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 ss. 240.14a-11(c) or ss. 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 29625
April 5, 1999
Dear Fellow Stockholders:
The 1999 Annual Meeting of Stockholders will be held at The Princeton Club,
15 West Forty-Third Street, New York City, on Wednesday, May 5, 1999 at 10:00
o'clock A.M. All Stockholders are welcome and encouraged to attend this meeting.
An official Notice of Annual Meeting, which includes information about the
matters scheduled for consideration at the Meeting, appears on the next page of
this Proxy.
After the formal part of the Meeting, members of management will be making
a presentation about the Company's recent performance and plans for the future.
This will be followed by an opportunity to question the management group, or to
comment on matters pertaining to Hampshire Group, Limited.
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 5, 1999,
at 10:00 A.M. to consider and act on the following proposals:
1.The election of six 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 1, 1999, 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, 1998, 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/ Charles W. Clayton
-------------------------------------
Anderson, South Carolina Charles W. Clayton
April 5, 1999 Secretary
<PAGE>
HAMPSHIRE GROUP, LIMITED
215 Commerce Boulevard
Anderson, SC 29625
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 5, 1999, 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 10, 1999 to Stockholders of record as of April 1, 1999 (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 six 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 4,208,246 shares of Common Stock, par
value $0.10 per share, (the "Common Stock") eligible to vote at the 1999 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 879,831 (1) 19.80%
Beatrice Ost-Kuttner - Estouteville, Keene VA 22946 916,137 (2) 21.77%
Hans W. Schmidig - Bleicherweg 39, CH-8027, Zurich,
Switzerland 481,386 11.44%
Peter W. Woodworth - 702 Main Street, Winona MN 55987 321,204 (3) 7.63%
Fidelity Low-Price Stock Fund - 82 Devonshire St.,
Boston MA 02109 300,700 7.15%
Eugene Warsaw 120,258 (4) 2.81%
Charles W. Clayton 118,275 (8) 2.79%
Herbert Elish 33,821 (5) *
Harvey L. Sperry 30,703 (6) *
H. Edward Hurley 20,374 (8) *
Joel Goldberg 715 (7) *
All directors and executive officers as a group
(eight persons) 1,525,181 33.51%
- --------------------------------------------------------------------------------
*Less than 1%.
</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,
161,761 shares issuable under presently exercisable options and 118,351
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 2,250 shares issuable under presently
exercisable options and 11,615 shares purchased under the Company's Common
Stock Purchase Plan; but does not include 71,511 shares held by his spouse,
as to which Mr. Woodworth disclaims beneficial ownership.
(4) (Eugene Warsaw) Includes 250 shares of Common Stock held by the children of
Mr. Warsaw, 48,666 shares of Common Stock purchased for the account of Mr.
Warsaw under the Common Stock Purchase Plan and 70,342 shares of Common
Stock issuable under presently
exercisable options.
(5) (Herbert Elish) Includes 22,000 shares of Common Stock held by his 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 17,158 shares of Common Stock purchased under
the Common Stock Purchase Plan.
(7) (Joel Goldberg) Consists of shares of Common Stock purchased for the
account of Dr. Goldberg under the Common Stock Purchase Plan.
(8) Includes, respectively, for Messrs. Clayton and Hurley 40,798 and 14,824
shares of Common Stock purchased under the Common Stock Purchase Plan and
30,535 and 5,250 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, six 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, 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 six 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 52 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 65 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. Presently, Mr. Elish serves as Executive Director of The Carnegie Library
of Pittsburgh.
Joel Goldberg Age 53 Director since 1998
Dr. Goldberg is a licensed therapist and has been a human resources consultant
for thirty years. He is the founder and President of Career Consultants, Inc.,
an international human resources consulting firm, and the President of SKA
Associates, an employment search firm. Dr. Goldberg serves on the Board of
Directors of several companies, including Phillips-Van Heusen Corporation,
Merrimac Industries, Inc., Marcal Paper Company and Modell's Inc.
Harvey L. Sperry Age 69 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 for the Company.
Eugene Warsaw Age 71 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 52 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 The 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 held by
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 52 Chairman of the Board, President
and Chief Executive Officer
Eugene Warsaw 71 President and Chief Executive Officer,
Hampshire Designers, Inc.
Charles W. Clayton 61 Vice President, Secretary, Treasurer
and Chief Financial Officer
H. Edward Hurley 50 Executive Vice President,
Hampshire Designers, Inc.
Peter W. Woodworth 52 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 & Co. 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.
Peter W. Woodworth joined the Company in October 1995. He serves as
President and Chief Executive Officer of Winona Knitting Mills Division and
previously served as President and Chief Executive Officer of The Winona
Knitting Mills, Inc. since 1983.
6
<PAGE>
<TABLE>
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 1998, 1997 and
1996.
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
----------------------------------------
Other
Annual
Name and Compensa-
Principal Position Year Salary(1) Bonus(1) tion (2)
- ------------------ ---- --------- ------- ---------
<S> <C> <C> <C> <C>
Ludwig Kuttner 1998 $400,000 $403,608 $17,902
Chairman, President and 1997 400,000 731,583 87,619
Chief Executive Officer 1996 400,000 554,908 29,031
- --------------------------------------------------------------------------
Eugene Warsaw 1998 $350,000 $442,148 $ 4,913
President and CEO, 1997 350,000 763,166 21,692
Hampshire Designers, Inc. 1996 350,000 537,363 5,952
- --------------------------------------------------------------------------
Charles W. Clayton 1998 $155,000 $153,117 $ 8,524
Vice President, Secretary 1997 155,000 193,970 23,775
Treasurer and CFO 1996 155,000 186,250 9,974
- --------------------------------------------------------------------------
H.Edward Hurley 1998 $110,000 $115,764 $ 1,286
Executive Vice President, 1997 110,000 190,075 5,402
Hampshire Designers, Inc. 1996 105,000 164,967 1,827
- --------------------------------------------------------------------------
Peter W. Woodworth 1998 $155,000 $129,147 $ 5,740
President and CEO, 1997 135,000 313,748 28,053
Winona Knitting Mills Division 1996 135,000 72,418 -
- --------------------------------------------------------------------------
</TABLE>
7
<PAGE>
(table continued)
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Securities
Name and Underlying All Other
Principal Position Year Options Compensation
- ------------------ ---- ------------ -------------
<S> <C> <C> <C>
Ludwig Kuttner 1998 - $103,200 (3)
Chairman, President and 1997 5,000 103,200
Chief Executive Officer 1996 7,500 78,000
- -----------------------------------------------------------------------
Eugene Warsaw 1998 10,000 $ 3,200 (4)
President and CEO, 1997 - 3,200
Hampshire Designers, Inc. 1996 - 3,000
- -----------------------------------------------------------------------
Charles W. Clayton 1998 10,000 $ 13,200 (3)
Vice President, Secretary 1997 - 13,200
Treasurer and CFO 1996 3,500 13,000
- -----------------------------------------------------------------------
H.Edward Hurley 1998 10,000 $ 3,200 (4)
Executive Vice President, 1997 - 3,200
Hampshire Designers, Inc. 1996 - 3,000
- -----------------------------------------------------------------------
Peter W. Woodworth 1998 - $ 1,600 (4)
President and CEO, 1997 - 1,170
Winona Knitting Mills Division 1996 3,000 -
- -----------------------------------------------------------------------
<FN>
(1) The annual salary and incentive bonuses for 1998 include amounts paid into
the Company's Common Stock Purchase Plan and Voluntary Deferred
Compensation Plan as follows: Kuttner - $161,142; Warsaw - $237,553;
Clayton - $141,848; Hurley - $42,384 and Woodworth - $132,779.
(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. In
addition, $3,200 was contributed by the Company pursuant to the Company's
401(k) Retirement Savings Plan for each executive.
(4) Represents amounts contributed by the Company pursuant to the Company's
401(k) Retirement Savings Plan.
</FN>
</TABLE>
7
<PAGE>
The following table sets forth information regarding grants of stock
options made during 1998 to each of the Named Executive Officers.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
<CAPTION>
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Expiration Present
Name Granted (#) Fiscal Yr. ($/Sh) (1) Date Value($)(2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Eugene Warsaw 2,500 $18.125 12/31/04 $ 4,075
2,500 18.125 12/31/05 4,750
2,500 18.125 12/31/06 5,650
2,500 18.125 12/31/07 6,825
--------------------------------------------------------------
10,000 21.16 $21,300
- -------------------------------------------------------------------------------
Charles W. 2,500 $18.125 12/31/04 $ 4,075
Clayton 2,500 18.125 12/31/05 4,750
2,500 18.125 12/31/06 5,650
2,500 18.125 12/31/07 6,825
--------------------------------------------------------------
10,000 21.16 $21,300
- -------------------------------------------------------------------------------
H. Edward Hurley 2,500 $18.125 12/31/04 $ 4,075
2,500 18.125 12/31/05 4,750
2,500 18.125 12/31/06 5,650
2,500 18.125 12/31/07 6,825
--------------------------------------------------------------
10,000 21.16 $21,300
- -------------------------------------------------------------------------------
<FN>
(1) The options were granted on May 6, 1998, under the Company's 1992 Stock
Option Plan at the fair market value on the date of grant and vest ratably
for each executive in annual installments on December 31, 1999 through 2002
and are conditional on a 15% increase in the net income of the Sweater
Segment over the previous year.
(2) A variant of the Black-Scholes option pricing model was used to determine
the grant date present value. In applying the model, the Company assumed a
6.65% risk-free rate of return, a 0% dividend yield, an average annualized
volatility of 21.19% and an expected term from vest of 6.09 years.
8
</FN>
</TABLE>
<PAGE>
<TABLE>
The following table sets forth information regarding the exercise of
options during 1998 and the number and value of unexercised options held at
year-end by each of the Named Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FY-END OPTION/SAR VALUE
---------------------------------------------------
<CAPTION>
No. of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Option/SARs at Options/SARs
Shares Value FY-End (#) at FY-End($)
Acquired Realized Exercisable/ Exercisable/
Name on Exercise(#) ($) Unexercisable Unexercisable(1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ludwig Kuttner 36,364 321,821 159,261/ - 550,375/ -
- -------------------------------------------------------------------------------
Eugene Warsaw 910 6,368 70,342/ - 438,831/ -
- -------------------------------------------------------------------------------
Charles W. Clayton 3,636 19,762 30,535/ 875 172,761/ 1,258
- --------------------------------------------------------------- ---------------
H. Edward Hurley 16,818 225,992 5,250/ - 25,925/ -
- -------------------------------------------------------------------------------
Peter W. Woodworth - - 2,250/ 750 3,236/ 1,078
- -------------------------------------------------------------------------------
<FN>
(1) The average of the closing bid and ask price of the Company's Common Stock
at December 31, 1998 was $12.438.
</FN>
</TABLE>
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
9
<PAGE>
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 receives 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 receives a salary of $155,000 per year, plus an incentive
bonus of two percent based on the income before income taxes of the Winona
Knitting Mills Division.
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 are provided by a profit
incentive plan, whereby approximately 15% of pre-tax profits are allocated to
the executives of the 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 are
determined by a profit incentive plan pursuant to which ten percent of the
income before income taxes of Winona is allocated annually to key executives.
Approximately two percent is allocated to Peter Woodworth, Chief Executive
Officer.
Incentive bonuses for Company officers, including Mr. Kuttner, are 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 1998 reflected the
achievement of both financial and subjective goals.
10
<PAGE>
Chief Executive Officer Compensation. Mr. Kuttner's compensation is based
on his employment agreement with the Company, which provides for an annual
salary of $400,000, annual incentive bonus compensation equal to 7% of net
after-tax earnings of the Company and an annual deferred compensation payment of
$100,000.
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, at a
discount, pursuant to the Company's 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.
In 1998, the Committee awarded options to purchase 10,000 shares each to
Messrs. Warsaw, Clayton and Hurley of Common Stock of the Company in recognition
of their contributions to the performance of the Company and to further align
their interest with those of the shareholders. The options vest ratably in
annual installments on December 31, 1999 through 2002 and are conditional on a
15% net income of the Sweater Segment over the previous year.
Awards of stock options by the Committee are made on a subjective basis
after the Committee's evaluation of an executive's performance.
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 considers the
limits on deductibility imposed by Section 162(m), the Committee believes that
the benefits of having flexibility in awarding cash compensation can sometimes
outweigh the lack of deductibility. All of the compensation earned by the Named
Executive Officers for 1998 was fully deductible.
COMPENSATION COMMITTEE
Herbert Elish and Joel Goldberg
11
<PAGE>
Compensation Committee interlocks
Mr. Elish has served as a member of the Compensation Committee since 1992
and Dr. Goldberg joined the Committee in 1998. Neither member of the Committee
is or has been an officer or an employee of the Company.
Dr. Goldberg provided consulting services to the Company during 1998.
COMPENSATION OF DIRECTORS
During 1998, Messrs. Elish and Sperry and Dr. Goldberg received annual
director's fees of $15,000 each and Messrs. Elish and Sperry receive $10,000
each for serving as members of the Investment Committee. At their election, all
of the director's fees earned by Mr. Sperry and Dr. Goldberg 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 at the Board of Directors'
meetings.
Meetings and Committees of the Board of Directors
The Board of Directors held seven meetings during the year ended December
31, 1998, and each Director attended at least 75% of the aggregate number of
meetings held while he was a director and of the total number of meetings held
by all committees of the Board on which he 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 Mr. Elish and Dr. Goldberg, neither
of which are officers or employees of the Company. The Compensation Committee
held two meetings during the fiscal year ended December 31, 1998.
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, Goldberg and Sperry, none of which
are officers or employees of the Company. The Audit Committee held two meetings
during the fiscal year ended December 31, 1998.
The Company has an Investment Committee which reviews with management all
significant investment opportunities. The Investment Committee currently consist
of Messrs. Kuttner, Elish and Sperry. The Investment Committee held five
meetings during the fiscal year ended December 31, 1998.
12
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
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 1998 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 Mr. Woodworth and certain of his relatives. 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 1998 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. Dr. Joel Goldberg, a Director of the Company, is a principal
of Career Consultants, Inc. which provides human resource consulting services to
the Company.
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 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, 1998.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as independent accountants of Hampshire
Group, Limited for 1998, 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 PricewaterhouseCoopers will be in attendance
at the Annual Meeting and will be given the opportunity to make a statement and
to respond to appropriate questions.
13
<PAGE>
<TABLE>
PERFORMANCE GRAPH
The following graph sets forth a comparison of the Company's stock
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, 1993 and the cumulation
and the reinvestment of dividends paid thereafter through December 31, 1998. 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.
<CAPTION>
[GRAPH APPEARS HERE]
<S> <C> <C> <C> <C> <C> <C>
"HAMP" 100 135 209 235 326 230
Hampshire
Group, Limited
"NASDAQ" 100 97 135 166 202 282
The NASDAQ
Stock Market
"DJAI" 100 114 137 205 171 148
Dow Jones
Apparel Index
| | | | | |
--------- --------- --------- --------- --------- ---------
Dec. 1993 Dec. 1994 Dec. 1995 Dec. 1996 Dec. 1997 Dec. 1998
</TABLE>
14
<PAGE>
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 2000 Annual
Meeting must be received by the Company no later than January 31, 2000 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, 215 Commerce Boulevard, Anderson, SC 29625.
INFORMATION AVAILABLE TO STOCKHOLDERS
The Company's 1998 Annual Report to Stockholders and Form 10-K are being
mailed with this Proxy Statement. Additional copies of the 1998 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, 215 Commerce Boulevard,
Anderson, SC 29625; 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 5, 1999
/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
<PAGE>
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
5, 1999 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 5, 1999,
at 10:00 A.M. and at any and all adjournments 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; 06-Joel Goldberg
___ 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: ____________, 1999
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)
