SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
Jones Apparel Group, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
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____________________________________________________________________
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ___________________________________________
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<PAGE>
JONES APPAREL GROUP, INC.
250 RITTENHOUSE CIRCLE
BRISTOL, PENNSYLVANIA 19007
_________________
April 24, 1998
TO OUR STOCKHOLDERS:
The 1997 annual meeting will be held on May 27, 1998 at 10:00 a.m. at 270
Park Avenue, 11th floor, Conference Room C, New York, New York. Please read
these materials so you will know what we plan to do at this meeting. Also,
please sign and return the accompanying proxy card in the postage-paid envelope.
This way, your shares will be voted as you direct even if you can't attend the
meeting. If you would like to attend, please see the instructions on page 11.
Sidney Kimmel
Chairman
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE FILL IN, SIGN, DATE AND PROMPTLY MAIL THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
<PAGE> i
TABLE OF CONTENTS
Page
----
Notice of Annual Meeting of Stockholders . . . . . . . . . . . . . . . . . ii
Who Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
How You Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Required Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Security Ownership of Certain Beneficial Owners. . . . . . . . . . . . . . 2
Election of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Compliance with Section 16(a) of the Securities Exchange Act of 1934 . . . 5
Committees of the Board of Directors . . . . . . . . . . . . . . . . . . . 5
Compensation Committee Interlocks and Insider Participation. . . . . . . . 5
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Compensation Committee and Stock Option Committee Reports
on Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . 8
Comparative Performance by the Company . . . . . . . . . . . . . . . . . . 9
Employment and Compensation Arrangements . . . . . . . . . . . . . . . . . 10
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Independent Certified Public Accountants . . . . . . . . . . . . . . . . . 10
Submission of Stockholder Proposals. . . . . . . . . . . . . . . . . . . . 11
Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
How to Attend the Annual Meeting . . . . . . . . . . . . . . . . . . . . . 11
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Jones
Apparel Group, Inc. will be held on May 27, 1998 at 10:00 a.m. at 270 Park
Avenue, 11th floor, Conference Room C, New York, New York. The purpose of
the meeting is to vote on the following matters:
1. The election of directors;
2. Ratification of selection of BDO Seidman, LLP as the Company's
independent certified public accountants for 1998;
3. Such other business as may properly come before the meeting.
The close of business on April 10, 1998 has been fixed as the record date.
Only stockholders of record at the close of business on that date can vote at
the meeting.
Please promptly date, sign and mail the enclosed proxy using the enclosed
addressed envelope, which needs no postage if mailed within the United States.
By Order of the Board of Directors
Sidney Kimmel
Chairman
Dated: April 24, 1998
-ii-
<PAGE> 1
PROXY STATEMENT
JONES APPAREL GROUP, INC.
250 Rittenhouse Circle
Keystone Park
Bristol, PA 19007
ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors is soliciting proxies to be used at the Annual
Meeting of Stockholders of the Company to be held on May 27, 1998 at 10:00
a.m. at 270 Park Avenue, 11th floor, Conference Room C, New York, New York.
This proxy statement and the proxies solicited hereby will be sent to
stockholders on or about April 24, 1998. The Company's Annual Report to its
Stockholders for the year ended December 31, 1997 accompanies this proxy
statement.
Who Can Vote
At the close of business on April 10, 1998, 50,312,850 shares of the
Company's Common Stock were outstanding and eligible for voting at the meeting.
Each stockholder of record has one vote for each share of Common Stock held on
all matters to come before the meeting. Only stockholders of record at the
close of business on April 10, 1998 are entitled to notice of and to vote at
the meeting.
How You Can Vote
If you return your properly signed proxy to us before the annual meeting, we
will vote your shares as you direct. You can specify on your proxy whether your
shares should be voted for all, some or none of the nominees for director. You
can also specify whether you approve, disapprove or abstain from the
ratification of BDO Seidman, LLP to be the Company's independent certified
public accountants for 1998.
The proxy may be revoked by the stockholder at any time prior to its use, by
voting in person at the Annual Meeting, by executing a later-dated proxy, or
by submitting a written notice of revocation to the Secretary of the Company
at the Company's office or at the Annual Meeting.
Under the rules of the Securities and Exchange Commission, boxes and a
designated blank space are provided on the proxy card for stockholders to
mark if they wish either to vote "for," "against" or "abstain" on the proposal
to ratify the selection of BDO Seidman, LLP as the Company's independent
certified public accountants for 1998, or to vote in favor or withhold
authority to vote for one or more of the Board of Directors' nominees for
director. If you do not specify on your proxy card how you want to vote your
shares, we will vote them "FOR" the election of all nominees for director
as set forth under "Election of Directors" below, and "FOR" the ratification of
BDO Seidman, LLP to be the Company's independent certified public accountants
for 1998.
Required Votes
Pennsylvania law and the Company's by-laws require the presence of a "quorum"
for the annual meeting. A quorum is defined as the presence, either in person
or represented by proxy, of the holders of a majority of the votes which could
be cast in the election or on a proposal. Votes withheld from director
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<PAGE> 2
nominees and abstentions will be counted in determining whether a quorum has
been reached. "Broker nonvotes," or proxies submitted by brokers which do not
indicate a vote for some or all of the proposals because they do not have
discretionary voting authority and have not received instructions as to how to
vote on those proposals (when such instructions are required by New York Stock
Exchange Rules), are not considered "shares present" and will not affect the
outcome of the vote.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for stockholder approval. The
selection of the Company's independent public accountants must be approved by
a majority of votes cast. Abstentions and broker non-votes are not counted in
determining the number of votes cast in connection with the selection of
independent public accountants. Director nominees must receive a plurality of
the votes cast at the meeting, which means that a broker non-vote or a vote
withheld from a particular nominee or nominees will not affect the outcome of
the meeting.
Security Ownership of Certain Beneficial Owners
The information contained herein has been obtained from the Company's records,
or from information furnished directly by the individual or entity to the
Company.
The table below shows all persons known to the Company to own 5% or more of
the Company's Common Stock, determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as of April 10, 1998.
Number of Percentage
Name and Address Shares Owned of Class
- --------------------------------------- -------------- ------------
Sidney Kimmel
c/o Jones Apparel Group, Inc.
250 Rittenhouse Circle, Keystone Park
Bristol, PA 19007 7,349,050 15%
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109 3,442,600<F1> 7%
_______________
<F1> Putnam Investments holds no shares with direct power to vote and 915,500
shares with shared power to vote. Putnam Investments has shared power to
dispose of or to direct the disposition of all reported shares.
Information as to the number of shares is as of December 31, 1997 and is
furnished in reliance on the Schedule 13G filed by Putnam Investments and
its subsidiaries, Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc., dated January 16, 1998.
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<PAGE> 3
The table below shows how much stock of the Company each director, nominee,
executive officer of the Company named in the Summary Compensation Table on
page 6 (the "Named Executive Officers") and all directors and executive officers
of the Company, as a group, owned as of April 10, 1998.
Number
of Percentage
Name Shares Owned of Class
- ---------------------------------- ------------ ----------
Sidney Kimmel. . . . . . . . . . . 7,349,050 15%
Herbert J. Goodfriend. . . . . . . 64,276 <F1> *
Jackwyn Nemerov. . . . . . . . . . 106,574 <F2> *
Irwin Samelman . . . . . . . . . . 20,000 <F3> *
Geraldine Stutz. . . . . . . . . . 19,000 <F4> *
Howard Gittis. . . . . . . . . . . 3,000 <F4> *
Wesley R. Card . . . . . . . . . . 50,934 <F5> *
All Directors and
Officers as a group
(8 persons). . . . . . . . . . . . 7,616,334 <F6> 15%
___________________
* Less than one percent.
<F1> Includes 18,841 shares issuable upon exercise of currently exercisable
options.
<F2> Includes 83,128 shares issuable upon exercise of currently exercisable
options.
<F3> Includes 20,000 shares issuable upon exercise of currently exercisable
options.
<F4> Includes 1,000 shares issuable upon exercise of currently exercisable
options.
<F5> Includes 35,834 shares issuable upon exercise of currently exercisable
options.
<F6> Includes 163,303 shares issuable upon exercise of currently exercisable
options.
Election of Directors
In accordance with the by-laws, the Company's Board of Directors has fixed
the number of directors which comprises the Board of Directors at five
directors. The Company's Board of Directors has nominated five persons to be
elected at the Annual Meeting to serve as directors of the Company until the
next annual meeting of stockholders and until their respective successors are
elected. All of the nominees currently serve as directors of the Company.
We will vote your shares as you specify on the enclosed proxy form. If you
sign, date and return the proxy form but don't specify how you want your shares
voted, we will vote them "FOR" all of the nominees listed below. If unforseen
circumstances (such as death or disability) make it necessary for the Board of
Directors to substitute another person for any of the nominees, we will vote
your shares for that other person.
The following information is supplied with respect to each person nominated
and recommended to be elected by the Board of Directors of the Company and is
based upon the records of the Company and information furnished to it by the
nominees. See "Security Ownership of Certain Beneficial Owners" for information
pertaining to stock ownership by the nominees.
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<PAGE> 4
Other Positions with
the Company and Has served as
Name Age Principal Occupation director since
- --------------------- --- ---------------------------- --------------
Sidney Kimmel 70 Chairman 1975
Herbert J. Goodfriend 71 Vice Chairman 1991
Irwin Samelman 67 Executive Vice President, 1991
Marketing
Geraldine Stutz 69 Principal Partner, Panache 1991
Productions
Howard Gittis 64 Vice Chairman and Chief 1992
Administrative Officer of
MacAndrews & Forbes
Holdings Inc.
Mr. Kimmel founded the Jones Apparel Division of W.R. Grace & Co. in 1970.
Mr. Kimmel has served as Chairman since 1975. Prior to 1975, Mr. Kimmel
occupied various executive offices, including President of Jones New York and
Vice President of John Meyer of Norwich. Prior to founding Jones, Mr. Kimmel
was employed by W.R. Grace & Co. and was President of Villager, Inc., a
sportswear company.
Mr. Goodfriend joined the Company in 1990 after serving as the Company's
legal counsel for the previous three years and has served as a director since
July 1991. Before joining the Company, Mr. Goodfriend served as a director of
Villager, Inc. and Venice Industries, Inc. In addition, Mr. Goodfriend is
engaged in the practice of law and is of counsel to the firm Phillips Nizer
Benjamin Krim & Ballon LLP, which provides legal services for the Company.
Mr. Samelman has been Executive Vice President, Marketing of the Company
since 1991 and has served as a director since July 1991. In addition, from
1987 to 1991, Mr. Samelman provided marketing consulting services to the
Company through Samelman Associates, Inc., a private consulting company
controlled by him. Prior thereto, Mr. Samelman was Regional Marketing Manager
of Russ Togs, Inc. and Vice President of Villager, Inc.
Ms. Stutz has been a director of the Company since July 1991. Since 1993,
Ms. Stutz has been a principal partner of Panache Productions, a fashion and
marketing service. During the previous five years, she was Publisher of
Panache Press at Random House, a book publisher. From 1960 until 1986, Ms.
Stutz was President of Henri Bendel. Ms. Stutz serves on the Board of
Directors of Tiffany & Co., The Theatre Development Fund and The Actors' Fund.
Mr. Gittis has been a director of the Company since April 1992. During the
past five years, Mr. Gittis' principal occupation has been Director and Vice
Chairman of MacAndrews & Forbes Holdings Inc., a diversified holding company.
In addition, Mr. Gittis is a director of Andrews Group Incorporated,
California Federal Bank, a Federal Savings Bank, Consolidated Cigar
Corporation, Consolidated Cigar Holdings Inc., First Nationwide Holdings Inc.,
First Nationwide (Parent) Holdings Inc., Loral Space and Communications Ltd.,
Mafco Consolidated Group Inc., Pneumo Abex Corporation, Power Control
-4-
<PAGE> 5
Technologies, Inc., Revlon, Inc., Revlon Consumer Products Corporation, Revlon
Worldwide Corporation and Rutherford-Moran Oil Corporation.
During 1997, the Board of Directors held five meetings and took action by
written consent on six occasions. All incumbent directors attended at least
75% of the total number of meetings of the Board of Directors and of the
Committees of the Board on which they served.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership (Form 3) and
reports of changes in ownership (Forms 4 and 5) of Common Stock of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Through an administrative oversight, Geraldine Stutz, a director of the
Company, did not file a Form 4 to report an open market purchase of the
Company's common stock in June 1997. The purchase was reported by Ms. Stutz
in a Form 5 filing in February 1998. To the Company's knowledge, based solely
on a review of the copies of such reports furnished to the Company, all other
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners have been complied with for the
year ended December 31, 1997.
Committees of the Board of Directors
The Board of Directors has an Audit Committee, a Stock Option Committee and
a Compensation Committee. The members of each committee are appointed by the
Board of Directors for a term beginning with the first regular meeting of the
Board of Directors following the Annual Meeting and ending when their respective
successors are elected and qualified.
Audit Committee. The Board of Directors appointed an Audit Committee
consisting of Ms. Stutz and Mr. Gittis. The Audit Committee meets periodically
to review and make recommendations with respect to the Company's internal
controls and financial reports, and in connection with such reviews, has met
with appropriate Company financial personnel and the Company's independent
certified public accountants. The Committee met two times in 1997.
Stock Option Committee. The Stock Option Committee, consisting of Mr. Gittis
and Ms. Stutz, administers the 1991 and 1996 Stock Option Plans. The Committee
met one time in 1997 and took action by written consent on six occasions in
1997. Mr. Gittis and Ms. Stutz are "non-employee directors" (within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934).
Compensation Committee. The Compensation Committee, consisting of Ms. Stutz
and Mr. Gittis, determines the cash and other incentive compensation, if any,
to be paid to the Company's executive officers. The Committee met one time in
1997 and took action by written consent one time in 1997.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 1997 were Ms. Stutz and Mr.
Gittis, both nonemployee directors. No member of the Compensation Committee
has a relationship that would constitute an interlocking relationship with
executive officers or other directors of the Company.
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<PAGE> 6
In the first quarter of 1998, the Company purchased from a partnership
equally owned by Mr. Kimmel and an unrelated third party, office, warehousing
and distribution facilities located in Bristol, Pennsylvania (which had been
previously leased from the partnership for a base rent of $1,000,000 per year)
for $10,500,000, of which $4,500,000 was received by Mr. Kimmel. The Company
believes that the purchase price represented the fair market value of the
property as used by the Company.
Executive Compensation
Summary of Executive Compensation
The following summary compensation table shows the before-tax compensation
for the three years ended December 31, 1997 for services in all capacities for
the Company's Chairman and the four other most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
------------------------------------ ----------
Other All
Annual Other
Name and Compen- Options Compen-
Principal Position Year Salary Bonus<F1> sation (shares)<F3> sation<F4>
- --------------------- ---- -------- --------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Sidney Kimmel 1997 $850,000 $ - $ - 400,000 $3,150
Chairman 1996 750,000 - - - 2,763
1995 750,000 - - - 1,500
Herbert J. Goodfriend 1997 537,101 100,000 8,394<F2> - 3,150
Vice Chairman 1996 543,750 75,000 8,794<F2> 100,000 3,048
1995 600,000 60,000 8,394<F2> - 1,500
Jackwyn Nemerov 1997 750,000 200,000 6,625<F5> 50,000 3,150
President 1996 554,167 150,000 5,661<F5> 200,000 3,150
1995 500,000 150,000 2,627<F5> - 1,500
Irwin Samelman 1997 650,000 200,000 - 200,000 3,150
Executive Vice 1996 500,000 150,000 - 100,000 3,048
President, Marketing 1995 500,000 125,000 - - 1,500
Wesley R. Card 1997 325,000 200,000 7,200<F2> 50,000 3,150
Chief Financial Officer 1996 300,000 100,000 7,200<F2> 100,000 3,056
1995 300,000 85,000 7,200<F2> - 1,500
__________________
</TABLE>
<F1> Annual bonus amounts are reported for the year earned and accrued
regardless of the timing of the actual payment.
<F2> These amounts are allowances for the employee's purchase or lease of
personal automobiles.
<F3> Adjusted to reflect 2-for-1 stock split effective October 2, 1996.
<F4> These amounts represent contributions by the Company to the Jones Apparel
Group, Inc. Retirement Plan on behalf of the named individuals.
<F5> These amounts are allowances for Company-provided clothing.
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<PAGE> 7
Stock option exercises by the Named Executive Officers during 1997, as well
as the number and total value of unexercised "in-the-money" options at December
31, 1997, are as follows:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1997 (#) December 31, 1997 ($)
on Value
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Sidney Kimmel - - - / 400,000 - / -
Herbert J. Goodfriend 81,563 2,613,503 43,007 / 80,000 1,087,465 / 1,520,000
Jackwyn Nemerov 54,206 2,022,744 81,128 / 318,666 2,109,313 / 6,451,811
Irwin Samelman 50,000 1,838,438 20,000 / 280,000 380,000 / 1,520,000
Wesley R. Card 48,166 1,487,711 15,834 / 194,000 300,846 / 3,459,700
</TABLE>
The following table sets forth the details of stock options granted to the
Named Executive Officers during 1997. The table shows, among other data,
hypothetical potential gains from stock options granted based entirely on
assumed growth rates of 5% and 10% in the value of the Company's stock price
over the ten-year life of the options. The assumed rates of growth were
selected by the Securities and Exchange Commission for illustration purposes
only and are not intended to predict future stock prices, which will depend
on market conditions and the Company's future performance and prospects.
All options were granted under the Company's 1996 Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Appreciation
Individual Grants for Option Term
-------------------------------------------------- ------------------------
% of Total
Number of Options Granted Expir- At 5% At 10%
Options to Employees Price ation Annual Annual
Name Granted in Fiscal Year $/Share Date Growth Rate Growth Rate
- ----------------------- ---------- --------------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sidney Kimmel 400,000<F1> 23.3% $50.50 07/22/07 $12,704,000 $32,194,000
Herbert J. Goodfriend - - - - - -
Jackwyn Nemerov 50,000<F2> 2.9% $45.3125 12/12/07 $1,424,375 $3,610,375
Irwin Samelman 200,000<F1> 11.6% $50.50 07/22/07 $6,352,000 $16,097,000
Wesley R. Card 50,000<F2> 2.9% $45.3125 12/12/07 $1,424,375 $3,610,375
</TABLE>
___________________
<F1> The options vest and become exercisable on a cumulative basis as to 33 1/3%
of the shares subject to options in each of the years commencing July 22,
1998 until July 22, 2000, and thereafter are exercisable until the tenth
anniversary of the date of grant.
<F2> The options vest and become exercisable on a cumulative basis as to 20% of
the shares subject to options in each of the years commencing December 12,
1998 until December 12, 2002, and thereafter are exercisable until the
tenth anniversary of the date of grant.
-7-
<PAGE> 8
Compensation Committee and Stock Option Committee Reports on
Executive Compensation
General. The Compensation Committee was established in February 1993. The
Company's compensation plans under which its executive officers have been
compensated for services rendered during 1997 were in place prior to the
establishment of the present compensation committee. These policies evolved
over the years when the Company operated as a private company, prior to an
initial public stock offering in May 1991. At the time of the initial public
stock offering, the Chairman's compensation level was reviewed and compared to
officers of other publicly held apparel companies, and has been adjusted since
that time. On January 1, 1997, Mr. Kimmel's salary was adjusted to $850,000
based on an updated review of other publically held apparel companies.
During 1997, the Compensation Committee engaged a compensation consultant to
review the Chairman's compensation package, as compared to the chief executive
officers of other comparable publically traded apparel companies. Upon review
of this study, in July 1997, the Chairman was awarded 400,000 stock options at
the market price on the date of the grant. The use of stock options to fairly
compensate the Chairman is in keeping with the Company's Compensation
Philosophy, as described in the next paragraph.
Compensation Philosophy. The Compensation Committee's executive compensation
philosophy is to provide competitive levels of compensation, integrate
management pay with the achievement of the Company's annual and long-term
performance goals, reward above average corporate performance, recognize
individual initiative and achievement, and assist the Company in attracting
and retaining qualified management. Management compensation is intended to
be set at levels that the Compensation Committee believes is consistent with
others in the Company's industry and gives special emphasis to the need for
the best creative talent available in product-related positions.
In determining what are competitive levels of compensation, the Committee
reviewed the salary and bonus levels of other publicly traded apparel companies
which were considered comparable to the Company, either in their size or type of
operations. The Committee has targeted the base salary of Company executives at
the median to high range of the surveyed companies.
Base Salaries. Base salaries for the Company's executive officers have been
established with reference to amounts paid by the Company's competitors for key
managerial and creative talent.
Annual Bonuses. The Company has a bonus program for its executive officers
under which cash bonuses are awarded by the Compensation Committee on a
subjective basis, considering individual job performance, the level of bonuses
paid by competitors, the level of base compensation and incentive stock options
awarded, and the overall performance of the Company (with primary emphasis on
growth in both revenues and net earnings per share), with no specific weighing
of the individual factors. Mr. Kimmel has not participated in the bonus
program.
Stock Option Grants. The Stock Option Committee awards stock options to the
Company's executive officers in order to link the long-term interests of such
persons and the Company's Stockholders, and assist in the retention of such
executives.
Tax Considerations. The Omnibus Budget Reconciliation Act of 1993
imposes a limit, with certain exceptions, on the amount that a publicly
held corporation may deduct in any year for the compensation paid or
accrued with respect to its five most highly compensated officers. While
the Committee cannot predict with certainty how the Company's compensation
might be affected, the Committee intends to try
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<PAGE> 9
to preserve the tax deductibility of all executive compensation while
maintaining the Company's compensation program as described in this report.
Compensation and Stock Option Committees: Geraldine Stutz, Howard Gittis
March 17, 1998
Comparative Performance by the Company
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock
with the cumulative total stockholder return of (i) a broad equity market index
and (ii) a published industry index or peer group. The following chart compares
the performance of the Company's Common Stock with that of the S&P 500
Composite Index and the S&P Textile Apparel Manufacturers Index, assuming an
investment of $100 on December 31, 1992 in each of the Common Stock, the stocks
comprising the S&P 500 Composite Index and the stocks comprising the S&P Textile
Apparel Manufacturers Index and the reinvestment of dividends (although
dividends have not been declared on the Company's Common Stock).
[GRAPH]
COMPARISON OF CUMULATIVE TOTAL RETURN
Measurement Period Jones S&P Textile
(Fiscal Year Covered) Apparel Group S&P 500 Manufacturers
- --------------------- ------------- ------- -------------
1992 $100.00 $100.00 $100.00
1993 78.36 110.08 75.61
1994 67.54 111.53 74.05
1995 103.28 153.45 83.17
1996 196.07 188.68 114.26
1997 225.58 251.63 123.22
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<PAGE> 10
Employment and Compensation Arrangements
The Company and Herbert J. Goodfriend, Vice Chairman of the Company, entered
into an agreement under which, at such time as his employment with the Company
is terminated, Mr. Goodfriend will serve as a consultant to the Company for a
five-year period, for an annual fee of $300,000. If Mr. Goodfriend's
employment is terminated by the Company, he would also be entitled to a one-time
severance payment of $600,000.
The Company has an agreement with Wesley R. Card, its Chief Financial
Officer, pursuant to which Mr. Card would be eligible to receive up to 12
months of salary continuation were the Company to terminate his employment
other than for willful misconduct or fraud.
Compensation of Directors
Each director who is not a full-time employee of the Company receives an
annual grant of options to purchase 1,000 shares of the Company's common stock
at an exercise price of $1.00 per share. Each option will expire on the tenth
anniversary of its date of grant, and will be exercisable commencing six months
from the date of grant, in whole or in part, during the exercise period.
Certain Transactions
Herbert J. Goodfriend, the Vice Chairman of the Company, is of counsel to
the law firm Phillips Nizer Benjamin Krim & Ballon LLP, which currently performs
legal services for the Company. During 1997, Phillips Nizer Benjamin Krim &
Ballon LLP received $9,035 in legal fees from the Company. Mr. Goodfriend
does not participate in any way in such fees.
The Company operates office, warehousing and distribution facilities in a
419,000 square foot free-standing building located in Bristol, Pennsylvania,
which, until March 1998, was leased from a partnership equally owned by Mr.
Kimmel and an unrelated third party. The triple net lease had a base rent of
$1,000,000 per year. The Company believes that the lease terms were at least
as favorable as those which could have been obtained from an independent third
party.
In the first quarter of 1998, the Company purchased the Bristol property for
$10,500,000, of which $4,500,000 was received by Mr. Kimmel. The Company
believes that the purchase price represented the fair market value of the
property as used by the Company.
On September 16, 1997, the Company purchased 150,000 shares of its Common
Stock from Mr. Samelman for $8,337,675 ($54.93 per share). The purchase price
was agreed to in writing by the Company and Mr. Samelman on September 15, 1997
and was based on the quoted prices for trades on the New York Stock Exchange on
September 16, 1997. The purchase was specifically authorized by the Board of
Directors, and the stock purchased from Mr. Samelman was part of an ongoing
stock purchase program previously authorized by the Board.
Independent Certified Public Accountants
BDO Seidman, LLP were the independent certified public accountants of the
Company during 1997 and have been selected, subject to ratification by the
stockholders of the Company at the Annual Meeting, as the Company's
independent certified public accountants for 1998. BDO Seidman, LLP has
served as the Company's independent accountants for more than the past five
years and is, therefore, familiar with the affairs and financial procedures
of the Company. A representative of BDO Seidman, LLP will be present at
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the Annual Meeting, with an opportunity to make a statement if he desires to
do so, and will be available to respond to appropriate questions.
If the selection of BDO Seidman, LLP is not ratified, or prior to the next
annual meeting of stockholders they decline to act or otherwise become
incapable of acting, or if its employment is otherwise discontinued by the
Board of Directors, the Board of Directors will appoint other independent
certified public accountants whose employment for any period subsequent to
the next annual meeting will be subject to stockholder approval at such
meeting.
Submission of Stockholder Proposals
Any stockholder proposal intended for inclusion in the proxy material for
the 1999 annual meeting must be received by the Company at its principal place
of business no later than December 28, 1998.
Other Matters
The Board of Directors is not aware of any business constituting a proper
subject for action by the stockholders to be presented at the meeting, other
than those set forth in this Proxy Statement. However, if any such matter
should properly come before the meeting, the persons named in the enclosed
proxy intend to vote such proxy in accordance with their best judgment.
How to Attend the Annual Meeting
The meeting is being held at 270 Park Avenue, 11th floor, Conference Room C,
New York, New York. 270 Park Avenue is located on the West side of Park Avenue,
between 47th and 48th Streets.
THE COMPANY'S 1997 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION, EXCLUSIVE OF EXHIBITS, WILL BE MAILED WITHOUT CHARGE TO ANY
STOCKHOLDER ENTITLED TO VOTE AT THE MEETING, UPON WRITTEN REQUEST TO:
JONES APPAREL GROUP, INC., 250 RITTENHOUSE CIRCLE, KEYSTONE PARK, BRISTOL,
PENNSYLVANIA 19007; ATTN: WESLEY R. CARD.
In addition to soliciting proxies by mail, the Company may make requests for
proxies by telephone, telegraph or messenger or by personal solicitation by
officers, directors, or employees of the Company, or by any one or more of the
foregoing means. The Company will also reimburse brokerage firms and other
nominees for their actual out-of-pocket expenses in forwarding proxy material
to beneficial owners of the Company's shares. All expenses in connection with
such solicitation are to be paid by the Company.
By Order of the Board of Directors
Sidney Kimmel
Chairman
Dated: April 24, 1998
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[FRONT SIDE]
PROXY
JONES APPAREL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sidney Kimmel, Herbert J. Goodfriend and
Wesley R. Card, and each of them, each with full power to act without the
other, and with full power of substitution, the attorneys and proxies of the
undersigned and hereby authorizes them to represent and to vote, all the
shares of Common Stock of Jones Apparel Group, Inc. that the undersigned would
be entitled to vote, if personally present, at the Annual Meeting of
Stockholders to be held on May 27, 1998 or any adjournment thereof, upon
such business as may properly come before the meeting, including the items set
forth on the reverse side.
(Continued, and to be marked, dated and signed, on the other side)
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<PAGE> 13
[REVERSE SIDE]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE Please mark
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. your votes
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR as indicated
PROPOSALS 1 AND 2. in this
example [X]
1. ELECTION OF DIRECTORS NOMINEES: Sidney Kimmel, Herbert J. Goodfriend,
Irwin Samelman, Geraldine Stutz &
FOR all WITHHOLD Howard Gittis
nominees AUTHORITY
listed to to vote INSTRUCTION: To withhold authority to vote for
the right for all any individual nominee, write that
(except as nominees nominee's name in the space provided
marked to listed to below.
the contrary) the right
[ ] [ ] _____________________________________
2. Ratification of BDO Seidman, LLP 3. In their discretion, the Proxies are
as the independent certified public authorized to vote upon such other
accountants of the corporation. business as may properly come before
the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as the name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated: __________________________, 1998
_______________________________________
Signature
_______________________________________
Signature if held jointly
(PLEASE SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE)
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