<PAGE>
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or rule 14a-12
TOMMY HIFIGLER CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $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 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
TOMMY HILFIGER CORPORATION
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 1, 1996
The 1996 Annual Meeting of Shareholders of Tommy Hilfiger Corporation will
be held at Little Dix Resort, Virgin Gorda, British Virgin Islands, on
November 1, 1996 at 3:00 p.m., local time, for the following purposes:
1. To elect three directors to the Board of Directors of the Company for
a term to expire at the 1999 Annual Meeting of Shareholders;
2. To amend the Company's Stock Option Plans to increase by 500,000 the
number of Ordinary Shares, par value $.01 per share, of the Company
authorized for issuance under the Stock Option Plans of the Company and its
subsidiaries;
3. To consider and act upon a proposal to ratify the appointment of Price
Waterhouse LLP as the Company's auditors for the fiscal year ending March
31, 1997;
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 17, 1996
as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting or any adjournments thereof.
Shareholders are invited to attend the Annual Meeting. Any shareholder
entitled to attend and vote at the Annual Meeting is entitled to appoint a
proxy to attend and vote instead of him. Whether or not you expect to attend,
WE URGE YOU TO VOTE, SIGN, DATE AND PROMPTLY RETURN the enclosed Proxy Card in
the envelope provided which requires no postage if mailed in the United
States. A proxy may be revoked by a shareholder at any time before the
effective exercise thereof.
By order of the Board of Directors
LAWRENCE T.S. LOK
Secretary
September 24, 1996
<PAGE>
TOMMY HILFIGER CORPORATION
6/F, PRECIOUS INDUSTRIAL CENTRE
18 CHEUNG YUE STREET
CHEUNG SHA WAN, KOWLOON, HONG KONG
TEL: 852-2745-7798
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Tommy Hilfiger Corporation (the "Company") of proxies to
be used at the 1996 Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on Friday, November 1, 1996 at 3:00 p.m., local time, at
Little Dix Resort, Virgin Gorda, British Virgin Islands, and at any
adjournment thereof.
This Proxy Statement and the accompanying Proxy Card were mailed to the
Company's shareholders beginning on September 25, 1996.
PROXY SOLICITATION
A Proxy Card is enclosed for use at the Meeting. Proxies which are properly
completed, signed and received prior to the Meeting will be voted in
accordance with the instructions of the persons executing the same. Unless
instructed to the contrary, the proxies will be voted FOR Proposals 1, 2 and 3
set forth in the Notice of the meeting. If any other matters are properly
presented to the Meeting for action, it is intended that the persons named in
the enclosed Proxy Card and acting thereunder will vote in accordance with
their best judgment on such matters. A proxy may be revoked by a shareholder
at any time before the effective exercise thereof.
The expense of preparing, printing and mailing this proxy statement and the
proxies solicited hereby will be borne by the Company. Additional solicitation
may be made by telephone, facsimile or other contact by certain directors,
officers, employees or agents of the Company, none of whom will receive
additional compensation therefor. The Company will reimburse brokerage houses
and other custodians, nominees and fiduciaries for their reasonable expenses
for forwarding material to the beneficial owners of shares held of record by
others.
A copy of the Annual Report of the Company containing audited financial
statements for the fiscal year ended March 31, 1996 is enclosed herewith or
has previously been sent to you. Such report is not a part of this proxy
statement.
On September 17, 1996, the record date for the determination of shareholders
entitled to vote at the Meeting, 37,048,679 Ordinary Shares, par value $.01
per share, of the Company (the "Ordinary Shares") were outstanding and carry
the right to one vote for each such share with respect to each matter to be
voted on at the Meeting.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth data as of September 1, 1996 concerning the
beneficial ownership of Ordinary Shares by (i) the persons known to the
Company to beneficially own more than five percent of the outstanding Ordinary
Shares of the Company, (ii) all directors and nominees and each Named
Executive Officer (as defined below) and (iii) all directors and executive
officers as a group as reported by each person.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OWNED OF CLASS(1)
------------------ -----------
<S> <C> <C>
Provident Investment Counsel, Inc.(2)
300 North Lake Avenue
Pasadena, CA 91101-4022..................... 3,762,322 10.0%
Pilgrim Baxter & Associates, Ltd.(3)
1255 Drummers Lane, Suite 300
Wayne, PA 19087............................. 2,558,700 6.8%
FMR Corp. (4)
82 Devonshire Street
Boston, MA 02109............................ 2,356,600 6.3%
Putnam Investments, Inc.(5)
One Post Office Square
Boston, MA 02109............................ 2,041,316 5.4%
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Silas K.F. Chou.............................. -- --
Thomas J. Hilfiger........................... 5,000 *
Joel J. Horowitz............................. 5,000 *
Robert C. Grayson............................ -- --
Jay M. Margolis.............................. -- --
Benjamin M.T. Ng(6).......................... 180,070 *
Lawrence S. Stroll........................... -- --
Ronald K.Y. Chao(7).......................... 2,000 *
Lester M.Y. Ma(7)............................ 2,000 *
Joseph M. Adamko(7).......................... 3,400 *
Clinton V. Silver(8)......................... 4,000 *
All directors and executive officers as a
group (13 persons).......................... 201,470 *
</TABLE>
- --------
* Less than 1%.
(1) Shares outstanding includes the right to acquire beneficial ownership of
457,395 Ordinary Shares pursuant to currently exercisable stock options
under Company stock option plans. For purposes of this table, "currently
exercisable" stock options include options becoming vested and exercisable
within 60 days from September 1, 1996.
(2) Information based on Schedule 13G dated July 9, 1996 filed with the
Securities and Exchange Commission ("SEC") by Provident Investment
Counsel, Inc. ("Provident"). According to the Schedule 13G, Provident, an
investment adviser, has sole dispositive power with respect to all of the
shares and sole voting power over 3,200,722 of the shares. Provident has
no power to vote or direct the voting of 561,600 of the shares.
(3) Information based on Schedule 13G dated February 14, 1996 filed with the
SEC by Pilgrim Baxter & Associates, Ltd. ("Pilgrim"). According to the
Schedule 13G, Pilgrim, an investment adviser, has sole dispositive power
and shared voting power over all of such shares.
(4) Information based on Amendment to Schedule 13G dated March 8, 1996 filed
with the SEC by FMR Corp. ("FMR"). According to the Schedule 13G, Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR, is the beneficial owner of 2,286,600 of the shares as a result of
acting as an investment adviser to certain registered investment companies
(the "Funds"). Each of FMR and Edward C. Johnson, 3rd, Chairman of FMR,
through its control of Fidelity and the Funds, has the sole power to
2
<PAGE>
dispose of such 2,286,600 shares. The sole power to vote or direct the
voting of the shares owned directly by the Funds resides with the Funds'
Boards of Trustees. Fidelity Management Trust Company ("FMTC"), a wholly-
owned subsidiary of FMR, is the beneficial owner of 70,000 of the shares as
a result of serving as investment manager of institutional accounts. Each
of FMR and Edward C. Johnson, 3rd, through its control of FMTC, has sole
dispositive power and no power to vote or direct the voting of such 70,000
shares.
(5) Information based on Schedule 13G dated January 29, 1996 filed with the
SEC by Putnam Investments, Inc. ("PI"). According to the Schedule 13G, PI,
an investment adviser and a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc., wholly owns two other investment advisers, Putnam
Investment Management, Inc. ("PIM") and The Putnam Advisory Company, Inc.
("PAC"). PI has shared dispositive power with respect to all of the shares
and shared voting power with respect to 150,461 of the shares, PIM has
shared dispositive power with respect to all of the shares and no voting
power with respect to any of the shares and PAC has shared dispositive
power with respect to all of the shares and shared voting power with
respect to 150,461 of the shares.
(6) Issuable upon the exercise of currently exercisable stock options under
the Company's employee stock option plans.
(7) Includes 2,000 Ordinary Shares issuable upon the exercise of stock options
which are currently exercisable under the Directors Option Plan.
(8) Includes 4,000 Ordinary Shares issuable upon the exercise of stock options
which are currently exercisable under the Directors Option Plan.
PROPOSAL ONE: ELECTION OF DIRECTORS
At the first annual meeting of the shareholders held on December 10, 1993,
the directors were classified into three classes, with one class elected
initially for a one-year term, one class elected initially for a two-year term
and one class elected initially for a three-year term. At each succeeding
annual meeting, the successors of the class of directors whose terms expire at
such meeting are elected for three-year terms.
NOMINEES FOR DIRECTOR
The Company's Board of Directors has nominated three directors to be elected
to the Board of Directors at the Meeting, each of whom is currently a director
of the Company: Silas K.F. Chou, Thomas J. Hilfiger and Joseph M. Adamko.
The principal occupations and other biographical information of the nominees
are as follows:
Silas K.F. Chou, 50, has been Chairman of the Board of Directors of the
Company since June 1992. Mr. Chou also has served for more than the past five
years as an Executive Director of Novel Enterprises Limited ("Novel
Enterprises"). Mr. Chou was appointed as Managing Director of Novel
Enterprises in 1996. Since 1992, Mr. Chou has been the Chairman of the board
of directors of Pepe Jeans London Corporation and its predecessor
(collectively, "Pepe") and Chief Executive Officer of Apparel International
Holdings Limited ("Holdings").
Thomas J. Hilfiger, 45, has been a Director since 1992 and Honorary Chairman
of the Board of Directors of the Company since 1994. Prior thereto, Mr.
Hilfiger was Vice Chairman of the Board of the Company and its predecessors
from 1989 to 1994, and President of Tommy Hilfiger, Inc. ("THI") from 1982 to
1989. Mr. Hilfiger has been designing clothes under the TOMMY HILFIGER(R)
trademark since 1984.
Joseph M. Adamko, 64, has been a Director of the Company since 1993. Since
1992, Mr. Adamko has been a director of Sterling Bancorp and Vice Chairman and
a director of Sterling National Bank and Trust Company of New York. Prior
thereto, Mr. Adamko was employed by Manufacturers Hanover Trust Company of New
York in a variety of positions for over 30 years, including most recently as a
Managing Director.
The election of the directors requires the affirmative vote of a plurality
of the Ordinary Shares voted at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL ONE.
3
<PAGE>
DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
The principal occupations and other biographical information of the
directors of the Company whose terms continue are as follows:
<TABLE>
<CAPTION>
EXPIRATION OF
NAME AGE PRESENT TERM
---- --- -------------
<S> <C> <C>
Joel J. Horowitz......................................... 46 1998
Benjamin M.T. Ng......................................... 34 1997
Lawrence S. Stroll....................................... 37 1997
Ronald K.Y. Chao......................................... 57 1998
Lester M.Y. Ma........................................... 49 1997
Clinton V. Silver........................................ 66 1997
</TABLE>
Joel J. Horowitz is Chief Executive Officer and President of the Company.
Mr. Horowitz has served as Chief Executive Officer since 1994 and as President
since June 1995. From 1989 to 1994, Mr. Horowitz served as President and Chief
Operating Officer of the Company and its predecessors. Mr. Horowitz has been a
Director of the Company since 1992.
Benjamin M.T. Ng has been a Director and Executive Vice President-Corporate
Finance and Assistant Secretary of the Company since 1992. Mr. Ng was a
consultant for corporate development to Novel Enterprises from 1991 through
1993. Mr. Ng devotes a significant portion of his time to matters related to
Holdings and its affiliates other than the Company.
Lawrence S. Stroll has been a Director of the Company since 1992. Mr. Stroll
has served as Chief Executive Officer of Tommy Hilfiger (HK) Limited ("THHK")
since 1993. Prior to 1993, he was active in the senior management of THI from
1989 to 1990 and has served as an advisor to the Company and its predecessors
since 1989 through a consulting arrangement. For more than the past five
years, Mr. Stroll has been President and Chief Executive Officer of Manifaro,
Inc., which from 1982 through 1993 was the exclusive licensee of Polo/Ralph
Lauren childrenswear in Canada, and of Paterfield Limited, which from 1984 to
1989 was a licensee for Polo/Ralph Lauren apparel in most of Western Europe.
Mr. Stroll has also been Group Chief Executive Officer of Pepe since 1993 and
Chairman of the Board of Holdings since 1992. Mr. Stroll's legal name is
Lawrence S. Strulovitch.
Ronald K.Y. Chao has been a Director of the Company since 1992. Mr. Chao has
served for more than the past five years as Managing Director of Novel
Enterprises. In 1996, Mr. Chao resigned as Managing Director and was appointed
as Vice Chairman of Novel Enterprises.
Lester M.Y. Ma has been a Director of the Company since 1992. Mr. Ma has
been a director and Group Chief Accountant of Novel Enterprises for more than
the past five years. Mr. Ma's legal name is Mang Yin Ma.
Clinton V. Silver has been a Director of the Company since 1994. Mr. Silver
currently serves as a consultant to, and from 1991 until his retirement in
1994, as Deputy Chairman of, Marks & Spencer plc ("Marks & Spencer"), an
international retailer based in London. Mr. Silver served as a director of
Marks & Spencer from 1974 to 1994 and as Joint Managing Director from 1990 to
1994.
Ronald K.Y. Chao and Silas K.F. Chou are brothers.
4
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has established an Audit Committee, a
Compensation Committee and an Investment Committee.
The Audit Committee recommends to the Board of Directors an accounting firm
to serve as the Company's independent accountants, reviews the scope and
results of the annual audit of the Company's consolidated financial
statements, reviews nonaudit services provided to the Company by the Company's
independent accountants and monitors transactions among the Company and its
affiliates. The Audit Committee currently consists of Mr. Silver, who is the
Chairman, and Mr. Adamko.
The Compensation Committee is responsible for supervising the Company's
compensation policies, administering the employee incentive plans, reviewing
officers' salaries and bonuses, approving significant changes in employee
benefits, and recommending to the Board such other forms of remuneration as it
deems appropriate. The Compensation Committee currently consists of Mr.
Adamko, who is the Chairman, and Mr. Silver.
The Investment Committee is responsible for overseeing the performance of
the Company's investments, identifying and interviewing potential investment
managers and determining the investment policies for the Company's short and
long term cash management. The Investment Committee is comprised of Mr. Ma,
who is the Chairman, and Mr. Ng.
During the last fiscal year, the Board of Directors held four meetings. The
Compensation Committee held four meetings during the year. Each of the Audit
and Investment Committees held two meetings. While serving as a director, each
of the directors participated in at least 75% of the meetings held by all
Committees of the Board on which such director served during the 1996 fiscal
year and, except for Messrs. Hilfiger, Chao and Ma, at least 75% of the
meetings of the Board of Directors.
DIRECTOR COMPENSATION
Directors who are employees of the Company or its subsidiaries receive no
additional compensation for their service on the Board and its Committees. All
other Directors of the Company receive a retainer of $25,000 per annum. Each
member of a Committee of the Board of Directors receives a retainer of $5,000
per annum, and each Chairman of a Committee of the Board of Directors receives
an additional retainer of $3,000 per annum. These Directors also receive
$2,000 for attendance at each meeting of the Board or a Committee.
In August 1994, the Board of Directors and the Company's shareholders
approved the Non-Employee Directors Stock Option Plan, whereby directors who
are not officers or employees of the Company or any of its subsidiaries are
eligible to receive an initial grant of 10,000 options, and subsequent annual
grants of 1,000 options, to acquire Ordinary Shares of the Company at the fair
market value on the dates of grant. See "Stock Option Plans."
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid and accrued by the
Company and its subsidiaries for the fiscal years ended March 31, 1996, 1995
and 1994 to the Company's chief executive officer and the five other most
highly compensated executive officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
--------------------------- ------ ---------- --------- ----------------
<S> <C> <C> <C> <C>
Joel J. Horowitz................ 1996 430,000 5,016,000 --
Chief Executive Officer and
President 1995 400,000 3,312,000 --
1994 375,000 2,261,000 --
Thomas J. Hilfiger.............. 1996 6,510,179 800,000 --
Honorary Chairman and Principal
Designer 1995 4,699,414 -- --
1994 3,539,000 -- --
Silas K.F. Chou................. 1996 750,000(1) 325,000 --
Chairman of the Board 1995 750,000(1) -- --
1994 600,000(1) 325,000 --
Lawrence S. Stroll.............. 1996 625,000(2) 325,000 --
Director; Chief Executive
Officer of THHK 1995 625,000(2) -- --
1994 475,000(2) -- --
Robert C. Grayson(3)............ 1996 524,000 450,000 --
Former Vice Chairman 1995 550,000 -- --
1994 -- -- --
Jay M. Margolis(4).............. 1996 2,563,000 -- --
Former Vice Chairman and
President 1995 919,500 -- --
1994 -- 350,000 190,993
</TABLE>
- --------
(1) Includes 50% of the fees paid pursuant to a consulting agreement between
Tommy Hilfiger U.S.A., Inc. ("TH USA") and Falcon International, Inc.
("Falcon International"), a subsidiary of Sportswear Holdings Limited
("Sportswear Holdings"). See "Certain Relationships and Related
Transactions".
(2) Includes (i) 50% of the fees paid pursuant to a consulting agreement
between TH USA and Falcon International; and (ii) all of the fees paid
pursuant to a consulting agreement between Tommy Hilfiger (Eastern
Hemisphere) Limited ("THEH") and an affiliate of Mr. Stroll. See "Certain
Relationships and Related Transactions."
(3) Mr. Grayson resigned as Vice Chairman of the Company on March 31, 1996.
1995 amount includes $114,000 of fees paid pursuant to a consulting
agreement between Mr. Grayson and TH USA prior to his employment in 1995.
(4) Mr. Margolis resigned as Vice Chairman and President of the Company on
June 1, 1995. 1996 amount includes $2,350,000 of fees payable through July
1997 pursuant to a consulting agreement between Mr. Margolis and TH USA
subsequent to his resignation.
6
<PAGE>
CERTAIN EMPLOYMENT AGREEMENTS
Subsidiaries of the Company had employment and consulting agreements with
Messrs. Hilfiger, Horowitz, Margolis and Grayson during fiscal 1996.
The employment agreement with Tommy Hilfiger, the Company's Honorary
Chairman of the Board and Principal Designer, provides for his employment as
the designer of all products carrying the TOMMY HILFIGER(R) trademark until
his death, disability or incompetence. Mr. Hilfiger receives an annual base
salary of $900,000, subject to adjustments. If net sales of TH USA and its
subsidiaries are less than $48,333,333 in any year, Mr. Hilfiger's base salary
for such year is reduced by 1.5% of such shortfall, to not less than $500,000.
If net sales are greater than $48,333,333 in any fiscal year, Mr. Hilfiger
receives an additional payment equal to 1.5% of such excess. If Mr. Hilfiger
terminates his employment without the consent of TH USA other than by reason
of his death, disability or incompetence, TH USA will have no further
obligations under the agreement. The employment agreement provides that TH USA
and its subsidiaries cannot enter into any line of business without the
consent of Mr. Hilfiger if he shall reasonably determine that such line of
business would be detrimental to the TOMMY HILFIGER(R) trademark.
The amended employment agreement with Mr. Horowitz provides for his
employment as Chief Executive Officer of the Company and TH USA until March
14, 1999 or such later date as the terms of a stockholder agreement among Mr.
Horowitz, Mr. Hilfiger, Sportswear Holdings and Holdings shall be extended.
The agreement provides for an annual base salary in fiscal year 1996 of
$430,000, subject to increase each year thereafter by the average percentage
increase for all employees of TH USA. In addition, Mr. Horowitz is entitled to
receive an amount equal to 5 percent of the Company's earnings before
depreciation, interest on financing of fixed assets, non-operating expenses
and taxes ("operating earnings"), subject to a minimum of $200,000 per year
and a maximum of $820,000 per year, which maximum shall be reduced each year
by the increase in his base salary; provided, that if the Company's operating
earnings are below $2 million in any year, TH USA is entitled to offset 10% of
any shortfall (up to $75,000) against such payments in future years to the
extent they would otherwise exceed $200,000.
Beginning in fiscal 1995, the Company became subject to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), under which public
companies are not permitted to deduct annual compensation paid to certain
executive officers in excess of $1,000,000 per executive, unless such excess
is paid pursuant to an arrangement based upon performance and approved by
shareholders and provided that the other requirements set forth in Section
162(m) and related regulations are met. Payments required to be made pursuant
to the Company's aforementioned employment agreements with Messrs. Hilfiger
and Horowitz, which were entered into prior to the effective date of Section
162(m), are not subject to such restrictions.
On May 22, 1995, the Compensation Committee approved and the Board of
Directors adopted, and on July 28, 1995, the shareholders approved, the Tommy
Hilfiger U.S.A., Inc. Supplemental Executive Incentive Compensation Plan (the
"SEIC Plan"), effective as of April 1, 1995 for each of the four fiscal years
ending March 31, 1999. The purpose of the SEIC Plan is to provide a
significant and flexible economic opportunity to Mr. Horowitz, Chief Executive
Officer and President of the Company and Chief Executive Officer of TH USA, in
an effort to reward his contribution to the Company and its subsidiaries. The
SEIC Plan replaces the performance-based compensation arrangement for Mr.
Horowitz that was in effect for fiscal year 1995. The SEIC Plan is
administered by the Compensation Committee and provides for a cash award to
Mr. Horowitz equal to 5 percent of the operating earnings (as defined above)
of the Company. Awards under the plan are calculated and paid quarterly based
on 3.75 percent of operating earnings for the first three fiscal quarters,
with the remaining amount of the bonus (based on the 5 percent rate) payable
at the end of the fiscal year. The amount of the award is reduced by the
amount of any other bonuses based on the operating earnings of the Company or
any of its subsidiaries granted to Mr. Horowitz. The 5 percent operating
earnings bonus payable under Mr. Horowitz's employment agreement is credited
against bonuses payable under the SEIC Plan. The SEIC Plan does not contain
any cap on the maximum amount of the bonus payable thereunder. The SEIC Plan
bonus payable to Mr. Horowitz in respect of fiscal year 1996, net of the
$820,000 bonus payable under his employment agreement,
7
<PAGE>
was $4,196,000. While the Company believes that compensation payable pursuant
to the SEIC Plan will be deductible for federal income tax purposes pursuant
to Section 162(m), there can be no assurance in this regard.
The employment agreements with Messrs. Hilfiger and Horowitz also provide
that such executives are eligible to receive additional annual bonuses at the
discretion of TH USA's Compensation Committee if the TH USA Compensation
Committee determines that certain performance levels established by the
Company's Compensation Committee have been satisfied. If, however,
compensation is awarded based on an arrangement that has not been approved by
the shareholders, the Company would not be allowed to deduct for tax purposes
any payments in excess of the $1,000,000 limitation. The Compensation
Committee approved a discretionary bonus of $800,000 for Mr. Hilfiger in
fiscal year 1996.
In June 1994, the Company and TH Retail entered into an employment agreement
with Mr. Grayson under which Mr. Grayson served as Chairman of the Board of
Directors and Chief Executive Officer of TH Retail and as Vice Chairman of the
Board of the Company. The agreement provided for a salary of $500,000 per
annum. In addition, Mr. Grayson acquired a 10% equity interest in TH Retail
for its appraised value as of March 31, 1994, subject to certain vesting
provisions. In connection with Mr. Grayson's resignation as an officer and
Director of the Company and TH Retail on March 31, 1996, Mr. Grayson
terminated his employment agreement and received a cash bonus of $450,000
earned by him in respect of the 1996 fiscal year. At that time, the Company
also repurchased Mr. Grayson's equity interest in TH Retail, which was
partially vested, for its fair value of $1,800,000.
On June 1, 1995, in connection with Mr. Margolis' resignation as a Director,
Vice Chairman and President of the Company and TH USA, Mr. Margolis terminated
his employment agreement with the Company and TH USA, and entered into a
consulting agreement with TH USA which provides for Mr. Margolis to receive
approximately $1,250,000 per annum as an independent consultant to TH USA
until July 31, 1997.
STOCK OPTION PLANS
Tommy Hilfiger U.S.A., Inc. and Tommy Hilfiger (Far East) Limited 1992 Stock
Incentive Plans
In September 1992, the Company and its subsidiaries adopted stock option
plans (collectively, the "Plans") authorizing the issuance of an aggregate of
up to 1,450,000 Ordinary Shares to directors, officers and employees of the
Company and its subsidiaries, as well as 1,520,000 Ordinary Shares that were
reserved for issuance in connection with an option granted to a former
director and executive officer of the Company pursuant to his employment
agreement. Messrs. Hilfiger, Horowitz, Chou, Chao and Stroll are not eligible
for grants under the Plans. In December 1993, the Company's shareholders
approved an amendment to the Plans to increase by 1,000,000 the number of
Ordinary Shares reserved for issuance under the Plans. In July 1995, the
shareholders approved an amendment to the Plans to reserve for issuance an
additional 1,000,000 Ordinary Shares. The Company is proposing a further
increase of 500,000 Ordinary Shares reserved for issuance under the Plans. See
PROPOSAL TWO.
The Plan for employees of TH USA has been administered by the Compensation
Committee of the Board of Directors of TH USA and the Plan for directors and
employees of the Company's non-United States subsidiaries have been
administered by the Company's Compensation Committee (collectively, the
"Compensation Committees"). The Compensation Committees determine the
employees and directors to whom awards are granted, the number of awards
granted and the specific terms and conditions of each grant, subject to the
provisions of the Plans.
Under the Plans, awards may include stock options, stock appreciation rights
and restricted stock. An option or right granted under the Plans must have an
exercise price of not less than market value at the date of grant, provided
that options granted prior to the offering must have had an exercise price of
not less than the initial public offering price. Options may be exercisable at
such times, in such amounts, in accordance with such terms
8
<PAGE>
and conditions, and subject to such restrictions as are set forth in the
option agreement evidencing the grant of such options. All currently
outstanding options under the Plans had original vesting periods of one to six
years.
Adjustments in the number and kind of shares subject to options granted
under the Plans are made by the Compensation Committees in the event of a
merger, consolidation, recapitalization, reclassification, stock split,
warrants or rights issuance, stock dividend or combination of shares. In
addition, the grants may provide for acceleration or immediate vesting in the
event of a change of control of the Company or its subsidiaries.
Non-Employee Directors Stock Option Plan
In August 1994, the Board of Directors and shareholders of the Company
approved the Non-Employee Directors Stock Option Plan (the "Directors Option
Plan"). Under the Directors Option Plan, directors who are not officers or
employees of the Company or any subsidiary of the Company ("Non-Employee
Directors") are eligible to receive stock options.
The Directors Option Plan is administered by the Company's Compensation
Committee consisting of not less than two members of the Board, each of whom
is a "disinterested person" as that term is used in Rule 16b-3 promulgated
under the Exchange Act ("Rule 16b-3"). Subject to certain specific limitations
and restrictions set forth in the Directors Option Plan, the Company
Compensation Committee has full and final authority to interpret the Directors
Option Plan; to prescribe, amend and rescind rules and regulations, if any,
relating to the Directors Option Plan and to make all determinations necessary
or advisable for the administration of the Directors Option Plan. However,
grants of stock options to participants under the Plan and the amount, nature
and timing of the grants are not subject to the determination of the
Committee.
The total number of Ordinary Shares for which options may be granted under
the Directors Option Plan may not exceed 200,000 shares while the Directors
Option Plan is in effect, subject to certain adjustments described in the
Directors Option Plan. Each Non-Employee Director receives an initial stock
option to purchase 10,000 Ordinary Shares at a price equal to the fair market
value at the time of grant of the Ordinary Shares subject to such stock
option.
Prior to termination of the Directors Option Plan, on the first to occur of
either the April 1 or October 1 following the first anniversary of each Non-
Employee Director's date of initial grant (the "First Annual Grant Date"), and
on each anniversary of each such Non-Employee Director's First Annual Grant
Date, each such Non-Employee Director will receive an additional stock option
to purchase 1,000 Ordinary Shares at a price equal to the fair market value of
the Ordinary Shares at the time of the grant, provided each such individual
continues to be a Non-Employee Director.
The term of each stock option will be 10 years unless earlier terminated by
termination of the director status of a Non-Employee Director. The stock
options will be exercisable in equal installments over five years from the
date of grant. The stock options granted under the Directors Option Plan may
not be assigned or transferred except by will, applicable laws of descent and
distribution or pursuant to a qualified domestic relations order.
The Board may amend, alter or discontinue the Directors Option Plan, but no
amendment, alteration or discontinuation will be made which would (i) impair
the rights of an optionee under a stock option without the optionee's consent,
except such an amendment as would cause the Directors Option Plan to qualify
for the exemption provided by Rule 16b-3 or (ii) disqualify the Directors
Option Plan from the exemption provided by Rule 16b-3. In addition, (i) no
amendment will be made without the approval of the Company's shareholders to
the extent such approval is required by law or agreement, and (ii) the
Directors Option Plan will not be amended more often than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
All stock options granted by the Company are non-qualified stock options for
purposes of the Code. The grant of non-qualified stock options does not result
in any taxable income to the participant. Upon the exercise
9
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of a non-qualified stock option, the excess of the market value of the shares
acquired over their cost to the participant is taxable to the participant as
ordinary income. TH USA will generally be entitled to a corresponding
deduction at the time such amounts are included in income by a TH USA Plan
participant. The participant's tax basis for the shares is their fair market
value at the time of exercise. Income realized on the exercise of a non-
qualified stock option is subject to federal and (where applicable) state and
local withholding taxes.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since August 1994, the Compensation Committee has consisted of Mr. Adamko,
who is the Chairman, and Mr. Silver.
Holdings is owned by Sportswear Holdings, Mr. Hilfiger and Mr. Horowitz.
Holdings owns all of the outstanding shares of SEL International Investments
Corp. ("SEL"), the majority shareholder of Pepe. Mr. Chou, the Chairman of the
Board of Directors of the Company, is Chairman of the Board of Directors of
Pepe. Mr. Stroll, a Director of the Company and Chief Executive Officer of
THHK, is Group Chief Executive Officer and a director of Pepe. Mr. Ng, an
executive officer and Director of the Company, is also a director of Pepe.
Messrs. Ma and Chao, Directors of the Company, are directors of certain
subsidiaries of Pepe. Novel Enterprises also holds other interests in the
apparel industry.
Mr. Chou, an executive officer and Director of the Company, is an executive
officer and director of Novel Enterprises. Messrs. Chao and Ma, Directors of
the Company, are executive officers and directors of Novel Enterprises.
Messrs. Chou, Hilfiger, Stroll, Horowitz and Ng, executive officers and
Directors of the Company, are executive officers and directors of Holdings.
Messrs. Chou and Stroll, executive officers and Directors of the Company,
are executive officers and directors of Sportswear Holdings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain relationships and transactions between the Company and certain
directors and officers of the Company and certain of their affiliates are
described below.
Effective June 30, 1996, the Company's joint venture arrangement with Tommy
Hilfiger Japan Co., Ltd. ("TH Japan") covering the Company's Japanese
operations expired. Effective July 1, 1996, the Company entered into an
exclusive license agreement for Japan with Novel-ITC Licensing Limited
("NIL"), a company jointly controlled by Itochu Corporation, which was the 51%
owner of TH Japan, and Novel Enterprises. Mr. Stroll indirectly owns a 3.5%
equity interest in NIL. Under the license agreement, NIL pays THLI a royalty
based on a percentage of the value of licensed products sold by NIL's
sublicensee. Novel Enterprises and Messrs. Stroll, Hilfiger and Horowitz
indirectly own equity interests of 12.4%, 12.4%, 8.0% and 2.7%, respectively,
in such sublicensee. Except with the approval of THLI, all products sold by or
through NIL or its sublicensee must be purchased through THEH or TH USA
pursuant to buying agency agreements. Under these agreements, THEH and TH USA
are paid a buying agency commission based on a percentage of the FOB cost of
products sourced through them. Pursuant to the prior arrangement, royalties
and commissions totaled $1,939,000 during fiscal year 1996.
Effective October 1, 1995, the Company entered into a license agreement with
SEL, the parent of Pepe, for the manufacture, sale and distribution of men's,
womens's and girl's jeanswear and jeans related apparel bearing the TOMMY
HILFIGER(R) registered trademarks. The Company received a non-interest bearing
note receivable from SEL in connection with this transaction. The note which
has a face value of $5,000,000, and is due on September 30, 2000, is recorded
at its present value of $2,874,000. Under this license agreement, the Company
receives a royalty from SEL based upon a percentage of net sales of licensed
products. The fiscal 1996 results of operations include $1,915,000 of
royalties received from SEL. Net sales included in the Company's consolidated
statements of operations for these licensed products prior to this agreement
were $12,370,000 in fiscal 1996, $9,104,000 in fiscal 1995 and $5,918,000 in
fiscal 1994.
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In June 1994, the Company granted Mr. Grayson an option to purchase a 10%
equity interest in Tommy Hilfiger Retail, Inc. ("TH Retail") in connection
with entering into an employment agreement with TH Retail. In July 1994, this
option was exercised at $193,000, an exercise price equal to 10% of the "Fair
Market Value" of TH Retail as determined by an independent appraisal. As a
result of this transaction, the value of the Company's proportionate interest
in TH Retail increased by $190,000. In March 1996, in connection with the
termination of Mr. Grayson's employment, the Company repurchased this equity
interest for its fair value of $1,800,000.
TH USA purchases finished goods in the ordinary course of business from
factories owned by South Ocean Knitters Limited, a subsidiary of Novel
Enterprises. Such purchases amounted to $10,970,000 during the fiscal year
ended March 31, 1996. In addition, contractors of the Company purchase raw
materials in the ordinary course of business from subsidiaries of Novel
Enterprises pursuant to the Company's designation of such sources as
acceptable suppliers. Such purchases amounted to $7,910,000 during the fiscal
year ended March 31, 1996.
THEH has entered into a buying agency agreement with Tommy Hilfiger Canada,
Inc., a Canadian licensee, which is controlled by Mr. Stroll's father. Under
this agreement, THEH receives commissions based on a percentage of the cost of
goods sourced on behalf of the licensee. Tommy Hilfiger Licensing, Inc.
receives a royalty from the licensee based upon a percentage of net sales of
licensed products. The Company's results of operations include $1,667,000 for
the year ended March 31, 1996 for commissions and royalties received from this
licensee.
The Company sells merchandise in the ordinary course of business to a retail
store that is owned by Mr. Hilfiger's sister. Sales to this customer amounted
to approximately $397,000 during the year ended March 31, 1996.
TH USA had a consulting services agreement with an affiliate, Falcon
International, pursuant to which TH USA paid Falcon International $500,000 per
year, plus reimbursement of expenses. The agreement had renewable one year
terms. The fees and related expenses under this consulting agreement totaled
$619,000 during the year ended March 31, 1996. This Agreement was terminated
effective March 31, 1996. A consulting services agreement with substantially
similar terms was entered into between THEH and another affiliate, Fasco
International, Inc., effective April 1, 1996.
THEH has a consulting agreement with an affiliate of Mr. Stroll. THEH paid
annual fees of $375,000 in fiscal 1996 to such affiliate.
Under the terms of an agreement with Novel Enterprises, THHK reimburses
Novel Enterprises for certain general and administrative expenses incurred by
it on behalf of THHK. Payments made to the affiliate for the year ended March
31, 1996 were $114,000.
The law firm of Gursky & Associates, P.C., of which Steven Gursky, Secretary
of TH USA and Assistant Secretary of the Company, is a member, provides legal
services to the Company and its subsidiaries. Payments to Gursky & Associates,
P.C., excluding reimbursement of expenses, were approximately $669,000 in
fiscal year 1996. Mr. Gursky is a cousin of Mr. Horowitz, an executive officer
and Director of the Company.
The Audit Committee of the Board of Directors monitors and approves
transactions between the Company and its affiliates to seek to insure that
such transactions are on terms which are no less favorable as a whole to the
Company than could be obtained from unaffiliated parties. The Audit Committee
is composed of non-employee directors who are not affiliated with Holdings,
Pepe, Novel Enterprises or Sportswear Holdings.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving the Company's compensation policies and the
compensation paid to its executive officers, including the Named Executive
Officers. The Committee is currently comprised of Messrs. Joseph M. Adamko,
who serves as Chairman, and Clinton V. Silver, each of whom is a Non-Employee
Director.
GENERAL POLICIES REGARDING COMPENSATION OF EXECUTIVE OFFICERS
In establishing compensation and benefit levels for executive officers, the
Committee seeks to (1) attract and retain individuals of superior ability and
managerial talent, (2) motivate executive officers to increase Company
performance, and (3) reward executives for exceptional individual
contributions to the achievement of the Company's business objectives. Each of
these compensation criteria is measured both internally and in comparison to
industry averages and standards, thereby providing the Committee with
comparative guidelines when determining executive compensation levels. The
Company's compensation structure consists of base salary, variable annual cash
bonuses and stock based long-term incentive awards in the form of stock
options and equity grants.
In determining salary and bonus levels for executive officers, the
Compensation Committee reviews certain Company performance factors, including
net revenues, operating earnings, net income and net profit margin.
Performance is measured in terms of both quantitative and qualitative goals at
the corporate, departmental and individual levels.
The Committee has adopted a policy to seek to maintain full deductibility of
executive compensation within the guidelines of Section 162(m) of the Internal
Revenue Code of 1986, as amended. Pursuant to this policy, the Committee
adopted and the shareholders approved the SEIC Plan described above under
"Certain Employment Agreements."
Certain of the Company's executive officers are eligible to receive stock
options in accordance with the Company's stock incentive plans. See "Stock
Option Plans." The objective of such grants is to align the long-term
interests of the Company's executives with those of its shareholders. The
Compensation Committee has the responsibility of governing stock option grants
to eligible executive officers and employees of the Company.
Cash compensation levels, including salary and bonus, of the Company's
executive officers, in particular the Named Executive Officers, are generally
determined based upon the amounts and formulas prescribed by each such
executive's employment agreement. See "Certain Employment Agreements." The
employment agreements are generally long-term with a view toward achieving
consistency at the higher levels of the Company's management ranks, and
contain variable salary and bonus structures which directly link the
compensation paid to certain executive officers to the Company's satisfactory
achievement of certain performance goals. Performance-based compensation is
generally determined based upon the attainment of certain annual net revenue,
operating earnings and net profit margin thresholds. Such bonus payments,
other than bonus payments prescribed by the employment agreements, are
generally at the discretion of the Committee and may be reduced from the
amounts prescribed by the formulas if, in the determination of the Committee,
such an adjustment is warranted.
Compensation levels are analyzed by the Committee through an assessment of
prevailing compensation levels among the Company's competitors. The Company's
competitors, for this purpose, include certain of the companies included in
the industry index used for comparison with the Company's performance in the
Cumulative Total Return graph which follows this report, as well as other
companies which, in the Committee's view, compete with the Company for
executive talent. These competitors may also include non-public companies and
companies in related industries such as retailing or general apparel
manufacturing.
12
<PAGE>
In selected cases, the Committee may feel that exceptional executive talent
may only be attracted and retained by compensation at the high end of
prevailing levels among the Company's competitors. In view of the
considerations described below, the Committee believes that compensation for
certain executive officers, and Messrs. Hilfiger and Horowitz in particular,
which are at the high end of the range for the Company's competitors, are
appropriate.
Long-term incentive compensation of the Company's executive officers, when
granted, generally takes the form of equity or stock option grants of both the
Company's and certain of its subsidiaries' common stock. Equity and stock
option grants of stock in specific operating subsidiaries of the Company align
the executive's potential for long-term compensation rewards with the
performance of the specific subsidiary for which the executive is primarily
responsible. This structure allows the Company and the executive to share in
the risks and rewards of the venture. Stock option grants of the Company's
Ordinary Shares are available under the Plans to certain executive officers
and may be utilized to provide incentives to certain of the Company's
officers, as well as the majority of its employees.
FISCAL YEAR 1996 COMPENSATION
Pursuant to Mr. Hilfiger's employment agreement, which has been in effect
since 1989, his annual cash compensation is fixed at 1.5% of certain of the
Company's net revenues and, accordingly, year-to-year increases in his
compensation are tied to increases in such revenues. The Company's net
revenues increased 49% in fiscal year 1996, which increase was largely due to
the success of Mr. Hilfiger's designs, his development of the TOMMY
HILFIGER(R) brand and image across an increasingly broad range of in-house and
licensed products and his insight into the direction of fashion industry
trends. The Committee reviewed other compensation arrangements in the apparel
industry which are based on a percentage of net revenues and found that Mr.
Hilfiger's compensation, while at the high end of the range in terms of total
dollars paid, was not unreasonable in terms of the percentage paid. In
addition, based on Mr. Hilfiger's contributions to the outstanding performance
of the Company in fiscal year 1996, the Committee approved a special
discretionary bonus award to Mr. Hilfiger in the amount of $800,000.
The other Named Executive Officers, except for Mr. Horowitz, received
compensation under one or more of the following arrangements: (1) base salary
and bonus, (2) in accordance with an employment agreement, or (3) in
accordance with the terms of a consulting agreement. Such compensation
represents, in the opinion of the Committee based upon a review of industry
standards, compensation commensurate with their respective contributions to
the continued growth, profitability, strategic direction and, ultimately,
shareholder return as depicted in the Cumulative Total Return graph which
follows this report. Significant achievements by these executives during the
past year include the continued expansion of the Company's in-store shop
programs, the growth in the number of new customers and doors, a significant
broadening of the range of product offerings (both in-house and through
licensing arrangements) including men's fragrance, robes and sleepwear,
golfwear and men's, women's and girl's jeans and jeans-related apparel, the
development of strategies to expand the Company's channels of distribution in
the retail arena, and the continued positioning of the Company for future
international growth.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Joel J. Horowitz is the Chief Executive Officer and President of the
Company. The fiscal year 1996 base salary of $430,000 represents a 7.5%
increase over the prior year and is consistent with the average increase given
to all employees of the Company. The contractual bonus paid under his
employment agreement was capped at $820,000 and is based upon a percentage of
operating earnings. Mr. Horowitz's fiscal year 1996 performance-based
compensation, which is determined in accordance with the SEIC Plan approved by
the shareholders at the 1995 Annual Meeting, is based on a percentage of
operating earnings less the amount of all other bonuses (which includes the
1996 contractual bonus) based on the operating earnings of the Company or any
of its subsidiaries. Mr. Horowitz received aggregate bonuses of $5,016,000
under these arrangements in respect of fiscal year 1996.
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The Committee compared the total compensation of Mr. Horowitz to a sample
which included chief executive officers of companies with publicly disclosed
compensation data. The Company and the Committee consider this sample group of
companies to be either peers or competitors in the apparel industry. The total
fiscal year 1996 compensation payable to Mr. Horowitz was at the high end of
the range of the sample group and is consistent with the Company's executive
compensation philosophy described above. The Committee noted that, as depicted
by the graph that follows this report, the cumulative total return achieved by
the Company's shareholders since the Company's initial public offering in 1992
far exceeds the returns realized by the general and industry-specific indexes.
COMPENSATION COMMITTEE
Joseph M. Adamko, Chairman
Clinton V. Silver
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COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total shareholder return on its Ordinary Shares
with the cumulative total shareholder return on (1) a broad equity market
index and (2) a published industry index or peer group. Although the chart
would normally be for a five-year period, the Ordinary Shares of the Company
began public trading on September 22, 1992 and, as a result, the following
chart commences as of such date. This chart compares the Ordinary Shares with
(1) the S & P 500 Composite Index and (2) the S & P Textile (Apparel
Manufacturers) Index, and assumes an investment of $100 on September 22, 1992
in each of the Ordinary Shares, the stocks comprising the S & P 500 Composite
Index and the stocks comprising the S & P Textile (Apparel Manufacturers)
Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
LOGO
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SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities ("Reporting
Persons") to file reports of ownership and changes in ownership ("Section 16
Reports") with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange. Reporting Persons are required by SEC regulation to furnish
the Company with copies of all Section 16 Reports they file.
Based solely on its review of the copies of such Section 16 Reports received
by it, or written representations received from certain Reporting Persons, all
Section 16(a) filing requirements applicable to the Company's Reporting
Persons during and with respect to the fiscal year ended March 31, 1996 have
been complied with on a timely basis, except that a Form 5 relating to an
employee stock option grant made by the Company to Mr. Ng was not filed in a
timely manner.
PROPOSAL TWO: AMENDMENT OF STOCK OPTION PLANS
In September 1992, the Company and its subsidiaries adopted the Plans
authorizing the issuance of an aggregate of up to 1,450,000 Ordinary Shares to
directors, officers and employees of the Company and its subsidiaries, as well
as 1,520,000 Ordinary Shares that were reserved for issuance in connection
with an option granted a former director and executive officer of the Company
pursuant to his employment agreement. In December 1993, the Company's
shareholders approved an amendment to the Plans to increase by 1,000,000 the
number of Ordinary Shares reserved for issuance under the Plans, and in July
1995, the shareholders approved an increase of an additional 1,000,000
Ordinary Shares. Messrs. Hilfiger, Horowitz, Chou, Chao and Stroll are not
eligible for grants under the Plans.
As of September 1, 1996, 4,358,425 options, net of cancellations, were
granted under the Plans, of which 2,481,255 have been exercised, including
1,775,000 options granted under the Plans to directors and officers of the
Company as a group, of which 1,589,930 have been exercised. The average
exercise price of all such options granted was $16.20 per Ordinary Share. The
outstanding options expire on the tenth anniversary of their grant.
As of September 1, 1996, 213,395 of the outstanding options granted were
vested and exercisable and 611,575 shares were available for future grants
under the Plans.
In July 1996, the Board of Directors of the Company and its subsidiaries
amended the Plans to increase by 500,000 the number of Ordinary Shares
authorized for issuance in connection with options granted to directors,
officers and employees of the Company and its subsidiaries, subject to the
approval of the Company's shareholders at the Meeting. See "Stock Option
Plans" for a further description of the Plans.
The affirmative vote of a majority of the shares voting, in person or by
proxy, on the proposal at the Meeting is required to approve the amendment of
the stock option plans.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
PROPOSAL THREE: APPOINTMENT OF AUDITORS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants to audit the accounts of the Company for the 1997
fiscal year, subject to approval by shareholders. A majority of the votes cast
at the Meeting is required for such approval.
Price Waterhouse LLP has served as independent accountants for the Company
since 1992. A representative of Price Waterhouse LLP will attend the Meeting
and will have the opportunity to make a statement and respond to appropriate
questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL THREE.
16
<PAGE>
PROPOSALS OF SHAREHOLDERS
The Company presently intends to mail its proxy statement for its 1997
Annual Meeting of Shareholders on or about June 20, 1997. Shareholder
proposals intended to be included in the Company's proxy statement for the
1997 Annual Meeting must be received by the Company by February 20, 1997.
OTHER MATTERS
The Board does not know of any other business which may be presented for
consideration at the Meeting. If any business not described herein should come
before the Meeting, the persons named in the enclosed Proxy Card will vote on
those matters in accordance with their best judgment.
The Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1996, and its Quarterly Report on Form 10-Q for the quarter ended June 30,
1996, in each case exclusive of exhibits, will be mailed without charge to any
stockholder entitled to vote at the meeting, upon written request to Tommy
Hilfiger U.S.A., Inc., 25 West 39th Street, New York, New York 10018, Attn:
Investor Relations.
By order of the Board of Directors
LAWRENCE T.S. LOK
Secretary
Hong Kong
September 24, 1996
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<PAGE>
TOMMY HILFIGER CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
1996 ANNUAL MEETING OF SHAREHOLDERS-NOVEMBER 1, 1996
The undersigned hereby appoints Silas K.F. Chou and Benjamin M.T. Ng, and each
of them, with full power of substitution, for and in the name of the undersigned
to vote all Ordinary Shares, par value $.01 per share, of Tommy Hilfiger
Corporation, a British Virgin Islands corporation, that the undersigned would be
entitled to vote if personally present at the 1996 Annual Meeting of
Shareholders, to be held at Little Dix Resort, Virgin Gorda, British Virgin
Islands on Friday, November 1, 1996 at 3:00 p.m., local time, and at any
adjournment thereof, upon the matters described in the Notice of Annual Meeting
and Proxy Statement dated September 24, 1996, receipt of which is hereby
acknowledged, subject to any direction indicated on the reverse side of this
card and upon any other business that may properly come before the meeting or
any adjournment thereof, hereby revoking any proxy heretofore executed by the
undersigned to vote at said meeting.
This proxy is being solicited by the Board of Directors of Tommy Hilfiger
Corporation. THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3 AND, WITH RESPECT TO ITEM 4,
AS SAID PROXIES, AND EACH OF THEM, MAY DETERMINE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
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<PAGE>
The Board of Directors recommends a vote "FOR" Proposals 1, 2 and 3.
Please mark
your votes as
indicated in
this example [X]
1. Election of Directors. NOMINEES: S.K.F. Chou, T.J.
Hilfiger, J.M. Adamko
FOR all nominees WITHHOLD
listed to the right AUTHORITY (INSTRUCTION: To withhold
(except as marked to vote for authority to vote for any
to the contrary) all nominees individual nominee, write
listed to the right that nominee's name in the space
provided below.)
[_] [_]
---------------------------------
2. Approval of Amendment of Stock Option Plans.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of Appointment of Auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof.
NOTE: Please date and sign this proxy exactly as your name appears hereon. In
the case of joint owners, each joint owner should sign. When signing in a
fiduciary or representative capacity, please give your full title. If this proxy
is submitted by a corporation or partnership, it should be executed in the full
corporate or partnership name by a duly authorized person.
Dated: , 1996
-----------------------------------------------
- ------------------------------------------------------------
Signature
- ------------------------------------------------------------
Signature
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