<PAGE> 1
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 240.14a-11(c) or 240.14a-12
PACIFIC SUNWEAR OF CALIFORNIA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PACIFIC SUNWEAR OF CALIFORNIA, INC.
5200 E. LA PALMA AVENUE
ANAHEIM, CALIFORNIA 92807
April 17, 2000
Dear Shareholders:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of the Company to be held on Wednesday, May 24, 2000, at the principal executive
offices of the Company located at 5200 E. La Palma Avenue, Anaheim, California
92807, beginning at 9:00 a.m., local time.
At this meeting, you are being asked to elect five directors. Greg H.
Weaver, Julius Jensen III, Pearson C. Cummin III, Peter L. Harris, and Sally
Frame Kasaks are the nominees for election to the Board of Directors for a
one-year term. Each of the nominees is currently serving as a director of the
Company.
The members of the Board and management look forward to personally greeting
as many shareholders as possible at the meeting. However, whether or not you
plan to attend personally, and regardless of the number of shares you own, it is
important that your shares be represented.
Although you presently may plan to attend the Annual Meeting, please
complete, sign, date and promptly return the enclosed proxy card. If you do
attend the Annual Meeting and wish to vote in person, you may withdraw your
proxy at that time.
Sincerely,
/s/ GREG H. WEAVER
Greg H. Weaver
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
PACIFIC SUNWEAR OF CALIFORNIA, INC.
5200 E. LA PALMA AVENUE
ANAHEIM, CALIFORNIA 92807
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2000
The Annual Meeting of Shareholders of Pacific Sunwear of California, Inc.,
a California corporation (the "Company"), will be held at the principal
executive offices of the Company located at 5200 E. La Palma Avenue, Anaheim,
California 92807, on Wednesday, May 24, 2000, at 9:00 a.m. local time for the
following purposes:
(1) To elect five members of the Board of Directors; and
(2) To transact such other business as may properly come before the Annual
Meeting and at any adjournment thereof.
Shares represented by properly executed proxies will be voted in accordance
with the specifications therein. It is the intention of the Board of Directors
that shares represented by proxies, which are not limited to the contrary, will
be voted for the election of those directors named in the attached proxy
statement.
The Board of Directors has fixed the close of business on April 10, 2000 as
the record date for determining shareholders entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof.
By Order of the Board of Directors
/S/ CARL W. WOMACK
Carl W. Womack
Sr. Vice President,
Chief Financial Officer and Secretary
Anaheim, California
April 17, 2000
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE, PLEASE INDICATE
YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE, SIGN AND RETURN
IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN PROMPTLY MAILING IN YOUR PROXY CARD.
- --------------------------------------------------------------------------------
<PAGE> 4
PACIFIC SUNWEAR OF CALIFORNIA, INC.
5200 E. LA PALMA AVENUE
ANAHEIM, CALIFORNIA 92807
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2000
------------------------
PROXY STATEMENT
------------------------
The accompanying proxy is being solicited by the Board of Directors of
Pacific Sunwear of California, Inc. (the "Company") for use at the Company's
Annual Meeting of Shareholders (the "Annual Meeting") to be held on Wednesday,
May 24, 2000, at 9:00 a.m. local time at the Company's principal executive
offices, 5200 E. La Palma Avenue, Anaheim, California 92807, and at any and all
adjournments thereof. This Proxy Statement and the accompanying proxy are being
mailed to shareholders on or about April 17, 2000.
PROXY PROCEDURES
All shares represented by each properly executed unrevoked proxy received
in time for the Annual Meeting will be voted in the manner specified therein.
Any shareholder has the power to revoke his or her proxy at any time before it
is voted. A proxy may be revoked by delivering a written notice of revocation to
the Secretary of the Company at the Company's principal executive offices, by a
subsequent proxy executed by the person executing the prior proxy and presented
to the Secretary of the Company at the Annual Meeting, or by attendance at the
Annual Meeting and voting in person by the person executing the proxy.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the person appointed by the Company to act as an inspector of election for the
meeting. The election inspector will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the shareholders for a vote. Abstentions,
however, do not constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of a plurality or of "votes cast."
The election inspector will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters).
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally or by telephone or
special letter without any additional compensation. The Company also will
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for any reasonable expenses in forwarding proxy materials to beneficial owners.
The Company may also engage a proxy solicitation company in connection with the
Annual Meeting for a fee which is not expected to exceed $10,000 plus
out-of-pocket expenses. The mailing address of the Company's principal executive
offices is 5200 E. La Palma Avenue, Anaheim, California 92807.
<PAGE> 5
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
On April 10, 2000, the record date with respect to this solicitation for
determining shareholders entitled to notice of and to vote at the Annual
Meeting, 31,641,965 shares of the Company's Common Stock were outstanding. No
shares of any other class of stock were outstanding. Only shareholders of record
on such date are entitled to notice of and to vote at the Annual Meeting and at
any adjournment thereof. Each shareholder of record is entitled to one vote for
each share held on all matters to come before the Annual Meeting and at any
adjournment thereof.
Except as otherwise indicated, the following table sets forth information
as of March 31, 2000 with respect to the beneficial ownership of the Company's
Common Stock by each person who is known by the Company to beneficially own more
than 5% of the Company's Common Stock, each director of the Company, each
nominee for election to the Board of Directors, each executive officer named in
the Summary Compensation Table and by all directors and executive officers as a
group. Except as otherwise indicated, beneficial ownership includes both voting
and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------------------------------------------ ---------- ----------
<S> <C> <C>
Wellington Management Company, LLP(1)....................... 3,361,650 10.7%
75 State Street
Boston, MA 02109
Nicholas-Applegate Capital Management(2).................... 2,213,575 7.0%
600 West Broadway, 29th Floor
San Diego, Ca 92101
Julius Jensen III(3)........................................ 144,821 *
Pearson C. Cummin III(4).................................... 106,763 *
Peter L. Harris(4).......................................... 74,252 *
Sally Frame Kasaks(5)....................................... 25,265 *
Greg H. Weaver(6)........................................... 947,869 3.0%
Timothy M. Harmon(7)........................................ 494,439 1.6%
Carl W. Womack(8)........................................... 210,087 *
Mark A. Hoffman............................................. 2,500 *
Michael J. Scandiffio....................................... 3,700 *
All directors and executive officers as a group (9
persons)(9)............................................... 2,009,696 6.2%
</TABLE>
- ---------------
* Less than one percent.
(1) Share ownership for Wellington Management Company, LLP as of February 29,
2000 and was obtained from a Schedule 13G, dated March 10, 2000, filed with
the Securities and Exchange Commission. Wellington Management Company, LLP
has shared voting power with respect to 2,387,200 and shared dispositive
power with respect to 3,361,650 shares.
(2) Share ownership for Nicholas-Applegate Capital Management as of December 31,
1999 and was obtained from a Schedule 13G, dated February 11, 2000, filed
with the Securities and Exchange Commission. Wellington Management Company,
LLP has sole voting power with respect to 1,985,475 and sole dispositive
power with respect to 2,213,575 shares.
(3) Includes 38,969 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
(4) Includes 74,252 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
(5) Includes 22,265 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
(6) Includes 526,269 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
2
<PAGE> 6
(7) Includes 324,781 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
(8) Includes 69,675 shares of Common Stock which may be acquired upon exercise
of stock options which are presently exercisable or will become exercisable
within 60 days of March 31, 2000.
(9) Includes 1,130,463 shares of Common Stock which may be acquired upon
exercise of stock options which are presently exercisable or will become
exercisable within 60 days of March 31, 2000.
3
<PAGE> 7
ELECTION OF DIRECTORS
The Company's Bylaws provide that the authorized number of directors of the
Company shall be not less than five nor more than nine until changed by
amendment of the Articles of Incorporation or by a Bylaw duly adopted by
approval of the outstanding shares. The exact number of directors shall be fixed
by amendment of the Bylaws duly adopted either by the Board of Directors or the
shareholders. The exact number of authorized directors as of the date of this
Proxy Statement is five.
Five directors will be elected at the 2000 Annual Meeting of Shareholders
for a term of one year and until their successors shall have been duly elected
and qualified. For the purpose of electing directors, each shareholder is
entitled to one vote per share for each of the five directors to be elected. The
candidates receiving the highest number of votes will be elected.
The accompanying proxies solicited by the Board of Directors will be voted
for the election of the five nominees named below, unless the proxy card is
marked to withhold authority to vote. Each nominee is presently a member of the
Company's Board of Directors and each nominee was previously elected to the
present term of office by the shareholders of the Company.
The nominees for election as directors are:
Greg H. Weaver
Julius Jensen III
Pearson C. Cummin III
Peter L. Harris
Sally Frame Kasaks
If any of the nominees should become unavailable for election to the Board
of Directors, the persons named in the proxy or their substitutes shall be
entitled to vote for a substitute to be designated by the Board of Directors.
Alternatively, the Board of Directors may reduce the number of directors. The
Board of Directors has no reason to believe that it will be necessary to
designate a substitute nominee or reduce the number of directors.
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes) and the nominees receiving the highest
number of affirmative votes of the shares entitled to be voted for them up to
the number of directors to be elected by those shares will be elected and votes
cast against a candidate or votes withheld will have no legal effect. Any
unmarked proxies, including those submitted by brokers or nominees, will be
voted as indicated in the accompanying proxy card. Cumulative voting will not
apply.
4
<PAGE> 8
NOMINEES
The following table provides information regarding each nominee for
election to the Board of Directors. The ages shown are as of April 12, 2000.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE DURING LAST FIVE YEARS AND DIRECTORSHIPS SINCE
------------ ------------------------------------------------------------ --------
<S> <C> <C>
Greg H. Weaver (46) Chief Executive Officer since October 1996, Chairman of the 1996
Board since November 1997 and a director since February
1996. Mr. Weaver served as President and Chief Executive
Officer from October 1996 to November 1997, as President and
Chief Operating Officer from February 1996 to October 1996
and as Chief Operating Officer and Executive Vice President
from October 1994 to February 1996. Mr. Weaver also served
as Executive Vice President, Senior Vice President and as
Vice President since he joined the Company in July 1987.
Julius Jensen III (66) General partner of Copley Venture Partners, a venture 1988
capital investment firm, since 1985. Director of Natural
Wonders, Inc.
Pearson C. Cummin III (57) General partner of Consumer Venture Partners, a venture 1988
capital investment firm, since January 1986. Director of
Natural Wonders, Inc. and Director of The Boston Beer
Company.
Peter L. Harris (56) Chairman, Chief Executive Officer and President of The 1994
Picture People, Inc., a mall-based entertainment retail
chain selling portraits and picture-related products, since
August 1995. Previously, Chairman of Accolade, Inc., a
publisher of interactive entertainment software, from May
1994 to January 1996, and Chief Executive of Accolade, Inc.
from May 1994 to June 1995. President and Chief Executive
Officer of F.A.O. Schwarz from 1985 to 1992 and President of
Gemco Department Stores from 1980 to 1984. Director of The
Stride Rite Corporation and Egghead, Inc.
Sally Frame Kasaks (55) Business consultant since January 1997. Previously, Chairman 1997
and Chief Executive Officer of Ann Taylor Stores, Inc., a
specialty apparel retailer, where she was employed from
February 1992 to August 1996. President and Chief Executive
Officer of Abercrombie and Fitch, which was a specialty
apparel retailing division of The Limited, Inc., from
February 1989 to February 1992. Chairman and Chief Executive
Officer of The Talbots, Inc., which was a specialty apparel
retailing division of General Mills Co., from November 1985
to September 1988. Director of Cortefiel, S.A., The White
House, Inc. and Tuesday Morning, Inc.
</TABLE>
5
<PAGE> 9
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
COMPENSATION OF DIRECTORS
During the fiscal year ended January 30, 2000 ("fiscal 1999"), non-employee
directors of the Company were paid a fee of $2,000 for each meeting attended of
the Board of Directors and were reimbursed for expenses incurred in attending
meetings of the Board of Directors. In addition, non-employee directors of the
Company were paid a fee of $500 for each telephonic meeting of the Board of
Directors that they participated in. During fiscal 1999, each non-employee
director of the Company received a stock option to purchase 9,000 shares of
Common Stock.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, currently consisting of Mr.
Jensen, Ms. Kasaks and Mr. Cummin, and a Compensation Committee, currently
consisting of Messrs. Jensen, Cummin and Harris. The primary responsibility of
the Audit Committee is to review the scope of audit and non-audit assignments
and internal auditing procedures and the adequacy of internal controls. The
Audit Committee meets with management and the Company's independent public
accountants. The Audit Committee met one time during fiscal 1999. The primary
responsibility of the Compensation Committee is to establish compensation and
incentives for the Company's executive officers and to administer the Company's
incentive compensation and benefit plans, including the Company's 1992 Stock
Award Plan, the Company's 1999 Stock Award Plan (together, the "Stock Award
Plans"), the Pacific Sunwear of California, Inc. Executive Deferred Compensation
Plan (the "Executive Deferred Compensation Plan") and the Pacific Sunwear of
California, Inc. Incentive Compensation Plan (the "Incentive Compensation
Plan"). The Compensation Committee met once telephonically and took action by
written consent eight times during fiscal 1999.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1999, the Board of Directors met seven times (two of such
meetings were telephonic), and twice took action by written consent. No director
attended fewer than 75% of the aggregate number of meetings held by the Board of
Directors and the Committees of the Board of Directors on which such director
served.
6
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth all compensation paid to or earned by the
named executive officers for fiscal 1999 and for the fiscal years ended January
31, 1999 ("fiscal 1998") and February 1, 1998 ("fiscal 1997").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL ------------------------
COMPENSATION(1) RESTRICTED SECURITIES
------------------- STOCK UNDERLYING
NAME AND SALARY BONUS AWARDS OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) ($) (#) COMPENSATION($)(2)
------------------ ---- -------- -------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Greg H. Weaver................... 1999 $609,600 $840,000 $1,190,150(3) 200,000 $31,846
Chairman of the Board and 1998 509,600 600,000 -- 225,000 32,965
Chief Executive Officer 1997 434,908 478,125 -- 225,000 27,287
Timothy M. Harmon................ 1999 $407,800 $375,200 -- 60,000 $20,917
President and Chief 1998 332,800 261,300 -- 75,000 21,182
Merchandising Officer 1997 265,550 193,125 -- 168,750 16,821
Mark A. Hoffman.................. 1999(4) $220,185 $202,031 -- 112,500 $ 8,000
Chief Operating Officer 1998 -- -- -- -- --
1997 -- -- -- -- --
Michael J. Scandiffio............ 1999(4) $178,000 $150,000 -- 75,000 $ 5,500
Executive Vice President of 1998 -- -- -- -- --
Merchandising 1997 -- -- -- -- --
Carl W. Womack................... 1999 $266,000 $169,000 -- 50,000 $14,436
Senior Vice President, 1998 246,000 108,000 -- 45,000 16,270
Chief Financial Officer and 1997 223,692 163,125 -- 50,625 14,727
Secretary
</TABLE>
- ---------------
(1) The annual compensation reported does not include the value of certain
perquisites which in the aggregate did not exceed the lesser of either
$50,000 or 10 percent of the total of annual salary and bonus reported for
the named executive.
(2) Amounts shown for all individuals except Mr. Weaver represent contributions
by the Company to the Company's Employee Savings Plan (401(k)) and Executive
Deferred Compensation Plan. The amounts shown for Mr. Weaver in each of
1999, 1998 and 1997 include contributions by the Company to such plans and
in each of 1999, 1998 and 1997 an annual premium of $1,670 was paid with
respect to a term life insurance policy purchased for the benefit of Mr.
Weaver. The amounts contributed to the plans are subject to vesting
requirements.
(3) On September 17, 1999, Mr. Weaver was granted a restricted stock award
covering 50,000 shares of Common Stock at a price of $0.01 per share. The
closing price of the Company's Common Stock on that date was $23.813. Such
shares vest in four equal annual installments, subject to the attainment of
certain cumulative earnings per share growth targets, beginning on September
17, 2001. The value of such restricted stock at the end of fiscal 1999 based
on the closing price of $26.19 for the Company's Common Stock on January 30,
2000, net of consideration paid by Mr. Weaver, was $1,309,000.
(4) Messrs. Hoffman and Scandiffio joined the Company in June 1999 and August
1999, respectively.
7
<PAGE> 11
SUMMARY OF OPTION GRANTS
The following table sets forth certain information with respect to grants
of stock options during fiscal 1999 to the named executive officers of the
Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
PERCENTAGE OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN EXERCISE OPTION TERM
GRANTED FISCAL PRICE EXPIRATION -----------------------------
NAME (#)(1) YEAR ($/SH)(2) DATE 5%($) 10%($)
---- ---------- ------------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Greg H. Weaver............... 200,000 24.4% $23.81 09/17/09 $2,995,174 $7,590,358
Timothy M. Harmon............ 60,000 7.3% 23.81 09/17/09 898,552 2,277,107
Mark A. Hoffman.............. 112,500 13.8% 22.44 06/21/09 1,587,468 4,022,955
Michael J. Scandiffio........ 50,000 6.1% 25.75 08/02/09 809,702 2,051,944
25,000 3.1% 23.81 09/17/09 374,397 948,795
------- ---- ---------- ----------
75,000 9.2% 1,184,099 3,000,739
Carl W. Womack............... 50,000 6.1% 23.81 09/17/09 748,793 1,897,589
</TABLE>
- ---------------
(1) All of such options were granted under the Stock Award Plans for a term of
10 years, subject to earlier termination in certain events related to
termination of employment. Acceleration of the exercisability of the options
may occur under certain circumstances, including a change in control of the
Company. Options begin vesting one year after the grant date. On the initial
vesting date, 25% of the options vest and, thereafter, options continue to
vest at the rate of 2.08% each calendar month.
(2) The exercise price and tax withholding obligations, if any, related to
exercise may be paid by delivery of already owned shares and by offset of
the underlying shares, respectively, subject in each case to certain
conditions.
SUMMARY OF OPTIONS EXERCISED
The following table provides information with respect to the exercise of
stock options during the most recently completed fiscal year by the named
executive officers of the Company together with the fiscal year-end value of
unexercised options.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END(1)($)
EXERCISE REALIZED(1) ------------------------- -------------------------
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Greg H. Weaver............... 88,593 $1,689,434 464,257/515,335 $8,161,625/$4,896,096
Timothy M. Harmon............ 100,000 2,705,572 292,184/215,842 5,480,265/ 2,421,860
Mark A. Hoffman.............. -- -- 0/112,500 0/ 421,931
Michael J. Scandiffio........ -- -- 0/ 75,000 0/ 81,275
Carl W. Womack............... 170,000 3,394,704 55,964/112,231 841,195/ 995,055
</TABLE>
- ---------------
(1) Market value of the securities underlying the "in-the-money" options at
exercise date or year-end, as the case may be, minus the exercise price of
such options.
8
<PAGE> 12
SEVERANCE AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company and Mr. Weaver are parties to an Amended and Restated
Employment Agreement, as amended (the "Employment Agreement"), pursuant to which
Mr. Weaver is entitled to (i) a base salary of $700,000 per year, subject to a
minimum annual adjustment equal to the greater of the increase in the Consumer
Price Index or five percent (5%), (ii) an annual bonus equal to a percentage of
his base salary based upon the achievement of financial performance criteria to
be established by the Company in consultation with Mr. Weaver and (iii) certain
other benefits, including a car allowance of $800 per month. The Employment
Agreement is renewed automatically each January 15 for one year unless the
Company provides 60 days notice of its intention not to renew. If the Company
gives a 60 day notice or if Mr. Weaver is terminated without cause, Mr. Weaver
shall be entitled to his then annual salary for a period of one year following
the effective date of his termination and a pro rata portion of any bonus to
which he would otherwise be entitled. Mr. Scandiffio, Mr. Hoffman, Mr. Harmon
and Mr. Womack are parties to severance agreements dated as of August 2, 1999,
June 21, 1999, October 27,1997 and February 6, 1996, respectively, which cover
severance and bonus payments in the event of termination. Mr. Scandiffio, Mr.
Hoffman and Mr. Harmon shall each be entitled to his then annual salary for a
period of nine months if terminated without cause and Mr. Womack shall be
entitled to his then annual salary for a period of six months if terminated
without cause, and each shall also be entitled to a pro-rata portion of any
bonus to which he would otherwise be entitled if terminated in the fourth
quarter of any fiscal year.
The Stock Award Plans and the Executive Deferred Compensation Plan provide
for acceleration of the vesting of awards granted thereunder and Company
contributions credited thereunder, respectively, upon the occurrence of certain
events. Under the Stock Award Plans, in the event the shareholders of the
Company approve the dissolution or liquidation of the Company, certain mergers
or consolidations, or the sale of substantially all of the business assets of
the Company (a "Change in Control"), unless prior to such event the Board of
Directors determines that there shall be either no acceleration or limited
acceleration of awards, each option and related stock appreciation right shall
become immediately exercisable, restricted stock shall immediately vest and the
number of shares covered by each performance share award shall be issued to the
participant. Under the Executive Deferred Compensation Plan, in the event of a
Change in Control, unless prior to such event the Board of Directors determines
that there shall be either no acceleration of vesting of Company contributions
or immediate payout of account balances, Company contribution amounts shall
immediately vest and there shall be immediate payout of account balances to
participants. In addition, the Incentive Compensation Plan provides that, if a
Change in Control occurs and the plan cannot be continued in its current form
because of the nature of the event, awards outstanding under such plan will be
paid on a pro rata basis based on the number of days in the applicable
performance period that occurred prior to the event and assuming the maximum
performance threshold(s) had been attained.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Julius Jensen III, Pearson
C. Cummin III and Peter L. Harris. No member of the Compensation Committee is
either an officer or employee of the Company.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
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<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
As members of the Compensation Committee, we are responsible for
administering the Company's incentive plans, including the Stock Award Plans and
the Incentive Compensation Plan. In addition, we review compensation levels of
members of senior management, evaluate the performance of senior management and
consider management succession and related matters. The Compensation Committee
reviews compensation for the executive officers of the Company with the Board.
The Compensation Committee is comprised entirely of non-employee directors.
OVERALL COMPENSATION POLICIES
The primary compensation policy of the Company, which is endorsed by the
Compensation Committee, is that a significant portion of the compensation of
each executive officer should be based upon the financial performance of the
Company and the contribution to that performance made by the executive officer.
Thus, a significant portion of the compensation for each executive officer is
"at risk." The Company and the Compensation Committee also believe that
executive compensation should serve to attract and retain key employees and
provide them with incentives to assist the Company in achieving strategic and
financial goals that ultimately enhance the value of the Company's stock. To
further these goals, the Company's compensation structure for executive officers
has three components:
- Long-Term Incentive Awards
- Annual Bonus
- Base Salary
The awards, bonus, and base salary for the Company's Chief Executive
Officer are determined and approved by the Compensation Committee. The awards,
bonus, and base salary for the other executive officers of the Company are
recommended by the Chief Executive Officer, subject to review, adjustment, and
approval by the Compensation Committee.
LONG-TERM INCENTIVE AWARDS. The Company from time to time provides
long-term incentives to key employees through the grant of stock option and
restricted stock awards under the Stock Award Plans. These long-term incentives
are designed to couple the interests of key employees with those of shareholders
in that the potential realizable value of the awards is directly related to the
future value of the Company's stock.
The Compensation Committee's current philosophy is that the Company should
grant stock options to executive officers upon initial employment and on an
annual basis thereafter, and that stock options should constitute the majority
of an executive's long-term incentives. Stock options typically vest over a
four-year period.
The Compensation Committee also may grant restricted stock awards from time
to time. Currently, there is no program of annual restricted stock grants. In
fiscal 1999, the Compensation Committee only granted one restricted stock award
to an executive officer (the award granted to Mr. Weaver, the Company's Chief
Executive Officer, which is described in more detail below under "Compensation
of Chief Executive Officer").
ANNUAL BONUS. Annual bonuses allow the Company to recognize individual
performance and contributions to the Company on an annual basis. Annual bonuses
for fiscal 1999, other than for Mr. Weaver, were determined by the Compensation
Committee in its discretion based on the factors described below. Mr. Weaver's
bonus was structured and paid under the Company's Incentive Compensation Plan,
which is also generally described below. While the Compensation Committee
generally prefers to retain absolute discretion to determine annual bonuses
based on Company and individual performance, Mr. Weaver's bonus was structured
under the Incentive Compensation Plan for tax reasons, as described below under
"Tax Treatment."
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<PAGE> 14
Annual bonuses for fiscal 1999 were paid to the Company's officers (other
than Mr. Weaver) based on the percentage of budgeted earnings achieved by the
Company. Bonuses for the Company's senior managers were based both on the
Company's earnings and a subjective evaluation of individual job performance and
achievement without regard to earnings. The named executive officers of the
Company (other than Mr. Weaver) were awarded bonuses in the aggregate amount of
$896,231, ranging from 64% to 92% of their respective base salaries, for
services rendered in fiscal 1999.
The Incentive Compensation Plan permits the payment of awards in stock as
well as cash, is administered by the Compensation Committee, and provides for
performance-based bonuses. Under the plan, the Compensation Committee
establishes (1) one or more specific performance targets that must be achieved
during a specified performance period in order for a bonus to become payable,
and (2) the formula for calculating the amount of the bonus if the performance
targets are achieved. The Compensation Committee granted Mr. Weaver an award
under the Incentive Compensation Plan for fiscal 1999. That award is described
in more detail below under "Compensation of Chief Executive Officer."
BASE SALARY. The base salary for Mr. Weaver is determined by the
Compensation Committee and described in more detail below. The Compensation
Committee determines base salaries for the Company's other executive officers,
as well as changes in such salaries, based upon recommendations of the Chief
Executive Officer. Base salaries are determined based on factors such as length
of service and a subjective determination of past performance and expected
future contributions. The Compensation Committee does not, in determining the
level of compensation to be paid to any executive, conduct any formal survey of
the compensation paid by other public retailing companies but has from time to
time reviewed publicly available compensation information of public retailing
companies.
TAX TREATMENT. The Compensation Committee considers the anticipated tax
treatment to the Company of the compensation and benefits paid to the executive
officers of the Company in light of Section 162(m) of the Internal Revenue Code
of 1986, as amended. Section 162(m) generally disallows a tax deduction to a
public corporation for compensation in excess of $1,000,000 paid during a year
to its chief executive officer or to one of its four other most highly
compensated officers. However, Section 162(m) exempts qualifying "performance
based" compensation from the $1,000,000 limit.
While striving to satisfy the Company's goal of linking a significant
portion of each executive officer's compensation to the financial performance of
the Company, the Compensation Committee also strives to provide each executive
officer with a compensation package that will preserve the Company's tax
deduction for such compensation. In that regard, the stock options and
restricted stock awarded to the Company's executive officers are intended to be
qualified "performance based" compensation for purposes of Section 162(m).
Bonuses granted and paid in accordance with the terms of the Incentive
Compensation Plan also are intended as "performance based" compensation for this
purpose. The Compensation Committee structured Mr. Weaver's bonus opportunity
for fiscal 1999, as well as his bonus opportunity for fiscal 2000, under the
Incentive Compensation Plan to help ensure that they are fully deductible. Other
executives' bonuses have not been structured under the Incentive Compensation
Plan because their compensation has been within the limits of Section 162(m).
However, bonus opportunities for other executives may in the future be
structured under the Incentive Compensation Plan if the Compensation Committee
determines that it is advisable in the circumstances.
The Compensation Committee and the Board may authorize non-deductible
compensation in such circumstances as they deem appropriate. Because of
ambiguities and uncertainties in Section 162(m), no assurances can be given that
compensation intended by the Company to be "performance based" within the
meaning of Section 162(m) will in fact be deductible by the Company.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In connection with his appointment as the Company's Chief Executive Officer
in September 1996, the Company entered into an employment agreement with Mr.
Weaver. The employment agreement was amended and restated on November 3, 1997.
Under the employment agreement, Mr. Weaver is entitled to a base salary that is
subject to a minimum annual increase. The aggregate base salary payments made to
11
<PAGE> 15
Mr. Weaver in fiscal 1999 were $600,000. In January 2000, the Company increased
Mr. Weaver's annual base salary to $700,000.
In September 1999, the Company granted Mr. Weaver a stock option covering
200,000 shares of Common Stock at an exercise price of $23.81 per share, and a
restricted stock award covering 50,000 shares of Common Stock at a purchase
price of $0.01 per share. The stock option is scheduled to vest over four years.
The vesting of the restricted stock award is contingent on the Company's
attainment of cumulative earnings per share growth targets.
In accordance with his employment agreement, Mr. Weaver also is entitled to
an annual bonus opportunity based on the Company's performance. Mr. Weaver was
granted a bonus opportunity for fiscal 1999 under the Incentive Compensation
Plan. The vesting and payment of the bonus was conditioned on the Company's
attainment of earnings per share targets during fiscal 1999. The Compensation
Committee confirmed, following the close of fiscal 1999, the earnings target
achieved by the Company for this purpose and determined that Mr. Weaver was
entitled to a bonus of $840,000 in accordance with his award. Mr. Weaver's bonus
opportunity for fiscal 2000 has also been structured under the Incentive
Compensation Plan and is again based on the Company's attainment of earnings
growth targets.
The increase to Mr. Weaver's base salary was greater than the minimum
increase required by his employment agreement. The Compensation Committee
determined that the greater increase, as well as the other awards described
above, were appropriate based on the Compensation Committee's subjective
evaluation of the continuing role of Mr. Weaver as Chief Executive Officer in
the financial performance of the Company during fiscal 1999 and the achievement
of several strategic objectives, including the opening of 111 stores, the
relocation/expansion of 31 stores, the continued development of d.e.m.o., the
Company's new retail concept, the development of a web site that sells
merchandise over the Internet, and improved financial results. The incentive
awards and bonus opportunity granted to Mr. Weaver also further the Company's
policy that a significant portion of his compensation be based upon the
financial performance of the Company. The restricted stock award, by virtue of
its vesting schedule, also directly links Mr. Weaver's long-term incentives to
the Company's continued earnings growth. The Compensation Committee determined
that this award was appropriate because earnings growth is not necessarily
directly reflected in the Company's stock price, because the continued success
of the Company is based (in part) on continued growth, and because of the key
role that Mr. Weaver plays in the Company's growth.
The Compensation Committee expects that the compensation paid to Mr. Weaver
for 1999 will be fully deductible.
CONCLUSION
The Compensation Committee has reviewed each element of compensation for
each of the executive officers for fiscal 1999. The Compensation Committee
reported to the Board of Directors that in the Compensation Committee's opinion,
the compensation of each executive officer is reasonable in view of the
Company's performance and the Compensation Committee's subjective evaluation of
the contribution of each executive officer to that performance.
COMPENSATION COMMITTEE
Julius Jensen III
Pearson C. Cummin III
Peter L. Harris
March 31, 2000
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<PAGE> 16
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total return on the Company's Common Stock with the cumulative total
return of the CRSP Total Return Index for the Nasdaq Stock Market (U.S.
Companies)("Nasdaq Market Index") and the CRSP Total Return Industry Index for
Nasdaq Retail Trade Stocks ("Retail Index") for the period commencing on January
29, 1995(1) and ending on January 30, 2000.
COMPARISON OF CUMULATIVE TOTAL RETURN FROM JANUARY 29, 1995 THROUGH JANUARY 30,
2000(1)
<TABLE>
<CAPTION>
PACIFIC SUNWEAR NASDAQ MARKET INDEX RETAIL INDEX
--------------- ------------------- ------------
<S> <C> <C> <C>
01/29/95 100 100 100
02/04/96 61 146 113
02/02/97 279 190 140
02/01/98 454 224 163
01/31/99 599 350 199
01/30/00 930 537 166
</TABLE>
- ---------------
(1) The Company's 1994 and 1999 fiscal years ended on January 29, 1995 and
January 30, 2000, respectively.
(2) Assumes $100.00 was invested on January 29, 1995 in the Company's Common
Stock at the closing price on that date of $2.81 per share and at the
closing sales price for each index on that date and that all dividends were
reinvested. No cash dividends have been declared on the Company's Common
Stock. Shareholder returns over the indicated period should not be
considered indicative of future shareholder returns.
OTHER MATTERS
Management does not know of any other matters to be presented at the Annual
Meeting of Shareholders, but should any other matters requiring a vote of
shareholders arise, including a question of adjourning the meeting, the persons
named in the accompanying proxy will vote thereon according to their best
judgment.
UPON REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED JANUARY 30, 2000 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE FURNISHED TO ANY SHAREHOLDER WITHOUT CHARGE BY THE COMPANY. ANY
SHAREHOLDER DESIRING A COPY SHOULD WRITE TO THE COMPANY AT THE ADDRESS SET FORTH
IN THE COVER PAGE OF THE PROXY STATEMENT, ATTENTION: CARL W. WOMACK, SECRETARY.
13
<PAGE> 17
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2001 Annual Meeting
of Shareholders of the Company must be received by December 18, 2000 for
inclusion in the Company's 2001 Proxy Statement. In addition, the Company's
Bylaws establish an advance notice procedure with regard to certain matters,
including shareholder proposals not included in the Company's Proxy Statement,
to be brought before an annual meeting of shareholders. In general, notice must
be received by the Secretary of the Company at the Company's principal executive
office not less than 15 days prior to the scheduled annual meeting, regardless
of any postponements, deferrals or adjournments of that meeting unless less than
25 days notice or prior public disclosure of the date scheduled for the meeting
is given or made, in which event notice by the shareholder to be timely must be
delivered or received not later than the close of business on the tenth day
following the earlier of (i) the day on which such notice of the date of the
scheduled annual meeting was mailed or (ii) the day on which such public
disclosure was made. The shareholder's notice to the Secretary of the Company
must set forth as to each matter the shareholder proposes to bring before the
annual meeting (i) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, including the names of nominees for election to the Board of
Directors, if any, (ii) the name and address, as they appear in the Company's
books, of the shareholder proposing such business and any other shareholders
known by such shareholder to be supporting such proposal, (iii) the class and
number of shares of the Company's stock that are beneficially owned by the
shareholder on the date of such shareholder notice, and by other shareholders
known by such shareholder to be supporting such proposal on the date of such
shareholder notice, and (iv) any financial interest of the shareholder in such
proposal. If the presiding officer at the annual meeting determines that a
shareholder proposal is not made in accordance with the terms described above,
the presiding officer shall so declare at the annual meeting, the proposal shall
be deemed by the presiding officer to be improperly before the shareholders and
the proposal shall not be acted upon at the annual meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Except as follows, to the Company's knowledge, based solely on its review
of copies of reports furnished to the Company and written representations that
no other reports were required, during fiscal 1999, all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were satisfied. One Form 4 for Mark Hoffman
disclosing a purchase of shares of the Company's common stock was inadvertently
not filed on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Deloitte & Touche LLP, the independent auditors of the
Company, will be in attendance at the Annual Meeting, able to make a statement
if he or she so desires, and available to respond to appropriate questions.
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<PAGE> 18
PACIFIC SUNWEAR OF CALIFORNIA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING, MAY 24, 2000
The undersigned, a shareholder of PACIFIC SUNWEAR OF CALIFORNIA, INC., a
California corporation (the "Company"), acknowledges receipt of a copy of the
Notice of Annual Meeting of Shareholders, the accompanying Proxy Statement and
the Annual Report to Shareholders for the year ended January 30, 2000; and,
revoking any proxy previously given, hereby constitutes and appoints Greg H.
Weaver and Carl W. Womack, and each of them, his or her true and lawful agents
and proxies with full power of substitution in each, to vote the shares of
Common Stock of the Company standing in the name of the undersigned at the
Annual Meeting of Shareholders of the Company to be held at the principal
executive offices of the Company located at 5200 E. La Palma Avenue, Anaheim,
California 92807 on Wednesday, May 24, 2000 at 9:00 a.m. local time, and at any
adjournment thereof, on all matters coming before said meeting.
The Board of Directors recommends a vote FOR Item 1
1. ELECTION OF DIRECTORS: Greg H. Weaver
Julius Jensen III
Pearson C. Cummin III
Peter L. Harris
Sally Frame Kasaks
FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES [ ]
(AUTHORITY TO VOTE FOR ANY NOMINEE NAMED MAY BE WITHHELD BY LINING THROUGH THAT
NOMINEE'S NAME.)
2. In their discretion, upon any other matters as may properly come before
the meeting or at any adjournment thereof.
(continued and to be signed on other side)
<PAGE> 19
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREBY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1. IF ANY NOMINEE BECOMES UNAVAILABLE FOR ANY REASON, THE
PERSONS NAMED AS PROXIES SHALL VOTE FOR THE ELECTION OF SUCH OTHER PERSON AS THE
BOARD OF DIRECTORS MAY PROPOSE TO REPLACE SUCH NOMINEE.
Dated , 2000
Dated , 2000
--------------------------
Signature of Shareholder
--------------------------
Signature of Shareholder
This Proxy must be signed
exactly as your name
appears hereon. Executors,
administrators, trustees,
etc., should give full
title, as such. If the
shareholder is a
corporation, a duly
authorized officer should
sign on behalf of the
corporation and should
indicate his or her title.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
