<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
STARTER 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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:
------------------------------------------------------------------------
<PAGE>
[LOGO]
STARTER CORPORATION
370 JAMES STREET
NEW HAVEN, CONNECTICUT 06513
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1998
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Starter
Corporation (the "Corporation" or "Starter") will be held at 10:00 o'clock a.m.,
local time, on June 30, 1998, at Starter Corporation, 370 James Street, New
Haven, Connecticut, for the following purposes:
1. To elect one director of the Corporation to hold office until the Annual
Meeting of Stockholders occurring in 2001 and until the election and
qualification of his successor;
2. To approve the 1998 Quality Performance-Based Goals relating to
compensation to be paid to a certain executive officer; and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Only holders of record of the Corporation's Common Stock at the close of
business on May 19, 1998 are entitled to notice of, and to vote at, the meeting
and any adjournments or postponements thereof. Such stockholders may vote in
person or by proxy.
STOCKHOLDERS WHO FIND IT CONVENIENT ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. IF YOU ARE NOT ABLE TO DO SO AND WISH THAT YOUR STOCK BE
VOTED, YOU ARE REQUESTED TO FILL IN, SIGN AND DATE THE ACCOMPANYING PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS,
MARK G. SKLARZ, ESQ.
Secretary
Dated: May 28, 1998
<PAGE>
STARTER CORPORATION
370 JAMES STREET
NEW HAVEN, CONNECTICUT 06513
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Starter Corporation (the "Corporation" or "Starter") of
proxies to be used at the Annual Meeting of Stockholders of the Corporation (the
"Annual Meeting") to be held at 10:00 a.m. local time, on June 30, 1998, and at
any adjournments or postponements thereof. The purposes of the meeting are:
1. To elect one director of the Corporation to hold office until the
Annual Meeting of Stockholders occurring in 2001 and until the election and
qualification of his successor;
2. To approve the 1998 Quality Performance-Based Goals relating to
compensation to be paid to a certain executive officer; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
If proxy cards in the accompanying form are properly executed and returned,
the shares of common stock of the Corporation, par value $.01 per share (the
"Common Stock"), represented thereby will be voted as instructed on the proxy.
If no instructions are given, such shares will be voted (i) for the election as
director of the nominee of the Board of Directors named below, (ii) for the
approval of the 1998 Quality Performance-Based Goals relating to compensation to
be paid to a certain executive officer as set forth below, and (iii) in the
discretion of the proxy holders named in the proxy card on any other proposals
to properly come before the meeting or any adjournments or postponements
thereof. Any proxy may be revoked by a stockholder prior to its exercise upon
written notice to the Secretary of the Corporation or by the vote of such
stockholder cast in person at the meeting. The mailing of this Proxy Statement
will begin on or about May 28, 1998.
<PAGE>
VOTING
Holders of record of shares of Common Stock on May 19, 1998 will be entitled
to vote at the Annual Meeting or any adjournment or postponement thereof. As of
that date, there were 28,022,851 shares of Common Stock outstanding and entitled
to vote. A majority of the outstanding shares of Common Stock, or 14,011,426
shares, will constitute a quorum for the transaction of business. Abstentions
and broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Each share of Common Stock
entitles such holders to one vote on all matters to come before the Annual
Meeting, including the election of directors.
The favorable vote of a plurality of the shares of Common Stock represented
and voted at the Annual Meeting is necessary to elect a director of the
Corporation. The affirmative vote of a majority of the shares of Common Stock
represented and voted at the Annual Meeting is necessary to approve all other
proposals. Abstentions and broker non-votes are not considered votes cast and
will have no effect on the outcome of the votes for the proposals. The Board of
Directors recommends a vote for each of the proposals.
INFORMATION AS TO NOMINEE AND OTHER DIRECTORS
One director is to be elected at the Annual Meeting. The Board of Directors
has selected the individual named in the first table below as nominee for
election as director. Such person is presently a director of the Corporation.
Unless otherwise specified in the accompanying proxy, the shares voted pursuant
to it will be voted for the election of the individual so named. If, for any
reason, at the time of the election, such individual should be unable or
unwilling to serve as a director, it is intended that such proxy will be voted
for the election, in such individual's place, of a substitute nominee
recommended by the Board of Directors. However, the Board of Directors has no
reason to believe that such individual will be unable or unwilling to serve as a
director.
The following information is supplied with respect to the nominee for
election as director in class II (whose term will continue until the Annual
Meeting of Stockholders in 2001 and the election and qualification of his
respective successor), and for the directors in each of classes III and I (whose
terms continue until the Annual Meeting of Stockholders occurring in 1999 and
2000, respectively, and the election and qualification of their respective
successors). Unless otherwise indicated below, each director has had the
principal occupation(s) indicated for five years or more. The age of each
director is given as of May 19, 1998.
NOMINEE FOR DIRECTOR
CLASS II
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION OR EMPLOYMENT AND POSITION WITH THE CORPORATION SINCE
- ------------------------- --- ----------------------------------------------------------------------- -----------
<S> <C> <C> <C>
Benjamin E. Cohen 70 Retired Partner, Blum, Shapiro & Company, P.C., an accounting firm and 1993
Director of the Corporation (1)
</TABLE>
2
<PAGE>
DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING
CLASS III
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION OR EMPLOYMENT AND POSITION WITH THE CORPORATION SINCE
- ------------------------- --- ----------------------------------------------------------------------- -----------
<S> <C> <C> <C>
Carmen L. Cozza 67 Assistant to the President and Director of Athletics, Yale University 1995
and Director of the Corporation (2)
Mark G. Sklarz 52 Partner, Cummings & Lockwood, since August 1996, previously a partner 1978
in Sklarz, Gallant & Temkin, P.C., and its predecessors since 1983 and
Director of the Corporation
</TABLE>
CLASS I
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION OR EMPLOYMENT AND POSITION WITH THE CORPORATION SINCE
- ------------------------- --- ----------------------------------------------------------------------- -----------
<S> <C> <C> <C>
David A. Beckerman 55 Chairman of the Board, President and Chief Executive Officer of the 1971
Corporation
Joseph P. Grant 66 Managing Director --Worldwide of Summit Properties International and 1993
Director of the Corporation (3)
Richard H. Saletan 54 Chairman of the Board and Chief Executive Officer, CSC Weston Group, a 1995
management consulting firm, since 1971 and Director of the Corporation
(4)
</TABLE>
- ------------------------
(1) On December 31, 1995, Mr. Cohen retired from Blum, Shapiro & Company, P.C.,
where he had been a partner since prior to 1989.
(2) In 1996, Mr. Cozza retired as Head Coach of the Yale University Football
Team, a position he had held since 1965.
(3) In January 1997, Mr. Grant was appointed Managing Director-Worldwide of
Summit Properties International. From October 1995 through 1996, Mr. Grant
was President of Licensed Properties International. From 1991 to 1995, Mr.
Grant was President and Chief Executive Officer of Time Warner Sports
Merchandising (a Time Warner company). Mr. Grant had previously been
employed at Time Warner companies in various capacities since 1968. All of
these organizations are licensing companies.
(4) Mr. Saletan became Chairman of the Board of CSC Weston Group in 1995.
MEETINGS OF THE BOARD
The Board of Directors has an Executive Committee, consisting of Messrs.
Beckerman, Cohen and Sklarz. The Executive Committee has the authority to act in
place of the Board of Directors on all matters which would otherwise come before
the Board of Directors, except for such matters which are required by law or by
the Corporation's Certificate of Incorporation or By-Laws to be acted upon
exclusively by the Board of Directors. The Executive Committee held one meeting
during 1997.
3
<PAGE>
The Board of Directors has an Audit Committee, consisting of Messrs. Cohen,
Cozza and Sklarz. The primary functions of the Audit Committee are to review the
Corporation's financial statements, recommend the appointment of the
Corporation's independent accountants and review the overall scope of audits of
the Corporation's financial statements, the internal accounting controls of the
Corporation and the audit practices and the professional services furnished by
the independent accountants. The Audit Committee held two meetings during 1997.
The Board of Directors has a Compensation Committee, consisting of Messrs.
Cohen, Cozza and Grant. The primary responsibility of the Compensation Committee
is to review the compensation arrangements relating to officers of the
Corporation, including annual incentive awards, and to administer the Starter
Corporation 1993 Stock Option Plan and the Starter Corporation Employee Stock
Purchase Plan. The Compensation Committee held two meetings during 1997.
The Board of Directors has no standing nominating committee.
During 1997, six meetings of the Board of Directors were held. No directors
attended fewer than 75% of the meetings of the Board of Directors and committees
of the Board of Directors on which they served which were held while they were
directors or committee members.
SECURITY OWNERSHIP OF CERTAIN STOCKHOLDERS
The following table provides certain information as of May 19, 1998, as to
each person who is known to the Corporation to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock, the only class of voting
securities of the Corporation outstanding.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AND PERCENT OF OUTSTANDING
NAME AND ADDRESS NATURE OF COMMON STOCK
OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP BENEFICIALLY OWNED(2)
- ------------------------------------------------------------------- --------------------- -------------------------
<S> <C> <C>
David A. Beckerman................................................. 17,615,729(3) 63.2%
Starter Corporation
370 James Street
New Haven, CT 06513
</TABLE>
- ------------------------
(1) Identifies persons having voting investment power with respect to the shares
set forth opposite their names, according to information furnished to the
Corporation. Each such person has sole voting or investment power with
respect to such shares, except as otherwise disclosed in the footnotes to
the table.
(2) Expressed as a percentage of the shares of Common Stock outstanding as of
May 19, 1998. For the purpose of calculating each person's beneficial
ownership, any shares subject to options exercisable within 60 days of May
19, 1998 are deemed to be beneficially owned by, and outstanding with
respect to, such person.
(3) Includes 143,338 shares owned by The Beckerman Family Associates Limited
Partnership (the "Partnership"), of which Mr. Beckerman is the general
partner. Mr. Beckerman owns a 1% general partnership interest and an 11%
limited partnership interest in the Partnership.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides certain information as of May 19, 1998 with
respect to shares of Common Stock beneficially owned by each director and
nominee (except Mr. Beckerman, whose holdings are shown in the preceding table)
and each of the four most highly compensated executive officers (other than Mr.
Beckerman) of the Corporation during the fiscal year ended December 31, 1997
(such executive officers, including the Chief Executive Officer, are called the
"Named Executive Officers"), and Messrs. Thorbeck and Tucker (see "Executive
Compensation"), and by all directors and executive officers as a group
(including Mr. Beckerman).
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED AND PERCENT OF OUTSTANDING
NATURE COMMON STOCK
OF BENEFICIAL OWNED(2)
NAME OF BENEFICIAL OWNER (1) OWNERSHIP BENEFICIALLY
- ------------------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
Frederick T. Burke II.............................................. 1,138 *
Benjamin E. Cohen.................................................. 9,400(3) *
Carmen L. Cozza.................................................... 2,500(4) *
Joseph P. Grant.................................................... 8,500(5) *
Gary S. Letendre................................................... 30,994(6) *
Lawrence C. Longo, Jr.............................................. 3,000 *
Richard H. Saletan................................................. 2,500(7) *
Mark G. Sklarz..................................................... 8,700(8) *
John S. Thorbeck...................................................
John M. Tucker.....................................................
John C. Warfel..................................................... 32,136(9) *
All executive officers and directors as a group (consisting of 16
individuals)..................................................... 17,793,563(10) 63.8%
</TABLE>
- ------------------------
* Less than 1%
(1) Identifies persons having voting or investment power with respect to the
shares set forth opposite their names, according to information furnished to
the Corporation. Each such person has sole voting or investment power with
respect to such shares, except as otherwise disclosed in the footnotes to
the table.
(2) Expressed as a percentage of the shares of Common Stock outstanding as of
May 19, 1998. For the purpose of calculating each person's beneficial
ownership, any shares subject to options exercisable within 60 days of May
19, 1998 are deemed to be beneficially owned by, and outstanding with
respect to, such person.
(3) Includes 4,500 shares which are subject to currently exercisable options,
500 shares held by a corporation, the shares of which corporation are owned
by two trusts (the "Trusts") organized for the benefit of Mr. Cohen's
children and certain other relatives of Mr. Cohen, and 1,000 shares held by
Mr. Cohen's wife, Shelia D. Cohen. Mr. Cohen disclaims beneficial ownership
of the shares held by the corporation and those owned by his wife. Mr. Cohen
is president of the corporation. Mr. Cohen is an income beneficiary of one
of the Trusts.
(4) Includes 2,500 shares which are subject to currently exercisable options.
5
<PAGE>
(5) Includes 4,500 shares which are subject to currently exercisable options.
(6) Includes 24,000 shares which are subject to currently exercisable options.
(7) Includes 1,500 shares which are subject to currently exercisable options.
(8) Includes 4,500 shares which are subject to currently exercisable options.
(9) Includes 23,000 shares which are subject to currently exercisable options.
(10) Includes 127,000 shares which are subject to currently exercisable options.
Does not include information with respect to the number of shares
beneficially owned by Messrs. Thorbeck and Tucker as the Corporation does
not have information with respect to such holdings as of May 19, 1998.
EXECUTIVE OFFICERS OF THE CORPORATION
The following table sets forth the names, ages (as of May 19, 1998) and
positions and offices with the Corporation held by the Corporation's present
executive officers. Unless otherwise indicated below, each person has held the
positions and offices indicated for more than five years.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
David A. Beckerman................................... 55 Chairman of the Board, President and Chief Executive
Officer(1)
Douglas T. Dryburgh.................................. 55 Senior Vice President, Sales and Marketing (2)
Gary S. Letendre..................................... 38 Senior Vice President, Operations (3)
John C. Warfel....................................... 45 Senior Vice President and Chief Financial Officer (4)
Robert G. Felice..................................... 41 Vice President, Field Sales (5)
Steven B. Raab....................................... 34 Vice President, Marketing (6)
Thomas G. White...................................... 37 Vice President, National Account Sales (7)
Julianne Wilhelm..................................... 54 Vice President, Human Resources(8)
Mark G. Sklarz....................................... 52 Secretary and Director(9)
Sean T. Smith........................................ 37 Controller and Chief Accounting Officer (10)
Theodore R. Voss..................................... 55 General Counsel and Assistant Secretary(11)
</TABLE>
- ------------------------
(1) Mr. Beckerman reassumed the position of President on August 22, 1997, a
title he had relinquished in August 1994. He continues to serve as Chairman
of the Board and Chief Executive Officer, which positions he has held for
more than five years.
(2) Mr. Dryburgh was appointed Senior Vice President, Sales and Marketing in
November of 1997. From April 1997, when he joined the Corporation until
November 1997, he was Senior Vice President, Sales. Prior to joining the
Corporation he was Executive Vice President of Phillips Van Heusen from
April 1994 to April 1997. From January 1992 to April 1994, Mr. Dryburgh was
President of Boston Traders Men's, a division of Boston Trading, Inc.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
6
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
- ------------------------
(3) Mr. Letendre was appointed Vice President, Operations in April 1998. From
March 1995 to April 1998, he was Senior Vice President, Sourcing. From
September 1993 to March 1995, Mr. Letendre was Senior Vice President and
Chief Operating Officer. From 1992 to September 1993, Mr. Letendre was Vice
President and Chief Operating Officer. From 1988 to 1992, Mr. Letendre was
Vice President and Chief Financial Officer.
(4) Mr. Warfel was appointed Senior Vice President, and Chief Financial Officer
in April 1998. From March 1995 to April 1998, Mr. Warfel was Senior Vice
President Administration and Finance. From 1992 to March 1995, Mr. Warfel
was Vice President and Chief Financial Officer. From 1988 to 1992, Mr.
Warfel was Vice President and Chief Operating Officer. Mr. Warfel serves as
a member of the Board of Directors of the Aristotle Corporation.
(5) Mr. Felice was appointed Vice President, Field Sales in April 1998. From
March 1995 to April 1998 Mr. Felice was Vice President, International. From
January 1991 to March 1995, Mr. Felice was Managing Director International.
From September 1990 to January 1991, Mr. Felice was International Sales
Manager and Sales Manager Special Markets.
(6) Mr. Raab was appointed Vice President, Marketing in February 1998. From
December 1996 until February 1998, he held the position of Director of
Special Markets. From May 1995 to December 1996, he held the position of
General Manager Olympics. From October 1994 to May 1995, he held the
position of Marketing Manager, Hockey and Baseball. From September 1992
until June of 1994, Mr. Raab was a student at the Harvard Business School.
(7) Mr. White was appointed Vice President, National Account Sales in October
1996. From March 1995, to October 1996, Mr. White served as Vice President
Sales. From January 1994 to March 1995, Mr. White was Director Retail Sales.
From June 1991 to January 1994, Mr. White was National Sales Manager and,
from April 1987 to June 1991, he was Regional/National Accounts Manager.
(8) Ms. Wilhelm was appointed Vice President, Human Resources in May 1996. Ms.
Wilhelm was Director of Human Resources of Starter from April 1994 until May
1996. From April 1993 until April 1994, Ms. Wilhelm was Executive Recruiter
of Johnson Smith & Knisely. Ms. Wilhelm was Vice President of Human
Resources at Medical Economics Company from September 1990 until December
1993.
(9) Mr. Sklarz is a partner in the law firm of Cummings & Lockwood. See
"Compensation Committee Interlocks and Inside Participation."
(10) In April 1998, Mr. Smith was appointed Controller and Chief Accounting
Officer. From February 1997 to April 1998, he was Controller of the
Corporation. Mr. Smith jointed Starter in July 1995 and served as Director
of Financial Reporting from July 1995 to February 1997. Mr. Smith was a
Senior Manager in the accounting firm of Ernst & Young LLP from 1989 to July
1995.
(11) Mr. Voss joined the Corporation in October 1994 as General Counsel. In
March 1995, he was appointed Assistant Secretary of Starter. From 1985 to
October 1994, Mr. Voss was the Assistant General Counsel and Assistant
Secretary of Crystal Brands, Inc., a manufacturer and distributor of apparel
and costume jewelry.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for 1997, 1996 and 1995, the compensation
for services in all capacities to the Corporation of those persons who were
Named Executive Officers at December 31, 1997 and two former executives who
would have been named executive officers in 1997 based on their salary and
bonuses but for the fact that they left the Corporation prior to December 31,
1997.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
AWARDS
ANNUAL COMPENSATION --------------------------
------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME & PRINCIPAL POSITION YEAR SALARY BONUS($) COMPENSATION AWARDS($) OPTIONS(#)
- ---------------------------------------- --------- --------- ------------- ----------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
David A. Beckerman (1).................. 1997 750,000 -- -- -- --
Chairman of the Board, President and 1996 750,000 -- -- -- --
Chief Executive Officer 1995 749,996 -- -- -- --
Frederick T. Burke, II (3).............. 1997 155,000 -- -- -- 15,000
1996 31,415 -- -- -- 5,000
Gary S. Letendre........................ 1997 185,773 -- -- -- 30,000
Sr. Vice President, 1996 175,006 -- -- -- 100,000
Sourcing 1995 175,006 -- -- -- 30,000
Lawrence C. Longo, Jr.(4)............... 1997 175,006 -- -- -- 15,000
1996 156,538 -- -- -- 45,000
1995 129,226 -- -- -- 35,000
John C. Warfel.......................... 1997 165,000 -- -- -- 10,000
Sr. Vice President, 1996 159,230 -- -- -- 95,000
Administration and Finance and Chief 1995 140,010 -- -- -- 10,000
Financial Officer
John M. Tucker(5)....................... 1997 336,537 -- -- -- --
President 1996 500,000 -- -- -- --
1995 350,012 -- -- -- 50,000
John S. Thorbeck(6)..................... 1997 181,441 -- -- -- --
1996 202,500 -- -- -- 25,000
1995 10,769 -- -- -- --
<CAPTION>
PAYOUTS
--------------- ALL OTHER
NAME & PRINCIPAL POSITION LTIP PAYOUTS($) COMPENSATION($)
- ---------------------------------------- --------------- -----------------
<S> <C> <C>
David A. Beckerman (1).................. -- 6,400(2)
Chairman of the Board, President and -- 6,000(2)
Chief Executive Officer -- 6,000(2)
Frederick T. Burke, II (3).............. -- 4,700(2)
--
Gary S. Letendre........................ -- 6,400(2)
Sr. Vice President, -- 6,000(2)
Sourcing -- 6,000(2)
Lawrence C. Longo, Jr.(4)............... -- 6,400(2)
-- 6,000(2)
-- 5,169(2)
John C. Warfel.......................... -- 6,400(2)
Sr. Vice President, -- 6,000(2)
Administration and Finance and Chief -- 5,600(2)
Financial Officer
John M. Tucker(5)....................... -- 163,484(7)
President -- --
-- --
John S. Thorbeck(6)..................... -- 16,827(7)
-- --
-- --
</TABLE>
- ------------------------------
(1) For certain information concerning compensation to be paid to Mr. Beckerman,
see "Employment Contracts and Termination of Employment".
(2) Represents contributions made to the Corporation's 401(k) Plan.
(3) Mr. Burke became an employee of the Corporation in October 1996 and left the
Corporation in April 1998. Mr. Burke held the position of Vice President,
Field Sales prior to leaving the Corporation.
(4) Mr. Longo left the Corporation in April 1998. Mr. Longo held the position of
Chief Financial Officer prior to leaving the Corporation.
(5) Mr. Tucker left the Corporation in August 1997. Mr. Tucker held the position
of President prior to leaving the Corporation.
(6) Mr. Thorbeck left the Corporation in November 1997. Mr. Thorbeck held the
position of Vice President, Marketing prior to leaving the Corporation.
(7) Represents severance compensation.
STOCK OPTION PLAN
In 1993, the Board of Directors established the Starter Corporation 1993
Stock Option Plan (the "Option Plan). The Option Plan was subsequently approved
by the Corporation's stockholders. The Option Plan provides that stock options
may be granted through the year 2003 to management and other employees of the
Corporation. An aggregate of 2,000,000 shares of Common Stock were reserved for
grant under the Option Plan and to date options for an aggregate of 1,242,500
shares have been granted under the Option Plan.
8
<PAGE>
OPTION GRANTS FOR THE FISCAL YEAR
The following table sets forth certain information as to stock options
granted under the Option Plan to the Named Executive Officers and Messrs. Tucker
and Thorbeck in 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL
RATES OF
STOCK
INDIVIDUAL GRANTS PRICE
----------------- APPRECIATION
NUMBER OF PERCENT OF FOR
SECURITIES TOTAL OPTIONS OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------
NAME GRANTED(#) IN FISCAL YEAR ($)/SH) DATE 5%($)
- ------------------------------------------------------ ------------- ----------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
David A. Beckerman.................................... -- -- -- -- --
Frederick T. Burke II................................. 15,000(2) 2.9% 4,935 7/29/07 121,920
Gary S. Letendre...................................... 30,000(1) 5.9% 4,935 7/29/07 243,840
Lawrence C. Longo..................................... 15,000(2) 2.9% 4,935 7/29/07 121,920
John C. Warfel........................................ 10,000(1) 2.0% 4,935 7/29/07 81,280
John M. Tucker........................................ -- -- -- -- --
John S. Thorbeck...................................... 20,000(2) -- -- -- --
<CAPTION>
NAME 10%($)
- ------------------------------------------------------ ---------
<S> <C>
David A. Beckerman.................................... --
Frederick T. Burke II................................. 200,389
Gary S. Letendre...................................... 400,777
Lawrence C. Longo..................................... 200,389
John C. Warfel........................................ 133,593
John M. Tucker........................................ --
John S. Thorbeck...................................... --
</TABLE>
- ------------------------
(1) Options become exercisable in 20% equal annual installments with the first
installment becoming exercisable on July 29, 1998.
(2) Messers. Burke, Longo and Thorbeck's options terminated upon their leaving
the employ of the Corporation.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information as to stock options
exercised in 1997 and the value of the stock options held at December 31, 1997
by each Named Executive Officer and Messrs. Tucker and Thorbeck.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL
SHARES ACQUIRED VALUE YEAR-END(#)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE
- ----------------------------------------- ------------------- --------------- ---------------------------
<S> <C> <C> <C>
David A. Beckerman....................... -- -- 0/0
Frederick T. Burke II.................... -- -- 0/15,000
Gary S. Letendre......................... -- -- 0/140,000
Lawrence C. Longo........................ -- -- 0/95,000
John S. Thorbeck......................... -- -- 0/0
John M. Tucker........................... -- -- 0/0
John C. Warfel........................... -- -- 0/115,000
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE
- ----------------------------------------- ---------------------------
<S> <C>
David A. Beckerman....................... 0/0
Frederick T. Burke II.................... 0/0
Gary S. Letendre......................... 0/0
Lawrence C. Longo........................ 0/0
John S. Thorbeck......................... 0/0
John M. Tucker........................... 0/0
John C. Warfel........................... 0/0
</TABLE>
COMPENSATION OF DIRECTORS
Each non-employee director of the Corporation receives an annual director's
fee of $5,000, an attendance fee of $1,000 for each meeting of the Board of
Directors attended and $250 for each meeting of a committee of the Board of
Directors attended. The non-employee directors who serve on the executive
committee of the Board of Directors have traditionally not accepted any fee for
attending such meetings thereof. Directors who are employees of the Corporation
receive no compensation for service as members of the Board of Directors. All
directors are reimbursed for expenses incurred in connection with attendance at
meetings. Each non-employee director as of the conclusion of each Annual Meeting
of Stockholders automatically receives an option to purchase 2,500 shares of
Common Stock
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pursuant to the Starter Corporation 1994 Stock Option Plan for Non-Employee
Directors. In 1998 the Board of Directors unanimously decided to waive their
annual fee and attendance fees until the Corporation's fiscal situation
improves.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
Effective January 1, 1997, the Corporation and Mr. Beckerman amended Mr.
Beckerman's employment agreement. The amended employment agreement (the
"Beckerman Employment Agreement"), has a three-year term (with an automatic
annual renewal period thereafter) and provides that Mr. Beckerman will serve as
Chairman of the Board of Directors and Chief Executive Officer of the
Corporation and will receive an annual base salary of $750,000 and a bonus (a
"First Level Bonus") of up to 150% of his base salary if the Corporation
achieves certain goals to be established by the Board of Directors or the
Compensation Committee. In addition, Mr. Beckerman is entitled to receive, at
the discretion of the Board of Directors or the Compensation Committee, an
additional bonus (a "Second Level Bonus") of up to 150% of his base salary if
the Corporation achieves certain financial and other performance-related goals
established from time to time by the Board of Directors or the Compensation
Committee. See "Compensation Committee Report On Executive Compensation" with
respect to allowable deductions of certain executive compensation pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Beckerman Employment Agreement further provides for certain payments to Mr.
Beckerman upon termination of employment without cause or as a result of death
or disability. If Mr. Beckerman's employment under the Beckerman Employment
Agreement is terminated without cause, Mr. Beckerman is entitled to receive (i)
within 60 days, a lump sum amount equal to two times Mr. Beckerman's annual base
salary and (ii) on each of the two annual anniversary dates succeeding the date
of termination, lump sum amounts equal to the aggregate of a First Level Bonus
and a Second Level Bonus as if the Board of Directors had fully awarded such
bonuses to Mr. Beckerman as of such anniversary dates. In the event of a change
of control of the Corporation, Mr. Beckerman is entitled to terminate his
employment and receive three annual payments each equal in amount to his annual
base salary as of the date of termination. Mr. Beckerman has also agreed, in
consideration for the execution of the Beckerman Employment Agreement by the
Corporation and the compensation to be paid him thereunder, not to compete with
the business of the Corporation for a period of two years following termination
of his employment. See "Compensation Committee Report on Executive
Compensation."
Prior to leaving the Corporation, on January 1, 1996, the Corporation
entered into a three-year employment agreement with Mr. Tucker to serve as
President and Chief Operating Officer of the Corporation (the "Tucker Employment
Agreement"). The Tucker Employment Agreement provided for an annual base salary
of $500,000, a First Level Bonus of up to 75% of his base salary and a Second
Level Bonus of up to an additional 75% of his base salary. Mr. Tucker left the
Corporation in November 1997 and agreed to waive any compensation provisions of
the Tucker Employment Agreement pertaining to 1998.
1998 PERFORMANCE GOALS
Section 162(m) precludes a deduction by a publicly held corporation for
compensation paid to each of its Chief Executive Officer and its next four most
highly compensated employees in excess of $1 million unless such compensation is
qualified performance-based compensation, the material terms of which are
disclosed to and approved by a majority of the stockholders of such corporation
before the compensation is paid. Qualified performance-based compensation must
be paid solely on account of the realization of one or more pre-established
objective goals. The Compensation Committee of the Board of Directors has
adopted, subject to stockholder approval, the 1998 Quality Performance-Based
Goals (the "1998 Performance Goals") under which incentive compensation paid to
the
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Chief Executive Officer and the President is designed to satisfy the
requirements of Section 162(m). The material terms of the 1998 Performance Goals
are described below.
The maximum amount of incentive compensation that may be paid to the Chief
Executive Officer is 300% of his base salary, consisting of a First Level Bonus,
equal to 150% of his base salary, and a Second Level Bonus, also equal to 150%
of his base salary. The Chief Executive Officer's base salary for 1998 is fixed
at $750,000 in accordance with the terms of the Beckerman Employment Agreement.
The business criteria for the First Level Bonus will be based on performance
goals related to net earnings before taxes. The Chief Executive Officer will not
be eligible to receive any First Level or Second Level Bonuses unless all other
employees of the Corporation who participate in the Corporation's Incentive
Compensation Plan (the "Incentive Plan") are eligible to receive incentive
compensation under the Incentive Plan and unless a specified positive cash flow
is attained The Chief Executive Officer is not eligible to participate in the
Incentive Plan.
The business criteria for Second Level Bonuses will be based on the increase
of the average price of the Common Stock above $6.50 per share during the month
of December 1998.
The 1998 Performance Goals will be administered by a committee composed of
not less than two non-employee directors of the Corporation (the "Committee") to
be designated by the Board of Directors. The Committee will determine the degree
of realization of performance goals, the amount, if any, to be paid as First or
Second Level Bonuses and the timing and form of such payment. Such payments will
be made as soon as practicable. The Committee has no discretion to pay more than
the maximum First and Second Level Bonuses specified above. Receipt of First or
Second Level Bonuses, or the possibility thereof, does not preclude
participation in other compensation and incentive plans of the Corporation.
The 1998 Performance Goals may be amended by the Board of Directors and, in
certain circumstances, by the Committee, except that any such amendment must be
approved by a majority of the stockholders of the Corporation if such approval
is necessary in order to maintain compliance with Section 162(m). The
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock represented and voting at the Annual Meeting is required for
approval of the 1998 Performance Goals.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE 1998 PERFORMANCE GOALS, AS
DESCRIBED ABOVE.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Sklarz receives no compensation for his position as Secretary of the
Corporation. Mr. Sklarz is a partner in the law firm of Cummings & Lockwood. The
law firm acted as counsel to the Corporation in the fiscal year ended December
31, 1997 and continues to provide legal services to the Corporation. The
Corporation paid Cummings & Lockwood legal fees of approximately $219,933 in
1997.
Mr. Saletan was a member of the Compensation Committee until October 1997.
Mr. Saletan is the Chief Executive Officer of C.S.C. Weston Group, a management
consulting firm. C.S.C. Weston Group provided consulting services to the
Corporation in the fiscal year 1997 and continues to provide consulting services
to the Corporation. The Corporation paid C.S.C. Weston Group consulting fees of
approximately $152,901 in 1997.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee establishes and reviews the Corporation's
arrangements and programs for compensating executive officers, including the
Named Executive Officers. The Compensation Committee is composed entirely of
directors who are not employees of the Corporation. The Compensation Committee
has been advised by outside legal counsel and by compensation consultants in
formulating the Compensation Committee's overall philosophy and objectives
regarding executive compensation and in structuring the Chief Executive
Officer's compensation package.
PHILOSOPHY AND POLICY
The Corporation's compensation program for executive officers consists of
three major elements: a base salary, a bonus that is conditioned upon the
Corporation's return on assets achieving a specified ratio to the return on
assets of the Standard & Poor's Textile-Apparel Manufacturing Companies (or, in
the case of Mr. Beckerman, a bonus as provided in his employment agreement) and
periodic grants of stock options. The Compensation Committee's policy is to
design executive compensation packages that reward the achievement of both
short-term and long-term objectives of the Corporation. In addition, the
Corporation seeks to establish executive compensation in a manner to be
competitive with companies in the apparel industry, with which the Corporation
competes with respect to products, and companies located in the same general
geographic area as the Corporation, with which the Corporation competes with
respect to attracting talented executives. Under this approach, the attainment
of short-term objectives is compensated through discretionary annual bonuses and
the attainment of long-term objectives is rewarded through the periodic grants
of stock options under the Option Plan. The Compensation Committee believes
that, in addition to compensating executives for attaining long-term objectives
of the Corporation which the Corporation believes eventually will be reflected
in the market value of the Common Stock, the granting of stock options aligns
the interest of the executives with those of the Corporation's stockholders. The
Compensation Committee, after considering management's recommendations,
determines the recipients to be awarded stock option grants. In 1997, the
Compensation Committee considered the following factors with regard to the
executives to whom options were be granted and the size of the options granted:
(i) the executive's position with the Corporation, (ii) the performance of the
departments for which the executive is responsible, (iii) the past performance
of the executive, (iv) the overall performance of the Corporation (including
sales levels, bookings and anticipated results for the fiscal year) and (v) the
number of options currently held by the executive. The weight accorded each of
the foregoing factors varies depending on the executive and his position with
the Corporation.
The base salary of each of the executives was determined by the Chairman of
the Board and the President. Mr. Beckerman's compensation was determined as
described below.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Beckerman's compensation for 1997 was established by the Beckerman
Employment Agreement. The base salary level included in such agreement was
determined by the Board of Directors in 1993, prior to establishment of the
Compensation Committee, and is intended to be competitive with companies which
were believed to be comparable to the Corporation in the apparel industry. In
connection therewith, the base salary level was determined after reviewing the
levels of executive compensation paid by companies including Liz Claiborne Inc.,
Fruit of the Loom, Inc. and VF Corporation (each of which are included in
Standard & Poor's Textile-Apparel Manufacturer Index). Mr. Beckerman received no
bonus for 1997. In determining any bonus compensation granted to Mr. Beckerman,
see "1998 Performance Goals."
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TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) precludes a deduction by a publicly held corporation for
compensation paid to each of its Chief Executive Officer and its next four most
highly compensated employees in excess of $1 million unless such compensation is
qualified performance-based compensation under Section 162(m). As described
above, the Corporation's executive compensation program is designed to encourage
management to strive for the short-term and long-term objectives of the
Corporation and to promote the achievement of business objectives and superior
overall performance. However, in order to satisfy the technical requirements of
Section 162(m), the Compensation Committee has adopted the 1998 Performance
Goals for the Chief Executive Officer and the President of the Corporation. The
1998 Performance Goals are being recommended for approval by stockholders in
this Proxy Statement.
COMPENSATION COMMITTEE
Benjamin E. Cohen
Carmen L. Cozza
Joseph P. Grant
THE FOREGOING REPORT OF THE COMPENSATION COMMITTEE SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL WITHIN THE MEANING OF REGULATIONS 14A AND 14C UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), INCORPORATED
BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THE PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE EXCHANGE ACT, AND SHALL NOT OTHERWISE BE DEEMED FILED
UNDER THE SECURITIES ACT OR THE EXCHANGE ACT.
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PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock with the cumulative total return of the Standard & Poor's 500 Stock
Index and the Standard & Poor's Textile-Apparel Manufacturer Index for the
period commencing April 8, 1993, the date of the Corporation's initial public
offering through December 31, 1997. The graph assumes that the value of the
investment in Common Stock was $100 on April 8, 1993. Total return assumes
dividend reinvestment.
COMPARISON OF 57 MONTH CUMULATIVE TOTAL RETURN
AMONG STARTER CORPORATION, THE S&P 500 INDEX
AND THE S&P TEXTILES (APPAREL) INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STARTER S & P 500 S & P TEXTILES
<S> <C> <C> <C>
CORPORATION (APPAREL)
4/8/93 $100 $100 $100
Dec-93 $79 $105 $81
Dec-94 $32 $107 $77
Dec-95 $32 $147 $87
Dec-96 $26 $181 $99
Dec-97 $14 $241 $106
</TABLE>
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CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
The Corporation leases space from Acorn Realty, a company owned by Mr.
Beckerman. Total lease payments were approximately $75,000 in 1997.
For a description of certain transactions and business relationships
involving Messrs. Sklarz and Saletan, see "Compensation Committee Interlocks and
Insider Participation."
Mr. Sklarz receives no compensation for his position as Secretary of the
Corporation. Mr. Sklarz is a partner in the law firm of Cummings & Lockwood. The
law firm acted as counsel to the Corporation in the fiscal year ending December
31, 1997 and continues to provide legal services to the Corporation. The
Corporation paid Cummings & Lockwood legal fees of approximately $219,933 in
1997.
Mr. Beckerman and the Corporation entered into an Agreement dated as of
March 31, 1998 pursuant to which Mr. Beckerman agreed to guarantee up to $22
million of the Corporation's credit facility and the Corporation agreed to pay
to Mr. Beckerman an annual fee equal to 3% of the amount of the guarantee and,
if the guarantee is ever drawn upon by the providers of the credit facility,
interest on the amount drawn at 3% per annum above the prime rate of interest
until such amount is repaid to Mr. Beckerman by the Corporation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation's executive officers and directors are required under the
Exchange Act to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of those reports must also be
furnished to the Corporation. Based solely on the Corporation's review of the
copies of reports it has received, the Corporation believes that, in 1997, all
its executive officers, directors and greater than ten percent beneficial owners
complied with all filing requirements applicable to them.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting or any adjournment or postponement thereof, it is intended that proxies
in the accompanying form will be voted in accordance with the judgment of the
proxy holders named therein.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Corporation for inclusion in the
Corporation's 1999 Proxy Statement and form of proxy on or prior to January 28,
1999.
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The Annual Report to Stockholders of the Corporation for 1997 (the "Annual
Report") is being furnished simultaneously herewith. The Annual Report is not to
be considered a part of this Proxy Statement.
Upon the written request of any stockholder, the Corporation will provide,
free of charge, a copy of the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, including the consolidated financial
statements and schedule thereto. Requests should be directed to John C. Warfel,
15
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Senior Vice President and Chief Financial Officer, Starter Corporation, 370
James Street, New Haven, Connecticut 06513.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or will be
borne by the Corporation. In addition to solicitation by mail, arrangements may
be made with brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy material to their principals, and the Corporation may
reimburse them for any attendant expenses.
It is important that your shares be represented at the Annual Meeting. If
you are unable to be present in person, you are respectfully requested to sign
the enclosed proxy and return it in the enclosed stamped and addressed envelope
as promptly as possible.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP ("Ernst & Young") has been recommended by the Audit
Committee of the Board of Directors to audit the books and accounts of the
Company for 1998. A representative of Ernst & Young will be present at the
Annual Meeting and will be given the opportunity to make a statement if such
representative desires to do so and will respond to appropriate questions of
stockholders.
Dated: May 28, 1998 New Haven, Connecticut
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