment and collect his salary for six months or through
December 31, 1996, whichever time period results in the greater payment. In
addition, Mr. Aronson, together with other members of management, voluntarily
reduced his base salary from $365,000 to $350,000 per annum effective February
11, 1995 for the remainder of the 1995 calendar year.
Mr. Lavigne is a party to an employment agreement (the "Lavigne Agreement"),
dated as of December 21, 1993, which provides for his employment as Executive
Vice President, Marketing of Salant Corporation and Chairman of its Perry Ellis
Division from January 2, 1994 until December 31, 1996. The Lavigne Agreement
provides for the payment of a fixed base salary in the amount of $475,000 in the
first contract year, $550,000 in the second contract year and $600,000 in the
third contract year. Mr. Lavigne is also paid a cash bonus equal to 10% of his
annual salary in the event the Company generates operating income for the year
equal to at least 90% of the operating income provided for in the Company's
annual business plan. If the Company's operating income for the year equals or
exceeds 95% of the annual business plan, then he will receive 25% of his annual
salary. If 100% of the annual business plan is achieved, he will receive 50% of
his annual salary. Actual operating income in excess of the annual business plan
increases Mr. Lavigne's incentive payment by 10% of his annual salary for each
five percentage point increment of increased operating income for the year.
Determinations of operating income for the year are calculated before
amortizations of intangibles and after the reserve for contingencies. In
addition to the incentive bonus described above, Mr. Lavigne will receive an
annual bonus equal to five (5%) percent of the Pretax Income (as such term is
defined in the Lavigne Agreement) of the Perry Ellis Division in each fiscal
year of the Lavigne Agreement. The Lavigne Agreement provides for a minimum
compensation (inclusive of all bonuses) to Mr. Lavigne of $910,000 for each of
the three contract years. In addition, pursuant to the Lavigne Agreement, the
Company loaned Mr. Lavigne $750,000 which is evidenced by a demand promissory
note of $750,000 (the "Note"). The Note bears interest at the prime rate in
effect from time to time at Chemical Bank plus one and one half (1 1/2%) percent
per annum. The Lavigne Agreement provides that the Company will not demand
payment of either principal or interest on the Note prior to the earlier to
occur of (i) December 31, 1996 or (ii) the date that Mr. Lavigne is no longer
employed by the Company. In addition, if the Company's aggregate actual
operating income during the three year period of the Lavigne Agreement exceeds
the aggregate planned operating income during such period, the Company will
forgive the Note plus all accrued interest thereon by the amount of such over
achievement. In addition, Mr. Lavigne, together with other members of
management, voluntarily reduced his base salary from $550,000 to $475,000 per
annum effective March 1, 1995 for the remainder of the 1995 calendar year.
Mr. Randall is a party to an employment agreement (the "Randall Agreement"),
dated July 30, 1993, which provides for his employment as Senior Vice President,
Treasurer and Chief Financial Officer of Salant through December 31, 1994. The
Randall Agreement provides for an annual base salary of $280,000 from January 2,
1994 through December 31, 1994. Mr. Randall is also paid a cash bonus equal to
36% of his annual salary in the event the Company generates operating income for
the year equal to at least 90% of the operating income provided for in the
Company's annual business plan. If the Company's operating income for the year
equals or exceeds 100% of the annual business plan, then he will receive 40% of
his annual salary. Determinations of operating income for the year are
calculated before amortization of intangibles and after any reserve for
contingencies. Mr. Randall has the right to terminate his employment following a
"change of control" for "good reason" (as those terms are defined in the Randall
Agreement) and receive within thirty days of the date of termination a lump sum
in an amount equal to the sum of (i) two times his then current salary, plus
(ii) $40,000, plus (iii) the excess of the aggregate "Fair Market Value" (as
defined in the applicable stock option plan) on the termination date of the
Common Stock subject to the stock options
12
<PAGE>
then held by Mr. Randall over the aggregate exercise price of those stock
options. With respect to the portion of the payment described in clause (iii),
Mr. Randall may defer payment and the date for measuring Fair Market Value for
up to seven months.
Mr. Randall is also a party to an agreement (the "1994 Randall Agreement"),
dated October 25, 1994. Pursuant to the 1994 Randall Agreement, Salant extended
his employment for two years under the terms and conditions of the Randall
Agreement and increased his annual base salary to $300,000 for 1995 and $320,000
for 1996. Mr. Randall, together with other members of management, voluntarily
reduced his base salary from $300,000 to $280,000 per annum effective February
26, 1995 for the remainder of the 1995 calendar year.
Mr. Kahn is a party to an employment agreement (the "Kahn Agreement"), dated
June 1, 1993, which provides for his employment as Vice President and General
Counsel of Salant through May 31, 1995. The Kahn Agreement provides for an
annual base salary of $150,000 for the first year and $165,000 for the second
year of the Kahn Agreement. Mr. Kahn has the right to terminate his employment
following a "change of control" for "good reason" (as those terms are defined in
the Kahn Agreement) and receive within thirty days of the date of termination a
lump sum in an amount equal to the sum of (i) two times his then current salary,
plus (ii) $40,000, plus (iii) the excess of the aggregate "Fair Market Value"
(as defined in the applicable stock option plan) on the termination date of the
Common Stock subject to the stock options then held by Mr. Kahn over the
aggregate exercise price of those stock options. With respect to the portion of
the payment described in clause (iii), Mr. Kahn may defer payment and the date
for measuring Fair Market Value for up to seven months.
Mr. Kahn is also a party to an agreement (the "1995 Kahn Agreement"), dated
April 12, 1995. Pursuant to the 1995 Kahn Agreement, Salant extended his
employment under the terms and conditions of the Kahn Agreement until December
31, 1997 and increased his annual base salary to $200,000 from December 1, 1995
to November 30, 1996 and $225,000 from December 1, 1996 to December 31, 1997.
Mr. Kahn is also paid a cash bonus equal to 40% of his annual salary in the
event the Company generates operating income for the year equal to at least 90%
of the operating income provided for in the Company's annual business plan. If
the Company's operating income for the year equals 100% of the annual business
plan, then he will receive 50% of his annual salary. Actual operating income in
excess of the annual business plan increases Mr. Kahn's incentive bonus by 5%
for each five percentage point increment of increased operating income for the
year. Determinations of operating income for the year are calculated before
amortization of intangibles and after any reserve for contingencies.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation and Stock Plan Committees are
Messrs. Leppo, Schiller and Yorke, none of whom were (i) during the 1995 fiscal
year, an officer of the Company or any of its subsidiaries or (ii) formerly an
officer of the Company or any of its subsidiaries.
JOINT REPORT OF THE COMPENSATION AND STOCK PLAN COMMITTEES ON EXECUTIVE
COMPENSATION
This report sets forth the compensation policies that guide decisions of the
Compensation and Stock Plan Committees with respect to the compensation of the
Company's executive officers. This report also reviews the rationale for pay
decisions that affected Mr. DiPaolo during the 1995 fiscal year, and, in that
regard, offers additional insight into the figures that appear in the
compensation tables which are an integral part of the overall disclosure of
executive compensation. Any consideration of pay-related actions that may become
effective in future fiscal years are not reported in this statement.
COMMITTEE RESPONSIBILITY. The central responsibility of the Compensation
Committee is to oversee compensation practices for the Company's executive
officers. In this capacity, it reviews salaries, benefits, and other
compensation paid to the Company's executive officers and recommends actions to
the full Board of Directors with respect to these matters. The Stock Plan
Committees administer the Company's 1987, 1988 and 1993 Stock Plans and, in this
role, are responsible for granting stock options to all of the Company's
eligible employees, including its officers.
13
<PAGE>
STATEMENT OF COMPENSATION POLICY. In the context of their oversight roles,
the Compensation and Stock Plan Committees are dedicated to ensuring that the
Company's financial resources are used effectively to support the achievement of
its short-term and long-term business objectives. In general, it is the policy
of the Company that executive compensation (a) reflect relevant market standards
for individuals with superior capabilities so as to ensure that the Company is
effectively positioned to recruit and retain high-performing management talent;
(b) be driven substantially by the Company's performance as measured by the
achievement of internally generated earnings targets; and (c) correlate with
share price appreciation, thereby coordinating the interests of management and
shareholders. Percentile objectives are not specified in setting executive
compensation.
The members of the Compensation and Stock Plan Committees believe that the
Company's executive compensation program is well structured to achieve its
objectives. These objectives are satisfied within the context of an overall
executive pay system that is comprised of a market driven base salary, variable
incentive compensation and options to purchase the Company's Common Stock.
DESCRIPTION OF COMPENSATION PRACTICES. It is the Company's practice to
enter into employment agreements with its executive officers. These agreements
specify the various components of compensation, including, among others, base
salary, incentive compensation and equity participation.
BASE SALARY. Base salaries for the Company's executive officers are defined
in their respective employment agreements, and, in the view of the Compensation
Committee, reflect base pay levels that generally are being commanded by
high-quality management in the marketplace. The Compensation Committee's normal
practice is to review each executive officer's salary at the time of contract
renewal, at which point adjustments are recommended to ensure consistency with
pay expectations in the apparel industry and to reflect the extent of the
executive's contribution to corporate performance over time. In the opinion of
the Compensation Committee and the Board, Mr. DiPaolo's leadership of the
Company, since his election as Chief Executive Officer on March 27, 1991, was a
key element in the Company's return to profitability and its achievement of
substantial consensus on the Plan of Reorganization. In order to assure the
continuing availability of Mr. DiPaolo's services beyond the first anniversary
of the Consummation Date, as provided by an employment agreement, dated March
27, 1991, at the recommendation of the Compensation Committee, the Board
approved the terms of the 1993 DiPaolo Agreement. Under the 1993 DiPaolo
Agreement, Mr. DiPaolo's annual base salary was $600,000 in the 1994 fiscal
year. Pursuant to the Extension Agreement, the Company had the option to extend
Mr. DiPaolo's employment for a period of one year commencing on January 1, 1995
on the same terms and conditions as the 1993 DiPaolo Agreement, except that the
base salary increased to $625,000 from $600,000. Based on Mr. DiPaolo's proven
leadership and continuing contribution, the Compensation Committee determined on
June 28, 1994 to exercise its option under the Extension Agreement and, pursuant
to the approval of the Compensation Committee, the Company extended Mr.
DiPaolo's employment from January 1, 1996 through December 31, 1996 on the same
terms and conditions as the 1993 DiPaolo Agreement, as modified by the Extension
Agreement.
INCENTIVE COMPENSATION. Incentive compensation payments to executive
officers are based on the Company's performance and are intended to motivate the
Company's executive officers to maximize their efforts to meet and exceed key
earnings goals. The specific terms of each incentive arrangement are
individually negotiated, but, in general, executive officers can earn
incremental cash compensation based on the extent to which the Company achieves
and exceeds annual earnings targets. Ordinarily, executive officers are paid a
fixed cash award in years when operating income (before amortization of
intangibles and after any reserve for contingencies) equals 100% of the annual
business plan. Smaller awards are paid when earnings fall below plan levels, and
greater payments are made when results exceed plan. There is no limit on the
overall incentive opportunity; however, in a year in which operating income
falls below 90% of the annual business plan, no incentive compensation payments
are made.
The 1993 DiPaolo Agreement provides for a cash bonus if the Company achieves
90% of its annual business plan. Inasmuch as the Company's operating income for
1995 did not equal 90% of the annual business plan, Mr. DiPaolo did not receive
incentive compensation for the 1995 fiscal year.
14
<PAGE>
STOCK PLANS. The Company reinforces the importance of producing attractive
returns to shareholders over the long term through the operation of its 1987,
1988 and 1993 Stock Plans. Stock options granted pursuant to the Stock Plans
provide recipients with the opportunity to acquire an equity interest in the
Company and to participate in the increase in shareholder value reflected in an
increase in the price of Company shares. Exercise prices of options are
ordinarily equal to 100% of the fair market value of the Company's shares on the
date of grant of the option. This ensures that executives will derive benefits
as shareholders realize corresponding gains. To encourage a long-term
perspective, options are assigned a 10-year term, and most options become
exercisable in equal installments on the first, second and third anniversaries
of the date of grant. Stock options granted to executive officers typically are
considered when employment agreements are initiated or renewed. In recent years,
the Stock Plan Committees have based their decisions to grant stock options on
competitive factors, their understanding of current industry compensation
practices and their assessment of individual potential and performance. By
granting stock options, the Committees are not only addressing market demands
with respect to total compensation opportunities, but are also effectively
reinforcing the Company's policy of encouraging executive stock ownership in
support of building shareholder value. The Stock Plan Committees made no
recommendations for additional option grants to Mr. DiPaolo in 1995.
At the recommendation of the Compensation and Stock Plan Committees, the
Board has adopted, subject to shareholder approval, the Salant Corporation 1996
Stock Plan. Such shareholder approval will be proposed at the Annual Meeting and
is discussed under the caption "Proposal 2--Approval of the Salant Corporation
1996 Stock Plan" in this Proxy Statement.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code ("Section 162(m)") generally disallows a federal income tax
deduction to any publicly-held corporation for compensation paid in excess of $1
million in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed by the Company
on the last day of the taxable year. In 1996, Section 162(m) may only affect the
tax deductibility of a portion of the compensation paid to three of the
Company's current executive officers. The Compensation Committee intends to
consider, to the extent practicable, appropriate action in the future to
preserve the deductibility of executive compensation.
SUMMARY. The Compensation and Stock Plan Committees are responsible for a
variety of compensation recommendations and decisions affecting the Company's
executive officers. By conducting their decision making within the context of a
highly integrated, multicomponent framework, the Committees ensure that the
overall compensation offered to executive officers is consistent with the
Company's interest in providing competitive pay opportunities which reflect its
pay-for-performance orientation and support its short-term and long-term
business mission. The Compensation and Stock Plan Committees will continue to
actively monitor the effectiveness of the Company's executive compensation plans
and assess the appropriateness of executive pay levels to assure prudent
application of the Company's resources.
Marvin Schiller, Chairman
Harold Leppo
Edward M. Yorke
SALANT CORPORATION RETIREMENT PLAN
Salant sponsors the Salant Corporation Retirement Plan (the "Retirement
Plan"), a noncontributory, final average pay, defined benefit plan. A
participant becomes vested upon completion of 5 years of service. The Retirement
Plan provides pension benefits and benefits to surviving spouses of participants
who die prior to retirement. The following table shows the annual pension
benefits which would be payable to members of the Retirement Plan at normal
retirement after specific periods of service at selected salary levels, assuming
the continuance of the Retirement Plan. The amounts in the table are calculated
on the basis of a single life annuity.
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<PAGE>
ESTIMATED ANNUAL PENSION PAYABLE TO MEMBER UPON RETIREMENT AT AGE 65
<TABLE>
<CAPTION>
AVERAGE ANNUAL COMPENSATION IN NUMBER OF YEARS OF SERVICE(B)
HIGHEST FIVE CONSECUTIVE YEARS OF THE -----------------------------------------------------
LAST 15 YEARS PRECEDING RETIREMENT(A) 10 20 25 30 35
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 60,000............................................. $ 5,323 $ 10,646 $ 13,307 $ 15,969 $ 18,630
80,000............................................. 7,823 15,646 19,557 23,469 27,380
100,000............................................. 10,323 20,646 25,807 30,969 36,130
120,000............................................. 12,823 25,646 32,057 38,469 44,880
150,000............................................. 16,573 33,146 41,432 49,719 58,005
180,000............................................. 16,573 33,146 41,432 49,719 58,005
200,000............................................. 16,573 33,146 41,432 49,719 58,005
</TABLE>
- ------------------------
(a) Effective from 1989 through 1993, no more than $200,000 of compensation
(adjusted for inflation) may be recognized for the purpose of computing
average annual compensation. Subsequent to 1993, no more than $150,000 of
compensation (adjusted for inflation) may be recognized for such purpose.
(b) Messrs. Aronson, DiPaolo, Lavigne, Randall and Kahn have, respectively, 33
years, 11 years, 5 years, 5 years, and 2 years of credited service under the
Retirement Plan.
Messrs. Aronson, DiPaolo and Lavigne were participants in the Manhattan
Industries, Inc. Employees Benefit Plan (the "Manhattan Plan"), which was merged
into the Retirement Plan as of March 1, 1992. Their years of service as
participants in the Manhattan Plan will be considered in determining their
benefits under the Retirement Plan. Furthermore, their benefits under the
Retirement Plan will never be less than their accrued benefits under the terms
of the Manhattan Plan determined as of January 31, 1989. The benefit formula of
the Manhattan Plan was the product of (a) the sum of (i) 0.50% of the
participants' average annual compensation for any 36-consecutive month period of
his employment ("final average compensation") in excess of his covered
compensation plus (ii) 1.00% of his final average compensation in excess of
covered compensation multiplied by (b) the number of his years of service.
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
Except as described below, no transactions have occurred since January 3,
1994 to which Salant was or is to be a party and in which directors, executive
officers or control persons of Salant, or their associates, had or are to have a
direct or indirect material interest.
According to the Schedule 13D filed with the Securities and Exchange
Commission by Apollo Apparel, in connection with the Plan of Reorganization,
Apollo Apparel received, as part of the consideration to discharge claims in
respect of $64,850,000 in principal amount of Salant's 13 3/4% Senior
Subordinated Reset Notes due 1995, 5,924,352 shares of Common Stock, or 43.8%,
of the then outstanding shares of Common Stock. Pursuant to the Plan of
Reorganization, Salant and Apollo Apparel entered into the Apollo Agreement,
which addresses the representation of Apollo Apparel on Salant's Board of
Directors and restricts the ownership level of Common Stock by Apollo Apparel
and its affiliates. Pursuant to the Apollo Agreement, if Apollo Apparel's
designees to Classes One and Two are elected (as was the case at the Annual
Meetings of Stockholders in 1994 and 1995), then Apollo Apparel (i) will vote
its shares of Common Stock in favor of Salant's slates for Classes One and Two
and (ii) will not solicit proxies in favor of or in any other way, directly or
indirectly, support nominees to Classes One and Two not proposed by Salant. The
Apollo Agreement does not address elections of directors in Class Three or any
subsequent elections of Class One or Class Two directors.
While Apollo Apparel has a designee on the Salant Board of Directors, one of
Apollo Apparel's designees will serve on the Executive Committee of Salant. If,
at any time, Apollo Apparel and its affiliates own less than 5% of the
outstanding shares of Common Stock, Apollo Apparel has agreed that each of the
Apollo Apparel designees to the Salant Board of Directors and the Apollo Apparel
designee to the Executive Committee of Salant will resign.
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In the event of the death or other removal of any Apollo Apparel designee
from the Board of Directors (other than upon their resignation when Apollo
Apparel owns less than 5% of Salant), Salant must use its best efforts to elect
the successor designated by Apollo Apparel.
Pursuant to the Apollo Agreement, Apollo Apparel and its affiliates are
generally prohibited for a period of three years from the Consummation Date
(September 20, 1996) from acquiring additional shares of Common Stock and from
forming, joining or participating in a group with any other person to acquire
shares of Common Stock. These prohibitions terminate if a tender offer is made
for more than 40% of the outstanding Common Stock or if a person who is not
affiliated or acting in concert with Apollo Apparel acquires or proposes to
acquire 40% of the outstanding Common Stock. The Apollo Agreement terminates
upon the later of (i) September 20, 1996 or (ii) when Apollo Apparel and its
affiliates own less than 5% of the outstanding Common Stock and Apollo Apparel
has no designees on the Board of Directors of Salant. Pursuant to the Plan of
Reorganization, Salant and Apollo Apparel also entered into a registration
rights agreement, which provides Apollo Apparel with piggyback registrations and
two demand registrations, subject to certain limitations, and with certain
indemnification rights against Salant for securities laws claims related to any
demand or piggyback registration.
Pursuant to an agreement dated December 1, 1995, the Company has retained
Lubin Delano to render certain financial advisory and investment banking
services to the Company for a monthly retainer of $8,333.33. The term of Lubin
Delano's engagement is coterminous with the employment of Michael A. Lubin by
the Company.
As described in "Employment Agreements" herein, the Company loaned Mr.
Lavigne $750,000, which is evidenced by a demand promissory note. The Note bears
interest at the prime rate in effect from time to time at Chemical Bank plus one
and one half (1 1/2%) percent per annum. The Lavigne Agreement provides that the
Company will not demand payment of either principal or interest on the Note
prior to the earlier to occur of (i) December 31, 1996 or (ii) the date Mr.
Lavigne is no longer employed by the Company. In addition, if the Company's
aggregate actual operating income during the three-year period of the Lavigne
Agreement exceeds the aggregate planned operating income during such period, the
Company will forgive the Note plus all accrued interest thereon by the amount of
such over achievement.
Pursuant to a consulting agreement, dated July 1995, the Company has
retained John S. Rodgers (the "Rodgers Agreement") to render certain legal
consulting services to the Company at a monthly retainer of $8,333.33. The term
of the Rodgers Agreement extends until June 30, 1996.
PROPOSAL 2--APPROVAL OF THE SALANT CORPORATION 1996 STOCK PLAN
On March 22, 1996, the Company's Board of Directors and Compensation
Committee approved, subject to the approval of the stockholders at the 1996
Annual Meeting, the Salant Corporation 1996 Stock Plan (the "1996 Stock Plan"),
to become effective on May 15, 1996.
The 1996 Stock Plan provides 600,000 shares of Common Stock for the granting
of options, stock appreciation rights and restricted stock to employees of the
Company and its subsidiaries and the granting of options to non-employee
directors of the Company (collectively or individually, "Awards"). Common Stock
is listed on the New York Stock Exchange.
The 1996 Stock Plan will become effective upon approval by the Company's
stockholders. Although such approval will not necessarily result immediately in
the grant of any options or restricted stock by the Stock Plan Committee, it is
expected that the Stock Plan Committee will make periodic grants in furtherance
of the goals described in the "Joint Report of the Compensation and Stock Plan
Committees on Executive Compensation."
The principal provisions of the 1996 Stock Plan are summarized below. This
summary, however, does not purport to be complete and is qualified in its
entirety by the terms of the 1996 Stock Plan, the entire text of which is
attached as Exhibit A and incorporated by reference. All defined terms used
below have the meaning set forth in the 1996 Stock Plan, unless otherwise
indicated.
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DESCRIPTION OF THE 1996 STOCK PLAN
GENERAL
The purpose of the 1996 Stock Plan is to advance the interests of the
Company and promote continuity of management by encouraging and providing for
the acquisition of an equity interest in the Company by key employees and
directors, thereby enabling the Company to attract and retain the services of
key employees and directors upon whose efforts the successful conduct of its
operations is largely dependent.
ADMINISTRATION
The 1996 Stock Plan will be administered by a committee (the "Stock Plan
Committee") of the Board of Directors of the Company consisting of two or more
members who are "disinterested" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act and "outside directors" within the meaning of
section 162 (m) of the Internal Revenue Code of 1986 (the "Tax Code"). Rule
16b-3 currently provides, in general, that a "disinterested person" is a person
who is not, during the one year prior to service on the Stock Plan Committee, or
during such service, granted or awarded equity securities pursuant to the 1996
Stock Plan or any other plan of the Company or any of its affiliates, subject to
certain limited exceptions specified in the rule; however, receipt of a Director
Option (as defined below) would not prevent a director from being a
"disinterested person." Treasury regulation Section1.162-27 defines an "outside
director" as one who (a) is not currently an employee of the Company, (b) is not
a former employee of the Company who currently receives compensation for prior
services (other than benefits under a tax-qualified retirement plan), (c) has
not been an officer of the Company and (d) does not receive remuneration from
the Company, either directly or indirectly, in any capacity other than as
director. Subject to the terms of the 1996 Stock Plan, the Stock Plan Committee
will have authority to interpret the 1996 Stock Plan, prescribe, amend and
rescind rules and regulations relating to the 1996 Stock Plan, and make all
other determinations necessary or advisable for the administration of the Plan.
ELIGIBILITY
The 1996 Stock Plan provides for the granting of nonstatutory or incentive
stock options ("Employee Options"), stock appreciation rights and shares of
restricted stock to key employees, including key employees who are also
directors, and the granting of nonstatutory stock options to nonemployee
directors of the Company ("Director Options"). The Stock Plan Committee will
select Eligible Employees to receive Employee Options, stock appreciation rights
and restricted stock from among officers and other key employees of the Company
and its subsidiaries.
SHARES SUBJECT TO PLAN
The 1996 Stock Plan provides for the issuance of up to 600,000 shares of
Common Stock, subject to adjustment as described below. If an option granted
under the 1996 Stock Plan expires, is cancelled or is terminated unexercised as
to any shares, or any shares subject to a restricted stock grant are reacquired
by the Company, such shares will again be available for issuance under the 1996
Stock Plan. Shares to be issued under the 1996 Stock Plan shall be either
authorized but unissued shares or treasury shares. Subject to adjustment as
described below, the maximum number of shares of Common Stock subject to an
option granted to an Eligible Employee may not exceed 150,000.
In the event of any change in the outstanding shares of Common Stock
(including an exchange of the Common Stock for stock or securities of another
corporation) by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split or reverse stock split,
extraordinary dividend, property dividend, combination or exchange of shares or
otherwise, the Stock Plan Committee shall make appropriate adjustments to the
number of shares subject to outstanding options and their stated exercise
prices, the maximum number of shares subject to an option which may be granted
to an individual, and the number of shares available for issuance under the 1996
Stock Plan. In such event, the Stock Plan Committee may also adjust the number
or type of shares subject to restricted stock grants.
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<PAGE>
OPTIONS
Each nonemployee director of the Company will be granted a Director Option
for 1,000 shares of Common Stock on the date he or she becomes a Director (the
"Initial Grant Date"). Each nonemployee director will also be granted a Director
Option for 300 shares of Common Stock on the anniversary of the Initial Grant
Date (or, in the case of a nonemployee director who participated in the Salant
Corporation 1993 Stock Plan (the "1993 Stock Plan") on the anniversary of the
Initial Grant Date as determined under the 1993 Stock Plan) for each year he
remains a nonemployee director and the 1996 Stock Plan is in effect. Director
Options will be exercisable in whole or in part at any time after the option is
granted. The per share exercise price for Director Options will be equal to the
fair market value (as defined below) of a share of Common Stock on the date the
Director Option is granted. No Director Option will be assignable or
transferable by a nonemployee director, except by will or the laws of descent
and distribution and may be exercised during the life of the nonemployee
director only by the nonemployee director. Director Options will expire ten
years from the date granted. If the service of the director terminates due to
death, any outstanding Director Options may be exercised at any time prior to
the expiration date of the Director Option or twelve months from the date of
death, whichever is shorter. If the service of a nonemployee director terminates
for any reason other than death, any outstanding option will terminate on the
earlier of the expiration date of the Director Option or three months from the
termination of service.
Employee Options will be granted to Eligible Employees at such times and
from time to time as determined by the Stock Plan Committee. The Stock Plan
Committee will also determine the number of shares to be granted and whether an
Employee Option is to be an incentive stock option or nonstatutory stock option.
The option price per share of Common Stock will be fixed by the Stock Plan
Committee, but, in the case of incentive stock options, will not be less than
the fair market value of the Common Stock on the date of grant (and not less
than 110% of such fair market value in the case of incentive stock options
granted to any person who owns stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company (a "Ten
Percent Stockholder")). The fair market value of the Common Stock means the
closing sale price of the Common Stock for the date in question, as published in
THE WALL STREET JOURNAL for such date, or if no sale price is quoted in THE WALL
STREET JOURNAL for such date, for the next preceding date for which such closing
sale price is quoted. The Stock Plan Committee will determine the expiration
date of each Employee Option but the expiration date will not be later than the
tenth anniversary of the date of grant and, in the case of an incentive stock
option granted to a Ten Percent Stockholder, the expiration date shall be no
later than the fifth anniversary of the date of grant. Options will be
exercisable at such times and be subject to such restrictions and conditions as
the Stock Plan Committee deems necessary or advisable, and need not be the same
for all Eligible Employees. No Employee Option will be assignable or
transferable by an Eligible Employee, except by will or the laws of descent and
distribution and may be exercised during the life of the Eligible Employee only
by the Eligible Employee. In the event the employment of an Eligible Employee is
terminated by reason of death or Disability, any outstanding options shall
thereupon become immediately exercisable for a period ending on the earlier of
the expiration date of such Employee Option or the first anniversary of the date
of Disability or death, subject to such exceptions which shall be set forth in
the Option Agreement as the Stock Plan Committee may in its sole discretion
approve. In the event the employment of an Eligible Employee is terminated by
reason of Retirement (as defined in the 1996 Stock Plan), all Employee Options
not then exercisable shall terminate immediately and, to the extent then
exercisable, terminate upon the earlier of the expiration date of the option or
three months after Retirement, subject to such exceptions which shall be set
forth in the Option Agreement as the Stock Plan Committee may in its sole
discretion approve. In the event the employment of an Eligible Employee shall
terminate for any reason other than death, Disability or Retirement, the rights
under any outstanding Employee Option shall, to the extent not then exercisable,
terminate immediately and, to the extent then exercisable, terminate upon the
expiration date of the Employee Option or sixty days after such date of
termination of employment, whichever first occurs, subject to such exceptions
(which shall be set forth in the Employee Option agreement) as the Stock Plan
Committee may, in its sole discretion, approve. Notwithstanding the foregoing,
if the employment of the Eligible Employee is terminated by the Company for
Cause (as defined in the 1996 Stock Plan), any then outstanding Employee Option
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<PAGE>
granted pursuant to the 1996 Stock Plan to the Eligible Employee shall terminate
immediately upon the termination of employment; PROVIDED, that the Stock Plan
Committee may, in its sole discretion, waive, in whole or in part, the automatic
forfeiture of such Employee Option and may set forth such waiver or condition in
the option agreement or at any other time, including following the termination
of employment. To the extent that the aggregate fair market value of stock
(determined on the date of grant) with respect to which incentive stock options
(whether granted under the 1996 Stock Plan or any other plan of the Company or a
parent or subsidiary) are exercisable for the first time by an individual
Eligible Employee during any calendar year exceeds $100,000, such options will
be treated as nonstatutory options.
At the time of exercise, the option price of Director or Employee Options
must be paid in full either (i) in cash, (ii) by tendering shares of previously
acquired Common Stock having a fair market value at the time of exercise equal
to the option price, or (iii) by a combination of (i) and (ii). The 1996 Stock
Plan does not permit the practice known as "pyramiding," whereby shares of stock
acquired upon exercise of an option are simultaneously surrendered in exchange
for all or part of the remaining shares subject to the option.
STOCK APPRECIATION RIGHTS
Stock appreciation rights may be granted by the Stock Plan Committee in
connection with any Employee Option granted under the 1996 Stock Plan. Stock
appreciation rights may be granted only at the time of grant if related to an
incentive stock option, or at any time during the term of the Option if related
to a nonqualified option. A stock appreciation right entitles the Eligible
Employee to surrender any portion of his Option, to the extent such Option is
then exercisable, and to receive payment of an amount equal to the product of
(i) the excess of the fair market value (as defined in the 1996 Stock Plan) of a
share of Common Stock on the date of exercise over the exercise price of such
Option and (ii) the number of shares as to which the stock appreciation right
has been exercised. An Eligible Employee exercising a stock appreciation right
may elect, subject to the consent of the Stock Plan Committee, to receive
payment in shares of Common Stock, in cash or in any combination thereof.
RESTRICTED STOCK
The Stock Plan Committee may grant shares of restricted stock to such
Eligible Employee in such amounts and at such times and from time to time as it
determines in its sole discretion. Shares of restricted stock may not be
transferred in any way, other than by will or by the laws of descent and
distribution, for the period of time determined by the Stock Plan Committee or
prior to the earlier satisfaction of other conditions specified by the Stock
Plan Committee, as set forth in the written restricted stock grant agreement.
The Stock Plan Committee may impose any other restriction on shares of
restricted stock as it deems advisable. Any restricted stock granted to an
officer, director or Ten Percent Stockholder may not be sold for at least six
months after the date it is granted. After the period of restriction, the shares
of restricted stock become freely transferable.
During the period of restriction, Eligible Employees will have sole voting
rights with respect to restricted shares and are entitled to receive all
dividends and other distributions with respect to those shares. If any dividends
or distributions are paid in shares of stock, however, the shares will be
subject to the same restrictions on transferability as the shares on which the
dividends or distributions are paid.
NO EMPLOYMENT RIGHTS
Pursuant to the 1996 Stock Plan, neither the establishment of the plan, nor
the granting of any Award will be construed to (a) give any grantee of an Award
the right to remain employed by the Company or any of its Subsidiaries or to any
benefits not specifically provided by the Plan or (b) in any manner modify the
right of the Company or any of its Subsidiaries to modify, amend, or terminate
any of its employee benefit plans.
WITHHOLDING
The Company may deduct from any distribution of cash to an Eligible Employee
under the Plan an amount equal to the federal, state and local income taxes and
other amounts required by law to be
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withheld ("Withholding Taxes"). Where a Participant (as defined in the 1996
Stock Plan) is subject to Withholding Taxes in connection with the receipt of
shares under the Plan pursuant to an Option exercise or the vesting or payment
of another type of Award, the Participant must pay the Withholding Taxes to the
Company prior to the issuance, or release from escrow, of the shares or payment
of the Award. Payment of the Withholding Taxes will be made, as determined by
the Stock Plan Committee in its discretion, in one of or a combination of the
following forms: (i) cash, (ii) shares of restricted or unrestricted Common
Stock owned by the Eligible Employee prior to that time and valued at its fair
market value on the business day immediately preceding the date of exercise, or
(iii) by making an election (a "Tax Election"), which may be accepted or
rejected by the Stock Plan Committee, to have withheld a portion of the shares
then issuable or to be released to the Participant having a fair market value
equal to the Withholding Taxes. Special rules apply in connection with Tax
Elections made by Participant to whom section 16(b) of the Securities Exchange
Act may apply.
CHANGE IN CONTROL
The Stock Plan Committee, either at the time Employee Options or shares of
restricted stock are granted, or, at any time thereafter, has the authority to
accelerate in whole or part the exercisability of Employee Options or the last
day of the period of restriction, as the case may be, upon a "Change in
Control." A "Change in Control" under the 1996 Stock Plan is generally defined
to occur (i) if, during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
(the "Continuing Directors") cease for any reason to constitute at least
two-thirds thereof, unless the election or nomination for election by
stockholders of the Company of each new director was approved by a vote of at
least two-thirds of the directors then in office who were then Continuing
Directors, (ii) when the Company acquires actual knowledge that any person (as
such term is used in sections 13(d) and 14(d)(2) of the Securities Exchange Act)
(other than an employee benefit plan of the Company or any of its subsidiaries,
or any trustee thereof, acting on behalf of such plan) is or has become the
beneficial owner (as such term is defined in rule 13d-3 promulgated under the
Securities Exchange Act) directly or indirectly, of securities of the Company
representing 25% or more of the outstanding shares of the Company's capital
stock entitled to vote generally in the election of directors, (iii) upon any
purchase pursuant to a tender or exchange offer, which purchase results in a
person (as such term is used in sections 13(d) and 14(d)(2) of the Securities
Exchange Act) (other than an employee benefit plan of the Company or any of its
subsidiaries, or any trustee thereof, acting on behalf of such plan)
beneficially owning, directly or indirectly, 25% or more of the outstanding
shares of the Company's capital stock entitled to vote generally in the election
of directors unless such purchase was approved by the Board of Directors of the
Company, (iv) upon the approval by the Company's stockholders of (A) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation and
which does not result in any reclassification or reorganization of the Company's
then outstanding shares of common stock), (B) a sale or disposition of all or
substantially all of the Company's assets or (C) a plan of liquidation or
dissolution of the Company.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend, modify or terminate the
1996 Stock Plan at any time, except that unless approved by the stockholders, no
amendment will (i) increase the maximum number of shares issuable under the 1996
Stock Plan (except for adjustments in such number contemplated by the 1996 Stock
Plan); (ii) materially increase the cost of the 1996 Stock Plan or materially
increase the benefits to Participants; (iii) extend the period during which
options or restricted stock may be granted; (iv) extend the maximum period after
the date of grant during which options may be exercised; or (v) change the class
of individuals eligible to receive options or restricted stock. Termination,
amendment or modification of the 1996 Stock Plan will not adversely affect the
rights of Participants under options or restricted stock previously granted,
without the consent of the Participant.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO OPTIONS, STOCK APPRECIATION
RIGHTS
AND RESTRICTED SHARES UNDER THE 1996 STOCK PLAN
Options granted under the 1996 Stock Plan may be (i) options which are
intended to qualify as incentive stock options under the Tax Code, (ii) options
which are not intended to so qualify ("nonstatutory stock options") or (iii) a
combination of the foregoing and may include stock appreciation rights. The
federal income tax consequences to the Company and Participants in the 1996
Stock Plan of the grant and exercise of incentive and nonstatutory stock options
and stock appreciation rights under currently applicable provisions of the Tax
Code are summarized below.
Neither receipt nor exercise of an incentive stock option is subject to
regular tax, and if the Eligible Employee does not dispose of stock acquired
under an incentive stock option prior to the expiration of the requisite holding
periods (two years from the date the option was granted or one year from the
date the option was exercised), any gain resulting from the sale of such stock
will be long-term capital gain. In such case, the Company is not entitled to any
deduction with respect to the grant or exercise of the option or subsequent
disposition of the stock. If the stock is disposed of before the end of the
requisite holding period, the lesser of (i) the difference between the exercise
price and the fair market value of the stock on the date of exercise or (ii) the
total amount of gain realized on the sale must be reported by the Eligible
Employee as ordinary income, in which case the Company is entitled to a
deduction in that amount, subject to any deduction limitation under section
162(m) of the Tax Code (described below) and compliance with applicable income
reporting requirements. The remaining gain, if any, will be taxed to the
Eligible Employee as long or short-term capital gain, depending on the period
that the Eligible Employee held the stock.
The grant of a nonstatutory stock option under the 1996 Stock Plan will not
result in any taxable income to any Participant or any deduction to the Company.
Generally, upon exercise of a nonstatutory stock option, the holder will realize
ordinary income (in the amount equal to the excess of the fair market value of
the shares at that time over the exercise price) and the Company will be
entitled to a corresponding deduction, subject to any deduction limitation under
section 162(m) of the Tax Code and compliance with applicable income reporting
requirements. The Participant's adjusted basis for stock received upon exercise
of a nonstatutory stock option will be the sum of the exercise price and any
ordinary income recognized upon the exercise of the option. The Participant's
holding period for the stock thereby acquired will commence when the option is
exercised. Special rules may apply in the case of a Participant who is subject
to the provisions of section 16 of the Securities Exchange Act.
In addition, the difference between the exercise price and the fair market
value of the stock on the date an incentive stock option is exercised is a tax
preference item which may subject the Eligible Employee to alternative minimum
tax in the year of exercise.
An option granted under the 1996 Stock Plan may include a stock appreciation
right. A stock appreciation right entitles the Eligible Employee to surrender
all or any portion of an option to the extent such option is then exercisable
and, in consideration of such surrender, to receive a payment of an amount equal
to the excess of the fair market value of the shares with respect to which the
stock appreciation right is being exercised over the exercise price of such
shares under the option. Such amount may be paid in cash, stock or any
combination of cash and stock. If an option is surrendered pursuant to a stock
appreciation right, the Eligible Employee will recognize ordinary income equal
to the amount of the cash plus the value of the stock received, and the Company
will be allowed a deduction in the same amount, subject to any deduction
limitation under section 162(m) of the Tax Code. Upon disposition of any stock
received upon such surrender, the Eligible Employee will recognize capital gain
or loss, which will be long- or short-term depending upon the period elapsed
since the date of such surrender, equal to the difference between the amount
realized on such disposition and the fair market value of such stock on the date
the option was surrendered.
The Company will withhold income taxes and applicable employment taxes from
the Participant's compensation at the time ordinary income is recognized as a
result of the exercise of a nonstatutory stock option.
Section 162(m) of the Tax Code generally disallows a federal income tax
deduction to any publicly-held corporation for compensation paid in excess of $1
million in any taxable year to the chief
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executive officer or any of the four other most highly compensated executive
officers who are employed by the Company on the last day of the taxable year,
but does not disallow a deduction for qualified "performance-based
compensation," the material terms of which are disclosed to and approved by
stockholders. The Company has structured the stock option and stock appreciation
rights portions of the 1996 Stock Plan with the intention that compensation
resulting therefrom would be qualified "performance-based compensation" and
would be deductible. To qualify, the Company is seeking stockholder approval of
the 1996 Stock Plan. If the Company grants awards of restricted stock,
compensation deductions attributable to those awards would be subject to the
general disallowance provisions of section 162(m) of the Tax Code.
Under certain circumstances, the accelerated vesting or exercise of Options
or stock appreciation rights, or the accelerated lapse of restrictions on other
Awards, in connection with a Change of Control of the Company might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of section 280G of the Tax Code. To the extent it is so considered, the
Participant may be subject to a 20% excise tax and the Company may be denied a
tax deduction.
The foregoing is a summary of federal income tax considerations only and
does not apply to dispositions other than sales (such as gifts).
NEW PLAN BENEFITS
Under the terms of the 1996 Stock Plan, the Stock Plan Committee has full
authority to determine when, to whom and in what amount Employee Options, stock
appreciation rights and restricted stock will be granted. Grants of Director
Options under the 1996 Stock Plan are fixed by the terms of the 1996 Stock Plan.
No Employee Options, stock appreciation rights or restricted stock have been
granted under the 1996 Stock Plan, nor are any such Awards now determinable.
Thus, it is not possible to predict the benefits or amounts that will be
received by or allocated to particular individuals or groups in 1996 or in any
future period.
Although no determination has been made as to the nature and amount of
Awards to be made under the 1996 Stock Plan to employees, in 1995 stock options
were granted under the 1993 Stock Plan to the Named Executive Officers as set
forth on the table entitled "Option Grants." Also during 1995, the Stock Plan
Committee granted stock options under the 1993 Stock Plan for 177,500 shares to
all executive officers as a group at an average exercise price of $5.03 per
share. However, these Awards are not necessarily indicative of Awards that may
be made in the future.
MISCELLANEOUS
The closing price of Common Stock on March 19, 1996, as reported in THE WALL
STREET JOURNAL, was $4.625 per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1996 STOCK
PLAN. PROXIES WILL BE VOTED FOR APPROVAL OF THE 1996 STOCK PLAN UNLESS OTHERWISE
SPECIFIED IN THE PROXY.
PROPOSAL 3--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
Deloitte & Touche LLP currently serve as independent auditors for Salant.
Deloitte & Touche and its predecessors have served as independent auditors for
Salant since 1951. Upon the recommendation of the Audit Committee, the Board of
Directors has appointed Deloitte & Touche to serve as Salant's independent
auditors to audit its books and accounts for its fiscal year which ends on
December 28, 1996. Such appointment is conditioned upon ratification by the
stockholders, and the matter will be presented at the Annual Meeting. If the
stockholders do not ratify the appointment, the selection will be reconsidered
by the Board of Directors. A representative of Deloitte & Touche will be present
at the stockholders' meeting. The representative will have an opportunity to
make a statement and will be available to respond to appropriate questions.
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STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal of a stockholder to be presented at the Annual Meeting of
Stockholders in 1997 must be received by the Secretary of Salant at its
principal offices, prior to 5:00 p.m., New York City time, on December 1, 1996,
in order to be considered for inclusion in Salant's 1997 proxy materials. Any
such proposal must be in writing and signed by the stockholder.
OTHER MATTERS
Management knows of no other matters that will be presented at the meeting.
If any other matters arise at the meeting, it is intended that the shares
represented by the proxies in the accompanying form will be voted in accordance
with the judgment of the persons named in the proxy. Stockholders may receive,
without charge, a copy of Salant's Form 10-K Report for the fiscal year ended
December 30, 1995, as filed with the Securities and Exchange Commission, by
writing to Secretary, Salant Corporation, 1114 Avenue of the Americas, New York,
New York 10036.
By Order of the Board of Directors,
[LOGO]
TODD KAHN
SECRETARY
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EXHIBIT A
SALANT CORPORATION
1996 STOCK PLAN
SECTION 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. Salant Corporation, a Delaware corporation (the
"Company"), hereby establishes the "1996 STOCK PLAN" (the "Plan") for key
employees and directors. The Plan permits the grant of Stock Options, Stock
Appreciation Rights and Restricted Stock.
1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its Subsidiaries and promote continuity of management by encouraging
and providing key employees and directors with the opportunity to acquire an
equity interest in the Company and to participate in the increase in shareholder
value as reflected in the growth in the price of the shares of the Company's
Stock and by enabling the Company to attract and retain the services of key
employees and directors upon whose judgment, interest, skills, and special
effort the successful conduct of its operations is largely dependent.
1.3 EFFECTIVE DATE. The Plan shall become effective on May 15, 1996.
SECTION 2. DEFINITIONS; CONSTRUCTION
2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) A "Change in Control" means a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Act, as amended; provided that, without
limitation, such a change in control shall be deemed to have occurred (i)
if, during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board (the "Continuing Directors")
cease for any reason to constitute at least two-thirds thereof, unless the
election or nomination for election by the Company's stockholders of each
new director was approved by a vote of at least two-thirds of the directors
then in office who were then Continuing Directors, (ii) when the Company
acquires actual knowledge that any person (as such term is used in Sections
13(d) and 14(d)(2) of the Act) (other than an employee benefit plan of the
Company or any Subsidiary, or trustee thereof, acting on behalf of such
plan) is or has become the beneficial owner (as such term is defined in Rule
13d-3 promulgated under the Act) directly or indirectly, of securities of
the Company representing 25% or more of the outstanding shares of the
Company's capital stock entitled to vote generally in the election of
directors, (iii) upon any purchase pursuant to a tender or exchange offer,
which purchase results in a person (as such term is used in Sections 13(d)
and 14(d)(2) of the Act) (other than an employee benefit plan of the Company
or any Subsidiary, or trustee thereof, acting on behalf of such plan)
beneficially owning, directly or indirectly, 25% or more of the outstanding
shares of the Company's capital stock entitled to vote generally in the
election of directors, (iv) upon the approval by the Company's stockholders
of (A) a merger or consolidation of the Company with or into another
corporation (other than a merger or consolidation in which the Company is
the surviving corporation and which does not result in any reclassification
or reorganization of the Company's then outstanding shares of common stock),
(B) a sale or disposition of all or substantially all of the Company's
assets or (C) a plan of liquidation or dissolution of the Company; PROVIDED,
HOWEVER, that the acquisition of Stock by Apollo Apparel Partners, Inc.
shall not constitute a "Change of Control" under this Plan.
(d) "Cause" means an Eligible Employee's (i) commission of an act of
fraud or intentional misrepresentation or an act of embezzlement,
misappropriation or conversion of assets or opportunities of the Company or
any Subsidiary, (ii) intentional failure to perform reasonably assigned
duties, (iii) dishonesty or willful misconduct in the performance of duties,
(iv) involvement in a transaction in connection with the performance of
duties to the Company or any of its Subsidiaries thereof which
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transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (v) willful
violation of any law, rule or regulation in connection with the performance
of duties (other than traffic violations or similar offenses).
(e) "Change in Capitalization" means any increase or reduction in the
number of shares of Stock, or any change (including, but not limited to, a
change in value) in the shares of Stock or exchange of shares of Stock for a
different number or kind of shares or other securities of the Company or any
other corporation or other entity, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, extraordinary dividend, property dividend, combination
or exchange of shares or otherwise.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means a committee of the Board designated to administer
the Plan which shall consist of two or more members of the Board each of
whom is "disinterested" within the meaning of Rule 16b-3 under the Act and
an Outside Director.
(h) "Company" means Salant Corporation, a Delaware corporation.
(i) "Director Option" means an Option granted to a Nonemployee Director
pursuant to Section 6.
(j) "Disability" shall have the meaning assigned to the terms "total
disability" or "totally disabled" in the Company's long-term disability
program for salaried employees, provided the Eligible Employee remains
totally disabled for six consecutive months; or, if the Company does not
maintain a long-term disability program, an individual shall have a
"Disability" if he is unable to engage in any substantial activity by reason
of any medically determinable, physical or mental impairment that can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months.
(k) "Eligible Employee" means any person designated by the Committee as
eligible to participate in the Plan pursuant to Section 3.1.
(l) "Employee Option" means an Option granted to an Eligible Employee
pursuant to Section 7.
(m) "Fair Market Value" means the closing sale price of the Stock for the
date in question, as published in THE WALL STREET JOURNAL for such date, or,
if no such sale price is quoted in THE WALL STREET JOURNAL for such date,
for the next preceding date for which such sale price is quoted.
(n) "Nonemployee Director" means a director of the Company who is not
otherwise an employee or consultant of the Company or any Subsidiary.
(o) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan an Option may be either
(i) an "incentive stock option" within the meaning of Section 422 of the
Code or (ii) a "nonstatutory stock option."
(p) "Option Price" means the price at which an Option states Stock may
be purchased.
(q) "Optionee" means a person to whom an Option has been granted under
the Plan.
(r) "Outside Director" means a member of the Board who is an "outside
director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
(s) "Participant" means an Eligible Employee or Nonemployee Director who
has been granted and, at the time of reference, holds an Option or share of
Restricted Stock.
(t) "Period of Restriction" means the period during which the transfer
of shares of Restricted Stock is restricted pursuant to Section 10 of the
Plan.
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(u) "Restricted Stock" means Stock granted to an Eligible Employee
pursuant to Section 10 of the Plan.
(v) "Retirement" means an Eligible Employee's termination of employment
after his "Retirement Date" as such term is defined in the Salant
Corporation Retirement Plan, or if such plan is not in effect, such term
shall mean the termination of employment with the Company by reason of the
attainment of the age which the Company, by policy or otherwise, has
established as the age at which salaried employees may or shall be required
to terminate their employment and receive retirement benefits.
(w) "Stock" means the common stock, par value of $1.00 per share, of the
Company.
(x) "Stock Appreciation Right" means the right to receive the increase
in the value of Stock subject to an Option in lieu of purchasing such Stock.
(y) "Subsidiary" means any present or future subsidiary of the Company,
as defined in Section 424(f) of the Code.
2.2 NUMBER. Except when otherwise indicated by the context, the singular
shall include the plural, and the plural shall include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION. Eligible Employees in the Plan shall be
selected by the Committee from among those officers and other key employees of
the Company and its Subsidiaries who, in the opinion of the Committee, are in a
position to contribute materially to the Company's continued growth and
development and to its long-term financial success. All Nonemployee Directors
shall participate in the Plan in accordance with Section 6.
SECTION 4. STOCK SUBJECT TO PLAN
4.1 NUMBER. The total number of shares of Stock subject to issuance under
the Plan may not exceed 600,000; provided, however, that the maximum number of
shares of Stock subject to an Option (whether or not connected with Stock
Appreciation Rights) granted to any Eligible Employee may not exceed 150,000.
The total number of shares of Stock that may be awarded under the Plan and the
maximum number of shares of Stock that may be awarded to any Eligible Employee
are subject to adjustment upon occurrence of any of the events indicated in
Subsection 4.4. The shares to be delivered under the Plan may consist, in whole
or in part, of authorized but unissued Stock or treasury Stock, not reserved for
any other purpose.
4.2 UNUSED STOCK; UNEXERCISED RIGHTS. In the event any shares of Stock are
subject to an Option, which for any reason expires or is terminated unexercised
as to such shares, or any shares of Stock subject to a Restricted Stock grant
made under the Plan are reacquired by the Company pursuant to Section 10 of the
Plan, such shares again shall become available for issuance under the Plan.
4.3 EXERCISE OF STOCK APPRECIATION RIGHT. Whenever a Stock Appreciation
Right is exercised and payment of the amount determined in Subsection 9.1(b) is
made in cash, the shares of Common Stock allocable to the portion of the Option
surrendered may again be the subject of Options and Restricted Stock awards
hereunder. Whenever a Stock Appreciation Right is exercised and payment of the
amount determined in Subsection 9.1(b) is made in shares of Common Stock, no
shares of Common Stock with respect to which the Stock Appreciation Right is
exercised may again be the subject of Options and Restricted Stock awards
hereunder.
4.4 ADJUSTMENT IN CAPITALIZATION.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the (i) maximum
number and class of shares of Stock or other securities with respect to which
Options or Restricted Stock may be granted under the Plan or to any individual,
(ii) the number and class of shares of Stock or other securities which are
subject to Director Options issuable under
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Section 6; and (iii) the number and class of shares of Stock or other securities
which are subject to outstanding Options or Restricted Stock granted under the
Plan, and the purchase price therefor, if applicable.
(b) Any such adjustment in the shares of Stock or other securities subject
to outstanding incentive stock options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) Any such adjustment in the shares of Stock or other securities subject
to outstanding Director Options (including any adjustments in the purchase
price) shall be made only to the extent necessary to preserve, without
exceeding, the value of such Director Option.
(d) If, by reason of a Change in Capitalization, a grantee of Restricted
Stock shall be entitled to, or an Optionee shall be entitled to exercise an
Option or Stock Appreciation Rights with respect to, new, additional or
different shares of stock or securities, such new, additional or different
shares shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Restricted Stock, or shares of
Stock or Stock Appreciation Rights subject to the Option, as the case may be,
prior to such Change in Capitalization.
SECTION 5. DURATION OF PLAN
5.1 DURATION OF PLAN. The Plan shall remain in effect, subject to the
Board's right to earlier terminate the Plan pursuant to Subsection 13.3 hereof,
until all Stock subject to it shall have been purchased or acquired pursuant to
the provisions hereof. Notwithstanding the foregoing, no Option or Restricted
Stock may be granted under the Plan on or after May 14, 2006.
SECTION 6. OPTION GRANTS FOR NONEMPLOYEE DIRECTORS.
6.1 GRANT.
(a) INITIAL GRANT. An initial grant of Director Options shall be made to
each Nonemployee Director upon the date the individual becomes a Nonemployee
Director (an "Initial Grant").
(b) ANNUAL GRANT. Director Options shall be granted in each year that the
Plan is in effect to (i) each Nonemployee Director who participated in the
Salant Corporation 1993 Stock Plan (the "1993 Stock Plan") on each anniversary
(or the next business day if such anniversary is not a business day) of the
"First Initial Grant Date," as that term is defined in the 1993 Stock Plan, and
(ii) each other Nonemployee Director on each anniversary (or the next business
day if such anniversary is not a business day) of his Initial Grant (each an
"Annual Grant"); provided, however, that no Annual Grant shall be made to a
Nonemployee Director unless such person has been a director of the Company for
at least six months prior to the date of grant.
6.2 OPTION AGREEMENT. Each Director Option shall be evidenced by an Option
Agreement that shall reflect the Option Price, the duration of the Option, the
number of shares of Stock to which the Option pertains, all as specified in this
Section 6, and such other terms and conditions not inconsistent with the
provisions of this Plan as determined by the Board; provided that such terms
shall not vary the timing of awards of Director Options, including provisions
dealing with forfeitures or termination of such Director Options. Director
Options shall be nonstatutory stock options.
6.3 NUMBER OF SHARES. Each Initial Grant shall be in respect of a number
of shares of Stock equal to 1,000 (in each case adjusted proportionately
pursuant to Section 4.4), less any shares of Stock being made as an "Initial
Grant" at the same time pursuant to Section 6.1(a) of the 1993 Stock Plan, and
each Annual Grant shall be in respect of a number of shares of Stock equal to
300 (in each case adjusted proportionately pursuant to Section 4.4), less any
shares of Stock being made as an "Annual Grant" at the same time pursuant to
section 6.1(b) of the 1993 Stock Plan.
6.4 OPTION PRICE. The Option Price for shares of Stock under each Director
Option shall be equal to 100% of the Fair Market Value of a share of Stock on
the date the Director Option is granted.
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6.5 DURATION OF DIRECTOR OPTIONS. Director Options shall be for a term of
ten years.
6.6 VESTING. Director Options shall be exercisable in whole or in part at
any time from the date of grant thereof.
6.7 AMENDMENTS. Notwithstanding anything in this Plan to the contrary,
neither the provisions in this Section 6 nor any other provision of the Plan to
the extent it relates to Director Options may be amended more than once every
six months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
thereunder, if such an amendment would cause any Nonemployee Director to be
other than a "disinterested" person within the meaning of Rule 16b-3 under the
Act or would cause the provisions of the Plan relating to the granting of
Director Options to fail to qualify under Rule 16b-3(c)(2)(ii) of the Act.
SECTION 7. OPTION GRANTS FOR ELIGIBLE EMPLOYEES
7.1 GRANT OF EMPLOYEE OPTIONS. Subject to the provisions of Sections 4 and
5, Employee Options may be granted to Eligible Employees at any time and from
time to time as shall be determined by the Committee. The Committee shall have
complete discretion in determining whether to grant Employee Options and,
subject to Section 4.1, the number of shares of stock subject to such Options
granted to each Eligible Employee. The Committee also shall determine whether an
Employee Option is to be an incentive stock option within the meaning of Section
422 of the Code or a nonstatutory stock option. Nothing in this Section 7 of the
Plan shall be deemed to prevent the grant of nonstatutory stock options in
excess of the maximum established by Section 422 of the Code.
7.2 OPTION AGREEMENT. Each Employee Option shall be evidenced by an Option
Agreement that shall specify the type of Option granted, the Option Price, the
duration of the Option, the number of shares of Stock to which the Option
pertains and such other provisions as the Committee shall determine.
7.3 OPTION PRICE. The Option Price for each Employee Option shall be
determined by, or in the manner specified by, the Committee; provided, that no
incentive stock option granted pursuant to the Plan shall have an Option Price
that is less than the Fair Market Value of the Stock on the date the Option is
granted (110% of Fair Market Value in the case of an incentive stock option
granted to any person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
(a "Ten Percent Stockholder")).
7.4 DURATION OF EMPLOYEE OPTIONS. Each Employee Option shall expire at
such time as the Committee shall determine at the time it is granted; provided,
however, that no Employee Option shall be exercisable later than the tenth
anniversary date of its grant (the fifth anniversary in the case of an incentive
stock option granted to a Ten Percent Stockholder).
7.5 EXERCISE OF EMPLOYEE OPTIONS. Employee Options granted under the Plan
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need not be
the same for all Eligible Employees.
SECTION 8. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
8.1 EXERCISE. Options shall be exercised by an Optionee only by a written
notice delivered in person or by mail to the Secretary of the Company at the
Company's principal executive office, specifying the number of shares of Stock
with respect to which the Option is being exercised. If requested by the
Committee, the Optionee shall deliver the agreement evidencing the Option being
exercised to the Secretary of the Company who shall endorse thereon a notation
of such exercise and return such agreement to the Optionee. In addition, Options
may be exercised through a registered broker-dealer pursuant to such cashless
exercise procedures as are, from time to time, deemed acceptable by the
Committee.
8.2 PAYMENT. The Option price upon exercise of any Option shall be payable
to the Company in full either (i) in cash or its equivalent, or (ii) in the case
of Employee Options, at the discretion of the Committee, and in the case of
Director Options, in all instances, by tendering shares of previously acquired
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Stock having a Fair Market Value at the time of exercise equal to the total
Option Price or (iii) by a combination of (i) and (ii). The proceeds from such a
payment shall be added to the general funds of the Company and shall be used for
general corporate purposes.
8.3 RESTRICTIONS ON STOCK TRANSFERABILITY. The Committee may impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such shares of Stock are then listed and under any
blue sky or state securities laws applicable to such shares.
8.4 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event the
employment of the Optionee is terminated by reason of death or Disability, and
in the event the service of a Nonemployee Director is terminated by reason of
death, any outstanding Options granted to the Optionee shall become immediately
exercisable and shall thereafter be fully exercisable at any time prior to the
expiration date of the Options or within twelve months after the date of death
or Disability, whichever period is the shorter, subject to such exceptions
applicable only to Employee Options (which shall be set forth in the Option
Agreement) as the Committee may in its sole discretion approve.
8.5 TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. In the event the
employment of the Optionee is terminated by reason of Retirement, the rights
under any then outstanding Employee Option granted to the Optionee pursuant to
the Plan shall, to the extent not then exercisable, terminate immediately and,
to the extent then exercisable, terminate upon the expiration date of the Option
or three months after such date of termination of employment, whichever first
occurs, subject to such exceptions applicable only to Employee Options (which
shall be set forth in the Option Agreement) as the Committee may, in its sole
discretion, approve.
8.6 TERMINATION OF EMPLOYMENT OTHER THAN FOR DEATH, DISABILITY OR
RETIREMENT. If the employment of the Optionee shall terminate for any reason
other than death, Disability or Retirement or, in the event the service of a
Nonemployee Director is terminated for any reason other than death, the rights
under any then outstanding Option granted to the Optionee pursuant to the Plan
shall, to the extent not then exercisable, terminate immediately and, to the
extent then exercisable, terminate upon the expiration date of the Option or
sixty days after such date of termination of employment or service, whichever
first occurs, subject to such exceptions applicable only to Employee Options
(which shall be set forth in the Option Agreement) as the Committee may, in its
sole discretion, approve. Notwithstanding the foregoing, if the employment of
the Optionee is terminated by the Company for Cause, any then outstanding Option
granted pursuant to the Plan to the Optionee shall terminate immediately upon
the termination of employment; provided, that the Committee may with respect to
Employee Options, in its sole discretion, waive, in whole or in part, the
automatic forfeiture of such Employee Options and may set forth such waiver or
condition in the Option Agreement or at any other time, including following the
termination of employment.
8.7 NONTRANSFERABILITY AND EXERCISABILITY OF OPTIONS. No Option granted
under the Plan may be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution. Further, all Options granted to an Optionee under the Plan shall
be exercisable during his lifetime only by such Optionee. Notwithstanding any
provision of the Plan to the contrary, no Option shall be exercisable prior to
the time a registration statement under the Securities Act of 1933 is effective
with respect to the shares of Stock issuable upon the exercise of such Option.
8.8 MODIFICATION. Subject to the terms of the Plan, the Committee may
modify outstanding Options or accept the surrender of outstanding Options (to
the extent not exercised) and grant new Options in substitution for them.
Notwithstanding the foregoing, no modification of an Option shall adversely
alter or impair any rights or obligations under the agreement granting such
Option without the Optionee's consent.
SECTION 9. STOCK APPRECIATION RIGHTS.
9.1 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, in
connection with the grant of an Employee Option, grant to the Optionee Stock
Appreciation Rights, the terms and conditions of which shall be set forth in an
agreement. A Stock Appreciation Right shall cover the same shares of Stock
covered
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by the Option (or such lesser number of shares of Stock as the Committee may
determine) and shall, except as provided in this Section 9, be subject to the
same terms and conditions as the related Option. Stock Appreciation Rights shall
be subject to the following terms and provisions:
(a) A Stock Appreciation Right may be granted:
(i) either at the time of grant, or at any time thereafter during the
term of the Option if related to a nonstatutory stock option; or
(ii) only at the time of grant if related to an incentive stock
option.
(b) A Stock Appreciation Right will entitle the holder of the related
Option, upon exercise of the Stock Appreciation Right, to surrender such
Option, or any portion thereof to the extent unexercised, and to receive
payment of an amount determined by multiplying (i) the excess of the Fair
Market Value of a share of Stock on the date of exercise of such Stock
Appreciation Right over the purchase price of a share of Stock under the
related Option, by (ii) the number of shares as to which such Stock
Appreciation Right has been exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any
Stock Appreciation Right by including such a limit in the agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) A Stock Appreciation Right will be exercisable at such time or times
and only to the extent that a related Option is exercisable, and will not be
transferable except to the extent that such related Option may be
transferable. A Stock Appreciation Right granted in connection with an
incentive stock option shall be exercisable only if the Fair Market Value of
a share of Stock on the date of exercise exceeds the purchase price of a
share of Stock specified in the related Option.
(d) Upon the exercise of a Stock Appreciation Right, the related Option
shall be canceled to the extent of the number of shares of Stock as to which
the Stock Appreciation Right is exercised, and upon the exercise of an
Option granted in connection with a Stock Appreciation Right, the Stock
Appreciation Right shall be canceled to the extent of the number of shares
of Stock as to which the Option is exercised or surrendered.
(e) Stock Appreciation Rights shall be exercised by an Optionee only by
a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number
of shares of Stock with respect to which the Stock Appreciation Right is
being exercised. If requested by the Committee, the Optionee shall deliver
the agreement evidencing the Stock Appreciation Right being exercised and
the agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such
agreement to the Optionee.
(f) Payment of the amount determined under Subsection (b) may be made in
the discretion of the Committee, solely in whole shares of Stock in a number
determined at their Fair Market Value on the date preceding the date of
exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Stock. If the Committee decides to make full payment
in Stock and the amount payable results in a fractional share, payment for
the fractional share will be made in cash. Notwithstanding the foregoing, no
payment in the form of cash may be made upon the exercise of a Stock
Appreciation Right pursuant to Subsection (b) to an individual who may be
subject to liability under Section 16(b) of the Exchange Act, unless the
exercise of such Stock Appreciation Right is made during the period
beginning on the third business day and ending on the twelfth business day
following the date of release for publication of the Company's quarterly or
annual statements of sales and earnings.
(g) No Stock Appreciation Right may be exercised before the date six
months after the date it is granted.
(h) Subject to the terms of the Plan, the Committee may modify
outstanding awards of Stock Appreciation Rights or accept the surrender of
outstanding awards of Stock Appreciation Rights (to the extent not
exercised) and grant new awards in substitution for them. Notwithstanding
the foregoing, no
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modification of an award of Stock Appreciation Rights shall adversely alter
or impair any rights or obligations under the agreement granting such Stock
Appreciation Rights without the Optionee's consent.
SECTION 10. RESTRICTED STOCK
10.1 GRANT OF RESTRICTED STOCK. Subject to the provisions of Sections 4
and 5, the Committee, at any time and from time to time, may grant shares of
Restricted Stock under the Plan to such Eligible Employees and in such amounts
as it shall determine in its sole discretion. Each grant of Restricted Stock
shall be in writing.
10.2 TRANSFERABILITY. Except as provided in this Section 10, the shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated for such period of time as shall
be determined by the Committee and shall be specified in the Restricted Stock
grant, or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Restricted Stock grant;
provided that Restricted Stock granted to an individual who may be subject to
liability under Section 16(b) of the Exchange Act may not be sold for at least
six months after the date of grant.
10.3 OTHER RESTRICTIONS. The Committee may impose such other restrictions
on any shares of Restricted Stock granted to any Eligible Employee pursuant to
the Plan as it may deem advisable including, without limitation, restrictions
under applicable federal or state securities laws, and may legend the
certificates representing Restricted Stock to give appropriate notice of such
restrictions.
10.4 CERTIFICATE LEGEND. In addition to any legends placed on certificates
pursuant to Subsection 10.3 hereof, each certificate representing shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer set forth in Salant
Corporation's 1996 Stock Plan, rules of administration adopted pursuant to
such Plan and a Restricted Stock grant dated . A copy of the
Plan, such rules and such Restricted Stock grant may be obtained from the
Secretary of Salant Corporation."
10.5 REMOVAL OF RESTRICTIONS. Except as otherwise provided in this Section
10, shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan shall become freely transferable by the Eligible Employee after the
last day of the Period of Restriction. Once the shares are released from the
restrictions, the Eligible Employee shall be entitled to have the legend
required by Subsection 10.4 removed from his Stock certificate.
10.6 VOTING RIGHTS. During the Period of Restriction, Eligible Employees
holding shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares.
10.7 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Eligible Employees holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held. If any such dividends or distributions are
paid in shares of Stock, the shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which they
were paid.
SECTION 11. BENEFICIARY DESIGNATION.
11.1 BENEFICIARY DESIGNATION. Subject to Sections 8.7, 9.1(c) and 10.2,
each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of the Participant's death before
he or she receives any or all of such benefit. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee and will be effective only when filed by the Participant in writing
with the Committee during the lifetime of the Participant. In the absence of any
such designation, benefits remaining unpaid at the Participant's death shall be
paid to the estate of the Participant.
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SECTION 12. RIGHTS OF EMPLOYEES AND DIRECTORS
12.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment or
service at any time nor confer upon any Participant any right to continue in the
employ or service of the Company.
12.2 PARTICIPATION. No employee shall have a right to be selected as an
Eligible Employee or, having been so selected, to be selected again as an
Optionee or recipient of Restricted Stock. The preceding sentence shall not be
construed or applied so as to deny an employee any participation in the Plan
solely on the basis that the employee was a Participant in connection with a
prior grant of benefits under the Plan.
SECTION 13. ADMINISTRATION; POWERS AND DUTIES OF THE COMMITTEE
13.1 ADMINISTRATION. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to provide for conditions and assurances
deemed necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express provisions of the
Plan. Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever. No member of the
Committee shall be personally liable for any action, determination or
interpretation made or taken with respect to the Plan and all members of the
Committee shall be fully indemnified by the Company with respect to any such
action, determination or interpretation.
13.2 CHANGE IN CONTROL. Without limiting the authority of the Committee as
provided herein, the Committee, either at the time Employee Options or shares of
Restricted Stock are granted, or, if so provided in the applicable Employee
Option agreement or Restricted Stock grant, at any time thereafter, shall have
the authority to accelerate in whole or in part the exercisability of Employee
Options and/or the last day of the Period of Restriction upon a Change in
Control. The Employee Option agreements and Restricted Stock grants approved by
the Committee may contain provisions whereby, in the event of a Change in
Control, the acceleration of the exercisability of Employee Options and/or the
last day of the Period of Restriction may be automatic or may be subject to the
discretion of the Committee or may depend upon whether the Change in Control
shall be approved by a majority of the members of the Board or such other
criteria as the Committee may specify. Nothing herein shall obligate the
Committee to take any action upon a Change of Control.
13.3 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN. The Board may at any
time terminate, and from time to time may amend or modify the Plan, provided,
however, that no such action of the Board, without approval of the stockholders,
may:
(a) Increase the total amount of Stock which may be issued under the
Plan, except as provided in Subsections 4.1 and 4.3 of the Plan.
(b) Materially increase the cost of the Plan or materially increase the
benefits to Participant.
(c) Extend the period during which Options or Restricted Stock may be
granted.
(d) Extend the maximum period after the date of grant during which
Options may be exercised.
(e) Change the class of individuals eligible to receive Options or
Restricted Stock.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options or Restricted Stock theretofore granted to any
Participant under the Plan, without the consent of that Participant.
SECTION 14. TAX WITHHOLDING
14.1 TAX WITHHOLDING. Whenever shares of Stock are to be issued under the
Plan, the Company shall have the power to require the recipient of the Stock to
remit to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to issuance of the certificate for shares of
Stock.
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SECTION 15. REQUIREMENTS OF LAW.
15.1 REQUIREMENTS OF LAW. The granting of Options or Restricted Stock, and
the issuance of shares of Stock upon the exercise of an Option shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
15.2 GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of New York
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by federal law.
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