FOSSIL, INC.
2280 N. Greenville Avenue
Richardson, Texas 75082
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
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 24th day of May 2000, at 4:00 p.m. (local time) for the following
purposes:
1. To elect three (3) directors to serve for a term of three years or
until their respective successors are elected and qualified;
2. To increase the number of authorized shares of common stock, par
value $0.01 per share of the Company (the "Common Stock") from 50,000,000
shares to 100,000,000 shares; and
3. 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 March 31,
2000 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 17, 2000
Richardson, Texas
<PAGE>
FOSSIL, INC.
2280 N. Greenville Avenue
Richardson, Texas 75082
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
---------------------------
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 2000
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
on May 24, 2000, 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 Proposal 2 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 17, 2000. The Company's Annual Report
to Stockholders covering the Company's fiscal year ended January 1, 2000, 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
1
<PAGE>
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.
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 March
31, 2000 (the "Record Date"). On the Record Date, there were 32,104,197 shares
of Common Stock issued and outstanding.
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 the holders of a plurality of the shares of Common Stock voting at the
meeting is required for the election of directors and the affirmative vote of a
majority of the outstanding shares of Common Stock is required to approve the
proposed amendment to the Amended and Restated Certificate of Incorporation
contained in Proposal 2.
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 no effect on the outcome of
the election of directors and will have the same effect as a vote against the
proposed amendment to the Amended and Restated Certificate of Incorporation
contained in Proposal 2.
2
<PAGE>
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The Company has only one outstanding class of equity securities, its
Common Stock, par value $0.01 per share. 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 Directors - Compensation of Executive Officers -
Executive 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.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)(2)
--------------------------------
Name of Beneficial Owner Number Percent
- ------------------------ ------ -------
<S> <C> <C> <C>
Tom Kartsotis (3) 10,224,950 (4) 31.85
Kosta N. Kartsotis (3) 4,591,284 14.30
Michael W. Barnes 105,748 (5) *
Richard H. Gundy 193,011 (6) *
Mark D. Quick 27,751 (7) *
Jal S. Shroff (8) 593,170 (9) 1.85
Kenneth W. Anderson 56,812 (10) *
Alan J. Gold 68,062 (11) *
Michael Steinberg 0 *
Donald J. Stone 56,700 (12) *
FMR Corp. (13) 1,688,300 5.26
All executive officers and
Directors as a group (12 persons)
(4)(5)(6)(7)(9)(10)(11)(12) 16,090,936 50.17
<FN>
- ------------------------
* Less than 1%
(1) Beneficial ownership as reported in the above table has been determined
in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The persons and entities named
in the table have sole voting and investment power with respect to all
shares shown as beneficially owned by them, except as noted below.
Amounts shown include shares of Common Stock issuable upon exercise of
certain outstanding options within 60 days after the Record Date.
(2) Except for the percentage of certain parties that are based on
presently exercisable options which are indicated in the following
footnotes to the table, the percentages indicated are based on
32,104,197 shares of Common Stock issued and outstanding on the Record
Date. In the case of parties holding presently exercisable options, the
percentage ownership is calculated on the assumption that the shares
presently held or purchasable within the next 60 days underlying such
options are outstanding.
(3) The address of such individual is 2280 N. Greenville Avenue,
Richardson, Texas 75082.
(4) Includes 1,190,925 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 14,658 shares owned by
Mr. Kartsotis as custodian for Annie Grace Kartsotis, his minor
daughter.
(5) Includes 30,658 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date.
(6) Includes 16,350 shares owned by the Richard Gundy Trust, and 16,350
shares owned by the Richard Gundy Family Trust. Mr. Gundy is a trustee
of each of these trusts and has sole voting and investment power with
respect to those shares. Also includes 29,345 shares issuable pursuant
to the exercise of stock options within 60 days of the Record Date.
3
<PAGE>
(7) Shares issuable pursuant to the exercise of stock options within 60
days of the Record Date.
(8) Mr. Shroff and his wife, Pervin J. Shroff, share voting and investment
power with respect to 424,252 of the shares shown.
(9) Includes 94,734 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date. Also includes indirect
ownership of 74,184 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date, which are owned by Mrs.
Shroff.
(10) Includes 34,312 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date. Also includes 11,250 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.
(11) Includes 34,312 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date.
(12) Includes 45,562 shares issuable pursuant to the exercise of stock
options within 60 days of the Record Date.
(13) Based on a Schedule 13G, dated February 14, 2000, filed by FMR Corp.
("FMR") with the Securities and Exchange Commission and the Company.
The Schedule 13G discloses that Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR and an investment
adviser is the beneficial owner of 1,688,300 shares of Common Stock or
5.267% 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. Edward C. Johnson, 3d, FMR, through control of
Fidelity and the funds, each has sole power to dispose of the 1,688,300
shares owned by the funds. Neither FMR, nor Edward C. Johnson, 3d 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. Strategic
Advisers, Inc., a wholly-owned subsidiary of FMR, provides investment
advisory services to individuals. It does not have sole power to vote
or direct the voting of shares of certain securities held for clients
and has sole dispositive power over such securities. As such, FMR's
beneficial ownership may include shares beneficially owned through
Strategic Advisers, Inc. The address of FMR is 82 Devonshire Street,
Boston, Massachusetts 02109.
</FN>
</TABLE>
---------------------------------
4
<PAGE>
ELECTION OF DIRECTORS
(Proposal 1)
The Board of Directors currently consists of eight members and is
classified into three classes. The term of one class of directors expires each
year. By resolution of the Board of Directors at its meeting on March 14, 2000,
the number of directors composing the Board of Directors has been set at eight.
The persons whose names are listed below ("Director Nominees") have been
nominated for election as directors by the Board of Directors to serve for a
term of office to expire at the Annual Meeting of Stockholders in 2003, with
each to hold office until his successor has been duly elected and qualified.
Stockholders will not be able to vote the proxies held by them for more than
three persons. To be elected a director, each Director Nominee must receive a
plurality of the votes cast at the Meeting for the election of directors. Should
any Director Nominee become unable or unwilling to accept nomination or
election, the proxy holders may vote the proxies for the election, in his or her
stead, of any other person the Board of Directors may recommend. Each nominee
has expressed his intention to serve the entire term for which election is
sought.
Directors and Nominees
The following table and text set forth the name, age and positions of
each Director Nominee and director:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Tom Kartsotis..................................... 40 Director, Chairman of the Board and Chief
Executive Officer
Kosta N. Kartsotis................................ 47 Director, President and Chief Operating Officer
Director and Executive Vice President
Michael W. Barnes................................. 39 Director and Managing Director of Fossil (East)
Jal S. Shroff..................................... 63 Limited
Director
Kenneth W. Anderson............................... 66 Director
Alan J. Gold...................................... 66 Director
Michael Steinberg ................................ 71 Director
Donald J. Stone................................... 71 Director
</TABLE>
The Director Nominees for election to the Board of Directors at the
2000 Annual Meeting of Stockholders are as follows:
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.
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.
Michael Steinberg has been a director of the Company since March 2000.
Mr. Steinberg served as Chairman and Chief Executive Officer of Macy's West, a
Division of Federated Department Stores, Inc., from a date prior to 1995 until
his retirement in January 2000.
5
<PAGE>
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 Director Nominees for the office of
director of the Company. Each of the Director Nominees is presently a director
of the Company.
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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR EACH DIRECTOR NOMINEE
FOR THE BOARD OF DIRECTORS.
-----------------------------------------------
Directors Serving Terms To Expire At The 2001 Annual Meeting Of Stockholders:
- ----------------------------------------------------------------------------
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.
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.
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.
Directors Serving Terms To Expire At The 2002 Annual Meeting Of Stockholders:
- ----------------------------------------------------------------------------
Michael W. Barnes has served as Executive Vice President since 1995.
Mr. Barnes has been a director of the Company since his election to the Board of
Directors in February 1993.
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. From
1987 to 1991, Mr. Anderson served in various positions with Amtech Corporation,
a remote electronic identification technology company, which he co-founded,
including the position of Chairman of its Executive Committee.
Board Committees and Meetings
The Board of Directors has established two standing committees: the
Audit Committee and the Compensation Committee. Messrs. Anderson, Gold,
Steinberg and Stone serve on the Audit Committee and the Compensation Committee.
6
<PAGE>
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. In March 2000, the
Board of Directors of the Company, on the recommendation of the Audit Committee,
adopted a written Audit Committee Charter in order to specify the roles and
responsibilities of the Audit Committee and to help focus Committee members on
their responsibilities as expressed in such charter. A copy of the Audit
Committee Charter is attached as Appendix A. The Audit Committee held two
meeting during the fiscal year ended January 1, 2000.
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 1,
2000.
The Board of Directors held four meetings during the fiscal year ended
January 1, 2000. During 1999 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 have 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 5,000 non-qualified
stock options on the date he becomes a director of the Company. On the first day
of each calendar year, each Nonemployee Director receives a grant of an
additional 3,000 non-qualified stock options, as long as he is then serving as a
Nonemployee Director. The grant of options pursuant to the Nonemployee Director
Plan is automatic. An aggregate of 225,000 shares of Common Stock have been
authorized for issuance pursuant to the Nonemployee Director Plan, of which
140,000 shares were subject to outstanding options on the Record Date.
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, 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.
7
<PAGE>
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:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Richard H. Gundy........................ 57 Executive Vice President
Randy S. Kercho......................... 43 Executive Vice President, Chief Financial Officer and
Treasurer
Mark D. Quick........................... 51 Executive Vice President
T.R. Tunnell............................ 46 Senior Vice President, Development, Chief Legal Officer
and Secretary
</TABLE>
Richard H. Gundy has served as Executive Vice President of the
Company since April 1994. Mr. Gundy previously 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 a date prior to 1995 until
February 1995.
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 1995, 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 a date prior to 1995 until April 1996.
8
<PAGE>
Key Employees
The following table and text set forth certain information regarding
other key employees of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Suzanne Amundsen 42 Vice President, Product Development
Diarmuid Bland 44 Senior Vice President, Product Development
Gary A. Bollinger 52 Senior Vice President, Donna Karan Division
Heath Carr 33 Vice President, Supply Chain Management
Sharon Dean 34 Vice President and Chief Accounting Officer
Robert V. Fiore 55 Vice President, Midwest Region
Cheri J. Friedman 43 Vice President, Northeast Region
Mark Ginsberg 45 Vice President, Armani Products
John Gonzales 47 Vice President, Distribution Operations
Kurt Hagen 31 Vice President, e-Commerce
Timothy G. Hale 39 Senior Vice President and Image Director
David Heath 46 Senior Vice President, Relic, Private Label and Special
Markets
Don Hicks 38 Senior Vice President, International
Mike Kovar 38 Senior Vice President, Finance
Julie Kramer 39 Vice President, Merchandising
Lisa Lapiska 44 Vice President, Human Resources and Organizational
Development
Enrico Margaretelli 40 Senior Vice President, Global Marketing
Isabelle Maujean 31 Vice President, International Marketing
David R. Moore 39 Vice President, Eyewear
Dora Y. O'Brien 39 Vice President, Western Region
Tom Olt 53 Senior Vice President, Stores and Real Estate
Margo Pieper 38 Vice President, Southwest Region
Frans Scheurl 48 Senior Vice President, International
Daniel M. Smith 62 Senior Vice President, RELIC/Private Label
Doug Smith 38 Vice President, Premiums/Special Markets
Justin Stead 32 Vice President, International
Gail Stoke 46 Vice President, Women's Leathers
Steve Street 35 Vice President, Planning and Inventory Management
John Talbot 41 Vice President, Marketing
Sarah White 35 Vice President, Product Design for Leathers
</TABLE>
Suzanne Amundsen has served as Vice President - Product Development
from a date prior to 1995. 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.
Diarmuid 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 a
date prior to 1995 until June 1996, Mr. Bland was employed by Timex Corporation
as Vice President Marketing and Sales - Fashion Brands/Asia.
9
<PAGE>
Gary A. Bollinger has served as Senior Vice President - Donna Karan
since June 1999. Mr. Bollinger is responsible for sales of the Company's Donna
Karan New York and DKNY licensed products. Mr. Bollinger served as Senior Vice
President, International from February 1997 until June 1999 and as Vice
President - International from a date prior to 1995 until February 1997.
Heath Carr has served as Vice President, Supply Chain Management
since August 1999. Mr. Carr is responsible for all purchasing and manufacturing
logistics. From June 1997 until August 1999 Mr. Carr was Vice President -
Promotional Products and from February 1996 until June 1997, Mr. Carr was Vice
President - Operations/Fossil East. From a date prior to 1995 until February
1996, he served as Division Manager, Order Management Department.
Sharon Dean has served as Vice President and Chief Accounting Officer
since February 2000. Ms. Dean is responsible for the Company's domestic
accounting operations, consolidations and budgeting. From March 1999 until
February 2000, Ms. Dean served as Chief Accounting Officer. From a date prior to
1995 until March 1999, Ms. Dean was a Divisional Controller for Banc One.
Robert V. Fiore has served as Vice President - Midwest Region from a
date prior to 1995. Mr. Fiore is responsible for sales of the Company's products
in the Midwest Region.
Cheri J. Friedman has served as Vice President - Northeast Region
from a date prior to 1995. Ms. Friedman is responsible for sales of the
Company's products in the Northeast Region.
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 1995 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 1995 until September 1995, Mr. Gonzales served as General
Warehouse Manager for M.J. Designs.
Kurt Hagen has served as Vice President, e-commerce since February
1999. Mr. Hagen is responsible for sales of the Company's products via
electronic means. From August 1996 to February 1999, Mr. Hagen served as Vice
President - European Operations. From February 1996 until August 1996, Mr. Hagen
served as Division Manager, Order Management Department. From a date prior to
1995 until February 1996, Mr. Hagen served as International Group Manager.
Timothy G. Hale has served as Senior Vice President and Image Director
since February 1999. Mr. Hale is responsible for coordinating the activities of
the Company's in-house advertising department. From a date prior to 1995 until
February 1999, Mr. Hale served as Vice President and Image Director.
David Heath has served as Senior Vice President, Relic, Private Label
and Special Markets since April 1999. Mr. Heath is responsible for sales and
development of the RELIC brand, the private label business and the premiums
business. From a date prior to 1995 until April 1999, Mr. Heath was employed by
Nike where he served in various capacities including Strategic Accounts Manager,
Director of USA Sales Development, Director of Global Sales for the Equipment
Division, and General Manager of USA Equipment Division.
Don Hicks has served as Senior Vice President, International since
February 2000. Mr. Hicks is responsible for finance and operations of the
Company's international subsidiaries and distributors and the Company's Emporio
Armani and Diesel brand licensed products. From February 1999 until February
2000, Mr.
10
<PAGE>
Hicks served as Vice President, Finance. Mr. Hicks served as the Vice
President and Chief Accounting Officer from September 1997 until February 1999.
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 1995 until November 1996, Mr. Hicks was employed by Maxum
Health Corp. where he initially served as Director of Accounting followed by
Controller and Chief Accounting Officer.
Mike Kovar has served as Senior Vice President, Finance since March
2000. From November 1997 until March 2000, Mr. Kovar served as Vice President
and Chief Financial Officer for BearCom Group, Inc. He served as Controller from
July 1996 to November 1997. From a date prior to 1995 until July 1996, Mr. Kovar
served as Director of Finance and Operations for the Golf Division of Sport
Supply Group, Inc.
Julie Kramer has served as Vice President, Merchandising since August
1999. Ms. Kramer is responsible for the Fossil apparel line. From July 1997
until August 1999, Ms. Kramer served as Divisional Merchandise Manager for
Junior Apparel/Accessories for Gadzooks. From March 1996 to June 1997, Ms.
Kramer was the Active Sportswear buyer for The Limited. From a date prior to
1995 until February 1996, Ms. Kramer served as Divisional Merchandise Manager
for Junior Apparel/Accessories for Merry-Go-Round.
Lisa Lapiska has served as Vice President, Human Resources since
October 1999. Ms. Lapiska is responsible for staffing, compensation, benefits,
employee relations and training. From a date prior to 1995 until October 1999,
Ms. Lapiska served as Vice President, Management Development for Pier 1 Imports.
Enrico Margaretelli has served as Senior Vice President, Global
Marketing since September 1999. Mr. Margaretelli is responsible for planning and
developing the goals, policies and programs of the worldwide marketing program.
From a date prior to 1995 until September 1999, Mr. Margaretelli served as
Managing Director of Fossil Italia Srl., a subsidiary of the Company.
Isabelle Maujean has served as Vice President, International Marketing
since September 1999. Ms. Maujean is responsible for the Company's international
marketing program. From a date prior to 1995 until September 1999, Ms. Maujean
served as General Manager of Fossil Italia Srl., a subsidiary of the Company.
David R. Moore has served as Vice President - Eyewear since August
1995. Mr. Moore is responsible for sales and development of the Company's
eyewear products. Mr. Moore served as Division Merchandising Manager from a date
prior to 1995 until August 1995.
Dora Y. O'Brien has served as Vice President - West Region since
February 1993. Ms. O'Brien is responsible for sales of the Company's products in
the West region.
Tom Olt has served as Senior Vice President, Stores and Real Estate
since February 2000. Mr. Olt is responsible for the development and operation of
the Company's outlet and retail stores. Mr. Olt served as Vice President -
Stores and Real Estate from a date prior to 1995 until February 2000.
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 1995 until February 1998, Ms. Pieper
served as Southwest Regional Manager for the Company.
Franz Scheurl has served as Senior Vice President, International since
April 1997. Mr. Scheurl is responsible for sales of the Company's products in
Europe and Japan. From a date prior to 1995 until April 1997, Mr. Scheurl served
as Managing Director of Fossil (Europe) GmbH, a subsidiary of the Company.
11
<PAGE>
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.
Doug Smith has served as Vice President of Sales and National Sales
Manager for the Premiums/Special Markets Division since April 1999. Mr. Smith is
responsible for sales and marketing of the Company's premium products to the
corporate market sector. From a date prior to 1995 until April 1999, Mr. Smith
served as National-Key Account Manager for The Gillette Company.
Justin Stead has served as Vice President, International since
February 2000. Mr. Stead is responsible for Fossil International General Stores
and for sales in Asia, the Pacific Rim, Japan, South Africa, the United Kingdom,
France, and Scandinavia. From November 1998 until November 1999, Mr. Stead
served as a Divisional Manager for Relic. From a date prior to 1995 until
November 1998, Mr. Stead was a buyer for Zale Corporation.
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 a date prior to 1995 until February 1998, Ms. Stoke served
in the positions of Account Executive and National Sales Manager for Women's
Leathers.
Steve Street has served as Vice President, Planning and Inventory
Management since February 1998. Mr. Street is responsible for the management of
the company's domestic and international inventory. From February 1995 until
February 1998, Mr. Street served as Division Manager, Order Management for the
Company.
John Talbot has served as Vice President, Marketing since November
1997. Mr. Talbot is responsible for domestic and international marketing of the
Company's products. 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 1995 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 a date prior to 1995 until
September 1996, Ms. White served as a Designer for the Company.
Compensation of Executive Officers
The total compensation paid for the 1999, 1998 and 1997 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 $100,000 for the fiscal year ended January 1, 2000 (collectively, the
"Named Executive Officers"), is set forth below in the following Summary
Compensation Table:
12
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation ($) Awards (2)
---------------------------------------------------------------------------------------
Securities
Name & Principal Position Fiscal Other Annual Underlying All Other
Year Salary Bonus Compensation (1) Options (#) Compensation ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tom Kartsotis 1999 262,500 -0- -0- -0- 12 (3)
Chairman, Chief Executive 1998 262,500 -0- -0- -0- 13 (3)
Officer and Director 1997 262,500 -0- -0- -0- 13 (3)
Kosta N. Kartsotis 1999 255,000 -0- -0- -0- 18 (3)
President, Chief Operating 1998 255,000 -0- -0- -0- 35 (3)
Officer and Director 1997 255,000 -0- -0- -0- 35 (3)
Michael W. Barnes 1999 233,846 -0- 50,000 33,751 2,923 (4)
Executive Vice President 1998 224,423 -0- -0- 26,250 3,162 (5)
and Director 1997 218,846 -0- -0- 37,500 2,526 (6)
Richard H. Gundy 1999 250,000 -0- 25,000 41,251 3,450 (4)
Executive Vice President 1998 250,000 -0- -0- 26,251 2,988 (5)
1997 250,000 -0- -0- 30,000 2,746 (6)
Mark D. Quick 1999 228,846 -0- 25,000 26,251 2,652 (4)
Executive Vice President 1998 219,423 -0- -0- 22,500 2,988 (5)
1997 210,384 -0- -0- 37,500 3,919 (6)
<FN>
(1) Represents employer contributions under the Fossil, Inc. and Affiliates
Deferred Compensation Plan.
(2) During the applicable reporting periods, no awards of restricted stock
were made as Long-Term Compensation and no payouts were made pursuant
to long-term incentive plans, therefore the columns "Restricted Stock
Award(s)" and "LTIP Payouts" have been omitted from the Summary
Compensation Table.
(3) Represents the dollar value of premiums paid by the Company on term
life insurance policies.
(4) Includes employer-matching contribution under the Fossil, Inc. Savings
and Retirement Plan to the Named Executive Officers in the following
amounts: Mr. Barnes - $2,707; Mr. Gundy - $2,762 and Mr. Quick -
$2,600. Also includes the dollar value of premiums paid by the Company
on term life insurance policies on the Named Executive Officers as
follows: Mr. Barnes - $216; Mr. Gundy - $688 and Mr. Quick - $52.
(5) Includes employer-matching contribution under the Fossil, Inc. Savings
and Retirement Plan to the Named Executive Officers in the following
amounts: Mr. Barnes - $2,898; Mr. Gundy - $2,898 and Mr. Quick -
$2,898. Also includes the dollar value of premiums paid by the Company
on term life insurance policies on the Named Executive Officers as
follows: Mr. Barnes - $264; Mr. Gundy - $90 and Mr. Quick - $90.
(6) Includes employer-matching contribution under the Fossil, Inc. Savings
and Retirement Plan to the Named Executive Officers in the following
amounts: Mr. Barnes - $2,338; and Mr. Gundy - $2,656; and Mr. Quick -
$3,829. Also includes the dollar value of premiums paid by the Company
on term life insurance policies on the Named Executive Officers as
follows: Mr. Barnes - $188; and Mr. Gundy - $90; and Mr. Quick - $90.
</FN>
</TABLE>
13
<PAGE>
The following table discloses, for each of the Named Executive
Officers, options granted during the fiscal year ended January 1, 2000 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
Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options/Shares Market
Options/ Granted to Exercise Price at
SARs Employees in Or Base Date of Expiration
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 33,751(3) 6.07% $18.0417(4) $18.0417 2/12/09 $382,966 $970,497
Richard H. Gundy 41,251(3) 7.41% $18.0417(4) $18.0417 2/12/09 $468,068 $1,186,156
Mark D. Quick 26,251(3) 4.72% $18.0417(4) $18.0417 2/12/09 $297,865 $754,837
<FN>
- ----------------------------------
(1) Represents the percentage of options/shares granted to all employees
pursuant to the Incentive Plan during the 1999 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 20% of such options on each of the first
through the fifth anniversary dates of the grants, 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>
14
<PAGE>
The following table describes for each of the Named Executive Officers
options exercised and the potential realizable values for their options at
January 1, 2000:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES
AND OPTION/SAR VALUES AT JANUARY 1, 2000
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
January 1, 2000 (#) January 1, 2000 (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 98,472 $2,617,383 1(2) 67,501(3) $18 $681,954
Richard H. Gundy 42,189 $ 605,761 1(4) 72,188(5) $13 $670,661
Mark D. Quick 227,813 $4,888,828 1(4) 57,187(6) $13 $606,197
<FN>
- ----------------------
(1) Based on $23.125 per share of Common Stock, which was the closing price
per share of Common Stock on December 31, 1999 on the Nasdaq National
Market, minus the exercise price of "in-the-money" Options/SARs.
(2) The exercise prices of such Options are $5.5556 per share.
(3) The exercise prices of such Options are (i) $5.5556 per share with
respect to 14,062 options, (ii) $9.75 with respect to 19,688 options,
and (iii) $18.0417 per share with respect to 33,751.
(4) The exercise price of such Options are $9.75 per share.
(5) The exercise prices of such Options are (i) $5.5556 per share with
respect to 11,250 options, (ii) $9.75 with respect to 19,687 options
and (iii) $18.0417 per share with respect to 41,251 options.
(6) The exercise prices of such Options are (i) $5.5556 per share with
respect to 14,063 options, (ii) $9.75 per share with respect to 16,873
options and (ii) $18.0417 per share with respect to 26,251 options.
</FN>
</TABLE>
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
15
<PAGE>
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 1, 2000, a total of 1,907,453 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 1999.
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 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 1999 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 1999.
16
<PAGE>
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
Michael Steinberg
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.
17
<PAGE>
Common Stock Performance Graph
The following performance graph compares the cumulative return of the
Company's Common Stock over the preceding five year periods 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 December 31,
1994 and is calculated assuming quarterly reinvestment of dividends and
quarterly weighting by market capitalization.
<TABLE>
<CAPTION>
1999 COMPARATIVE TOTAL RETURNS
Fossil, Inc., Nasdaq Stock Market and
Nasdaq Stock Market Retail Trades Group
(Performance Results through 12/31/99)
(Graphic Omitted)
(1999 Comparative Total Returns)
========================================================================================================================
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fossil, Inc. 100.00 63.81 102.86 190.48 328.57 396.43
Nasdaq Stock Market 100.00 141.33 174.04 213.07 300.25 542.43
Nasdaq Retail Trades 100.00 110.14 131.31 154.27 187.59 181.50
========================================================================================================================
</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.
18
<PAGE>
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(Proposal 2)
General Description of Proposal
The Board of Directors has approved a proposed amendment to Article IV
of the Amended and Restated Certificate of Incorporation of the Company that
increases the number of authorized shares of Common Stock from 50,000,000 shares
to 100,000,000 shares. The Board of Directors believes that it is desirable to
increase the number of authorized shares of Common Stock in order to ensure that
the Company has a sufficient number of authorized but unissued shares of Common
Stock available to provide the flexibility needed for future expansion of the
Company's activities. The availability of the additional authorized shares of
Common Stock will permit the Company to meet advantageous market conditions for
the sale of additional Common Stock, future acquisitions of the properties or
securities of other companies, dividend reinvestment plans, stock dividends,
stock splits, and other general corporate purposes. The increase will also give
the Company greater flexibility by allowing shares of Common Stock to be issued
by the Board of Directors for such purposes without the delay and expense of a
special meeting of stockholders.
Pursuant to Delaware corporate law, the Board of Directors is
authorized to issue the additional shares of Common Stock from time to time for
any corporate purposes without further action by the Company's Stockholders,
except as may be required for a particular transaction by the Company's Amended
and Restated Certificate of Incorporation, or by the rules of any applicable
exchange. The Common Stock is currently listed on the Nasdaq National Market
System. The Board, however, has no current plans, understandings, or
arrangements for the issuance of any of the additional Common Stock that would
be authorized by this proposed amendment to the Amended and Restated Certificate
of Incorporation of the Company. Holders of presently outstanding shares of
Common Stock have no preemptive rights to purchase additional shares of Common
Stock.
Possible Effects of the Proposal
Anti-takeover Issues. Although the Board of Directors does not view the
proposed amendment to increase the number of authorized shares of Common Stock
to be an anti-takeover proposal, it may be deemed to be one. The availability of
additional shares of Common Stock may make it more difficult to effect, or may
discourage an attempt, to gain control of the Company by means of a merger,
tender offer, or proxy contest that is not approved by the Company's management.
The proposal is not the result of any knowledge of the Company of any specific
effort to accumulate the Company's securities or to obtain control of the
Company. As discussed above, the primary purpose of the proposed amendment is to
increase the Company's flexibility for the future expansion of the Company's
activities.
Delaware Statute. Pursuant to Delaware law, Delaware corporations are
prohibited from engaging in a wide range of specified transactions with any
"interested stockholder," defined to include, among others, any person or entity
who in the last three years obtained 15% or more of any class or series of stock
entitled to vote generally in the election of directors, unless, among other
exceptions, the transaction is approved by (i) the Board of Directors prior to
the date the interested stockholder obtained such status or (ii) the holders of
two-thirds of the outstanding shares of each class or series of stock entitled
to vote generally in the election of directors, not including those shares owned
by the interested stockholder. By virtue of the Company's decision not to opt
out of the provisions of this law, it applies to the Company.
The Amended and Restated Certificate of Incorporation of the Company
contains other provisions that also may be deemed to have the effect of
delaying, deferring, or preventing a change in control of the Company. The
following summary description of those provisions is necessarily general, and
reference should be made in each case to the Amended and Restated Certificate of
Incorporation of the Company.
19
<PAGE>
Removal of Directors. The Company's Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws provide that a director of the
Company may be removed for cause by vote or other action of the stockholders by
the affirmative vote of at least a majority of the shares then entitled to vote
at an election of directors; or without cause by the affirmative vote of at
least 80% of all directors then in office at a meeting of the Board of Directors
called for that purpose, or 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 entitled to vote in the election of directors.
Classified Board of Directors. The Company's Amended and Restated
Certificate of Incorporation divides the Company's Board of Directors into three
approximately equal classes with staggered terms. This provision may have the
effect of significantly extending the time required to make any change in
control of the Board and may tend to discourage any hostile takeover bid for the
Company. Staggered terms 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. This provision also makes 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, this provision also tends to perpetuate incumbent management and
increases the amount of time required for a takeover bidder to obtain control of
the Company without the cooperation of the Board, even if the bidder were to
acquire a majority of the Company's outstanding stock; accordingly, it may 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. This provision may 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, this
provision may 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.
Issuance of Preferred Stock. The Company's Amended and Restated
Certificate of Incorporation also authorizes the Board of Directors to issue up
to 1,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), from time to time, in one or more series. No shares of the
Preferred Stock of the Company have been issued, and the Company has no present
plans to issue such shares. The Board of Directors has the authority, without
action by the stockholders, to create one or more series of Preferred Stock and
determine the number of shares, designation, price, sinking fund terms,
conversion and voting rights with respect to any such series. The issuance of
any such series of Preferred Stock could be used to render more difficult an
unfriendly tender offer, proxy contest, merger or other change in control of the
Company.
All of the various provisions described above, as well as the authority
of the Board of Directors to issue additional shares of Common Stock if the
proposal to increase the number of authorized share of Common Stock is approved
by the stockholders, could be used by the Board of Directors in a manner
calculated to prevent the removal of management and make more difficult or
discourage a change in control of the Company. Certain aspects of the foregoing
provisions in the Amended and Restated Certificate of Incorporation and the
Amended and Restated Bylaws of the Company were designed to afford the Board of
Directors the opportunity to evaluate the terms of a takeover attempt without
haste or undue pressure, advise stockholders of its findings and to negotiate to
protect the interests of all stockholders.
The Company is not aware of any effort to accumulate the Company's
securities or to obtain control of the Company, and the Company has no present
intention or agreement to issue any additional share of Common Stock.
Furthermore, the proposal to increase the number of authorized shares of Common
Stock is not part of any plan by the Company to adopt a series of anti-takeover
measures, and the Company has no present intention of soliciting vote on any
such measures or series of measures.
20
<PAGE>
Effective Date of Amendment and Board Recommendation
The proposed amendment to increase the number of authorized shares of
Common Stock, if passed, would become effective upon the filing of the
Certificate of Amendment with the Secretary of State of the State of Delaware,
which filing is expected to be made shortly after the stockholders approve the
amendment. The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting of
Stockholders is required to adopt the amendment.
The Board of Directors has approved the proposed amendment to the
Company's Amended and Restated Certificate of Incorporation and submits the
following resolution for adoption by the shareholders at the Annual Meeting:
RESOLVED, that it is deemed by the Board of Directors to be in the best
interests of the Company and its stockholders to amend the Company's
Amended and Restated Certificate of Incorporation to increase the total
authorized shares of Common Stock of the Company, including that which
is outstanding, from 50,000,000 shares of Common Stock, par value
$0.01, to 100,000,000 shares of Common Stock, par value $0.01, and
that, to accomplish the foregoing, paragraph 1 of Article IV of the
Company's Amended and Restated Certificate of Incorporation be amended
to read as follows:
"The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 101,000,000 shares,
consisting of 1,000,000 shares of preferred stock, par value $.01 per
share ("Preferred Stock"), and 100,000,000 shares of common stock, par
value $.01 per share ("Common Stock")."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE INCREASE
IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
---------------------------------
21
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, 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 accountants for the fiscal year ended
January 1, 2000 was 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 December 30, 2000.
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 17, 2000 for inclusion in the Company's Proxy
Statement relating to that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
T. R. Tunnell
Senior Vice President, Development
and Chief Legal Officer and Secretary
April 17, 2000
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.
22
<PAGE>
APPENDIX 1
----------
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") in fulfilling its responsibility to oversee
management's conduct of the Company's financial reporting process, including
overviewing the financial reports and other financial information provided by
the Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal accounting and financial controls,
the annual independent audit of the Company's financial statements and the
Company's legal compliance and ethics programs as established by management and
the Board.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and the power to retain outside counsel,
auditors or other experts for this purpose. The Board and the Committee are in
place to represent the Company's shareholders; accordingly, the outside auditor
is ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the Board,
and the Committee's composition will meet the requirements of the Audit
Committee Policy of the NASD.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within
a reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee will have accounting or
related financial management expertise.
KEY RESPONSIBILITIES
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management,
including the internal audit staff, if any, as well as the outside auditors,
have more time, knowledge and more detailed information on the Company than do
Committee members; consequently, in carrying out its oversight responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
outside auditor's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set forth
as a guide with the understanding that the Committee may diverge from this guide
as appropriate given the circumstances.
o As a whole, or through a Committee representative, the Committee shall
review with management and the outside auditors the audited financial
statements to be included in the Company's Annual Report on Form 10-K
(or the Annual Report to Shareholders if distributed prior to the
filing of Form 10-K) and review and consider with the outside auditors
the matters required to be discussed by Statement of Auditing Standards
("SAS") No. 61.
<PAGE>
o As a whole, or through a Committee representative, the Committee shall
review with the outside auditors the Company's interim financial
results to be included in the Company's quarterly reports to be filed
with Securities and Exchange Commission and the matters required to be
discussed by SAS No. 61; this review will occur prior to the Company's
filing of the Form 10-Q.
o The Committee shall discuss with management and the outside auditors at
regularly held Audit Committee meetings, or at such other time as
deemed appropriate, the quality and adequacy of the Company's internal
controls.
o The Committee shall request from the outside auditors annually, a
formal written statement delineating all relationships between the
auditor and the Company consistent with Independence Standards Board
Standard Number 1; discuss with the outside auditors any such disclosed
relationships and their impact on the outside auditor's independence;
and recommend that the Board take appropriate action to oversee the
independence of the outside auditor.
o The Committee, subject to any action that may be taken by the full
Board, shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditor.
<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 March 31, 2000, at the Annual Meeting of Stockholders of the
Company to be held on May 24, 2000, 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" THE ELECTION OF THE NOMINEES UNDER PROPOSAL
1, "FOR" PROPOSAL 2, AND, THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO
ANY MATTERS REFERRED TO IN PROPOSAL 3.
1. PROPOSAL TO ELECT THREE (3) DIRECTORS OF THE COMPANY TO SERVE FOR A
TERM OF THREE YEARS OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND
QUALIFIED.
[ ] FOR all nominees listed
(except as marked below to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
Kosta N. Kartsotis
Alan J. Gold
Michael Steinberg
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
- ----------------------------------------------------------
2. PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK, PAR VALUE $0.01 PER SHARE OF THE COMPANY FROM 50,000,000 SHARES TO
100,000,000 SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 ____________________, 2000
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Signature
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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.
