UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrants [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HAMPSHIRE GROUP, LIMITED
(Name of Registrant as Specified in its Charter)
Charles W. Clayton, Secretary
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14(a)-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: ___________________________
4) Proposed maximum aggregate value of transaction: _______________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 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) Amounts previously paid: ______________________________
2) Form, Schedule or Registration Statement No.: _____________
3) Filing Party: _________________________________________
4) Date Filed: __________________________________________
<PAGE>
Hampshire Group, Limited
215 Commerce Boulevard
Anderson, South Carolina 29621
April 3, 1998
Dear Fellow Stockholder:
The 1998 Annual Meeting of Stockholders will be held at The Princeton Club,
15 West Forty-Third Street, New York City, on Wednesday, May 6, 1998 at 10:00
o'clock A.M. All Stockholders are welcome and encouraged to attend this meeting.
An official Notice of Annual Meeting of Stockholders appears on the next page of
this Proxy.
The matters scheduled for consideration at the Annual Meeting are set forth
in the Notice of Annual Meeting. In addition, the management group will be
updating those attending the meeting on the Company's activities and future
plans. We will plan ample time for questions and comments, as we value the
opportunity to have a dialogue with our Stockholders.
I sincerely hope that you will be able to attend the Annual Meeting, but in
any event, please mark and sign your Proxy and return it to the Company. If you
attend the meeting in person and wish to change your vote, you may do so at that
time.
Sincerely,
/s/ Ludwig Kuttner
-----------------------------
Ludwig Kuttner
Chairman of the Board
and Chief Executive Officer
<PAGE>
HAMPSHIRE GROUP, LIMITED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Hampshire
Group, Limited, a Delaware corporation (the "Company"), will be held at The
Princeton Club, 15 West Forty-Third Street, New York, New York on May 6, 1998,
at 10:00 A.M. to consider and act on the following proposals:
1. The election of five Directors to serve until the next Annual
Meeting of Stockholders; and
2. Any other business which may properly come before the Meeting, or
any and all adjournments thereof.
Information regarding the matters to be considered and voted upon at the
Annual Meeting is set forth in the Proxy Statement accompanying this Notice. The
Board of Directors has fixed the close of business on April 3, 1998, as the
record date for the determination of the holders of Common Stock entitled to
notice of and to vote at the Annual Meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1997, and form of Proxy are being mailed together with this
Notice.
Please complete and return to the Company the enclosed Proxy, whether or
not you plan to be present at the meeting. If you attend the meeting, you may
revoke your Proxy if you choose to cast your vote in person.
By Order of the Board of Directors,
/s/ Ludwig Kuttner
____________________________
Anderson, South Carolina Ludwig Kuttner
April 3, 1998 President
<PAGE>
HAMPSHIRE GROUP, LIMITED
215 Commerce Boulevard
Anderson, SC 29621
PROXY STATEMENT
The accompanying Proxy is solicited on behalf of the Board of Directors of
Hampshire Group, Limited (the "Company") for use at the Annual Meeting of
Stockholders to be held at The Princeton Club, 15 West Forty-Third Street, New
York, New York, on May 6, 1998, at 10:00 A.M., or at any and all adjournments
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. This Proxy Statement and the accompanying Proxy are being mailed
on or about April 7, 1998 to Stockholders of record as of April 3, 1998 (the
"Record Date"). All expenses incident to the preparation and mailing of, or
otherwise making available to the Stockholders the Notice, Proxy Statement and
Proxy are to be paid by the Company. In addition to solicitation by mail,
arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries to send material to their principals, and the Company may
reimburse them for their expenses in so doing. To the extent necessary and in
order to ensure sufficient representation, officers and employees of the Company
may, without additional remuneration, solicit proxies from Stockholders by
telephone or personal interviews.
Properly signed and dated Proxies received by the Company's Secretary prior
to or at the Annual Meeting will be voted as instructed thereon, or in the
absence of such instructions will be voted as follows:
(1) FOR the election as Directors of the Company those five persons
designated as nominees.
Any Stockholder giving the Proxy enclosed with this statement may cast a
vote in person by revoking the Proxy at the Annual Meeting. Any Proxy may be
revoked by notice in writing to the Secretary at any time prior to the Annual
Meeting.
1
<PAGE>
OUTSTANDING VOTING STOCK
As of the Record Date, there were 4,143,343 shares of Common Stock, par
value $0.10 per share, (the "Common Stock") eligible to vote at the 1998 Annual
Meeting of Stockholders. Holders of Common Stock are entitled to one vote for
each share of stock held on the Record Date.
Beneficial Ownership
The following table sets forth certain information regarding the ownership
of Common Stock of the Company as of the Record Date by: (a) each person known
to the Company to be the beneficial owner of more than 5% of the outstanding
shares of Common Stock; (b) each director and named executive officer of the
Company designated in the section of the Proxy Statement captioned "Executive
Officers of the Registrant"; and (c) all directors and executive officers of the
Company as a group. Except as otherwise indicated, all persons listed below
have: (x) sole voting power and investment power with respect to their shares of
Common Stock, except to the extent that authority is shared by spouses under
applicable law; and (y) record and beneficial ownership with respect to their
shares of Common Stock of the Company.
<TABLE>
BENEFICIAL OWNERSHIP TABLE
<CAPTION>
Name Shares Percent
- ------------------------------------------------------- ---------- ----------
<S> <C> <C>
Ludwig Kuttner - Estouteville, Keene VA 22946 868,285 (1) 19.74%
Beatrice Ost-Kuttner - Estouteville, Keene VA 22946 916,137 (2) 22.11%
Hans W. Schmidig - Bleicherweg 39, CH-8027,
Zurich, Switzerland 481,386 11.62%
Peter W. Woodworth - 702 Main Street, Winona MN 55987 303,455 (3) 7.32%
Fidelity Low-Price Stock Fund - 82 Devonshire St.,
Boston MA 02109 300,700 7.26%
Eugene Warsaw 117,168 (4) 2.78%
Charles W. Clayton 110,385 (7) 2.64%
Herbert Elish 33,821 (5) *
H. Edward Hurley 19,340 (7) *
Harvey L. Sperry 29,161 (6) *
Fritz Schulte 9,296 (7) *
All directors and executive officers as a group
(eight persons) 1,490,911 33.02%
- --------------------------------------------------------------------------------
<FN>
*Less than 1%.
</FN>
</TABLE>
(Footnotes continued on Page 3)
2
<PAGE>
(Footnotes continued from Page 2)
(1) (Ludwig Kuttner) Includes 72,727 shares issuable upon exercise of warrants,
181,819 shares issuable under presently exercisable options and 103,957
shares purchased under the Company's Common Stock Purchase Plan for
Directors and Executives (the "Common Stock Purchase Plan"); but does not
include shares held by Mrs. Ost-Kuttner and 189,636 shares held by their
adult sons, as to which Mr. Kuttner disclaims beneficial ownership.
(2) (Beatrice Ost-Kuttner) Does not include shares held by Mr. Kuttner and
189,636 shares held by their adult sons, as to which Mrs. Ost-Kuttner
disclaims beneficial ownership.
(3) (Peter W. Woodworth) Includes 1,500 shares issuable under presently
exercisable options and 6,628 shares purchased under the Company's Common
Stock Purchase Plan; but does not include 65,571 shares held by his spouse,
as to which Mr. Woodworth disclaims beneficial ownership.
(4) (Eugene Warsaw) Includes 200 shares of Common Stock held in trust for the
children of Mr. Warsaw, 44,716 shares of Common Stock purchased for the
account of Mr. Warsaw under the Common Stock Purchase Plan and 71,252
shares of Common Stock issuable under presently exercisable options.
(5) (Herbert Elish) Includes 22,000 shares of Common Stock held by spouse and
11,821 shares of Common Stock purchased for the account of Mr. Elish under
the Common Stock Purchase Plan.
(6) (Harvey L. Sperry) Includes 15,616 shares of Common Stock purchased under
the Common Stock Purchase Plan.
(7) Includes, respectively, for Messrs. Clayton, Hurley and Schulte, 33,852,
13,790 and 2,671 shares of Common Stock purchased under the Common Stock
Purchase Plan and 33,296, 5,250 and 6,250 shares issuable under presently
exercisable options.
Quorum Requirements
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting; but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
Under applicable Delaware law, abstentions will be counted for purposes of
determining the existence of a quorum, but broker non-votes will not.
3
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
At the Annual Meeting, five Directors of the Company will be elected to
serve for the ensuing year and until their successors shall be duly elected and
qualified. The Board of Directors of the Company is soliciting Proxies for the
election of the persons named below. Should any of these nominees not remain a
candidate at the time of the Annual Meeting (a situation which is not
anticipated), Proxies solicited hereunder will be voted in favor of those
nominees who do remain as candidates and may be voted for substituted nominees.
Directors will be elected by the vote of the holders of a majority of the stock
present in person or represented by Proxy at the Annual Meeting.
Nominees
- --------
The five persons listed below have been nominated for election as Directors
of Hampshire Group, Limited and each is currently a Director of the Company.
Ludwig Kuttner Age 51 Director since 1977
Mr. Kuttner was elected Chairman of the Board in 1979 and has served as
President and Chief Executive Officer of the Company from 1979 to 1992 and 1994
through the present. Previously, he served in various capacities in the textile
and real estate industries.
Herbert Elish Age 64 Director since 1986
Mr. Elish is the former Chairman of the Board and Chief Executive Officer of
Weirton Steel Corporation, having served in that position from 1987 through
1995.
Harvey L. Sperry Age 68 Director since 1977
Mr. Sperry has been a Partner in the law firm of Willkie Farr & Gallagher since
1964. Willkie Farr & Gallagher renders legal services to the Company. He is a
former Director of Weirton Steel Corporation.
Eugene Warsaw Age 70 Director since 1994
Mr. Warsaw has served as President and Chief Executive Officer of Hampshire
Designers, Inc., a subsidiary of Hampshire Group, Limited, since 1987. He served
as President and Chief Executive Officer of the Private Label Sportswear
division of Phillips Van Heusen and President of Sommerset Knitting Mills from
1982 through 1986.
Peter W. Woodworth Age 51 Director since 1995
Mr. Woodworth is President and Chief Executive Officer of Winona Knitting Mills,
a division of Hampshire Designers, Inc. He was the majority stockholder and
President of Winona Knitting Mills, Inc. from 1983 until the time of its merger
into Hampshire Group, Limited in October 1995.
Information about the beneficial ownership of the Company's Common Stock of each
nominee is included in the "Beneficial Ownership Table" on Page 2.
4
<PAGE>
ITEM 2. TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
that may come before the meeting. If any other matters are properly presented to
the meeting for action, it is the intention of the persons named as Proxies in
the enclosed form of Proxy to vote such Proxies in accordance with the best
judgment of a majority of the Proxies on such matters.
5
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Hampshire Group, Limited, who are elected by and
serve at the discretion of the Board of Directors of the Company, are as
follows:
Name Age Position
----------------------- -------- ---------------------------------------
Ludwig Kuttner 51 Chairman of the Board, President
and Chief Executive Officer
Eugene Warsaw 70 President and Chief Executive Officer,
Hampshire Designers, Inc.
Charles W. Clayton 60 Vice President, Secretary, Treasurer
and Chief Financial Officer
H. Edward Hurley 49 Executive Vice President,
Hampshire Designers, Inc.
Fritz Schulte 42 President and Chief Executive Officer,
Hampshire Hosiery Division
Peter W. Woodworth 51 President and Chief Executive Officer,
Winona Knitting Mills Division
Ludwig Kuttner has been Chairman of the Board of the Company since 1979 and
has served as President and Chief Executive Officer of the Company from 1979 to
1992 and 1994 through the present. Previously, he served in various capacities
in the textile and real estate industries.
Eugene Warsaw has been President and Chief Executive Officer of Hampshire
Designers, Inc., a subsidiary of Hampshire Group, Limited, since 1987. Prior to
joining the Company, Mr. Warsaw served as President and Chief Executive Officer
of the Private Label Sportswear Division of Phillips Van Heusen and President of
Sommerset Knitting Mills from 1982 to 1986.
Charles W. Clayton has been Vice President, Secretary, Treasurer and Chief
Financial Officer of the Company since 1984. He served as Vice President of
Finance and Controller from 1979 to 1983. Prior to joining the Company, Mr.
Clayton was employed with Price Waterhouse LLP as an audit manager.
H. Edward Hurley has been Executive Vice President of Hampshire Designers,
Inc. since 1993. He served as Vice President of Operations and Corporate
Controller from 1986 to 1993. Formerly, he served as Controller of the Finishing
Division of Springs Industries, Inc.
Fritz Schulte has been President and Chief Executive Officer of Hampshire
Hosiery Division since 1996. He served as President of the Division for 1994 and
1995. From 1991 to 1994, he was employed as Vice President of Manufacturing at
Sheffield Industries, Inc., a hosiery manufacturer. From 1981 until 1991, Mr.
Schulte was employed as President and Chief Executive Officer of Chic Hosiery,
Inc.
Peter W. Woodworth joined the Company in October 1995. He serves as
President of Winona Knitting Mills Division and previously served as President
and Chief Executive Officer of Winona Knitting Mills, Inc. since 1983.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and its four next most highly compensated
executive officers (the "Named Executive Officers") for the years 1997, 1996 and
1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
--------------------------------------
Other
Annual
Compensa-
Name and Salary($) Bonus($) tion
Principal Position Year (1) (1) ($) (2)
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ludwig Kuttner 1997 400,000 731,583 87,619
Chairman, President and 1996 400,000 554,908 29,031
Chief Executive Officer 1995 400,000 466,281 44,301
- ------------------------------------------------------------------
Eugene Warsaw 1997 350,000 763,166 21,692
President and CEO, 1996 350,000 537,363 5,952
Hampshire Designers, Inc. 1995 350,000 730,579 17,236
- ------------------------------------------------------------------
Charles W. Clayton 1997 155,000 193,970 23,775
Vice President, Secretary 1996 155,000 186,250 9,974
Treasurer and CFO 1995 155,000 134,360 12,766
- ------------------------------------------------------------------
H. Edward Hurley 1997 110,000 190,075 5,402
Executive Vice President, 1996 105,000 164,967 1,827
Hampshire Designers, Inc. 1995 100,000 149,021 3,540
- ------------------------------------------------------------------
Peter W. Woodworth 1997 135,000 313,748 28,053
President and CEO, 1996 135,000 72,418 -
Winona Knitting Mills (5)1995 33,750 18,540 -
- -------------------------------------------------------------------
</TABLE>
7
<PAGE>
SUMMARY COMPENSATION TABLE (continued)
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Awards Payouts
--------------------- --------
Securities All
Under- Other
Restricted lying LTIP Compensa-
Name and Stock Options/ Payouts tion
Principal Position Year Awards($) SAR (#) ($) ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ludwig Kuttner 1997 - 5,000 - 103,200 (3)
Chairman, President and 1996 - 7,500 - 78,000
Chief Executive Officer 1995 - 15,000 - 128,000
- -------------------------------------------------------------------------------
Eugene Warsaw 1997 - - - 3,200 (4)
President and CEO, 1996 - - - 3,000
Hampshire Designers, Inc. 1995 - 15,000 - 3,000
- -------------------------------------------------------------------------------
Charles W. Clayton 1997 - - - 13,200 (3)
Vice President, Secretary 1996 - 3,500 - 13,000
Treasurer and CFO 1995 - 7,000 - 13,000
- -------------------------------------------------------------------------------
H. Edward Hurley 1997 - - - 3,200 (4)
Executive Vice President, 1996 - - - 3,000
Hampshire Designers, Inc. 1995 - 7,000 - 3,000
- -------------------------------------------------------------------------------
Peter W. Woodworth 1997 - - - 1,170 (4)
President and CEO, 1996 - 3,000 - -
Winona Knitting Mills (5)1995 - - - 650
- -------------------------------------------------------------------------------
<FN>
(1) The annual salary and incentive bonuses for 1997 include amounts paid into
the Company's Common Stock Purchase Plan and Voluntary Deferred
Compensation Plan as follows: Kuttner - $547,435; Warsaw - $305,266;
Clayton - $156,454; Hurley - $55,764 and Woodworth - $181,589.
(2) The amounts reported represent discounts on stock purchased under the
Company's Common Stock Purchase Plan.
(3) Pursuant to the terms of a deferred compensation plan, Kuttner and Clayton
were awarded contributions of $100,000 and $10,000, respectively, which is
included in the amount reported and amounts contributed by the Company
pursuant to the Company's 401(k) Retirement Savings Plan.
(4) Represents amounts contributed by the Company pursuant to the Company's
401(k) Retirement Savings Plan.
(5) Represents amounts from date of merger, October 11, 1995 through the end of
the year.
</FN>
</TABLE>
7a
<PAGE>
The following table sets forth information regarding grants of stock
options made during 1997 to each of the Named Executive Officers.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
<CAPTION>
Percent
Number of of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees in Price Expiration Present
Name Granted (#) Fiscal Year ($/Sh) (1) Date Value($)(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ludwig Kuttner 1,250 - 14.50 12/31/02 5,429.13
1,250 - 14.50 12/31/03 6,309.13
1,250 - 14.50 12/31/04 7,519.00
1,250 - 14.50 12/31/05 8,170.63
-------------------------------------------------------------
5,000 44.35 27,427.89
- --------------------------------------------------------------------------------
<FN>
(1) Options were granted under the Company's 1992 Stock Option Plan at the fair
market value on the date of grant. The options were granted on May 7, 1997
and vest in 25% increments on December 31, 1997, 1998, 1999 and 2000,
respectively.
(2) A variant of the Black-Scholes option pricing model was used to determine
the grant date present value. In applying the model, the Company assumed a
6.65% risk-free rate of return, a 0% dividend yield, an average annualized
volatility of 21.19% and an expected term from vest of 6.09 years.
</FN>
</TABLE>
The following table sets forth information regarding the exercise of
options during 1997 and the number and value of unexercised options held at
year-end by each of the Named Executive Officers.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FY-END OPTION/SAR VALUE
----------------------------------------------------
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Shares Options/SARs SARs at
Acquired Value at FY-End (#) FY-End ($)
Name on Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable (1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ludwig Kuttner - - 181,819 / 20,681 1,795,068 / 192,040
- --------------------------------------------------------------------------------
Eugene Warsaw - - 71,252 / - 920,978 / -
- --------------------------------------------------------------------------------
Charles W. Clayton 3,636 41,578 33,296 / 1,750 416,871 / 14,219
- --------------------------------------------------------------------------------
H. Edward Hurley - - 22,068 / - 284,921 / -
- --------------------------------------------------------------------------------
Peter W. Woodworth - - 1,500 / 1,500 12,188 / 12,188
- --------------------------------------------------------------------------------
<FN>
(1) The average of the closing bid and ask price of the Company's Common Stock
at December 31, 1997 was $19.13.
</FN>
</TABLE>
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for determining executive compensation.
Compensation of All Executives - The Committee believes that, in order to
maximize the Company's profitability, it must attract, motivate and retain
executives of the highest caliber to cause the Company to achieve such
profitability. To this end, the Company provides its executives with competitive
salaries and incentives, including equity-based compensation, intended to align
the interests of executives with that of the stockholders.
Annual Compensation - Annual compensation consists of salary and incentive
bonuses with emphasis on lower base salary and higher incentive bonuses.
Incentive bonuses for executives of Hampshire Designers and Hampshire Hosiery is
provided by a profit incentive plan, whereby approximately 15% of pre-tax
profits are allocated to the executives of each business, either in accordance
with employment agreements, or by management with the approval of the Committee.
Incentive bonuses for executives of Winona Knitting Mills Division is
determined by a profit incentive plan pursuant to which five percent of the
operating profits of Winona is allocated annually to key executives.
Incentive bonuses for Company officers, including Mr. Kuttner, is based on
annual goals established by the Committee. A major portion of the incentive
bonus is based on the Company achieving profit goals established by the
Committee. The incentive bonus paid to Mr. Kuttner for 1997 reflected the
achievement of both financial and subjective goals.
Long-term Incentive Compensation - Long-term incentive compensation
consists of grants of stock options and the opportunity for key executives to
use a portion of their incentive bonuses to purchase Common Stock of the Company
pursuant to the Common Stock Purchase Plan for Directors and Executives.
Long-term incentive compensation awards are based on the individual
responsibilities of the executive, Company financial results and financial
performance of particular profit centers.
Policy with Respect to the $1 Million Deduction Limit - Section 162(m) of
the Internal Revenue Code denies a publicly held corporation a federal income
tax deduction for compensation in excess of $1 million per year paid to or
accrued for each of its Chief Executive Officer and four other most highly
compensated executive officers. Certain "performance- based" compensation, such
as stock options awarded under the Company's 1992 Stock Option Plan, are not
subject to the limitation on deductibility. While the Committee has considered
the limits on deductibility imposed by Section 162(m) with respect to Messrs.
9
<PAGE>
Kuttner's and Warsaw's cash compensation, because of the incremental amounts by
which such compensation exceeds $1 million and the constraints imposed by
Section 162(m) in order to qualify such cash compensation as "performance
based", the Committee has determined that the benefits of having more
flexibility in awarding cash compensation outweigh the lack of deductibility.
COMPENSATION COMMITTEE
Herbert Elish and Harvey L. Sperry
COMPENSATION COMMITTEE INTERLOCKS
Mr. Elish has served as a member of the Compensation Committee since 1992.
Mr. Sperry joined the committee in 1997. Neither member of the Committee is or
has been an officer or an employee of the Company.
Mr. Elish formerly served as Chairman of the Board and Chief Executive
Officer of Weirton Steel Corporation. Mr. Sperry formerly served as a Director
of Weirton Steel Corporation.
Mr. Sperry is a partner in the law firm of Willkie Farr & Gallagher which
was retained by the Company during 1997.
10
<PAGE>
COMPENSATION OF DIRECTORS
During 1997, Messrs. Elish and Sperry received annual director's fees of
$25,000 each. At his election, all of the director's fees earned by Mr. Sperry
were used to purchase Common Stock under the Common Stock Purchase Plan. Messrs.
Kuttner, Warsaw and Woodworth do not receive director's fees. The Company
reimburses the directors for expenses associated with attendance of Board of
Directors meetings.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the year ended December 31,
1997, and each Director attended at least 75% of the aggregate number of
meetings held while he was a director and the total number of meetings held by
all committees of the Board on which served.
The Company has a Compensation Committee (the "Compensation Committee")
which reviews and recommends to the Board of Directors the cash or other
compensation, including any stock options, to be paid to management. The
Compensation Committee currently consists of Messrs. Elish and Sperry, neither
of which are officers or employees of the Company. The Compensation Committee
held two meetings during the fiscal year ended December 31, 1997.
The Company has an Audit Committee which consults with management regarding
selection of the independent public accountants, reviews with management all
significant accounting and disclosure matters and reviews the scope and findings
of such accountant's examination. The Audit Committee also meets with the
independent accountants, without the participation of management, to inquire as
to the adequacy of the Company's internal controls and the cooperation of
management and company personnel in respect to the accountant's examination. The
Audit Committee consists of Messrs. Elish and Sperry, neither of which are
officers or employees of the Company. The Audit Committee held two meetings
during the fiscal year ended December 31, 1997.
11
<PAGE>
EMPLOYMENT CONTRACTS
Mr. Kuttner has an employment agreement with the Company effective January
1, 1998, which provides for an annual salary of $400,000; annual incentive
compensation equal to 7% of the net after tax earnings of the Company; and an
annual deferred compensation payment of $100,000. The employment agreement may
be terminated by the Company or Mr. Kuttner at any time. If the Company
terminates the employment agreement without cause, Mr. Kuttner would receive an
amount ("severance payment") equal to: (i) his average compensation for the five
calendar years preceding the year in which the termination occurs, (ii)
multiplied by two, and (iii) paid in equal 24 monthly installments. Mr. Kuttner
would receive an amount equal to the severance payment if he terminates his
employment within 180 days after a change of control, which would include a
merger where the Company did not survive, a sale by the Company of substantially
all of its assets or the election of a majority of the directors who had not
been nominated by the existing board of directors. Mr. Kuttner's spouse would
receive an amount equal to the severance payment if he were to die while
employed by the Company. The Company carries insurance on the life of Mr.
Kuttner to cover such contingency.
Mr. Warsaw has an employment agreement with Hampshire Designers, Inc.
pursuant to which he received a salary of $350,000 per year, plus an incentive
bonus based on the pre-tax income of the sweater division. The Company and Mr.
Warsaw each have the right to terminate the agreement at any time upon twelve
months notice.
Mr. Warsaw has an employment agreement with Hampshire Designers, Inc.
pursuant to which he received a salary of $350,000 per year, plus an incentive
bonus based on the pre-tax income of the sweater division. The Company and Mr.
Warsaw each have the right to terminate the agreement at any time upon twelve
months notice.
Mr. Woodworth has an employment agreement with Hampshire Designers, Inc.
pursuant to which he received a salary of $135,000 per year, an incentive bonus
based on the pre-tax income of certain divisions under his management, plus
$67,000 and an incentive bonus based on the pre-tax income of the sweater
division.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Company assists the directors and executives in filing reports pursuant
to Section 16 of the Securities and Exchange Act of 1934, including Form 4
monthly transaction reports, for those reporting persons who so requested and
who agreed to advise the Company of changes in the ownership of the Company's
equity securities. To the best of the Company's knowledge and belief, based
solely on the review of reports filed with the Securities and Exchange
Commission and upon written representations by directors and certain executives,
there were no delinquent Section 16 reports during the fiscal year ended
December 31, 1997.
12
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth a comparison of the Company's Stockholder
performance, the National Association of Security Dealers Automated Quotation
Composite Index and the Dow Jones Apparel Industry Index (United States), in
each case assuming an investment of $100 on December 31, 1992 and the cumulation
and the reinvestment of dividends paid thereafter through December 31, 1997. The
Company chose the NASDAQ Composite Index as a measure of the broad equity market
and the Dow Jones Apparel Index as a measure of its relative industry
performance.
HAMP 100 96 129 200 225 313
NASDQ 100 115 111 155 191 232
DJAI 100 73 83 100 150 125
| | | | | |
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Dec. 1992 Dec. 1993 Dec. 1994 Dec. 1995 Dec. 1996 Dec. 1997
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
Pursuant to an Agreement and Plan of Merger dated June 5, 1995, the Company
acquired all the issued and outstanding common stock of Winona Knitting Mills,
Inc. ("Winona") from Pete and Joyce Woodworth and certain minority shareholders.
Mr. Woodworth subsequently was elected to the Hampshire Group, Limited Board of
Directors. The purchase price consisted of cash, convertible preferred stock,
common stock and $3,250,000 of debt.
The Company leases its Anderson, South Carolina corporate office facilities
(10,000 square feet) and distribution center (57,000 square feet) from Commerce
Center Associates, Inc. ("Commerce Center"). Ludwig Kuttner, Chief Executive
Officer of the Company, and his wife, Beatrice Ost-Kuttner, together own
approximately 18% of the voting stock of Commerce Center. The terms of these
leases were approved by the Board of Directors of the Company without the
participation of Mr. Kuttner. The Board believes, based upon the advice of an
independent appraiser, that the leases are fair and reasonable and are at market
terms. The aggregate rent paid during 1997 on these two facilities was $200,000.
The Company leases its sewing plant in La Crescent, Minnesota (15,600
square feet) and certain storage facilities in Winona, Minnesota from Pete
Woodworth, President and Chief Executive Officer of Winona Knitting Mills
Division, and his wife. Further, the Company leases its knitting and finishing
plant (110,000 square feet) from relatives of Mr. Woodworth. The Board believes,
based upon the advice of an independent appraiser, that the leases are fair and
reasonable and are at market terms. The aggregate annual rent for these
facilities during 1997 was $161,000.
Mr. Harvey L. Sperry, a Director of the Company, is a partner in the law
firm of Willkie Farr and Gallagher. The firm has served as legal counsel to the
Company since 1977.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as independent accountants of Hampshire Group,
Limited for 1997 after having previously served in the same capacity since 1984
and is, therefore, familiar with the affairs and financial procedures of the
Company. A representative of Price Waterhouse will be in attendance at the
Annual Meeting and will be given the opportunity to make a statement and to
respond to appropriate questions.
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DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company no later than January
31, 1999 to be considered for inclusion in the Company's Proxy Statement and
form of Proxy relating to that meeting. Such proposals should be addressed to:
Hampshire Group, Limited, Attn.: Secretary, Post Office Box 2667, Anderson, SC
29622.
INFORMATION AVAILABLE TO STOCKHOLDERS
The Company's 1997 Annual Report to Stockholders and Form 10-K are being
mailed with this Proxy Statement. Additional copies of the 1997 Annual Report
and Form 10-K as filed with the United States Securities and Exchange
Commission, may be obtained by Stockholders without charge from the Company by
writing to: Hampshire Group, Limited, Attn.: Secretary, Post Office Box 2667,
Anderson, SC 29622; or by request at Hampshire's e-mail address: [email protected].
Financial statements are also on file with the United States Securities and
Exchange Commission, Washington, DC 20549 and can be obtained directly at
http://www.sec.gov/.
Anderson, South Carolina By order of the Board of Directors,
April 3, 1998
/s/ Ludwig Kuttner
--------------------------------
Ludwig Kuttner
Chairman of the Board, President
and Chief Executive Officer
STOCKHOLDERS ARE URGED TO PROMPTLY COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY.
YOUR COOPERATION IS GREATLY APPRECIATED.
15
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PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
HAMPSHIRE GROUP, LIMITED FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned Stockholder(s) of Hampshire Group, Limited (the "Company"),
having received Notice of the Annual Meeting of Stockholders to be held on May
6, 1998 and the Proxy Statement accompanying such Notice, hereby constitutes and
appoints Ludwig Kuttner and Harvey L. Sperry and each of them, with several
powers of substitution, for and in the name, place and stead of the undersigned,
to attend and vote all shares of common stock of the Company, which the
undersigned would be entitled to vote at the Annual Meeting, to be held at the
Princeton Club, 15 West Forty-Third Street, New York, New York, on May 6, 1998,
at 10:00 A.M. and at any and all adjourn- ments thereof, with all power the
undersigned would possess if personally present.
Item 1. Election of five Directors.
Nominees: 01-Ludwig Kuttner; 02-Herbert Elish; 03-Harvey L. Sperry;
04-Eugene Warsaw; and 05-Peter W. Woodworth
___ For all nominees listed above
___ Withhold authority to vote for all nominees
___ Withhold authority to vote for any individual
nominee _____, _____, _____, _____,
(write numbers of nominee(s) above)
This proxy will be voted as directed; but if no direction is indicated it will
be voted FOR the election of the five nominees listed above.
___ Please check here if you plan to attend the Annual Meeting.
Number of shares: ___________
Dated:_______________, 1998
Signature(s)____________________________
____________________________
[Please sign exactly as names(s) appear(s) on the stock certificate. For joint
accounts, all co-owners must sign Executor, Administrators, Trustees, etc.
should so indicate when signing.]
(Please complete, date, sign and return)
