SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by 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 Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Fossil, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Fossil, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FOSSIL, INC.
2280 N. Greenville Avenue
Richardson, Texas 75082
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
To the Stockholders of Fossil, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Fossil, Inc., a Delaware corporation (the "Company"), will be held
at the offices of the Company, 2280 N. Greenville Avenue, Richardson, Texas, on
the 27th day of May 1998, at 4:00 p.m. (local time) for the following purposes:
1. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to create a classified Board of Directors; and
2. To elect seven (7) directors to serve for terms of one to three
years, respectively, or until their respective successors are elected and
qualified if Proposal 1 is approved, and to elect the same persons as
directors for a term of one year if Proposal 1 is not approved; and
3. To consider and act upon a proposal to amend the 1993 Long-Term
Incentive Plan to increase the number of shares of common stock that may be
made the subject of a grant; and
4. To transact any and all other business that may properly come
before the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on April 3, 1998, as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at such meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on the Record Date are
entitled to notice of and to vote at such meeting. The stock transfer books will
not be closed. A list of stockholders entitled to vote at the Annual Meeting
will be available for examination at the offices of the Company for 10 days
prior to the Annual Meeting.
You are cordially invited to attend the meeting; whether or not you expect
to attend the meeting in person, however, you are urged to mark, sign, date, and
mail the enclosed form of proxy promptly so that your shares of stock may be
represented and voted in accordance with your wishes and in order that the
presence of a quorum may be assured at the meeting. Your proxy will be returned
to you if you should be present at the meeting and should request its return in
the manner provided for revocation of proxies on the initial page of the
enclosed proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ T. R. Tunnell
-------------------------------------
T. R. Tunnell
Senior Vice President, Development
and Chief Legal Officer and Secretary
April 20, 1998
Richardson, Texas
<PAGE>
FOSSIL, INC.
2280 N. Greenville Avenue
Richardson, Texas 75082
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
---------------------------
SOLICITATION AND REVOCABILITY
OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
Fossil, Inc., a Delaware corporation (the "Company"), to be voted at the 1998
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
on May 27, 1998, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders (the "Notice") and at any
adjournment(s) thereof. When proxies in the accompanying form are properly
executed and received, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions noted thereon; if no direction
is indicated, such shares will be voted for the election of directors and in
favor of Proposals 1 and 3 as set forth on the accompanying Notice.
The executive offices of the Company are located at, and the mailing
address of the Company is, 2280 N. Greenville Avenue, Richardson, Texas 75082.
Management does not intend to present any business at the Annual Meeting
for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the stockholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying form of proxy
are being mailed on or about April 20, 1998. The Company's Annual Report to
Stockholders covering the Company's fiscal year ended January 3, 1998, is
enclosed herewith, but does not form any part of the materials for solicitation
of proxies.
Any stockholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to the Company addressed to T.R. Tunnell,
Senior Vice President, Development, Chief Legal Officer and Secretary, Fossil,
Inc., 2280 N. Greenville Avenue, Richardson, Texas 75082; no such revocation
shall be effective, however, unless such notice of revocation has been received
by the Company at or prior to the Annual Meeting.
In addition to the solicitation of proxies by use of the mail, officers and
regular employees of the Company may solicit the return of proxies, either by
mail, telephone, telegraph, or through personal contact. Such officers and
employees will not be additionally compensated but will be reimbursed for
out-of-pocket expenses. Brokerage houses and other custodians, nominees, and
fiduciaries will, in connection with shares of common stock, par value $0.01 per
share (the "Common Stock"), registered in their names, be requested to forward
solicitation material to the beneficial owners of such shares of Common Stock.
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
reasonable cost of forwarding solicitation materials to the beneficial owners of
shares of the Company's Common Stock, and other costs of solicitation, are to be
borne by the Company.
<PAGE>
QUORUM AND VOTING
The record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting was the close of business on April 3, 1998
(the "Record Date"). On the Record Date, there were 20,484,892 shares of Common
Stock issued and outstanding. All references in this Proxy Statement to (i)
numbers of shares of Common Stock and options and (ii) per share and related
data have been adjusted to give effect to a three for two stock split declared
on March 4, 1998, effected as a fifty percent (50%) stock dividend payable on
April 8, 1998 to stockholders of record as of March 25, 1998 (the "3-for-2 Stock
Dividend").
Each holder of Common Stock is entitled to one vote per share on all
matters to be acted upon at the meeting and neither the Company's Amended and
Restated Certificate of Incorporation nor its Amended and Restated Bylaws allow
for cumulative voting rights. The presence, in person or by proxy, of the
holders of a majority of the issued and outstanding Common Stock entitled to
vote at the meeting is necessary to constitute a quorum to transact business. If
a quorum is not present or represented at the Annual Meeting, the stockholders
entitled to vote thereat, present in person or by proxy, may adjourn the Annual
Meeting from time to time without notice or other announcement until a quorum is
present or represented. Assuming the presence of a quorum, the affirmative vote
of a majority of the issued and outstanding shares of Common Stock is required
to approve Proposal 1, the affirmative vote of the holders of a plurality of the
shares of Common Stock voting at the meeting is required for the election of
directors in Proposal 2 and the affirmative vote of a majority of the
outstanding shares of Common Stock present and entitled to vote at the Annual
Meeting is required to approve Proposal 3.
An automated system administered by the Company's transfer agent tabulates
the votes. Abstentions and broker non-votes are each included in the
determination of the number of shares present for determining a quorum. Each
proposal is tabulated separately. Abstentions, with respect to any proposal
other than the election of directors, will have the same effect as a vote
against such proposal. Broker non-votes will have the same effect as a vote
against the proposed amendment to the Amended and Restated Certificate of
Incorporation contained in Proposal 1, but will have no effect on the outcome of
the election of directors or Proposal 3.
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PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each director of the
Company; (ii) each Named Executive Officer (as defined in "Election of
DirectorsCCompensation of Executive OfficersCExecutive Cash Compensation");
(iii) all present executive officers and directors of the Company as a group;
and (iv) each other person known to the Company to own beneficially more than
five percent (5%) of the Common Stock as of the Record Date. Unless otherwise
noted, the persons named below have sole voting and investment power with
respect to the shares shown as beneficially owned by them.
Name of Beneficial Owner Number Notes Percent
- ------------------------ ------ ----- -------
Tom Kartsotis (1)................ 7,977,562 (2) 38.9
Kosta N. Kartsotis (1)........... 3,710,857 18.1
Michael W. Barnes................ 93,937 (3) *
Richard H. Gundy................. 296,572 (4) 1.4
Mark D. Quick.................... 107,625 (5) *
Jal S. Shroff (6)................ 393,910 (7) 1.9
Kenneth W. Anderson.............. 29,625 (8) *
Alan J. Gold..................... 37,125 (9) *
Donald J. Stone.................. 29,550 (10) *
FMR Corp. (11)................... 1,500,000 7.3
All executive officers 12,774,779 60.7
and directors as a group
(11 persons)
(2) (3) (4) (5) (7) (8) (9) (10)
* Less than 1%
(1) The address of such individual is 2280 N. Greenville Avenue, Richardson,
Texas 75082.
(2) Includes 753,450 shares of Common Stock owned of record by Lynne Stafford
Kartsotis, wife of Mr. Tom Kartsotis, as to which Mr. Kartsotis disclaims
beneficial ownership, and 9,772 shares owned by Mr. Kartsotis as custodian
for Annie Grace Kartsotis, his minor daughter.
(3) Includes 93,337 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(4) Includes 135,888 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date. Also includes 7,500 shares owned by the
Richard Gundy Trust, and 7,500 shares owned by the Richard Gundy Family
Trust. Mr. Gundy is a trustee of each of these trusts.
(5) Includes 103,125 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(6) Mr. Shroff and his wife, Pervin J. Shroff, share voting and investment
power with respect to 312,235 of the shares shown.
(7) Includes 47,812 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date. Also includes indirect ownership of
33,862 shares issuable pursuant to the exercise of stock options within 60
days of the Record Date which are owned by Mrs. Shroff.
(8) Includes 22,125 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date. Also includes 7,500 shares owned by the
K.W. Anderson Family Limited Partnership. Mr. Anderson is managing general
partner of the partnership and has sole voting and investment power with
respect to those shares.
(9) Includes 22,125 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(10) Includes 22,125 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(11) Based on a Schedule 13G, dated February 14, 1998, filed by FMR Corp.
("FMR") with the Securities and Exchange Commission and the Company. The
Schedule 13G discloses that Fidelity Management & Research Company
(AFidelity@), a wholly-owned subsidiary of FMR and an investment adviser is
the beneficial owner of 1,500,000 shares of Common Stock or 7.42% of the
Common Stock of the Company as a result of acting as investment advisor to
various companies registered under the Investment Company Act of 1940.
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<PAGE>
Edward C. Johnson, 3rd. , FMR, through control of Fidelity and the funds,
each has sole power to dispose of the 1,500,000 shares owned by the funds.
Neither FMR, nor Edward C. Johnson, 3rd has the sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds, which
power resides with the Fund's Board of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by such Board of
Trustees. The address of FMR is 82 Devonshire Street, Boston, Massachusetts
02109.
---------------------------------
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AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION TO ESTABLISH A CLASSIFIED BOARD OF DIRECTORS
(Proposal 1)
The Board of Directors has unanimously approved and recommended that the
stockholders adopt an amendment (the "Amendment") to the Company's Amended and
Restated Certificate of Incorporation to divide the Company's Board of Directors
into three approximately equal classes with staggered terms. The purpose of the
Amendment is to promote continuity and stability in the Company's management and
policies by making an attempted takeover of the Company more difficult. The
proposed Amendment is not, however, in response to any efforts of which the
Company is aware to accumulate the Company's Common Stock. Rather, the Board of
Directors wishes to protect stockholder investments in the Company by ensuring
that unsolicited bidders will not be in a position to place undue pressure on
the ability of the Board of Directors to negotiate with any potential acquirer
from the strongest practical position, which is in the interest of all
stockholders.
To implement the classified Board of Directors, the Amendment would permit
Class I, Class II and Class III directors initially to be elected at the Annual
Meeting for terms of one year, two years and three years, respectively. If the
Amendment is adopted, Class I directors elected at the Annual Meeting will hold
office until the 1999 Annual Meeting; Class II directors elected at the Annual
Meeting will hold office until the 2000 Annual Meeting; and Class III directors
elected at the Annual Meeting will hold office until the 2001 Annual Meeting;
and, in each case, until their successors are duly elected and qualified or
until their earlier death, resignation or removal. At each annual meeting
commencing with the 1999 Annual Meeting, directors elected to succeed those in
the class whose terms then expire will be elected for three-year terms so that
the terms of one class of directors will expire each year. Thus, the
stockholders will elect only approximately one-third of the directors at each
annual meeting. In addition, the Board of Directors may fill any vacancies which
occur for the remainder of the term of the director who ceases to be a director.
Delaware law provides that the certificate of incorporation of a
corporation may provide that the directors be divided into one, two or three
classes, the terms of the directors initially to be classified as follows: the
first class to expire at the annual meeting next ensuing; the second class one
year thereafter; and the third class two years thereafter, and that at each
annual election held after such classification, directors shall be elected for a
full term. The Amendment is also consistent with the rules of the Nasdaq
National Market on which the Company's Common Stock is traded.
The Board of Directors believes that dividing the directors into three
classes is advantageous to the Company and its stockho1ders because providing
that directors will serve three-year terms rather than one-year terms increases
the likelihood of continuity and stability in the policies formulated by the
Board. While management has not experienced any problems with continuity in the
past, it wishes to ensure that this experience will continue and believes that
the staggered election of directors will promote continuity because only
approximately one-third of the directors will be subject to election each year.
The Amendment would significantly extend the time required to make any
change in control of the Board and will tend to discourage any hostile takeover
bid for the Company. Presently, a change in control of the Board can be made by
the holders of a majority of the outstanding voting stock of the Company at a
single annual meeting. Under the proposed Amendment, it will take at least two
annual meetings for such stockholders to make a change in control of the Board,
since only a minority of the directors will be elected at each meeting.
Staggered terms would also guarantee that approximately two-thirds of the
directors at any one time would have at least one year's experience as directors
of the Company.
The Amendment will make it more difficult for stockholders to change the
composition of the Board even if stockholders believe such a change would be
desirable. Because of the additional time required to change control of the
Board, the Amendment will also tend to perpetuate incumbent management. The
Amendment will increase the amount of time required for a takeover bidder to
obtain control of the Company without the cooperation of the Board,
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<PAGE>
even if the bidder were to acquire a majority of the Company's outstanding
stock; accordingly, it will tend to discourage certain tender offers, perhaps
including some offers that stockholders might deem to be in their best interest.
As a result, stockholders may be deprived of opportunities to sell some or all
of their shares in a tender offer. Tender offers for control usually involve a
purchase price higher than the current market price and may involve a bidding
contest between competing takeover bidders. The Amendment could also discourage
open market purchases by a potential takeover bidder. Such purchases could
temporarily increase the market value of the Company's Common Stock, enabling
stockholders to sell their shares at a price higher than that which would
otherwise prevail. Finally, the Amendment could decrease the market price of the
Company's Common Stock by making the stock less attractive to persons who invest
in securities in anticipation of an increase in price if a takeover attempt
develops.
The complete text of the proposed amendment to the third paragraph of
Article V is as follows:
The Board of Directors shall consist of such number of directors that, from
time to time, shall be fixed by, or in the manner provided in, the bylaws
of the Corporation. Election of directors need not be by written ballot
unless the bylaws so provide.
The directors to be elected at the 1998 Annual Meeting of Stockholders
shall be divided into three classes as nearly equal in number as possible,
and designated as Class I, Class II and Class III. Class I directors shall
be elected initially for a term expiring at the 1999 Annual Meeting of
Stockholders, Class II directors shall be elected initially for a term
expiring at the 2000 Annual Meeting of Stockholders, and Class III
directors shall be elected initially for a term expiring at the 2001 Annual
Meeting of Stockholders. Members of each class shall hold office until
their successors are elected and qualified. At the 1999 Annual Meeting of
Stockholders and at each subsequent annual meeting of the stockholders of
the Corporation, the successors of the class of directors whose term
expires at that meeting shall be elected by a plurality vote of all votes
cast at such meeting, to hold office for a term expiring at the Annual
Meeting of Stockholders held in the third year following the year of their
election, and until their successors are elected and qualified.
For information regarding the nominees for election to the Board of
Directors at the Annual Meeting and the class of directors in which each
director will initially serve if the Amendment is adopted, see Proposal No. 2
below.
The Company's Amended and Restated Certificate of Incorporation and Amended
and Restated Bylaws presently contain other provisions having an anti-takeover
effect. The proposal to create a classified board of directors is not part of a
plan by management to adopt a series of anti-takeover measures and the Company
does not presently intend to propose other anti-takeover amendments in future
proxy solicitations.
The Company's Bylaws establish advance notice procedures with regard to
stockholder proposals relating to the nomination of candidates for election as
directors, the removal of directors and amendments to the Certificate of
Incorporation or Bylaws to be brought before meetings of stockholders of the
Company. These procedures provide that notice of such stockholder proposals must
be timely given in writing to the Secretary of the Company prior to the meeting
at which the action is to be taken. Generally, to be timely, notice must be
received at the principal executive offices of the Company not less than 90 days
nor more than 180 days prior to an annual meeting or, in the case of a special
meeting, not less than 40 days nor more than 60 days prior to such meeting (or
if fewer than 50 days' notice or prior public disclosure of the meeting date is
given or made by the Company, not later than the seventh day following the day
on which the notice was mailed or such public disclosure was made). The notice
must contain certain information specified in the Bylaws. In addition, the
Company's Bylaws require that any action taken by the stockholders to remove one
or more directors without cause or to amend, alter or repeal the Bylaws be
approved by the affirmative vote of the holders of at least 80% of the voting
power of all outstanding shares of capital stock of the Company.
The Company has 1,000,000 authorized and unissued shares of Preferred
Stock. The existence of authorized but unissued Preferred Stock may enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of the Company by means of a merger, tender offer, proxy consent
or otherwise. For example, if in the due exercise
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of its fiduciary obligations, the Board of Directors were to determine that a
takeover proposal is not in the Company's best interests, the Board of Directors
could cause shares of Preferred Stock to be issued without stockholder approval
in one or more private offerings or other transactions that might dilute the
voting or other rights of the proposed acquiror or insurgent stockholder or
stockholder group or create a substantial voting block in institutional or other
hands that might undertake to support the position of the incumbent Board of
Directors. In this regard, the Company's Certificate of Incorporation grants the
Board of Directors broad power to establish the rights and preferences of
authorized and unissued Preferred Stock. The issuance of shares of Preferred
Stock pursuant to the Board of Director's authority described above could
decrease the amount of earnings and assets available for distribution to holders
of Common Stock and adversely affect the rights and powers, including voting
rights, of such holders and may have the effect of delaying, deferring or
preventing a change in control of the Company. The Board of Directors does not
currently intend to seek stockholder approval prior to any issuance of Preferred
Stock, unless otherwise required by law.
The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Laws. In general, subject to certain exceptions,
Section 203 prohibits a Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder,
unless (i) prior to such date the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder or (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
for purposes of determining the number of shares outstanding those shares owned
by (x) persons who are directors and also officers and (y) employee stock plans
in which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer), or (iii) on or subsequent to such date the business combination is
approved by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. Section 203 defines a "business combination" to include
certain mergers, consolidations, asset sales and stock issuances and certain
other transactions resulting in a financial benefit to an "interested
stockholder." In addition, Section 203 defines an "interested stockholder" to
include any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation and any entity or person affiliated with such an
entity or person.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO
CREATE A CLASSIFIED BOARD OF DIRECTORS
---------------------------------------------
7
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ELECTION OF DIRECTORS
(Proposal 2)
By resolution of the Board of Directors at its meeting on March 3, 1998,
the number of directors composing the Board of Directors has been set at seven.
The directors elected at the Annual Meeting will hold office until his successor
is duly elected and qualified. Assuming stockholder approval of Proposal 1,
Messrs. Anderson and Barnes will hold office until the 1999 Annual Meeting
(Class I), Messrs. Gold and Kosta Kartsotis will hold office until the 2000
Annual Meeting (Class II), and Messrs. Stone and Tom Kartsotis and Shroff will
hold office until the 2001 Annual Meeting (Class III). If Proposal 1 is not
approved by the stockholders, all directors will be elected to hold office until
the 1999 Annual Meeting.
Directors and Nominees
Unless otherwise directed in the enclosed proxy, it is the intention of the
persons named in such proxy to nominate and to vote the shares represented by
such proxy for the election of the following named nominees for the office of
director of the Company. Each of the nominees is presently a director of the
Company.
The following table and text set forth the name, age and positions of each
nominee:
Name Age Position
---- --- --------
Tom Kartsotis.............. 38 Director, Chairman of the Board
and Chief Executive Officer
Kosta N. Kartsotis......... 45 Director, President and Chief
Operating Officer
Michael W. Barnes.......... 37 Director and Executive Vice
President
Jal S. Shroff.............. 61 Director and Managing Director
of Fossil (East) Limited
Kenneth W. Anderson........ 64 Director
Alan J. Gold............... 64 Director
Donald J. Stone............ 69 Director
Tom Kartsotis has served as Chairman of the Board and Chief Executive
Officer since December 1991. Mr. Tom Kartsotis founded the Company in 1984 and
served as its President until December 1991. He has been a director of the
Company since 1984.
Kosta N. Kartsotis has served as President and Chief Operating Officer
since December 1991. Mr. Kosta Kartsotis joined the Company in 1988 and served
as Vice President -- Marketing until December 1991. He has been a director of
the Company since 1990.
Michael W. Barnes has served as Executive Vice President since February
1995. Mr. Barnes served as Senior Vice President -- International from August
1994 until February 1995. From December 1993 until August 1994, Mr. Barnes
served as Senior Vice President -- Operations. Mr. Barnes joined the Company in
1985 and served as Vice President -- Operations until December 1991. He served
as a director of the Company from 1985 until March 1992. Mr. Barnes has been a
director of the Company since he was re-elected to the Board of Directors in
February 1993.
Jal S. Shroff has served as Managing Director of Fossil (East) Limited
("Fossil East") since January 1991 and has been a director of the Company since
April 1993. Mr. Shroff joined S. Framjee & Co., a privately held trading company
headquartered in Hong Kong, and has served as its Managing Director since a date
prior to 1992.
Kenneth W. Anderson has been a director of the Company since April 1993.
Mr. Anderson was a co-founder of Blockbuster Entertainment Corporation, a video
rental company, and served as its President from 1985 until 1987.
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<PAGE>
From 1987 to 1991, Mr. Anderson served in various positions with Amtech
Corporation, a remote electronic identification technology company, which he
co-founded, including as the Chairman of its Executive Committee.
Alan J. Gold has been a director of the Company since April 1993. Mr. Gold
was the founder of Accessory Lady, a women's fashion accessory retail chain, and
served as its President until 1992. Mr. Gold is currently President of Goldcor
Investments.
Donald J. Stone has been a director of the Company since April 1993. Mr.
Stone served as Vice Chairman of Federated Department Stores until February
1988, at which time he retired.
The Board of Directors does not contemplate that any of the above-named
nominees for director will refuse or be unable to accept election as a director
of the Company, or be unable to serve as a director of the Company. Should any
of them become unavailable for nomination or election or refuse to be nominated
or to accept election as a director of the Company, then the persons named in
the enclosed form of proxy intend to vote the shares represented in such proxy
for the election of such other person or persons as may be nominated or
designated by the Board of Directors.
Mr. Tom Kartsotis and Mr. Kosta N. Kartsotis are brothers. There are no
other family relationships among any of the directors, director nominees or
executive officers of the Company.
Board Committees and Meetings
The Board of Directors has established two standing committees: the Audit
Committee and the Compensation Committee. Messrs. Stone, Anderson and Gold serve
on the Audit Committee and the Compensation Committee. The functions of the
Audit Committee are to recommend to the Board of Directors the appointment of
independent auditors, to review the plan and scope of any audit of the Company's
financial statements and to review the Company's significant accounting policies
and other related matters. The Audit Committee held two meetings during the
fiscal year ended January 3. 1998. The functions of the Compensation Committee
are to make recommendations to the Board of Directors regarding the compensation
of senior officers and to administer the 1993 Long-Term Incentive Plan (the
"Incentive Plan"). The Compensation Committee held one meeting during the fiscal
year ended January 3. 1998.
The Board of Directors held four meetings during the fiscal year ended
January 3. 1998. During 1997 each director attended, in person or by conference
call, all of the meetings of the Board of Directors and the meetings held by all
committees of the Board on which such director served.
Director Compensation
The Company pays an annual retainer of $15,000 to each nonemployee
director. In addition, the Company pays each nonemployee director a fee of
$1,000 for each meeting of the Board of Directors or any committee thereof which
he attends. The Company also reimburses its directors for ordinary and necessary
travel expenses incurred in attending such meetings.
Nonemployee Director Stock Option Plan. The Board of Directors and the
stockholders of the Company has approved the adoption of the 1993 Nonemployee
Director Plan (the "Nonemployee Director Plan"). Pursuant to the Nonemployee
Director Plan each Nonemployee Director receives a grant of 7,500 non-qualified
stock options on the date he becomes a director of the Company and on the first
day of each calendar year, each Nonemployee Director receives a grant of an
additional 4,500 non-qualified stock options, so long as he is then serving as a
Nonemployee Director. The grant of options pursuant to the Nonemployee Director
Plan is automatic. After giving effect to the 3-for-2 Stock Dividend, an
aggregate of 150,000 shares of Common Stock have been authorized for issuance
pursuant to the Nonemployee Director Plan, of which 90,000 shares were subject
to outstanding options on the Record Date.
9
<PAGE>
Options granted pursuant to the Nonemployee Director Plan will become
exercisable (i) with respect to 50% of the total number of shares subject
thereto, on the first anniversary of the date of grant and (ii) with respect to
the remaining shares subject thereto, in installments of 25% of such shares on
the second and third anniversaries of the date of grant. The exercise price of
options granted pursuant to the Nonemployee Director Plan shall be the fair
market value of the Common Stock on the date of grant. Such exercise price must
be paid in full in cash at the time an option is exercised. The term of options
granted under the Nonemployee Director Plan will expire on the earliest of (i)
ten years from the date of grant, (ii) one year after the optionee ceases to be
a director by reason of death or disability or (iii) three months after the
optionee ceases to be a director for any reason other than death or disability.
The Nonemployee Director Plan provides that the Board of Directors may make
certain adjustments to the exercise price and number of shares subject to
options granted thereunder in the event of a stock split, stock dividend,
combination or reclassification or certain other corporate transactions. Subject
to certain limitations, the Board of Directors is authorized to amend the
Nonemployee Director Plan as it deems necessary, but no amendment may adversely
affect the rights of an optionee with respect to an outstanding option without
his consent. The Compensation Committee of the Board of Directors is not
responsible for the administration of the Nonemployee Director Plan.
Executive Officers
The name, age, current position with the Company, and the principal
occupation during the last five years of executive officers Messrs. Tom
Kartsotis, Kosta N. Kartsotis and Michael W. Barnes and the year each first
became an executive officer of the Company is set forth above under the caption
"Directors and Nominees" and with respect to each remaining executive officer is
set forth in the following table and text:
Name Age Position
- ---- --- --------
Richard H. Gundy.............. 55 Executive Vice President
Randy S. Kercho............... 41 Executive Vice President, Chief
Financial Officer and Treasurer
Mark D. Quick................. 49 Executive Vice President
T. R. Tunnell................. 44 Senior Vice President, Development,
Chief Legal Officer and Secretary
Richard H. Gundy has served as Executive Vice President of the Company
since April 1994. From a date prior to 1992, Mr. Gundy served as Executive Vice
President and Director of County Seat Stores, Inc., a national retailer of
apparel and fashion accessories.
Randy S. Kercho has served as Executive Vice President and Chief Financial
Officer of the Company since March 1997. Mr. Kercho served as Senior Vice
President and Chief Financial Officer of the Company from February 1995 until
March 1997 and has served as Treasurer since May 1995. Mr. Kercho served as Vice
President and Chief Financial Officer from May 1993 until February 1995 and
served as Vice President - Finance from May 1992 until May 1993. Prior to May
1992, Mr. Kercho served as Vice President, Controller, Treasurer and Secretary
of BSN Corp., a publicly traded consumer products company.
Mark D. Quick has served as Executive Vice President since March 1997. Mr.
Quick is responsible for the Company's fashion accessory lines including,
handbags, small leather goods, belts and sunglasses. From November 1995 until
March 1997 he served as Senior Vice President - Accessories. From a date prior
to 1992, Mr. Quick served as Senior Vice President - General Merchandise Manager
of Foley's (currently part of May Co.).
T.R. Tunnell has served as Senior Vice President, Development, Chief Legal
Officer and Secretary of the Company since December 1996. Mr. Tunnell served as
Vice President and General Counsel of Pillowtex Corporation from April 1996
until December 1996. Mr. Tunnell served as Vice President, Secretary and General
Counsel of the Company from September 1993 until April 1996. From a date prior
to 1992, Mr. Tunnell was employed by Mary Kay Cosmetics, Inc. as Vice President,
Legal Operations and Assistant Secretary.
10
<PAGE>
Key Employees
The following table and text set forth certain information regarding
other key employees of the Company.
Name Age Position
- ---------------------------------- -------- ------------------------------------
- ---------------------------------- -------- ------------------------------------
Suzanne Amundsen 40 Vice President, Product Development
Dairmuid Bland 42 Senior Vice President, Product
Development
Gary A. Bollinger 50 Senior Vice President, International
Heath Carr 31 Vice President, Promotional Products
Robert V. Fiore 53 Vice President, Midwest Region
Cheri J. Friedman 41 Vice President, Northeast Region
Mark Ginsberg 43 Vice President, Armani Products
John Gonzales 45 Vice President, Distribution
Operations
Kurt Hagen 29 Vice President, European Operations
Timothy G. Hale 37 Vice President and Image Director
J. Dan Heard 37 Senior Vice President, Operations
Don Hicks 36 Chief Accounting Officer
David R. Moore 37 Vice President, Eyewear
Monica A. Nicholson 34 Controller
Tom Olt 51 Vice President, Stores and Real
Estate
Margo Pieper 36 Vice President, Southwest Region
Daniel M. Smith 60 Senior Vice President, RELIC/Private
Label
Gail Stoke 44 Vice President, Women's Leathers
Steve Street 33 Vice President, Planning and
Inventory Management
John Talbot 39 Vice President, Marketing
Sarah White 33 Vice President, Product Design for
Leathers
Dora A. Yarid 37 Vice President, Western Region
Suzanne Amundsen has served as Vice President - Product Development since
October 1993. Ms. Amundsen is responsible for certain of the Company's private
label watch accounts as well as watch product development for the Company's
RELIC and premium product divisions. From a date prior to 1992 until October
1993, Ms. Amundsen was employed by Innovative Time, Inc. where she most recently
served as Senior Vice President.
Dairmuid Bland has served as Senior Vice President, Product Development
since February 1998. Mr. Bland served as Vice President - Product Development
from July 1996 until February 1998. Mr. Bland is responsible for new product
development of FOSSIL watches and certain licensed watch brands. From December
1993 until June 1996, Mr. Bland was employed by Timex Corporation as Vice
President Marketing and Sales - Fashion Brands / Asia. From a date prior to 1992
until December 1993, Mr. Bland served as General Manager - International Watch
Division of Dickson Concepts International, Ltd.
Gary A. Bollinger has served as Senior Vice President - International since
February 1997. Mr. Bollinger served as Vice President - International from
February 1993 until February 1997. Mr. Bollinger joined the Company in May 1992
and served as Manager - International until February 1993. From a date prior to
1992 until May 1992, Mr. Bollinger served as Divisional Merchandise Manager of
Foley's (currently a division of May Co.).
Heath Carr has served as Vice President - Promotional Products since June
1997. Mr. Carr is responsible for the sales and operations of the promotional
products division of the Company. From February 1996 until June 1997, Mr. Carr
was Vice President - Operations/ Fossil East. From August 1994 until February
1996, he served as Division Manager, Order Management Department. From February
1994 until August 1994, he served as Group Manager, Order Management Department.
From a date prior to 1993 until February 1994, he served as Order Management
Department Manager.
11
<PAGE>
Robert V. Fiore has served as Vice President - Midwest Region since January
1992. Prior to 1992, Mr. Fiore was an independent sales representative for the
Company and was responsible for sales of the Company's products in the Midwest
region, including the Chicago area.
Cheri J. Friedman has served as Vice President - Northeast Region since
January 1992. From a date prior to 1992, Ms. Friedman was an independent sales
representative for the Company in the Northeast region and operated her own
showroom in which the Company's watches were displayed in New York City.
Mark Ginsberg has served as Vice President, Armani Products since March
1998. Mr. Ginsberg is responsible for sales of Emporio Armani products
worldwide. From a date prior to 1993 until March 1998, Mr. Ginsberg was Sales
Manager for Knoll, Inc.
John Gonzales has served as Vice President, Distribution Operations since
February 1998. Mr. Gonzales is responsible for the warehousing and distribution
operations in the United States. From September 1995 until February 1998, Mr.
Gonzales served as Director of Distribution for the Company. From a date prior
to 1993, Mr. Gonzales served as General Warehouse Manager for M.J. Designs.
Kurt Hagen has served as Vice President - European Operations since August
1996. Mr. Hagen is responsible for managing the Company's operations in
Traunstein, Germany. Prior to February 1992, Mr. Hagen served as Data Processing
Manager. From February 1992 until 1994, Mr. Hagen served as Purchasing/Data
Processing Group Manager. In 1994, Mr. Hagen was promoted to International Group
Manager. From February 1996 until August 1996, Mr. Hagen served as Division
Manager, Order Management Department.
Timothy G. Hale has served as Vice President and Image Director since
December 1991. Mr. Hale is responsible for coordinating the activities of the
Company's in-house advertising department. Mr. Hale joined the Company in 1987
and served as manager of creative services from 1987 until December 1991.
J. Dan Heard has served as Senior Vice President - Operations since
February 1995. Mr. Heard is responsible for the Company's domestic operations,
distribution and information systems functions. From a date prior to 1992 until
1995, Mr. Heard was employed by The Bonneau Company, Inc., a Dallas-based
eyewear manufacturer and marketer where he most recently served as Chief
Operating Officer.
Don Hicks has served as Chief Accounting Officer since September 1997. From
April 1997 until September 1997, he served as Vice President and Controller of
HealthCor Holdings, Inc. a publicly held home healthcare services company. From
a date prior to 1993 until November 1996, Mr. Hick was employed by Maxum Health
Corp. where he initially served as Director of Accounting followed by Controller
and Chief Accounting Officer
David R. Moore has served as Vice President - Eyewear since August 1995 and
served as Division Merchandising Manager from September 1994 until August 1995.
From a date prior to 1992 until August 1994, Mr. Moore was employed at The
Bonneau Company, Inc., a Dallas-based eyewear manufacturer and marketer, where
he most recently served as Vice President of Marketing and Merchandising.
Monica A. Nicholson has served as Controller since July 1995. Ms. Nicholson
joined the Company as Senior Accountant in January 1992, and served in that
capacity until February 1994. Ms. Nicholson served as Accounting Manager from
February 1994 until July 1995.
Tom Olt has served as Vice President - Stores and Real Estate since
September 1994. Mr. Olt is responsible for the development and operation of the
Company's outlet and retail stores. From 1993 until September 1994, Mr. Olt
served as Vice President of Sales for Pier 1 Imports, Inc. From 1992 until 1993,
Mr. Olt was President of Scandia Down.
12
<PAGE>
Margo Pieper has served as Vice President, Southwest Region since February
1998. Ms. Pieper is responsible for sales of the Company's products in the
Southwest region. From a date prior to 1993 until February 1998, Ms. Pieper
served as Southwest Regional Manager for the Company.
Daniel M. Smith has served as Senior Vice President - RELIC / Private Label
since March 1996. Mr. Smith is responsible for the marketing and sale of the
Company's RELIC and Private Label watches. From February 1995 until March 1996
Mr. Smith served as Senior Vice President - RELIC Division and as Vice President
- - RELIC Division from a date prior to 1992 until February 1995.
Gail Stoke has served as Vice President, Women's Leathers since February
1998. Ms. Stoke is responsible for sales of the Company's women's leather goods.
From July 1994 until February 1998, Ms. Stock served in the positions as Account
Executive and National Sales Manager for Women's Leathers. From a date prior to
1993 until July 1994, Ms. Stoke was Senior Account Executive for Liz Claiborne.
Steve Street has served as Vice President, Planning and Inventory
Management since February 1998. From February 1995 until February 1998, Mr.
Street served as Division Manager, Order Management for the Company. From August
1993 until February 1995, Mr. Street served as Merchandise Planner for County
Seat Stores. From a date prior to 1993 until August 1993, he served as General
Merchandise Manager for Big & Tall Shoppes.
John Talbot has served as Vice President, Marketing since November 1997.
From June 1997 until November 1997, Mr. Talbot was self-employed. From June 1996
until May 1997, he served as Vice President, Marketing for Buster Brown Apparel.
From a date prior to 1993 until June 1996, Mr. Talbot was Vice President,
Merchandising for Buster Brown Apparel.
Sarah White has served as Vice President, Product Design for Leathers since
February 1998. Ms. White is responsible for the design and development of
leather goods for men and women. From September 1996 until February 1998, Ms.
White served as Design Director for the Company. From December 1994 until
September 1996, she served as a Designer for the Company. From July 1994 until
December 1994, she was Director of Accessories for Cole Haan. From March 1994
until June 1994, Ms. White served as a Designer for the Company. From September
1993 until March 1994, Ms. White was Product Coordinator for Lane Bryant. From a
date prior to 1993 until September 1993, she was an Associate Design Director
for Liz Claiborne.
Dora A. Yarid has served as Vice President - West Region since February
1993. Ms. Yarid joined the Company in 1990 and served as manager for the
Company's south central region from 1990 to 1992 and as Manager - Midwest Region
from 1992 until February 1993.
Compensation of Executive Officers
The total compensation paid for the 1997, 1996 and 1995 fiscal years,
respectively, to the Chief Executive Officer, Mr. Tom Kartsotis, and the other
four most highly paid executive officers who received cash compensation in
excess of $100,000 for the fiscal year ended January 3, 1998 (collectively, the
"Named Executive Officers"), is set forth below in the following Summary
Compensation Table:
13
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation(1) Awards(2)
---------------------------------------------------------------------
Securities
Fiscal Underlying All Other
Name & Principal Position Year Salary ($) Bonus($) Options(#)(3) Compensation
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tom Kartsotis 1997 262,500 -0- -0- 6,149 (6)
Chairman of the Board, Chief 1996 272,932 -0- -0- 2,611 (4)
Executive Officer and 1995 262,500 -0- -0- 4,006 (5)
Director
Kosta N. Kartsotis 1997 254,000 -0- -0- 2,290 (11)
President, Chief Operating 1996 264,807 -0- -0- -0-
Officer and Director 1995 255,000 -0- -0- -0-
Michael W. Barnes 1997 218,846 -0- 37,500 10,996 (6)
Executive Vice President and 1996 212,062 -0- 75,000 2,994 (4)
Director 1995 202,500 -0- 30,000 4,400 (5)
Richard H. Gundy 1997 250,000 -0- 30,000 4,387(4)
Executive Vice President 1996 257,515 -0- 158,572 (8) 4,841 (9)
1995 250,000 -0- 30,000 6,865 (10)
Mark D. Quick 1997 210,385 -0- 37,500 4,199 (4)
Executive Vice President 1996 181,731 -0- -0- -0-
1995 16,827 (7) -0- 112,500 -0-
- ----------------------------------------
<FN>
(1) The Company's executive officers did not receive any other annual
compensation in addition to salary and cash bonuses during the applicable
reporting periods, therefore the "Other Annual Compensation" column has
been omitted.
(2) During the applicable reporting periods, no awards of restricted stock were
made as Long-Term Compensation, therefore the column "Restricted Stock
Award(s)" has been omitted from the Summary Compensation Table.
(3) The column for 1996 includes all options repriced for such Named Executive
Officer during 1996, as described in the Ten-Year Option/SAR Repricing
Table set forth below. As a result, the number of options shown as granted
during 1996 to such Named Executive Officer may be duplicative since these
numbers include options that were granted in exchange for the cancellation
of options granted to such Named Executive Officer during prior years.
(4) Includes employee matching contributions under the 1993 Fossil, Inc.
Savings and Retirement Plan (the "Retirement Plan") to the Named Executive
Officers.
(5) Includes employer matching contributions under the Retirement Plan to the
Named Executive Officers in the following amounts: Mr. Tom Kartsotis -
$2,776; and Mr. Barnes - $3,000. Also includes redistributions of excess
contributions under the Plan to the Named Executive Officers in the
following amounts: Mr. Tom Kartsotis - $1,230; and Mr. Barnes - $1,400.
(6) Include employer matching contribution under the Retirement Plan to the
Named Executive Officers in the following amounts: Mr.. Tom Kartsotis -
$5,701; and Mr. Barnes - $9,292. Also includes dollar value of premiums
paid by the Company on term life insurance policies on the Named Executive
Officers as follows: Mr. Tom Kartsotis - $1,078; and Mr. Barnes - $1,704.
(7) Mr. Quick joined the Company in November 1995. The amount shown represents
the pro rata portion of Mr. Quick's 1995 base salary of $175,000 for the
period during which he was employed by the Company.
14
<PAGE>
(8) Includes options exercisable for 30,000 shares that were granted during
1996 and options exercisable for 128,572 shares that were repriced during
1996.
(9) Includes $2,052 representing the dollar value of premiums paid by the
Company on a term life insurance policy on Mr. Gundy and $2,789
representing employer matching contributions under the Retirement Plan.
(10) Includes $4,365 representing the dollar value of premiums paid by the
Company on a term life insurance policy on Mr. Gundy and $2,500
representing employer matching contributions under the Retirement Plan.
(11) Represents the dollar value of premiums paid by the Company on term life
insurance policies on Mr. Kosta Kartsotis.
</FN>
</TABLE>
The following table discloses, for each of the Named Executive Officers,
options granted during the fiscal year ended January 3, 1998 and the potential
realizable values for such options:
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation
for Option Term
- ---------------------------------------------------------------------------------------------------------------
% of Total
Options/Shares Market
Granted to Exercise Price at
Options/SARs Employees in or Base Date of Expiration 5% (2) 10% (2)
Name Granted (#) Fiscal Year (1) Price Grant Date 5% (2) 10% (2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tom Kartsotis -0- -- -- -- -- -- --
Kosta N. Kartsotis -0- -- -- -- -- -- --
Michael W. Barnes 37,500(3) 7.40% $8.33(4) $8.33 2/6/07 $196,530 $498,045
Richard H. Gundy 30,000(3) 5.92% $8.33(4) $8.33 2/6/07 $157,224 $398,436
Mark D. Quick 37,500(3) 7.40% $8.33(4) $8.33 2/6/07 $196,530 $498,045
- --------------------
<FN>
(1) Represents the percentage of options/shares granted to all employees
pursuant to the Incentive Plan during the 1997 fiscal year.
(2) These dollar amounts represent the value of the option assuming certain
rates of appreciation from the market price of the Common Stock at the date
of grant. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock and overall market conditions.
There can be no assurance that the amounts reflected in this column will be
achieved.
(3) These options were granted pursuant to the Incentive Plan and become
exercisable with respect to 50% of such options on the first anniversary
date of the grant, with respect to 25% of such options on the second
anniversary date of the grant, and as to 25% on the third anniversary date
of the grant, cumulatively.
(4) Pursuant to the Incentive Plan under which this option was granted, the
exercise price was the closing price of a share of Common Stock on the
Nasdaq National Market on the date of grant.
</FN>
</TABLE>
15
<PAGE>
The following table describes for each of the Named Executive Officers
options exercised and the potential realizable values for their options at
January 3, 1998:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES
AND OPTION/SAR VALUES AT JANUARY 3, 1998
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
January 3, 1998 (#) January 3, 1998 (1)
---------------------- ---------------------
Shares
Acquired on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ---------------- ------------ -------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Tom Kartsotis -- -- -- -- -- --
Kosta N. Kartsotis -- -- -- -- -- --
Michael W. Barnes 6,000 $71,000 60,150(2) 67,875(3) $560,915 $650,656
Richard H. Gundy -0- N/A 173,572(4) 45,000(5) $1,621,438 $411,250
Mark D. Quick -0- N/A 84,375(6) 65,625(7) $815,625 $565,625
- ---------------
<FN>
(1) Based on $16.16 per share of Common Stock, which was the closing price per
share of Common Stock on January 2, 1998 on the Nasdaq National Market,
minus the exercise price of "in-the-money" Options/SARs.
(2) The exercise prices of such Options are (i) $5.00 per share with respect to
12,000 options, (ii) $10.33 per share with respect to 12,750 options, (iii)
$8.70 per share with respect to 14,775 options, and (v) $4.41 with respect
to 20,625 options.
(3) The exercise prices of such Options are (i) $4.41 per share with respect to
30,375 options, and (ii) $8.33 with respect to 37,500 options.
(4) The exercise prices of such Options are (i) $6.66 per share with respect to
128,572 options, (ii) $8.70 per share with respect to 30,000 options, and
(iii) $4.41 with respect to 15,000 options.
(5) The exercise prices of such Options are (i) $4.41 per share with respect to
15,000 options, and (ii) $8.33 with respect to 30,000 options.
(6) The exercise price of such Options is $6.50 per share.
(7) The exercise prices of such Options are (i) $6.50 per share with respect to
28,125 options, and (ii) $8.33 with respect to 37,500 options.
</FN>
</TABLE>
Compensation Arrangements
The Company has entered into letter agreements with Mr. Richard H. Gundy
and Mr. Mark D. Quick (each an "Executive") dated April 1, 1994 and October 5,
1995, respectively, regarding the compensation to be paid to the Executive in
the event his employment is terminated by the Company prior to the third
anniversary of the Executive's employment with the Company (the "Expiration
Date"). In such event, the Executive is entitled to receive salary continuation
at his then current salary from the date of such termination until the
Expiration Date. No such payments shall be payable, however, in the event that
such Executive's employment is terminated by reason of his death or voluntary
termination prior to the Expiration Date. Each Executive's employment may be
terminated by either party effective upon written notice to the other party. The
Company negotiated the terms of the Executive's employment with the Company at
arm's length.
16
<PAGE>
Compensation Committee Report on Executive Compensation
In March 1993, the Board of Directors established a Compensation Committee
to review and make recommendations to the Board of Directors regarding the
compensation of senior management and to administer the Incentive Plan. The
Committee is charged with reviewing with the Board of Directors all aspects of
compensation for the executive officers of the Company.
Compensation Philosophy.
- -----------------------
The philosophy of the Company's compensation program is to employ, retain
and reward executives capable of leading the Company in achieving its strategic
business objectives. These objectives include achieving further growth in its
watch and fashion accessories businesses and capitalizing on growing consumer
awareness of the FOSSIL brand name by expanding the scope of its product
offerings to additional categories of fashion accessories. Additional objectives
include preserving a strong financial posture, increasing the assets of the
Company and positioning the Company's assets and business operations in selected
international markets and product segments that offer long term growth
opportunities and enhance stockholder value. The accomplishment of these
objectives is measured against conditions prevalent in the industry within which
the Company operates, which, in recent years have been highly competitive.
Compensation Vehicles.
- ---------------------
The available forms of executive compensation currently include base
salary, cash bonus awards and stock options. Performance of the Company is a key
consideration. The Company's compensation policy recognizes, however, that stock
price performance is only one measure of performance and, given industry
business conditions and the long term strategic direction and goals of the
Company, it may not necessarily be the best current measure of executive
performance. Therefore, the Company's compensation policy also gives
consideration to the Company's achievement of specified business objectives when
determining executive officer compensation. An additional objective of the
Compensation Committee in determining compensation has been to reward executive
officers with equity compensation in addition to salary in keeping with the
Company's overall compensation philosophy, which attempts to place equity in the
hands of its employees in an effort to further instill stockholder
considerations and values in the actions of all the employees and executive
officers.
Compensation paid to executive officers is based upon a Company-wide salary
structure consistent for each position relative to its authority and
responsibility compared to industry peers. Individual awards under the 1993
Fossil, Inc. Long-Term Incentive Plan (the "Incentive Plan") were determined on
the basis of a subjective evaluation of the executive officer's ability to
influence the Company's long term growth and profitability, including such
factors as degree of management responsibility, performance of departments under
his management or supervision, excellence of work product, commitment to
accomplishing the Company's goals as reflected by time committed,
constructiveness of working relationships with other executive officers and
staff, and assumption of responsibility and initiative.
As of January 3, 1998, a total of 1,663,560 options under the Incentive
Plan were issued and outstanding to executive officers and other key employees.
These awards were intended to assure the stability of the Company's management
team as well as to provide incentives for individual performance that coincide
with the enhancement of stockholder value. The Committee believes that it is
important during this period of Company growth to use stock options for its
executive officers as a cornerstone of incentive compensation to tie their
success directly to the growth of stockholder value.
Chief Executive Officer Compensation.
- ------------------------------------
The Compensation Committee considered a number of factors in reviewing and
approving the Chief Executive Officer's (the "CEO") compensation for 1997. In
addition to stock price performance, the factors considered by the Committee
included an evaluation of CEO compensation levels
for other comparable companies in the industry, the
17
<PAGE>
achievement of specified business objectives during the prior fiscal year,
including increasing the market awareness of the FOSSIL brand, the expansion of
the business into additional accessory lines, improving revenues, income and
operating cash flow, and developing the ability of the Company to expand
internationally. Based on these considerations, a fiscal 1997 salary level of
$262,500 was judged by the Compensation Committee to be fair and appropriate for
the most senior executive officer of the Company, taking into account the level
of salary compensation paid to other executive officers of the Company and in
comparison to the CEO's industry peers. The CEO did not receive any grants of
stock options in 1997.
Corporate Tax Deduction on Compensation.
- ---------------------------------------
Federal income tax legislation has limited the deductibility of certain
compensation paid to the CEO and the four other most highly compensated
executive officers of the Company to $1,000,000 annually to such officers. To
the extent readily determinable, and as one of the factors in its consideration
of compensation matters, the Compensation Committee takes into account any
anticipated tax treatment to the Company and to the executive officers of the
available compensation vehicles. Some types of compensation and the
deductibility of those expenses for federal income tax purposes depend upon the
timing of an executive's vesting or exercise of previously granted rights. In
addition, interpretation of, and changes in, the tax laws also affect the
deductibility of certain compensation expenses. To the extent reasonably
practicable, and to the extent it is within the Compensation Committee=s
control, the Compensation Committee intends to limit executive compensation
under ordinary circumstances to that which is deductible under Section 162(m) of
the Internal Revenue Code of 1986. In doing so, the Compensation Committee may
utilize alternatives (such as deferring compensation or establishing performance
based compensation plans for covered employees) for qualifying executive
compensation for deductibility and may rely on grand fathering provisions with
respect to existing contractual commitments.
COMPENSATION COMMITTEE
Kenneth W. Anderson
Alan J. Gold
Donald J. Stone
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries or had any relationship
requiring disclosure pursuant to Item 404 of Regulation S-K. No executive
officer of the Company served as a member of the compensation committee (or
other board committee performing similar functions or, in the absence of any
such committee, the entire board of directors) of another corporation, one of
whose executive officers served on the Compensation Committee. No executive
officer of the Company served as a director of another corporation, one of whose
executive officers served on the Compensation Committee. No executive officer of
the Company served as a member of the compensation committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another corporation, one of whose
executive officers served as a director of the registrant.
Common Stock Performance Graph
The following performance graph compares the cumulative return of the
Company's Common Stock since the date of the Company's initial public offering
on April 8, 1993 (the "Offering"), with that of the Broad Market (CRSP Total
Return Index of the Nasdaq Stock Market (US)) and the Nasdaq Retail Trade
Stocks. Each Index assumes $100 invested at April 8, 1993 and is calculated
assuming quarterly reinvestment of dividends and quarterly weighting by market
capitalization.
18
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1997 COMPARATIVE TOTAL RETURNS
Fossil, Inc., Nasdaq Stock Market and
Nasdaq Stock Market Retail Trades Group
(Performance Results through 12/31/97)
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
===================================================================================
4/8/93 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fossil, Inc. 100 253.33 175.00 111.66 180.00 333.33
Nasdaq Stock Market 100 116.84 114.21 161.52 198.66 243.79
Nasdaq Retail Trades 100 120.96 110.20 121.40 144.74 170.56
- -----------------------------------------------------------------------------------
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which became effective May 1, 1991, requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities (the "10% Stockholders"), to file reports of
ownership and changes of ownership with the SEC and the Nasdaq National Market.
Officers, directors and 10% Stockholders of the Company are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms so
filed. Based solely on review of copies of such forms received, the Company
believes that, during the last fiscal year, all filing requirements under
Section 16(a) applicable to its officers, directors and 10% Stockholders were
timely met, with the exception of Mr. Barnes who filed a Form 4 with respect to
two transactions four days late.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF EACH OF THE INDIVIDUALS NOMINATED FOR ELECTIONS AS A DIRECTOR.
----------------------------------
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INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE THE SUBJECT OF
GRANTS UNDER THE 1993 LONG-TERM INCENTIVE PLAN OF FOSSIL, INC.
(Proposal 3)
General Description of the Proposal
The Board of Directors has approved a proposed amendment to paragraph 4 of
the 1993 Long-Term Incentive Plan of Fossil, Inc. to increase the aggregate
number of shares of Common Stock which shall be available for awards by 900,000
shares. The Board of Directors believes that it is desirable to increase the
number of shares available for award under the Incentive Plan in order to ensure
that the Company has a sufficient number of shares available to attract and
retain employees who hold positions of responsibility and whose performance can
have a significant effect on the success of the Company.
Principal Features of the Incentive Plan.
General. Pursuant to the Incentive Plan which was adopted in 1993, officers
and other key employees of the Company and its subsidiaries are eligible to
receive options to purchase shares of Common Stock, which include incentive
stock options ("Incentive Option(s)") meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified
stock options ("Nonqualiafied Stock Options") (together with Incentive Options,
"Options"), as well as stock appreciate rights, stock awards and cash awards
(collectively, "Awards").
The purpose of the Incentive Plan is to retain key executives and other
selected employees and reward them for making major contributions to the success
of the Company and its subsidiaries. It is intended that this purpose be
achieved by making awards to employees thereunder and thereby providing such
employees with a proprietary interest in the growth and performance of the
Company and its subsidiaries.
The Incentive Plan is administered by the Compensation Committee. The Board
of Directors has delegated to the Compensation Committee the responsibility and
authority to administer the Incentive Plan, including the determination of
eligibility to participate, the making of Awards and, when appropriate, the
adoption of rules and regulations for such administration. The Compensation
Committee consists of three members, each of whom is a "disinterested person"
for purposes of the Incentive Plan within the meaningn of Rule 16b-3 under the
Exchange Act.
The persons eligible to participate in the Incentive Plan include employees
of the Company and its subsidiaries who hold positions of responsibility and
whose performance, in the judgment of the Compensation Committee, can have a
significant effect on the success of the Company and its subsidiaries.
The maximum number of shares of Common Stock that may be made the subject
of a grant of Awards under the Incentive Plan is 2,625,000 shares. Such amount
is subject to the adjustment provisions contained in the Incentive Plan. The
shares of Common Stock subject to the Incentive Plan will consist of unissued
shares or shares held in treasury by the Company, and such amount of shares will
be reserved by the Company for sale for such purpose. If any outstanding Awards
or portion thereof expires, is canceled or is otherwise terminated for any
reason (other than upon the surrender of the Award pursuant to the Incentive
Plan), the shares allocable to the canceled or otherwise terminated Award or
portion thereof may again be the subject of Awards granted under the Incentive
Plan.
Stock Options. The purchase price for shares subject to Options will be
determined by the Compensation Committee. The Options will be for such term as
the Compensation Committee shall determine. Options granted to eligible
employees will become exercisable in one or more installments on such date or
dates and subject to such conditions as the Compensation Committee may
determine, and the terms and conditions of such exercise will be set forth in
the stock option agreement entered into by each eligible employee and the
Company. It is anticipated that Options granted under the Incentive Plan may be
exercised at any time during the ten-year period beginning on the date of grant,
subject to the limitation that such Options
shall vest and become exercisable (i) with respect to 50% of
20
<PAGE>
the total number of Option shares, as of the first anniversary date of the
grant; (ii) with respect to 25% of the total number of Option shares, as of the
second anniversary date of the grant; and (iii) with respect to the remaining
25% of the total number of Option shares, as of the third anniversary date of
the grant. To the extent not exercised, installments will accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires, except that the stock option
agreement may provide for the forfeiture of vested and non-vested options upon
the occurrence of specified events. The Compensation Committee may accelerate
the exercisability of an Option or portion thereof at any time.
The exercise price of each Option will be paid in full at the time of
exercise in cash or, if permitted by the Compensation Committee, by means of
tendering Common Stock or surrendering another Award, including shares of
restricted stock, valued at fair market value on the date of exercise.
Stock Appreciation Rights. An Award may consist of a right to receive a
payment, in cash or Common Stock, equal to the excess of the fair market value
or other specified valuation of a specific number of shares of Common Stock on
the date the stock appreciation right is exercised over a specified strike price
as determined by the Compensation Committee and set forth in the Award
agreement.
Stock Awards. An Award may consist of Common Stock or may be denominated in
units of Common Stock. All or part of any stock award may be subject to
conditions established by the Compensation Committee, and set forth in the Award
agreement, which may including continuous service with the Company and its
subsidiaries, achievement of specific business objectives, increases in
specified indices, attaining growth rates and other comparable measurements of
performance. Such Awards may be based on fair market value or other specified
valuations. The certificates evidencing shares of Common Stock issued in
connection with a stock award shall contain appropriate legends and restrictions
describing the terms and conditions of the restrictions applicable thereto.
Cash Awards. An Award may be denominated in cash with the amount of the
eventual payment subject to future service and such other restrictions and
conditions as may be established by the Compensation Committee, and set forth in
the Award agreement, including, but not limited to, continuous service with the
Company and its subsidiaries, achievement of specific business objectives,
increases in specified indices, attaining growth rates and other comparable
measurements of performance.
Other Provisions. The Incentive Plan provides that in the event of any
subdivision or consolidation of outstanding shares of Common Stock or
declaration of a dividend payable in shares of Common Stock or capital
reorganization or reclassification or other similar transactions, the
Compensation Committee may adjust proportionally (i) the number of shares of
Common Stock reserved under the plan and covered by Awards thereunder; (ii) the
exercise or other price in respect of such Awards; and (iii) the appropriate
fair market value and other price determinations for such Awards. In the event
of any consolidation or merger of the Company with another company, or the
adoption of a plan of exchange affecting the Common Stock, the Compensation
Committee shall make such adjustments or other provisions as it may deem
equitable. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Compensation
Committee shall be authorized to issue or assume stock options, regardless of
whether in a transaction to which Section 425(a) of the Internal Revenue Code
applies, by means of substitution of new options, or to make provisions for the
acceleration of the exercisability of, or lapse of restrictions with respect
to, Awards and the termination of unexercised options in connection with such
transaction.
Upon the termination of employment by a participant under the Incentive
Plan, any unexercised, deferred or unpaid Awards shall be treated as provided in
the Award agreement executed by the employee and the Company. In the event of
termination, the Compensation Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting of an Award,
eliminate or make less restrictive any restrictions contained in an Award of
otherwise amend or modify the Award in any manner not adverse to such employee.
The Board may amend, modify, suspend or terminate the Incentive Plan for
the purpose of meeting or addressing any changes in legal requirements or for
any other purpose permitted by law, except that (i) no amendment
21
<PAGE>
or alteration that would impair the rights of any participiant under any award
granted to such participant shall be made without such participiant's consent
and (ii) no amendment or alteration shall be effective prior to approval by the
Company's stockholders to the extent such approval is then required pursuant to
Rule 16b-3 in order to preserve the applicability of any exemption provided by
such rule to any award then outstanding (unless the holder of such award
consents) to the extent stockholder approval is otherwise required by applicable
legal requirements.
No Award granted to an employee pursuant to the Incentive Plan will be
assignable or transferable except by will or the laws of descent or
distribution, or to a Qualified Domestic Relations Order (as that term is
defined in the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, and rules promulgated thereunder). Any attempted assignment
or transfer of an Award or any other benefit under the Incentive Plan
inconsistent with this paragraph shall be null and void.
Options Granted. As of January 3, 1998, the Company and its Subsidiaries
had approximately 250 employees who were eligible to participate in the
Incentive Plan. In the fiscal year ended January 3, 1998, the Company had
granted to certain key employees options under the Incentive Plan to purchase an
aggregate of 506,588 shares of Common Stock at an average exercise price of
$8.651 per share. These Options are exercisable during the ten-year period
beginning on the date of the grant, subject to the limitation that such Options
shall vest and become exercisable in accordance with the terms and conditions
contained in the stock option award agreement with each eligible employee. In
general, such Options vest and become exercisable (i) with respect to 50% of the
total number of Option shares, as of the first anniversary date of the grant;
(ii) with respect to 25% of the total number of Option shares, as of the second
anniversary date of the grant; and (iii) with respect to the remaining 25% of
the total number of Option shares, as of the third anniversary date of the
grant. The closing price of the Common Stock as reported on the Nasdaq National
Market on March 31, 1998 was $21.58 per share after giving effect to the 3-for-2
Stock Dividend.
Federal Income Tax Consequences
Incentive Stock Options. An Optionee to whom an Incentive Option is granted
under the Incentive Plan will not recognize income upon either the grant or the
exercise of the Incentive Option. However, the excess of the fair market value
of the shares of Common Stock purchased over the exercise price (the "spread")
will increase the alternative minimum taxable income of the Optionee, which may
cause such Optionee to incur "alternative minimum tax." The date on which the
"spread" will be determined is generally as follows: (i) in the case of an
Optionee who is not an officer or director of the Company, the date of exercise
and (ii) in the case of an Optionee who is an officer or director of the
Company, the date on which a sale of such Common Stock would no longer subject
the Optionee to claim under Section 16(b) of the Exchange Act (usually six
months after purchase). The payment of any alternative minimum tax attributable
to the exercise of an Incentive Option would be allowed as a credit against the
Optionee's regular tax liability in a later year to the extent the Optionee's
regular tax liability is in excess of the alternative minimum tax for that year.
On the sale of shares of Common Stock acquired by exercise of an Incentive
Option (assuming that the sale does not occur within two years from the date of
grant of the Incentive Option or within one year from the date of exercise), the
Optionee generally will be taxed on the excess (the "realized gain") of the
amount realized on the sale of such shares over the exercise price of the
Incentive Option at the tax rate then applicable to long-term capital gains. If
the shares purchased upon the exercise of an Incentive Option are sold or
disposed of (including a transfer of such shares in satisfaction of the exercise
price of another Incentive Option) within two years from the date of grant or
one year from the date of exercise, a "disqualifying disposition" will occur.
The Optionee generally will recognize in the year of a disqualifying disposition
(assuming the disposition is to an unrelated party) (i) ordinary income in an
amount equal to the realized gain or, if less, the excess of the fair market
value of the shares of Common Stock on the date of exercise of the Incentive
Option over the exercise price and (ii) capital gain equal to the excess, if
any, of the realized gain over the amount of ordinary income recognized under
the rule described in clause (i). If the exercise price exceeds the amount
realized in the subsequent disqualifying disposition, such excess would
ordinarily constitute a capital gain. Any Optionee who makes a disqualifying
disposition of any shares of Common Stock issued to the Optionee pursuant
22
<PAGE>
to the Optionee's exercise of an Incentive Option must, within ten days of the
disposition, notify the Company and immediately deliver to the Company any
amount of federal income tax withholding required by law.
If the Optionee pays the exercise price of an Incentive Option by using
shares of Common Stock prerviously acquired pursuant to the exercise of an
incentive Option, no gain will be recognized by the Optionee on the disposition
of such previously acquired shares provided such disposition does not constitute
a disqualifying disposition. Under proposed Treasury regulations, the tax basis
of previously acquired shares of Common Stock used to pay part or all of the
exercise price of an Incentive Option will be allocated to the same number of
shares received on exercise as the number of shares surrendered, and, except as
provided in the last sentence of this paragraph, the holding period of such
shares received will have a basis equal to the amount of cash, if any, paid on
the exercise and will have a holding period that begins on the date the shares
are transferred to the Optionee. The proposed regulations further provide that
(i) for purposes of determining whether a disqualifying disposition has occurred
the holding period of all of the shares acquired pursuant to the exercise of an
Incentive Option with previously acquired shares will commence on the date such
shares are transferred to the Optionee and (ii) a disqualifying disposition of
such shares will be deemed to be a disposition of the shares with the lowest tax
basis.
The Company will not be entitled to a tax deduction upon the grant or
exercise of an Incentive Option. The Company will be entitled to a deduction in
the year of a disqualifying disposition to the extent the Optionee recognizes
ordinary income as a result of a disqualifying disposition.
Nonqualiafying Stock Options. An Optionee to whom a Nonqualified Stock
Option is granted under the Incentive Plan or the Stock Option Plan will not
recognize income at the time of the grant of the Nonqualified Stock Option. Upon
the exercise of a Nonqualified Stock Option, the Optionee will recognize
ordinary income (subject to withholding by the Company) in an amount equal to
the difference between the fair market value of the shares of Common Stock as of
the date of exercise and the exercise price, unless the Optionee is an officer
or director of the Company. If the Optionee is an officer or director, such
taxation and withholding would normally be deferred (unless the Optionee files
an election with the Internal Revenue Service to be taxed in the manner
described in the preceding sentence) until such time as the Optionee is no
longer subject to a claim under Section 16(b) of the Exchange Act on the sale of
such stock (usually six months after purchase), at which time the Optionee would
recognize ordinary income equal to the excess of the then fair market value of
such Common Stock over the exercise price. The Optionee generally will have a
tax basis in the shares of Common Stock received pursuant to the exercise of a
Nonqualified Stock Option equal to the fair market value of such shares on the
date on which the Optionee recognizes income as discussed in this paragraph.
Under current rulings, if the Optionee uses previously held shares of
Common Stock in satisfaction of part or all of the exercise price of a
Nonqualified Stock Option, no gain will be recognized on the disposition of such
previously held shares or on receipt of the equivalent number of shares acquired
on exercise. The tax basis (and holding period) of such previously held shares
will be allocated to the same number of shares acquired on exercise as the
number of previously held shares used to pay the exercise price. The fair market
value of any shares of Common Stock received by the Optionee in excess of the
number of shares used to pay the exercise price (less the amount of cash, if
any, paid by the Optionee) will be taxed in accordance with the rules described
in the immediately preceding paragraph, and the holding period for such
additional shares will commence on the date of exercise of the options.
Upon a subsequent sale of shares of Common Stock acquired pursuant to the
exercise of a Nonqualified Stock Option, the holder will generally recognize
long-term or short-term capital gain or loss, depending upon the holding period
of the shares, in an amount equal to the difference between the amount realized
upon such sale and his or her tax basis in the shares sole. The holding period
requuired for long-term capital gain or loss is currently more than one year.
The Company will be entitled to a tax deduction that corresponds as to
timing and amount with the ordinary income recognized by the Optionee on a
Nonqualified Stock Option if and to the extent that such amount is an ordinary
23
<PAGE>
and necessary business expense to the Company and the reasonable compensation
test and applicable withholding requirement are satisfied.
Estimated Benefits
No benefits or amounts have been allocated to eligible employees under the
Incentive Plan with respect to this proposal, nor are any such benefits or
amounts now determinable. For comparison purposes, refer to the grants and
awards that were made under the Incentive Plan in the year ended January 3, 1998
as shown in the Option /SAR Grants in Last Fiscal Year table on page 15. In
addition, in the year ended January 3, 1998, 105,000 options were granted to the
Named Executive Officers as a group and 506,588 options were granted to all
eligible employees as a group.
Effective Date of the Amendment and Board Recommendation
The proposed amendment to increase the aggregate number of shares of Common
Stock which shall be available for award under the Incentive Plan, if passed,
would become effective immediately upon the approval of the Amendment by the
stockholders. The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock present and entitled to vote at the Annual
Meeting is required to adopt the amendment.
The Board of Directors has approved the proposed amendment to the Plan and
submits the following resolution for adoption by the stockholders at the Annual
Meeting of Stockholders:
RESOLVED, the Board of Directors hereby approves an amendment to paragraph
4 of the Incentive Plan to increase the aggregate number of shares of Common
Stock which shall be available for awards by 600,000 shares (900,000 shares
after giving effect to the 3-for-2 Stock Dividend) and that to accomplish the
foregoing, after giving effect to the Stock Dividend, the first sentence of
paragraph 4 of the Incentive Plan shall be amended to read as follows:
"Common Stock Available for Award. There shall be available for Awards
granted wholly or partly in Common Stock (including rights or options which
may be exercised for or settled in Common Stock) during the term of this
Plan an aggregate of 3,525,000 shares of Common Stock."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE INCREASE IN
THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE THE SUBJECT OF GRANTS
UNDER THE 1993 LONG-TERM INCENTIVE PLAN OF FOSSIL, INC.
--------------------------------------
24
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, howewver, any other business should properly come before the Annual
Meeting, the person named in the accompanying proxy will vote the proxy as in
his discretion he may deem appropriate, unless directed by the proxy to do
otherwise.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accounts for the fiscal year ended January
3, 1998 were the firm of Deloitte & Touche LLP. It is expected that one or more
representatives of such firm will attend the Annual Meeting and be available to
respond to appropriate questions. The Board of Directors of the Company, on the
recommendation of the Audit Committee, has selected the firm of Deloitte &
Touche LLP as the Company's independent accountants for the fiscal year ending
January 2, 1999.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the proxy statement for the next
Annual Meeting must be received by the Company at its principal executive
offices on or before December 20, 1998 for inclusion in the Company's Proxy
Statement relating to that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ T.R. Tunnell
---------------------------------------
T.R. Tunnell
Senior Vice President, Development
and Chief Legal Officer and Secretary
April 20, 1998
Richardson, Texas
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED TO DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
25
<PAGE>
FOSSIL, INC.
2280 N. Greenville Avenue
Richardson, Texas 75082
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints T.R. Tunnell and Randy S. Kercho, and each
of them, as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated below, all of the shares of
the common stock of Fossil, Inc. (the "Company"), held of record by the
undersigned on April 3, 1998, at the Annual Meeting of Stockholders of the
Company to be held on May 27, 1998, and any adjournment(s) thereof.
[To Be Dated And Signed On Reverse Side]
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1, FOR THE ELECTION OF THE NOMINEES UNDER
PROPOSAL 2, FOR PROPOSAL 3, AND, THE PROXIES WILL USE THEIR DISCRETION WITH
RESPECT TO ANY MATTERS REFERRED TO IN PROPOSAL 4.
1. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO CREATE A CLASSIFIED BOARD OF DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL TO ELECT SEVEN (7) DIRECTORS OF THE COMPANY TO SERVE FOR TERMS
OF ONE TO THREE YEARS, RESPECTIVELY, OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE
ELECTED AND QUALIFIED IF PROPOSAL 1 IS APPROVED, AND TO ELECT THE SAME PERSONS
AS DIRECTORS FOR A TERM OF ONE YEAR IF PROPOSAL 1 IS NOT APPROVED.
[ ] FOR all nominees listed
(except as marked below to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
Tom Kartsotis Jal S. Shroff Donald J. Stone
Kosta N. Kartsotis Kenneth W. Anderson
Michael W. Barnes Alan J. Gold
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
3. PROPOSAL TO AMEND THE 1993 LONG-TERM INCENTIVE PLAN OF FOSSIL, INC. TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE MADE THE SUBJECT OF A
GRANT.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
Dated ____________________, 1998
---------------------------------------------------
Signature
---------------------------------------------------
Signature, If Held Jointly
Please execute this proxy as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
