<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant |X|
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VANS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
[ ] Fee paid previously with preliminary material.
[ ] 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:
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(4) Date Filed:
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<PAGE> 2
VANS LOGO
15700 SHOEMAKER AVENUE
SANTA FE SPRINGS, CALIFORNIA 90670
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 20, 1998
Dear Stockholders:
The 1998 Annual Meeting of Stockholders of Vans, Inc., a Delaware
corporation (the "Company"), will be held on Tuesday, October 20, 1998, at 10:00
a.m., Pacific Time, at the Sheraton Cerritos Hotel, 12725 Center Court Drive,
Cerritos, California, for the following purposes:
1. To elect 11 directors to serve for the ensuing year and until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for fiscal 1999; and
3. To transact such other business as may be properly brought before the
Annual Meeting or any adjournment thereof.
In accordance with the Company's Restated By-Laws, the Board of Directors
has fixed the close of business on August 26, 1998, as the record date for the
purpose of determining stockholders entitled to receive notice of and to vote at
the Annual Meeting or any adjournment or adjournments thereof. The stock
transfer books will not be closed.
A list of the stockholders entitled to vote at the Annual Meeting may be
examined at the Company's executive offices, located at 15700 Shoemaker Avenue,
Santa Fe Springs, California, during the 10-day period preceding the Annual
Meeting.
YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend
the Annual Meeting in person, please sign and return the enclosed proxy in the
envelope provided. If you attend the Annual Meeting and desire to vote in
person, you may do so even though you have previously sent a proxy.
By Order of the Board of Directors,
/s/ Craig E. Gosselin
Craig E. Gosselin
Vice President, General Counsel,
and Corporate Secretary
September 21, 1998
Santa Fe Springs, California
<PAGE> 3
VANS LOGO
15700 SHOEMAKER AVENUE
SANTA FE SPRINGS, CALIFORNIA 90670
------------------------
PROXY STATEMENT
------------------------
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Vans, Inc., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual Meeting")
of the Company to be held on Tuesday, October 20, 1998, and at any adjournment
thereof. The approximate date of mailing of this Proxy Statement and the
accompanying proxy card is September 21, 1998.
The Board of Directors of the Company has selected August 26, 1998, as the
record date for the Annual Meeting. Only those stockholders of record at the
close of business on that date will be entitled to notice of and to vote at the
Annual Meeting. The Company had a total of 13,207,585 shares of $.001 par value
common stock (the "Common Stock") outstanding at August 26, 1998. The Common
Stock is the only outstanding class of voting securities of the Company.
Stockholders will be entitled to one vote for each share of stock held by them
of record at the close of business on the record date on any matter that may be
presented for consideration and action by the stockholders at the Annual
Meeting. Stockholders are not entitled to cumulate their votes and have no
rights of appraisal with respect to the proposals described herein.
All valid proxies received in response to this solicitation will be voted
in accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no contrary instructions are given, proxies received will be
voted in favor of the election of the 11 director nominees named in this Proxy
Statement and in favor of the other proposal described herein. Proxies solicited
hereby may be voted for adjournment of the Annual Meeting (whether or not a
quorum is present for the transaction of business) in order to permit further
solicitation of proxies if the Board of Directors of the Company determines that
such adjournment would be advisable in order to obtain sufficient votes for
approval of the matters to be voted upon at the Annual Meeting.
The Board of Directors does not know of any other business to be presented
for action at the Annual Meeting. If any other business is properly presented at
the Annual Meeting and may properly be voted upon, the proxies solicited hereby
will be voted on such matters in accordance with the best judgment of the proxy
holders named in such proxies. A stockholder's proxy may be revoked at any time
before it is voted at the Annual Meeting by giving written notice of such
revocation to the Corporate Secretary of the Company (which notice may be given
by the filing of a duly executed proxy bearing a later date) or by attending the
Annual Meeting and voting in person.
The costs of this proxy solicitation will be paid by the Company. To the
extent necessary, proxies may also be solicited by personnel of the Company in
person, by telephone, or through other forms of communication. Company personnel
who participate in this solicitation will not receive any additional
compensation for such solicitation. The Company will request record holders of
shares beneficially owned by others to forward this Proxy Statement and related
materials to the beneficial owners of such shares and will reimburse such record
holders for their reasonable expenses incurred in doing so.
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of August 26, 1998: (i) by each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) by each director; (iii) the executive officers
named in the Summary Compensation Table set forth under the caption "Executive
Compensation and Other Information;" and (iv) by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNERSHIP(1) OF CLASS
---- -------------------------- --------
<S> <C> <C>
Mellon Bank Corporation..................................... 1,453,575(2) 11.0%
One Mellon Bank Center
Pittsburgh, PA 15258
Neumeier Investment Counsel, LLC............................ 1,235,400(2) 9.4%
26435 Carmel Rancho Blvd
Carmel, CA 93923
Columbia Special Fund, Inc.................................. 860,000(2) 6.5%
1301 S.W. Fifth Avenue
P.O. Box 1350
Portland, OR 97207.
Fleet Financial Group, Inc.................................. 860,000(2) 6.5%
One Federal Street
Boston, MA 02110
Franklin Resources, Inc..................................... 831,800(2) 6.3%
777 Mariners Island Boulevard
San Mateo, CA 94404
Wall Street Associates...................................... 759,600(2) 5.8%
1200 Prospect Street
Suite #100
La Jolla, CA 92037
Walter E. Schoenfeld........................................ 275,353(3) 2.1%
Gary H. Schoenfeld.......................................... 200,982(4) 1.5%
George E. McCown............................................ 101,043 *
Philip H. Schaff, Jr........................................ 141,006(5) 1.0%
Wilbur J. Fix............................................... 62,000(6) *
James R. Sulat.............................................. 15,834(7) *
Kathleen M. Gardarian....................................... 12,501(8) *
Lisa M. Douglas............................................. 10,834(9) *
Gerald Grinstein............................................ 0(10) N/A
Charles G. Armstrong........................................ 5,000(11) N/A
Leonard R. Wilkins.......................................... 0(11) N/A
Neal R. Lyons............................................... 23,799(12) *
Sari K. Ratsula............................................. 54,615(13) *
Craig E. Gosselin........................................... 37,291(14) *
All directors and executive officers as a group (24
persons).................................................. 1,042,514(15) 7.5%
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally includes
voting or investment power with respect to securities. Except as indicated
by footnote, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on shares of Common Stock
outstanding as of August 26, 1998, plus shares deemed outstanding pursuant
to Rule 13d-2(d)(1) under the Securities Exchange Act of 1934, as amended.
2
<PAGE> 5
(footnotes continued from prior page)
(2) Based on Schedule 13G filings, and amendments thereto, made by such
stockholders for the year ended December 31, 1997.
(3) Includes 169,212 shares of Common Stock that are subject to stock options
which are exercisable within 60 days of August 26, 1998.
(4) Includes 144,696 shares of Common Stock that are subject to incentive stock
options which are exercisable within 60 days of August 26, 1998. Excludes
115,930 shares of Common Stock that are subject to the same stock options
which are not exercisable within 60 days of August 26, 1998.
(5) Excludes 6,666 shares of Common Stock that are subject to non-statutory
stock options which are not exercisable within 60 days of August 26, 1998.
Includes 61,514 shares of Common Stock that are subject to non-statutory
stock options which are exercisable within 60 days of August 26, 1998.
(6) Includes 48,000 shares of Common Stock that are subject to non-statutory
stock options which are exercisable within 60 days of August 26, 1998.
Excludes 6,666 shares of Common Stock that are subject to non-statutory
stock options which are not exercisable within 60 days of August 26, 1998.
(7) Represents shares of Common Stock that are subject to non-statutory stock
options which are exercisable within 60 days of August 26, 1998. Excludes
6,666 shares of Common Stock that are subject to the same non-statutory
stock options which are not exercisable within 60 days of August 26, 1998.
(8) Represents shares of Common Stock that are subject to non-statutory stock
options which are exercisable within 60 days of August 26, 1998. Excludes
6,666 shares of Common Stock that are subject to the same non-statutory
options which are not exercisable within 60 days of August 26, 1998.
(9) Represents shares of Common Stock that are subject to non-statutory options
which are exercisable within 60 days of August 26, 1998. Excludes 6,666
shares of Common Stock that are subject to the same non-statutory stock
options which are not exercisable within 60 days of August 26, 1998.
(10) Excludes 7,500 shares of Common Stock that are subject to non-statutory
stock options which are not exercisable within 60 days of August 26, 1998.
(11) Excludes 7,500 shares of Common Stock that are subject to non-statutory
stock options which were granted to these individuals in September 1998.
(12) Includes 13,870 shares of Common Stock that are subject to incentive stock
options which are exercisable within 60 days of August 26, 1998. Excludes
23,815 shares of Common Stock that are subject to the same options which
are not exercisable within 60 days of August 26, 1998.
(13) Includes 26,338 shares of Common Stock that are subject to incentive stock
options which are exercisable within 60 days of August 26, 1998. Excludes
33,799 shares of Common Stock that are subject to the same options which
are not exercisable within 60 days of August 26, 1998.
(14) Includes 32,018 shares of Common Stock that are subject to incentive stock
options which are exercisable within 60 days of August 26, 1998. Excludes
9,312 shares of Common Stock that are subject to the same options which are
not exercisable within 60 days of August 26, 1998.
(15) Includes 642,073 shares that are subject to non-statutory and incentive
stock options which are exercisable within 60 days of August 26, 1998 and
are held by certain executive officers and directors of the Company.
PROPOSAL 1
ELECTION OF DIRECTORS
The Restated By-laws of the Company, as amended, provide for no less than
five and no more than 11 directors, as determined from time to time by the
Board. The Board has currently fixed the number of directors at 11. The Restated
By-laws provide that the directors shall be elected annually.
3
<PAGE> 6
Set forth below are the names of the persons nominated by the Board of
Directors for election as directors at the Annual Meeting, together with their
ages, principal occupations and business experience during the last five years,
present directorships and the year each first became a director of the Company.
All of the nominees are presently directors. If any nominees are unable to serve
as a director, the person or persons voting the proxies solicited hereby will
select another nominee in his or her place. The Company has no reason to believe
that any of the nominees will be unable or unwilling to serve if elected. The
vote of a plurality of the total votes cast in person or by proxy at the Annual
Meeting is required to elect each of the nominees. Pursuant to the Restated
By-laws, abstentions and broker non-votes will not be deemed votes cast.
<TABLE>
<CAPTION>
FIRST
BECAME
NOMINEES FOR ELECTION AGE POSITION HELD IN THE COMPANY A DIRECTOR
- --------------------- --- ---------------------------- ----------
<S> <C> <C> <C>
Walter E. Schoenfeld 67 Director and Chairman of the Board 1991
Gary H. Schoenfeld 35 Director; President and Chief Executive Officer 1995
Charles G. Armstrong 56 Director 1998
Lisa M. Douglas 39 Director 1995
Wilbur J. Fix 71 Director 1993
Kathleen M. Gardarian 53 Director 1994
Gerald Grinstein 66 Director 1998
George E. McCown 63 Director and Vice Chairman of the Board 1988
Philip H. Schaff, Jr. 77 Director 1989
James R. Sulat 48 Director 1994
Leonard R. Wilkins 61 Director 1998
</TABLE>
WALTER E. SCHOENFELD has served as a director since August 1991 and has
served as Chairman of the Board since July 1996. He served as Chief Executive
Officer from May 1995 to February 1997 and was President from May 1995 to July
1996. He previously held the positions of President and Chief Executive Officer
from July 1993 to September 1994. From April 1993 to July 1993, he served as
Acting President and Chief Executive Officer. Mr. Schoenfeld was a Vice Chairman
of the Board from March 1993 to July 1996. Mr. Schoenfeld has served as Chairman
of the Board of Schoenfeld Group Ltd., a private consulting and investment
company, since 1987, and was Chairman of the Board of Access Long Distance
Telephone Company from 1991 until January 1998. From 1976 to 1982 he was a
General and Limited Partner of the Seattle Mariners Baseball Club. Mr.
Schoenfeld is the father of Gary H. Schoenfeld, a director and President and the
Chief Executive Officer of the Company. Mr. Schoenfeld received a B.B.A. from
the University of Washington.
GARY H. SCHOENFELD has served as a director since November 1995. He became
President in July 1996 and Chief Executive Officer in February 1997. He served
as the Company's Chief Operating Officer from September 1995 to February 1997.
Prior to joining the Company, Mr. Schoenfeld was a partner of McCown De Leeuw &
Co., a venture banking firm ("MDC"). During his employment with MDC from July
1988 to August 1995, Mr. Schoenfeld was a director of five MDC-affiliated
companies, and has been involved with the Company since 1989. Prior to joining
MDC, Mr. Schoenfeld was employed for two years by David H. Murdock, a private
financier, and was previously involved in a variety of projects with Brittania
Sportswear Company, including offshore sourcing operations in Hong Kong. Mr.
Schoenfeld is a director of Fitness Holdings, Inc., an MDC portfolio company.
Mr. Schoenfeld is the son of Walter E. Schoenfeld, the Company's Chairman of the
Board. Mr. Schoenfeld received a B.A. from the University of California at Los
Angeles and an M.B.A. from Stanford University.
CHARLES G. ARMSTRONG has served as a director since September 1998. Mr.
Armstrong has been the President and Chief Operating Officer of the Seattle
Mariners Baseball Club since July 1992. He was President of the Mariners from
1983 to 1989, and was Interim Director for the University of Washington in 1991.
During his involvement with Major League Baseball, Mr. Armstrong has served on a
number of committees for the American League and the Major League Baseball
Commissioners Office; he currently serves on the International Committee. Mr.
Armstrong received a B.S. in Industrial Engineering from Purdue University, and
a J.D. from Stanford University Law School.
4
<PAGE> 7
LISA M. DOUGLAS has served as a director since November 1995. Ms. Douglas
is President and Chief Executive Officer of Nufitness Corporation, a producer of
fitness and wellness-related television and multimedia programs. Prior to
founding Nufitness in 1991, Ms. Douglas was Director of Corporate Sales for
Koala Blue, a women's sportswear manufacturer founded by Olivia Newton-John. Ms.
Douglas currently serves on the Board of the Douglas Family Foundation and
formerly served as a member of the Board and the Steering Committee of the
Associates of Cedars-Sinai Medical Center. Ms. Douglas received a B.S. from the
University of Minnesota and a Masters in Psychology from California State
University, Northridge.
WILBUR J. FIX has served as a director of the Company since February 1993.
From 1980 to 1993, Mr. Fix was Chairman of the Board and Chief Executive Officer
of The Bon Marche, a Seattle-based chain of department stores which was acquired
by Campeau Corporation in 1986. Mr. Fix ultimately became Senior Vice President
of Allied Stores Corporation, the parent company of The Bon Marche, and a member
of the Boards of Directors of Allied Stores and Federated Stores. Mr. Fix is a
member of the Board of Directors of BMC West Corporation, a publicly traded
corporation. Mr. Fix received a B.A. from the University of Washington.
KATHLEEN M. GARDARIAN has served as a director of the Company since
December 1994. She has been, since 1988, the owner and President of Qualis
International, Inc., an Irvine, California-based international trading and
distribution company. Ms. Gardarian is a founding Trustee and Board member of
the World Business Academy, and is on the Advisory Boards of The Gorbachev
U.S.A. Foundation, The Institute of Transpersonal Psychology, and The Forum for
Corporate Directors. Ms. Gardarian received a B.A. from the University of
California at Los Angeles.
GERALD GRINSTEIN has served as a director since June 1998. Mr. Grinstein is
Chairman of the Board of Delta Airlines and serves on the Boards of Browning
Ferris Industries, Sundstrand Corporation, PACCAR, Inc. and Imperial Holly
Corporation. From 1990 to 1995 he was Chairman, President and Chief Executive
Officer of Burlington Northern Inc., where he oversaw the acquisition of Santa
Fe Pacific Corp. He is a Trustee of the Henry M. Jackson Foundation. Mr.
Grinstein is a graduate of Yale College and Harvard Law School.
GEORGE E. MCCOWN has served as Vice Chairman of the Board since July 1996.
From February 1988 to July 1996, he was Chairman of the Board. From February
until July 1988, he served as President/Chief Executive Officer. Mr. McCown was
co-founder and has been a managing general partner of MDC Management Company,
the general partner of MDC, since 1984. He also serves as Chairman of the Board
and a director of Building Materials Holding Corporation, a publicly traded
corporation, and is a director of FiberMark, Inc., a publicly traded
corporation, and several other MDC portfolio companies. He is Chairman of the
World Business Academy. Mr. McCown received a B.S. from Stanford University,
where he serves as a Trustee, and an M.B.A. from Harvard University.
PHILIP H. SCHAFF, JR. has served as a director of the Company since January
1989. Mr. Schaff has owned and operated his own investment and consulting firm,
Phil Schaff Enterprises, since 1983. From 1947 to 1983, Mr. Schaff was employed
by Leo Burnett Co., Inc., a leading advertising agency, eventually becoming its
Chairman of the Board and Chief Executive Officer. He is a former Trustee of
Princeton University and has been President of several not-for-profit
institutions.
JAMES R. SULAT has served as a director of the Company since October 1994.
He became Chief Financial Officer of Chiron Corporation, a manufacturer and
marketer of healthcare products for the treatment, prevention and diagnosis of
disease, in April 1998. Prior to joining Chiron, Mr. Sulat was Chief Financial
Officer of Stanford Health Services, a not-for-profit health care provider which
operates the Stanford University hospital and clinic, from 1993 to March 1998.
Mr. Sulat received a B.S. from Yale College and an M.B.A. and M.S. from Stanford
University.
LEONARD R. WILKINS has served as a director of the Company since September
1998. Mr. Wilkins has been Head Coach of the Atlanta Hawks Basketball Team since
1994 and was previously Head Coach of the Cleveland Cavaliers. Mr. Wilkens has
coached in the NBA for 26 years and is the winningest coach in the NBA's
history. He also served as Coach of The Dream Team of the 1996 Atlanta Olympic
Games. He
5
<PAGE> 8
formerly served as Vice President of the NBA Players Association and is
currently President of the NBA Coaches Association. Mr. Wilkens has been elected
to the NBA Hall of Fame as both Player and Coach. He is a Graduate of Providence
College with a Degree in Economics and has an Honorary Doctorate in Humanities
from both Providence College and Seattle University. Mr. Wilkens serves on the
Board of Trustees of Providence College and also serves on the Boards of the
Atlanta Center for Children and the Odessa Brown Children's Clinic.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE ABOVE NOMINEES TO THE BOARD.
Board Committees. The Board of Directors has a Compensation Committee,
which makes recommendations concerning salaries and incentive compensation for
officers and employees of the Company; an Audit Committee, which reviews the
results and scope of the audit and other services provided by the Company's
independent auditors, and determines the Company's investment policies; an
Executive Committee, which reviews the operations of the Company on a periodic
basis; a Mergers and Acquisitions Committee, which considers appropriate
acquisitions for the Company; and a Nominating Committee, which considers and
recommends appropriate candidates for the Board. The Nominating Committee does
not, at this time, consider nominees for the Board recommended by stockholders.
The members of the Compensation Committee are Wilbur J. Fix, Chairman,
Philip H. Schaff, Jr., Lisa M. Douglas and Kathleen M. Gardarian. The
Compensation Committee met, or acted pursuant to Written Consent, three times
during fiscal 1998. The members of the Audit Committee are James R. Sulat,
Chairman, Philip H. Schaff, Jr., and Wilbur J. Fix. The Audit Committee met four
times during fiscal 1998. The members of the Executive Committee are George E.
McCown, Chairman, Walter E. Schoenfeld, and Gary H. Schoenfeld. The Executive
Committee met two times during fiscal 1998. The members of the Mergers and
Acquisitions Committee are James R. Sulat, Chairman, Gerald Grinstein, Walter E.
Schoenfeld and Gary H. Schoenfeld. The Mergers and Acquisitions Committee met
two times during fiscal 1998. The members of the Nominating Committee are Walter
E. Schoenfeld, Chairman, George E. McCown, Lisa M. Douglas, and Gary H.
Schoenfeld. The Nominating Committee met two times during fiscal 1998.
Compensation of Directors. It is the Company's policy to pay its outside
directors (who are currently Ms. Gardarian, Ms. Douglas and Messrs. Schaff, Fix,
Sulat, Grinstein, Armstrong and Wilkins) a quarterly fee of $3,000 plus a fee of
$2,000 for in-person Board and Committee meetings and $1,000 for telephonic
Board and Committee meetings, as compensation for their services. All directors
are reimbursed for expenses incurred in connection with attendance at Board and
Committee meetings and receive an initial grant of a non-statutory stock option
to purchase 7,500 shares upon joining the Board and annual grants of
non-statutory stock options to purchase 5,000 shares on the date of each Annual
Meeting of Stockholders. Until May 31, 1998, MDC Management Company, the general
partner of MDC, provided management, consulting and financial services to the
Company pursuant to a management agreement for a fixed annual fee, subject to
adjustment based upon increases in the Consumer Price Index. The agreement
expired on May 31, 1998. See "Certain Transactions." George E. McCown, a
director and officer of the Company, and David E. De Leeuw, a former director
and officer of the Company, are general partners of MDC Management Company.
Messrs. McCown and De Leeuw received no director compensation during the term of
the agreement.
Meetings of the Board of Directors. During fiscal 1998, there were eight
regularly scheduled and special meetings of the Board of Directors of the
Company. The Board also acted pursuant to Written Consent one time during fiscal
1998.
Each nominee for the Board, except Messrs. Grinstein, Armstrong and
Wilkins, attended at least 75% of the aggregate of (i) the total number of Board
meetings, and (ii) the total number of meetings held by all Committees on which
he or she served during fiscal 1998. Messrs. Grinstein, Armstrong and Wilkins
joined the Board after the end of fiscal 1998.
Board Members who have left the Company since the last Annual Meeting.
David E. De Leeuw resigned as a Board member in June 1998.
6
<PAGE> 9
Information Relating to Current Executive Officers. Set forth below are the
names and ages of the current executive officers of the Company, other than
Walter E. and Gary H. Schoenfeld and George E. McCown (see "Proposal
1 -- Election of Directors"), together with the positions held by these persons.
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Sari K. Ratsula 33 Senior Vice President -- Sales and Product Development
Neal R. Lyons 41 Senior Vice President -- Retail Stores
Stephen M. Murray 37 Senior Vice President -- International and Apparel*
Kyle B. Wescoat 46 Vice President -- Chief Financial Officer
Jay E. Wilson 51 Vice President -- Marketing
Steven J. Van 42 Vice President -- Promotions
Doren
Craig E. Gosselin 38 Vice President -- General Counsel and Corporate Secretary
Charles C. Kupfer 37 Vice President, Controller and Assistant Corporate Secretary
Gary L. Dunlap 53 Vice President -- Management Information Systems
Robert H. Camarena 32 Vice President -- Distribution and Corporate Logistics
Ralph Serna 41 Vice President -- Design
Scott A. Brabson 43 Vice President -- Global Sourcing
Michael C. Jonte 36 Vice President -- Merchandising
</TABLE>
SARI K. RATSULA has been Senior Vice President -- Sales and Product
Development since December 1996. Prior to that time, she was Vice President --
Design and Product Development from June 1994 to December 1996. She has been
employed by the Company since 1989, and has been involved in all facets of the
design and development of the Company's product line, ultimately becoming
Director of Product Development, a position she held from 1991 to June 1994. Ms.
Ratsula received an M.S. from the Helsinki School of Economics and Business
Administration.
NEAL R. LYONS has been Senior Vice President -- Retail Stores since
September 1997. Prior to that time, he was Vice President -- Retail Stores from
September 1995 to September 1997. Prior to joining the Company, Mr. Lyons was
Director of Stores for Reebok International Ltd. from June 1994 to February
1995. From September 1989 to June 1994, he was President of Midlantic Footwear,
a large-scale footwear and apparel organization and a division of Intershoe Inc.
STEPHEN M. MURRAY will become Senior Vice President -- International and
Apparel upon receipt of certain immigration documentation permitting him to work
in the U.S. Mr. Murray was employed by Reebok International Ltd. for seven
years, eventually becoming responsible for all merchandising, design, product
development, distribution and brand strategy for Reebok apparel throughout the
world. Prior to joining Reebok, Mr. Murray was Sales Director for Dunlop
Slazenger International, where he managed sales of hard goods and apparel.
KYLE B. WESCOAT has served as Vice President -- Chief Financial Officer
since February 1996. From November 1995 to February 1996, Mr. Wescoat served as
Assistant to the President of Equity Management Inc., a marketing services
company that specializes in brand extension licensing. From January 1994 to
October 1995, Mr. Wescoat was Chief Financial Officer of Shirmar Corporation, an
industrial products company. From August 1990 to January 1994, Mr. Wescoat
served as Chief Financial Officer of PLC Leather, a manufacturer, wholesaler and
importer of women's fashion accessories. Mr. Wescoat received a B.S. from Drexel
University and an M.B.A. from the University of Michigan.
JAY E. WILSON has been Vice President -- Marketing of the Company since
December 1996. Prior to joining the Company, Mr. Wilson was a consultant with
Dark Horse Distribution from February 1995 to December 1996, focusing on extreme
sports brands. From March 1994 to February 1995, he was a Managing Partner of
Brand Building Communications, a venture providing brand building expertise to
clients such as Disney Americast, Rhino Records and Kids Mart. From December
1990 to March 1994, he was Creative
- ---------------
* Subject to Mr. Murray obtaining certain immigration documentation.
7
<PAGE> 10
Director of Lintas Campbell Ewald, an advertising agency located in Los Angeles.
Mr. Wilson received a B.A. from the Art College of Design.
STEVEN J. VAN DOREN has been a Vice President since May 1990. He is
currently primarily responsible for the Company's point-of-purchase and
promotional efforts, and is the Company's executive in charge of the VANS Warped
Tour, a traveling music/sports festival sponsored by the Company, and the Vans
Triple Crown series of alternative sports events. Mr. Van Doren has been
employed by the Company in various capacities since the formation of the
predecessor of the Company in 1966. Mr. Van Doren is the son of Paul Van Doren,
a founder of the predecessor of the Company.
CRAIG E. GOSSELIN has been Vice President -- General Counsel of the Company
since July 1992. He became Secretary in May 1993. He was an Assistant Secretary
of the Company from February 1988 to May 1993. From March 1990 to June 1992, Mr.
Gosselin was a Partner of the law firm of Cooper & Dempsey. Mr. Gosselin
received a B.B.A. from Loyola Marymount University and a J.D. from Southwestern
University School of Law.
CHARLES C. KUPFER has been a Vice President and Assistant Corporate
Secretary of the Company since July 1996. He was the Company's Controller from
September 1994 to October 1996 when he took charge of the Company's production
and sourcing efforts. He re-assumed the position of Controller again in November
1998. From July 1995 to December 1995 he was Acting Chief Financial Officer of
the Company. He served as Assistant Controller of the Company from August 1992
until September 1994. Mr. Kupfer received a B.A. from the University of
California at Irvine and a second B.A. from the California State University at
Fullerton.
GARY L. DUNLAP has been Vice President -- Management Information Systems of
the Company since May 1995. Prior to joining the Company he was Vice President
-- Information Services for OroAmerica, Inc. from March 1992 to April 1995, and
held the same position at Berkshire Properties & Development from July 1985 to
March 1992. Mr. Dunlap received a B.S. from Lycoming College.
ROBERT H. CAMARENA has been Vice President -- Distribution and Corporate
Logistics of the Company since February 1996. Prior to that time, from May 1995
to February 1996, Mr. Camarena was Director of Distribution and Corporate
Logistics. Prior to joining the Company, Mr. Camarena was General Manager of
Silver America and Vice President of Operations of OroAmerica, Inc. from May
1992 to May 1995.
RALPH SERNA has been Vice President -- Design of the Company since June
1997. Prior to becoming a Vice President, Mr. Serna was Director -- Product
Design of the Company from June 1996 to July 1997. From June 1995 to June 1996,
Mr. Serna was Director of Running, Basketball and Classic Footwear for Reebok
International Ltd. From February 1994 to June 1995, he was Director of
International Footwear Design and Development for Muzuno Inc., and from
September 1990 to February 1994, he was Director of Design and Development for
Etonic Inc. Mr. Serna received a B.A. in Fine Arts from the University of
California at Irvine.
SCOTT A. BRABSON has been Vice President -- Global Sourcing of the Company
since November 1997. Prior to joining the Company, he was Vice
President -- Global Sourcing and Operations of Deckers Outdoor Corporation from
September 1996 to November 1997. From March 1992 to September 1996 he was
Managing Director, Asian Operations and Worldwide Sourcing for L.A. Gear, Inc.,
and from July 1988 to March 1992, he was Regional Director, Technical Services
for Reebok International Ltd. Mr. Brabson has a B.A. in Business Administration
from the University of Michigan.
MICHAEL C. JONTE has been Vice President - Merchandising of the Company
since January 1998. Prior to that time he was Director of Retail Merchandising
of the Company from December 1995 to January 1998, ultimately becoming
responsible for the Company's Triple Crown of Surfing apparel line. From June
1992 to December 1995, Mr. Jonte was Director of Product Development for Young
Mens and Children for B.U.M. Equipment. Mr. Jonte has a B.A. in Public
Administration from San Diego State University.
Executive Officers who have left the Company since the last Annual
Meeting. The following individuals resigned from the Company since the last
Annual Meeting: John T. Dickinson, John P. Walker and Casey G. Waid.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation for the three fiscal years ended
May 31, 1998, received by (i) the Company's President and Chief Executive
Officer during fiscal 1998, and (ii) the four remaining most highly paid
executive officers as of May 31, 1998 (collectively, the "named executive
officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-----------------------
SECURITIES
FISCAL YEAR ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND ENDED -------------------------------- STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION MAY 31 SALARY($) BONUS($) OTHER($) AWARDS($) SARS(#) COMPENSATION($)
------------------ ----------- --------- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gary H. Schoenfeld............ 1998 350,000 115,667 -- -0- 204,912(6) -0-
President and Chief 1997 289,713 147,500 -- -0- 200,000 -0-
Executive Officer 1996 183,645(1) 44,874 -- -0- 100,000 108,650(2)
Walter E. Schoenfeld.......... 1998 288,000 -0- 42,501(3) -0- -0- -0-
Chairman of the Board 1997 226,627 -0- 117,356(4) -0- -0-
1996 196,297 -0- 64,490(5) -0- -0- -0-
Neal R. Lyons................. 1998 208,078 48,785 -- -0- 27,684(6) -0-
Senior Vice President -- 1997 182,407 60,000 -- -0- 10,000 -0-
Retail Sales 1996 160,369 45,885 -- -0- 5,000 -0-
Sari K. Ratsula............... 1998 200,000 15,700 -- -0- 24,692(6) -0-
Senior Vice President -- 1997 171,782 52,500 -- -0- 20,000 -0-
Sales & Prod. Dev. 1996 119,366 25,000 -- -0- 16,667 -0-
Craig E. Gosselin............. 1998 181,635 26,316 -- -0- 12,885(6) -0-
Vice President 1997 175,607 26,392 -- -0- 2,000 -0-
General Counsel 1996 169,616 33,750 -- -0- 2,000 -0-
and Corporate Secretary
</TABLE>
- ---------------
(1) Mr. Schoenfeld joined the Company on September 1, 1995. He became President
of the Company in July 1996 and Chief Executive Officer in February 1997.
Pursuant to his Employment Agreement, his annual salary is no less than
$250,000 per year.
(2) Represents (i) amounts paid to Mr. Schoenfeld to reimburse him for
relocating his residence to Southern California when he joined the Company,
and (ii) amounts payable to Mr. Schoenfeld to reimburse him for certain
costs associated with the sale of his former residences.
(3) Includes $30,000 paid by the Company to reimburse Mr. Schoenfeld for the
expense of maintaining secretarial support in Seattle, which is his home for
purposes of conducting Company business there.
(4) Includes $60,000 paid by the Company for an automobile to replace the
automobile previously leased for Mr. Schoenfeld. In accordance with Board
policy, the Company no longer leases new Company vehicles. Mr. Schoenfeld
primarily uses the vehicle for Company business. Also includes (i) $31,356
paid by the Company for accommodations at a temporary residence Mr.
Schoenfeld maintained in fiscal 1997, and (ii) $26,000 paid by the Company
to reimburse Mr. Schoenfeld for the secretarial support referred to in
footnote (3) above.
(5) Consists of (i) $40,490 paid by the Company for the residence referred to in
footnote (4) above, and (ii) $24,000 paid by the Company to reimburse Mr.
Schoenfeld for the secretarial support referred to in footnote (3) above.
(6) Includes options which were repriced during fiscal 1998 as follows: Mr.
Schoenfeld, 200,000 shares; Mr. Lyons, 25,000 shares; Ms. Ratsula, 21,885
shares; and Mr. Gosselin, 10,329 shares.
9
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 1998 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF PERCENT
SECURITIES OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE MARKET
OPTIONS/ GRANTED TO OF BASE VALUE ON
SARS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) FISCAL 1998 ($/SHARE) DATE ($/SHARE)
---- ---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gary H. Schoenfeld.... 1. 4,912(1) * 14.25(2) 9/15/07 14.25
2. 100,000(3) 15.2% 9.25 8/22/06 9.25
3. 100,000(3) 15.2% 9.25 5/19/07 9.25
Walter E.
Schoenfeld.......... -0- N/A N/A N/A N/A
Neal R. Lyons......... 1. 2,684(1) * 14.25(2) 9/15/07 14.25
2. 15,000(1) 2.3% 14.25(2) 9/15/07 14.25
3. 10,000(3) 1.5% 9.25 5/19/07 9.25
Sari K. Ratsula....... 1. 2,807(1) * 14.25(2) 9/15/07 14.25
2. 1,885(3) * 9.25 9/17/02 9.25
3. 10,000(3) 1.5% 9.25 6/24/06 9.25
4. 10,000(3) 1.5% 9.25 12/29/06 9.25
Craig E. Gosselin..... 1. 2,556(1) * 14.25(2) 9/15/07 14.25
2. 5,773(3) * 9.25 9/17/02 9.25
3. 2,000(3) * 9.25 5/19/07 9.25
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM
------------------------------------------
0% 5% 10%
APPRECIATION APPRECIATION APPRECIATION
NAME ($) ($) ($)
---- ------------ ------------ ------------
<S> <C> <C> <C>
Gary H. Schoenfeld.... -0- 26,577 66,342
-0- 467,271 1,132,175
-0- 518,349 1,281,548
Walter E.
Schoenfeld.......... N/A N/A N/A
Neal R. Lyons......... -0- 14,522 36,251
-0- 81,160 202,592
-0- 51,835 128,155
Sari K. Ratsula....... -0- 15,188 37,912
-0- 4,226 9,220
-0- 45,588 109,913
-0- 49,119 120,157
Craig E. Gosselin..... -0- 13,830 34,522
-0- 12,941 28,236
-0- 10,367 25,631
</TABLE>
- ---------------
* Less than 1%.
(1) Each of these options is an incentive stock option which expires 10 years
after the date of grant. The options are exercisable in five annual
increments of 20% commencing on the first anniversary of the grant date. The
options also become fully exercisable in the event of a change in control of
the Company.
(2) The exercise price of each of these options was amended in April 1998. See
"Ten-Year Options/SAR Repricings."
(3) Each of these options was an existing option whose exercise price was
amended in April 1998. See "Ten-Year Options/SAR Repricings." Each of the
options expires 10 years after the date of grant. The options are either
exercisable in three annual increments of 33.33% or five annual increments
of 20% commencing on the first anniversary of the grant date. The options
also became fully exercisable in the event of a change in control of the
Company.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information on option/SAR exercises in fiscal
1998 by the named executive officers, and the value of such officers'
unexercised options/SARs at May 29, 1998, the last trading day of fiscal 1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FISCAL SARS AT FISCAL
SHARES YEAR-END(#) YEAR-END($)(3)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary H. Schoenfeld.................. 24,286 -0-(1) 89,714 170,912 192,642 128,184
Walter E. Schoenfeld................ 71,929 594,500(2) 169,212 -0- 484,810 N/A
Neal R. Lyons....................... -0- N/A 11,667 26,016 27,250 22,211
Sari K. Ratsula..................... 28,222 -0-(1) 22,443 31,694 48,028 71,470
Craig E. Gosselin................... -0- N/A 29,330 11,999 100,909 43,778
</TABLE>
- ---------------
(1) No value was realized by Mr. Schoenfeld or Ms. Ratsula pursuant to the
acquisition of these shares since they did not sell them.
(2) Mr. Schoenfeld sold 50,000 of the shares he acquired primarily to pay the
exercise price of the option and taxes due upon the sale. He held the
remaining 21,929 shares he acquired and therefore realized no value pursuant
to the acquisition of such shares.
10
<PAGE> 13
(footnote continued from prior page)
(3) Calculated by multiplying the number of shares by the difference between (i)
$10.00, the closing sales price of the Company's Common Stock on May 29,
1998, the last trading day of fiscal 1998, and (ii) the exercise prices of
those options which were in-the-money as of that date.
TEN-YEAR OPTIONS/SAR REPRICINGS
In order to retain and continue to incentivize the Company's employees, the
Compensation Committee approved on April 6, 1998, amendments to the exercise
prices of certain options of the Company's employees, including all of the
Company's current executive officers who hold options, except Walter E.
Schoenfeld, to lower such exercise prices to $9.25, the closing sales price of
the Common Stock on April 6, 1998. The following table sets forth certain
information as of May 31, 1998, with respect to the repricing of stock options
held by the Company's executive officers.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING MARKET PRICE EXERCISE PRICE LENGTH OF
OPTIONS/SARS OF STOCK AT TIME AT TIME OF ORIGINAL OPTION
REPRICED OR OF REPRICING OR REPRICING OR NEW EXERCISE TERM REMAINING
AWARDED AMENDMENT AMENDMENT PRICE AT DATE OF
NAME DATE (#) ($) ($) ($) REPRICING OR
---- ------ ------------ ---------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary H. Schoenfeld................... 4/6/98 100,000 9.25 13.56 9.25 100 mos.
President and Chief Executive
Officer 4/6/98 100,000 9.25 11.25 9.25 109 mos.
4/6/98 4,912 9.25 14.25 9.25 113 mos.
Neal R. Lyons........................ 4/6/98 10,000 9.25 11.25 9.25 109 mos.
Senior Vice President -- Retail
Stores 4/6/98 15,000 9.25 14.25 9.25 113 mos.
4/6/98 2,684 9.25 14.25 9.25 113 mos.
Sari K. Ratsula...................... 4/6/98 1,885 9.25 9.50 9.25 53 mos.
Senior Vice President -- 4/6/98 10,000 9.25 13.25 9.25 98 mos.
Sales & Product Development 4/6/98 10,000 9.25 11.125 9.25 104 mos.
4/6/98 2,807 9.25 14.25 9.25 113 mos.
Craig E. Gosselin.................... 4/6/98 5,773 9.25 9.50 9.25 53 mos.
Vice President and General Counsel 4/6/98 2,000 9.25 11.25 9.25 109 mos.
4/6/98 2,556 9.25 14.25 9.25 113 mos.
Kyle B. Wescoat...................... 4/6/98 25,000 9.25 12.75 9.25 98 mos.
Vice President and Chief Financial 4/6/98 7,500 9.25 13.56 9.25 100 mos.
Officer 4/6/98 2,000 9.25 11.25 9.25 109 mos.
4/6/98 2,351 9.25 14.25 9.25 113 mos.
Steven J. Van Doren.................. 4/6/98 2,918 9.25 9.50 9.25 53 mos.
Vice President -- Promotions 4/6/98 5,000 9.25 11.125 9.25 104 mos.
4/6/98 1,772 9.25 14.25 9.25 113 mos.
Charles C. Kupfer.................... 4/6/98 2,182 9.25 9.50 9.25 53 mos.
Vice President and Controller 4/6/98 5,000 9.25 13.25 9.25 98 mos.
4/6/98 5,000 9.25 11.125 9.25 104 mos.
4/6/98 10,000 9.25 11.125 9.25 104 mos.
4/6/98 1,825 9.25 14.25 9.25 113 mos.
Gary L. Dunlap....................... 4/6/98 5,000 9.25 13.25 9.25 98 mos.
Vice President -- MIS 4/6/98 1,598 9.25 14.25 9.25 113 mos.
Robert H. Camarena................... 4/6/98 5,000 9.25 13.25 9.25 98 mos
Vice President -- 4/6/98 10,000 9.25 11.125 9.25 104 mos.
Logistics and Operations 4/6/98 15,000 9.25 16.00 9.25 115 mos.
4/6/98 1,888 9.25 14.25 9.25 113 mos.
Jay E. Wilson........................ 4/6/98 20,000 9.25 15.75 9.25 104 mos.
Vice President -- Marketing 4/6/98 5,000 9.25 11.25 9.25 107 mos.
4/6/98 5,000 9.25 14.25 9.25 113 mos.
Ralph Serna.......................... 4/6/98 3,333 9.25 13.88 9.25 99 mos.
Vice President -- Design 4/6/98 5,000 9.25 11.25 9.25 109 mos.
4/6/98 1,333 9.25 13.56 9.25 101 mos.
4/6/98 1,895 9.25 14.25 9.25 113 mos.
Scott A. Brabson..................... 4/6/98 25,000 9.25 16.94 9.25 114 mos.
Vice President -- 4/6/98 2,000 9.25 13.25 9.25 98 mos.
Operations & Global Sourcing
Michael C. Jonte..................... 4/6/98 2,000 9.25 13.25 9.25 98 mos.
Vice President -- Merchandising 4/6/98 2,000 9.25 11.25 9.25 98 mos.
4/6/98 842 9.25 14.25 9.25 113 mos.
</TABLE>
11
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
The Committee determined in April 1998 that the exercise prices of many
stock options previously granted to employees of the Company were at such high
levels compared to existing market value that the incentive and retention powers
of the options had been negated to a certain extent. Accordingly, on April 6,
1998, the Committee approved the amendment of the exercise prices of certain
employee options to lower them to $9.25, the closing sales price of the Common
Stock on that date. All employees of the Company, including each current
executive officer, were eligible to receive such option repricings.
Respectfully Submitted
by the Compensation Committee
Wilbur J. Fix
Philip H. Schaff, Jr.
Lisa M. Douglas
Kathleen M. Gardarian
DEFERRED COMPENSATION PLAN
The Company has established a deferred compensation plan for the benefit of
Walter E. Schoenfeld, the Company's Chairman of the Board, and his spouse. Under
the plan, the Company has established a trust which holds and disperses assets
pursuant to the terms of the plan. The Company will, for a period of five years,
deposit $200,000 per year with the trustee of the trust. The trust funds are
invested by the trustee in accordance with instructions given by the Company.
Commencing in 2001, the trustee will pay Mr. Schoenfeld $100,000 per year from
the trust funds. Such payments will continue for the remainder of Mr.
Schoenfeld's life and then will be paid to his spouse, if she survives him.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement in whole or in part, the following report and the
Performance Graph on page 15 shall not be incorporated by reference into any
such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
Decisions on compensation of the Company's executives generally are made by
the four-member Compensation Committee of the Board. Each member of the
Compensation Committee is an "outside director," as such term is defined under
the final regulations promulgated by the Internal Revenue Service under Section
162(m) of the Internal Revenue Code of 1986 (the "Code") (collectively, "IRC
Section 162(m)"). All decisions relating to the compensation of the Company's
executive officers, including decisions about grants or awards under the
Company's 1991 Long-Term Incentive Plan (the "Incentive Plan"), and the
Vanstastic Employee Stock Option Plan (the "Vanstastic Plan"), are made solely
by the Compensation Committee. Set forth below is a report submitted by the
Compensation Committee addressing the Company's compensation policies for fiscal
1998 as they affected the named executive officers.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. Target levels of the
executive officers' overall compensation are intended to be consistent with
others in the Company's industry, but are weighted toward programs contingent
upon the Company's medium- to longer-term (generally three to five years)
performance. Certain key managers also are eligible for selection as
participants in the Company's executive
12
<PAGE> 15
compensation plans. As a result of the increased emphasis on tying executive
compensation to corporate performance, in any particular year the Company's
executives may be paid more or less than the executives of the Company's
competitors, depending upon the Company's performance. It is the goal of the
Compensation Committee, through the grant or award of incentive compensation
tied to corporate performance, to pay the Company's executives and key managers
more than the executives and key managers of competitors if the Company performs
well. Increased orientation of executive compensation policies toward long-term
performance has been accompanied by increased utilization of objective
performance criteria.
The Compensation Committee also endorses the position that stock ownership
by management and stock-based performance compensation arrangements are
beneficial in aligning management's and stockholders' interests in the
enhancement of stockholder value. Thus, the Committee has also increasingly
utilized these elements in the Company's compensation packages for its executive
officers and for certain key managers.
RELATIONSHIP OF COMPANY PERFORMANCE TO EXECUTIVE COMPENSATION
Compensation paid to the named executive officers (other than Walter E.
Schoenfeld) and to the Company's other executive officers for fiscal 1998,
consisted of the following elements: (i) base salary; (ii) in some cases,
long-term incentive compensation in the form of awards of incentive stock
options under the Incentive Plan; (iii) grants of incentive stock options under
the Vanstastic Plan; and (iv) bonus compensation.
Base Salary. It is the policy of the Compensation Committee to approve only
cost-of-living adjustments to executive officer salaries unless an officer's
responsibilities have been significantly increased or such officer's performance
has been superior. For fiscal 1999, executive officers of the Company generally
only received cost-of-living adjustments to their salaries.
Grant of Options under the Incentive Plan. During fiscal 1998, the
Committee approved grants of incentive stock options under the Incentive Plan
only to Mr. Lyons among the named executive officers, and to certain other
executive officers and key managers. The grant to Mr. Lyons was made in
conjunction with his promotion to Senior Vice President. In determining the size
and other terms of the fiscal 1998 grants, the Compensation Committee considered
the value of the services provided by these individuals, the value and number of
their previously granted options, and the value and number of options previously
granted to individuals of comparable levels. The exercise prices of the options
were based on the closing sales price of the Common Stock on the dates of grant.
Grants of Options under the Vanstastic Plan. Grants of options under the
Vanstastic Plan are determined in the sole discretion of the Compensation
Committee. Unless otherwise determined by the Committee, officers of the Company
receive an annual grant of options equal to 20% of their base salary, divided by
the closing sales price of the Common Stock on the date of grant. On September
16, 1997, all officers of the Company received grants of options pursuant to
such formula except Jay E. Wilson, who was awarded options at a rate equal to
47.5% of his salary in recognition of his superior efforts as the Company's Vice
President -- Marketing.
Annual Bonus. Generally, it is the Company's policy that annual bonuses may
be earned by each named executive officer (other than Walter E. Schoenfeld),
each other executive officer of the Company, and certain key managers, under
Bonus Programs adopted each fiscal year by the Compensation Committee, solely on
the basis of (i) whether the Company achieves corporate performance targets, and
(ii) whether the executive or key manager achieves individual performance goals.
Under the Fiscal 1998 Bonus Program, the named executive officers, the other
executive officers, and certain managers were entitled to receive bonuses equal
to a percentage of their base salaries if certain objectives were met during the
year. Such bonuses were dependent on the Company meeting budgeted sales, gross
margin and net income goals and the satisfaction of individual performance
objectives. Since the Company did not meet all of its budgeted objectives for
fiscal 1998, full bonuses were not paid to any of the named executive officers
or any of the other executive officers or key managers of the Company.
13
<PAGE> 16
CEO COMPENSATION
Under Gary H. Schoenfeld's employment agreement, his salary compensation
may not be set below $250,000 per year. When Mr. Schoenfeld was appointed
President in July 1996, his salary was increased to $295,000 to reflect his
increased responsibilities. When he was appointed Chief Executive Officer in
February 1997, his salary was increased to $350,000 to reflect the increased
responsibilities of that position. It is the intention of the Committee to tie
most of Mr. Schoenfeld's future annual compensation to the performance of the
Company. In that regard, it is the intention of the Committee to only increase
Mr. Schoenfeld's future salary compensation in accordance with cost of living
standards, and to provide him with bonus opportunities equal to 100% of his
salary if the Company meets sales, earnings per share, gross margin and other
targets set by the Committee at the beginning of each fiscal year.
CERTAIN TAX CONSIDERATIONS
IRC Section 162(m) limits the Company to a deduction for federal income tax
purposes of not more than $1 million of compensation paid to certain executive
officers in a taxable year. Compensation above $1 million may be deducted if it
is "performance-based compensation" within the meaning of the Code. Generally,
options granted (i) by a Compensation Committee consisting solely of outside
directors, (ii) under a Plan approved by stockholders, and (iii) at the fair
market value of the underlying securities, are considered "performance-based" if
the Plan contains a limitation on the number of shares which can be granted to
an individual in any one fiscal year.
The Compensation Committee concluded that it is in the best interests of
the Company to establish restrictions on the granting of options under the
Incentive Plan and the Vanstastic Plan to assist in the qualification of
compensation recognized on the exercise of such options as "performance-based."
As a result, it adopted Amendment No. 3 to the Incentive Plan in July 1994,
which limits the aggregate number of shares which may be granted under the Plan
to any one individual to 300,000 in any one fiscal year. This Amendment was
approved by the Stockholders at the 1994 Annual Meeting of Stockholders. The
Committee also included a similar provision in the Vanstastic Plan which was
approved by the Stockholders at the 1997 Annual Meeting of Stockholders. The
Compensation Committee does not believe that other components of the Company's
annual cash compensation will be likely to exceed $1 million in the foreseeable
future and, therefore, concluded that no further action, with respect to
qualifying such compensation for deductibility, was necessary at this time. The
Compensation Committee will continue to evaluate the advisability of qualifying
the deductibility of such compensation in the future.
Respectfully Submitted
by the Compensation Committee
Wilbur J. Fix
Philip H. Schaff, Jr.
Lisa M. Douglas
Kathleen M. Gardarian
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return among the Company, the NASDAQ Index and a Peer Group Index, from May 31,
1993 through May 31, 1998. Note: the stock price performance shown on the graph
is not necessarily indicative of future price performance.
<TABLE>
<CAPTION>
VANS, INC. NASDAQ PEER GROUP
<S> <C> <C> <C>
5/31/93 100 100 100
5/31/94 59 105 84
5/31/95 55 125 106
5/31/96 242 182 225
5/31/97 152 205 254
5/31/98 121 261 203
</TABLE>
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company is a party to employment agreements with each of the named
executive officers.
Walter Schoenfeld's employment agreement extends until May 31, 2000. Under
the agreement, Mr. Schoenfeld is entitled to participation in any medical or
insurance plans established by the Company, and to reimbursement of expenses
incurred by him in the performance of his duties, including living expenses and
a car allowance. The Company reimburses Mr. Schoenfeld for the reasonable
expenses of his spouse when she accompanies him on business trips, and for the
expense of maintaining secretarial support in Seattle, where he lives, for
purposes of conducting Company business there.
Mr. Gosselin's agreement extends until September 17, 2000. His agreement
entitles him to an annual salary of no less than $176,000. Mr. Gosselin is also
entitled to participation in the Company's stock option and bonus plans, as well
as any medical or insurance plans established by the Company. Mr. Gosselin is
entitled to a severance payment equal to one year's salary if he is terminated
without cause or resigns from the Company for a good reason, or resigns or is
terminated after a "Change in Control" of the Company during the term of his
agreement. The term "Change of Control" includes mergers or acquisitions
involving the Company and material changes in the composition of the Board of
Directors.
15
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The terms of Gary Schoenfeld's, Mr. Lyons' and Ms. Ratsula's agreements are
generally the same as Mr. Gosselin's, with the following differences: Mr.
Schoenfeld's minimum base compensation is $250,000 and the Company leases an
automobile for him; Mr. Lyons' minimum base compensation is $229,000 and his
severance payment is equal to six month's pay and the Company leases an
automobile for him; and Ms. Ratsula's minimum base compensation is $200,000 and
her severance payment is equal to six months' pay.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
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 ("SEC") initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended May 31, 1998, all Section
16(a) filing requirements applicable to its officers, directors, and greater
than 10% owners were compiled with.
CERTAIN TRANSACTIONS
Until May 31, 1998, MDC Management Company, the general partner of MDC,
provided management, consulting and financial services to the Company for a
fixed annual fee of $350,000, subject to adjustment based upon increases in the
Consumer Price Index. The management agreement terminated as of May 31.
George E. McCown, a current director and officer of the Company, and David
E. De Leeuw, a former director and officer of the Company, are general partners
of MDC Management Company. Additionally, Gary H. Schoenfeld, the Company's
President and Chief Executive Officer and a director, is a former partner of
that firm.
During fiscal 1998, the Company was a party to a Consulting Agreement with
Taryn Veytia, the daughter of George E. McCown, an officer and director of the
Company. Pursuant to the agreement, Ms. Veytia acted as the coordinator for the
Company's European distributors in exchange for a monthly consulting fee. For
the fiscal year ended May 31, 1998, the Company paid Ms. Veytia consulting fees
of $60,000. The agreement expired on August 31, 1998.
During fiscal 1997, the Company loaned $75,000 to John P. Walker, the
Company's then Vice President -- Merchandising, to assist him with the
relocation of his residence to California. The loan did not bear interest and
was repayable over a five-year period. Mr. Walker resigned from the Company in
January 1998 and currently owes a balance of $60,000 on the loan.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
GENERAL
KPMG Peat Marwick LLP have been the independent auditors of the Company
since November 1, 1990 and, upon recommendation of the Audit Committee, have
been appointed by the Board of Directors as the auditors for fiscal 1999. The
stockholders of the Company are requested to ratify this appointment. A
representative of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she so desires and to
respond to appropriate questions.
REQUIRED VOTE
The vote required to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors is an affirmative vote by stockholders holding a
majority of the total votes cast in person or by proxy at the Annual Meeting.
Pursuant to the Restated By-laws, abstentions and broker non-votes will not be
deemed votes cast.
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Delaware law does not require the Company to submit the Board's appointment
of the Company's independent auditors to the stockholders for ratification;
however, the Company has chosen to do so in order to give stockholders an
opportunity to express their views on the Company's independent auditors. If
less than the vote required to ratify KPMG Peat Marwick LLP is received, the
Board and the Audit Committee will decide whether to select other independent
auditors for fiscal 1999.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU RATIFY THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
FISCAL 1999.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or executive officers of the Company, none of the
persons who have been directors or executive officers of the Company since May
31, 1997, no nominee for the Board of Directors and no associate of any of the
foregoing, has any material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the
Annual Meeting.
STOCKHOLDER PROPOSALS
Any stockholder of the Company wishing to have a proposal considered for
inclusion in the Company's 1999 proxy solicitation materials must set forth such
proposal in writing and file it with the Corporate Secretary of the Company on
or before May 18, 1999. Proposals received after such date shall be considered
untimely and shall not be included in the Company's proxy solicitation materials
or considered at the 1999 Annual Meeting. The Board of Directors of the Company
will review any timely submitted stockholder proposals which are filed as
required and will determine whether such proposals meet applicable criteria for
inclusion in its 1999 proxy solicitation materials.
OTHER REPORTS
The Company's Annual Report to Stockholders for the fiscal year ended May
31, 1998 has been distributed to stockholders with this Proxy Statement. Upon
written request of any stockholder solicited hereby, the Company will provide,
free of charge, a copy of its Annual Report on Form 10-K (excluding exhibits)
for the fiscal year ended May 31, 1998, which has been filed with the SEC.
Requests should be directed to Craig E. Gosselin, Vice President, General
Counsel, and Corporate Secretary, Vans, Inc., 15700 Shoemaker Avenue, Santa Fe
Springs, California 90670.
By Order of the Board of Directors,
/s/ Craig E. Gosselin
Craig E. Gosselin
Vice President, General Counsel,
and Corporate Secretary
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<PAGE> 20
PROXY
VANS, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 20, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of VANS, INC., a Delaware corporation (the
"Company"), hereby acknowledges receipt of the Proxy Statement and the Notice of
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held on Tuesday, October 20, 1998, at 10:00 a.m., Pacific Time, at the Sheraton
Cerritos Hotel, 12725 Center Court Drive, Cerritos, California, and hereby
further revokes all previous proxies and appoints Gary H. Schoenfeld and Craig
E. Gosselin and each of them, as proxy of the undersigned, with full power of
substitution for and in the name of the undersigned, at the Annual Meeting and
any adjournments thereof with the same effect as if the undersigned were
present, for the following purposes:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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<PAGE> 21
<TABLE>
<CAPTION>
Please mark ___
your votes as
indicated in X
this example ___
<S> <C> <C> <C> <C>
AUTHORITY GRANTED AUTHORITY
to vote WITHHELD
for all nominees to
listed except as vote for all
indicated to the nominees
contrary below. listed. FOR AGAINST ABSTAIN
1. The election of the following persons 2. The ratification of
as directors of the Company to serve [ ] [ ] KPMG Peat Marwick [ ] [ ] [ ]
until the next Annual Meeting of the LLP as the
Stockholders and until their independent auditors
respective successors are elected of the Company for
and qualified. fiscal 1999.
Walter E. Schoenfeld Gary H. Schoenfeld George E. McCown
Wilbur J. Fix Philip H. Schaff, Jr. Kathleen M. Gardarian
James R. Sulat Gerald Grinstein Lisa M. Douglas
Charles G. Armstrong Leonard R. Wilkins
(INSTRUCTION: To vote against any one nominee, write that nominee's
name in the space provided below.)
___________________________________________________________________________
THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS YOU HAVE INDICATED ABOVE. IF NO
INDICATION HAS BEEN MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR
THE ABOVE NOMINEES AND IN FAVOR OF THE
ABOVE PROPOSAL, AND, AS THE PROXY DEEMS
ADVISABLE, ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
Signature(s)____________________________________________________________________________________ Dated: _____________________, 1998
Sign exactly as your name appears on your stock certificate. When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If more than one trustee, all should sign. All joint owners should sign. If a corporation, sign
in full corporation name by president or other authorized officer. If a partnership, sign in partnership name by authorized
person. Persons signing in a fiduciary capacity should indicate their full title in such capacity.
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