SCHEDULE 14A
(RULE 14A-101)
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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SUNGLASS HUT INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the 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 transactions 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>
SUNGLASS HUT INTERNATIONAL, INC.
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 4, 1997
-------------------------
To the Shareholders of
Sunglass Hut International, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of Sunglass Hut International, Inc., a Florida corporation
("Sunglass Hut" or the "Company"), will be held at 9:00 A.M. local time, on
Wednesday, June 4, 1997, at the Essex House Hotel, 160 Central Park South, New
York, New York 10019, for the following purposes:
(1) To elect three members to the Company's Board of Directors to hold office
until the Company's 2000 Annual Meeting of Shareholders or until their
successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 24, 1997 as
the record date for determining those shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
JAMES N. HAUSLEIN
CHAIRMAN OF THE BOARD
Coral Gables, Florida
May 9, 1997
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE>
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
SUNGLASS HUT INTERNATIONAL, INC.
-------------------------
PROXY STATEMENT
-------------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Sunglass Hut International, Inc., a Florida
corporation ("Sunglass Hut" or the "Company"), of proxies from the holders of
the Company's common stock, par value $.01 per share (the "Common Stock"), for
use at the 1997 Annual Meeting of Shareholders of the Company to be held on
Wednesday, June 4, 1997, or at any adjournments or postponements thereof (the
"Annual Meeting"), pursuant to the enclosed Notice of Annual Meeting of
Shareholders. The approximate date that this Proxy Statement and the enclosed
proxy are first being sent to shareholders is May 9, 1997. Shareholders should
review the information provided herein in conjunction with the Company's 1996
Annual Report to Shareholders which accompanies this Proxy Statement. The
Company's principal executive offices are located at 255 Alhambra Circle, Coral
Gables, Florida 33134, and its telephone number is (305) 461-6100.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
<PAGE>
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
(1) To elect three members to the Company's Board of Directors to serve until
the Company's 2000 Annual Meeting of Shareholders or until their
successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (1) FOR the election of the three nominees for director named
below, and (2) by the proxies in their discretion upon any other proposals as
may properly come before the Annual Meeting. In the event a shareholder
specifies a different choice by means of the enclosed proxy, such shareholder's
shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on April 24, 1997 as
the record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 54,654,046 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Each share of Common Stock
is entitled to one vote on each matter submitted to shareholders for approval at
the Annual Meeting. Shareholders do not have the right to cumulate their votes
for directors.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. Any other matter that may be submitted to a vote of the
shareholders will be approved if the number of shares of Common Stock voted in
favor of the matter exceeds the number of shares voted against the matter,
unless the matter is one for which a greater vote is required by law or the
Company's Articles of Incorporation or Bylaws. If less than a majority of
outstanding shares of Common Stock are represented at the Annual Meeting, a
majority of the shares so represented may adjourn the Annual Meeting to another
date, time or place, and notice need not be given of the new date, time or place
if the new date, time or place is announced at the meeting before an adjournment
is taken.
Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the meeting. Such inspector(s) shall determine the number of
shares of Common Stock represented at the meeting, the existence of a quorum and
the validity and effect of proxies, and shall receive, count and tabulate
ballots and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote at the Annual Meeting and will
be counted as votes cast at the Annual
2
<PAGE>
Meeting, but will not be counted as votes cast for or against any given matter.
The inspectors of election will treat shares referred to as "broker or nominee
non-votes" (shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. For purposes of determining the outcome of
any matter as to which the proxies reflect broker or nominee non-votes, shares
represented by such proxies will be treated as not present and not entitled to
vote on that subject matter and therefore will not be considered by the
inspectors of election when counting votes cast on the matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters). Accordingly, abstentions and broker or nominee
non-votes will not have the same effect as a vote against the election of any
director.
3
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1997 (unless otherwise
indicated) by (a) each person known by the Company to beneficially own more than
five percent of the outstanding shares of Common Stock, (b) each director of the
Company who beneficially owns any shares, (c) each Named Officer (see "Executive
Compensation and Other Information"), and (d) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(2)
----------------------------------
NAME AND ADDRESS(1) SHARES PERCENTAGE
- --------------------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Metropolitan Life Insurance Company .............................. 4,226,900(3) 7.8%
Mellon Bank Corporation .......................................... 3,565,000(4) 6.5%
James N. Hauslein ................................................ 1,364,936(5) 2.5%
Jack B. Chadsey ................................................... 1,318,436(6) 2.4%
Rohit M. Desai ................................................... 652,000(7) 1.2%
John H. Duerden ................................................... 52,000(8) *
William S. Field ................................................... 52,000(8) *
Larry G. Petersen ................................................ 39,500(8) *
Charles W. Mineo ................................................... 33,875(8) *
William E. Phillips ................................................ 30,000(9) *
Edward L. Grund ................................................... 21,250(8) *
Robert C. Grayson ................................................ 12,000(8) *
All directors and executive officers as a group (13 persons) ...... 3,021,747(10) 5.5%
</TABLE>
- ----------------
* Less than 1%
(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is 255 Alhambra Circle, Coral Gables, Florida 33134.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares.
(3) Based upon the Schedule 13G, dated February 6, 1997, filed with the SEC by
Metropolitan Life Insurance Company ("Metropolitan"), which reported its
address as One Madison Avenue, New York, New York 10010, and the Schedule
13G, dated February 14, 1997, filed with the SEC by State Street Research &
Management Company ("State Street"), which reported its address as One
Financial Center, 30th Floor, Boston, Massachusetts 02111-2690. The Company
has been advised by representatives of Metropolitan that State Street is an
indirect wholly-owned subsidiary of Metropolitan and is the record holder
of the shares indicated.
(4) Based solely on the Schedule 13G, dated February 4, 1997, filed with the
SEC by Mellon Bank Corporation ("MBC"), Mellon Bank, N.A. ("MBNA") and The
Dreyfus Corporation ("Dreyfus"). The Schedule 13G reports that all of the
securities are beneficially owned by MBC and direct or indirect
subsidiaries in their various fiduciary capacities, including MBNA and
Dreyfus, which entities have sole voting power and shared dispositive power
over all such shares. MBC reported its address as One Mellon Bank Center,
Pittsburgh, Pennsylvania 15258.
4
<PAGE>
(5) Represents 887,780 shares held of record and 477,156 shares subject to
presently exercisable stock options.
(6) Represents 889,780 shares held of record by Chadsey Family Investments,
Ltd., a Florida limited partnership controlled by Mr. Chadsey, and 428,656
shares subject to presently exercisable stock options.
(7) Represents 342,000 shares held of record by Equity-Linked Investors, L.P.
("ELI"), 258,000 shares held of record by Equity-Linked Investors II
("ELI-II") and 52,000 shares subject to presently exercisable stock
options. ELI and ELI-II are limited partnerships, the general partners of
which are Rohit M. Desai Associates and Rohit M. Desai Associates-II
(together, the "General Partners"), respectively. Mr. Desai is a director
of the Company and is the managing general partner of the General Partners.
Mr. Desai is also the sole stockholder, Chairman of the Board and President
of Desai Capital Management Incorporated ("DCMI"), which acts as an
investment advisor to ELI and ELI-II. Under the investment advisory
agreements between DCMI and each of ELI and ELI-II, DCMI has the power to
vote and dispose of these securities. DCMI and Mr. Desai each disclaim
beneficial ownership of the securities. Mr. Desai's address is 540 Madison
Avenue, 36th Floor, New York, New York 10022.
(8) Represents shares subject to presently exercisable stock options.
(9) Represents 4,000 shares owned and 26,000 shares subject to presently
exercisable stock options.
(10) Includes 1,240,187 shares subject to options held by executive officers and
directors that are presently exercisable. Does not include shares held of
record by ELI or ELI-II. See footnote (7).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
Common Stock. Such persons are required by SEC regulation to furnish the Company
with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filings with respect to the Company's
1996 fiscal year were timely filed.
5
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's Articles of Incorporation provide that the Board of Directors
shall consist of not less than three nor more than nine members, with the exact
number to be fixed from time to time by the Board of Directors. The Articles of
Incorporation divide the Board of Directors into three classes, with staggered
three-year terms. The current classes of the Board of Directors and their terms
of office are as follows:
<TABLE>
<CAPTION>
CLASS DIRECTORS TERM EXPIRES IN:
- -------- ---------------------- ------------------
<S> <C> <C>
I Jack B. Chadsey 1997
I John H. Duerden 1997
I William S. Field 1997
II James N. Hauslein 1998
II Robert C. Grayson 1998
III Rohit M. Desai 1999
III William E. Phillips 1999
</TABLE>
The three directors serving in Class I have terms expiring at the Annual
Meeting. The Class I directors currently serving on the Board, Messrs. Chadsey,
Duerden and Field, have been nominated by the Board of Directors for re-election
to three-year terms at the Annual Meeting. Each Class I director elected at the
Annual Meeting will serve for a term expiring at the Company's 2000 Annual
Meeting of Shareholders or when his successor has been duly elected and
qualified. The Board of Directors has no reason to believe that any nominee will
refuse or be unable to accept election; however, in the event that any nominee
is unable to accept election or if any other unforeseen contingencies should
arise, each proxy that does not direct otherwise will be voted for the remaining
nominees, if any, and for such other person(s) as may be designated by the Board
of Directors.
6
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jack B. Chadsey 49 President, Chief Executive Officer and Director
Edward L. Grund 52 Executive Vice President and General Manager-Sunglass Hut
North America
Larry G. Petersen 49 Senior Vice President-Finance and Chief Financial Officer
Steven S. Krajenka 35 Vice President-North American Store Operations
Sherry L. Lay 46 Vice President-Merchandising
Charles W. Mineo 42 Vice President-Real Estate and Construction
Sergio G. Moroni 40 Vice President-International Business Development
George L. Pita 35 Vice President-Finance
James N. Hauslein 38 Chairman of the Board
Rohit M. Desai 58 Director
John H. Duerden 56 Director
William S. Field 67 Director
Robert C. Grayson 52 Director
William E. Phillips 67 Director
</TABLE>
Mr. Chadsey has served as President since joining the Company in July 1989,
and as Chief Executive Officer and a director since March 1990. From February
1984 through July 1989, Mr. Chadsey was employed by the Dayton Hudson
Corporation, a diversified retail holding company headquartered in Minneapolis.
Mr. Chadsey served as President and Chief Executive Officer of the Branden's
specialty store division of Dayton Hudson from February 1986 until joining the
Company and as Vice President of its Target Stores division from March 1984
until February 1986. Mr. Chadsey has over 20 years of senior management
experience in both the specialty and general merchandise sectors of the
retailing industry, including earlier employment with Kohl's Department Stores,
Shopko Stores and May Department Stores Company.
Mr. Grund, appointed Executive Vice President and General Manager-Sunglass
Hut North America in December 1996, served as Senior Vice President of Store
Operations, Real Estate and Construction from March 1994 to December 1996, and
as Vice President of Store Operations from May 1992 until March 1994. From
February 1987 until he joined the Company in May 1992, Mr. Grund was employed by
Liz Claiborne, Incorporated, where he most recently served as Senior Vice
President of Store Operations. Mr. Grund has over 20 years of experience in the
retailing industry, including earlier employment with the Broadway Department
Stores, R.H. Macy & Company and May Department Stores Company.
Mr. Petersen, appointed Senior Vice President in March 1994, has served as
Chief Financial Officer since joining the Company in February 1994 and served as
Vice President-Finance from February 1994
7
<PAGE>
through March 1994. From 1982 to 1993, Mr. Petersen was employed by Carter
Hawley Hale Stores, Inc., where he most recently served as Executive Vice
President-Chief Financial Officer. Mr. Petersen has over 20 years of experience
in the retailing industry, including earlier employment with J.C. Penney
Company, Clarkins, Inc. and Lafayette Radio.
Mr. Krajenka has served as Vice President of North American Store
Operations since joining the Company in July 1996. From April 1993 until such
time, Mr. Krajenka was employed by The Limited where he served as Vice President
of Store Operations. From July 1992 to January 1993, he was employed by Gap
Kids, where he served as a Regional Vice President. From September 1990 to June
1992, he was employed by Banana Republic where he served as a Regional Manager.
Mr. Krajenka has over nine years of experience in the retail industry, including
earlier employment with The Gap Organization.
Ms. Lay has served as Vice President of Merchandising since joining the
Company in September 1996. From September 1993 until such time, Ms. Lay was
employed by Ann Taylor where she most recently served as Vice President of
Merchandising. From November 1992 to September 1993, Ms. Lay was employed by
Petite Sophisticate where she served as a Divisional Merchandise Manager. From
August 1984 to November 1992, she was employed by The Limited, Inc. where she
most recently served a a Senior Merchant for The Limited Stores.
Mr. Mineo has served as Vice President-Real Estate and Construction since
joining the Company in December 1992. From April 1990 until such time, Mr. Mineo
served as Vice President-Real Estate and Construction of Waldenbook Company, a
national chain of bookstores headquartered in Stamford, Connecticut. From June
1984 until April 1990, Mr. Mineo was employed by C and J Clark, a shoe retailer
headquartered in Kennett Square, Pennsylvania, most recently as Vice
President-Real Estate and Construction.
Mr. Moroni was appointed Vice President-International Business Development
in April 1997. From March 1996 to January 1997, Mr. Moroni was employed by
Authentic Fitness Corporation where he served as President, Retail Division. Mr.
Moroni has over sixteen years experience in the retail industry, including
prior employment with Fila USA, Fashion Service Moda & Co., Esprit de Corp and
Benetton USA in various capacities.
Mr. Pita, appointed Vice President-Finance in October 1994, served as
Managing Director of Finance from April 1993 to October 1994 and as Controller
from October 1989 to April 1993. Prior to joining the Company, Mr. Pita was
employed by Arthur Andersen LLP where he most recently served as Audit Manager.
Mr. Hauslein joined the Company's Board in March 1990 and has served as
Chairman of the Board since July 1991. From July 1991 through January 1995, and
since February 1997, Mr. Hauslein has devoted substantially all of his working
time to the Company's affairs (see Director Compensation). From February 1995
until January 1997, Mr. Hauslein was managing director at Hauslein & Company,
Inc. engaging in private investments. From May 1986 until November 1990, Mr.
Hauslein served as a partner of Kidd Kamm & Co., a private investment firm
headquartered in Greenwich, Connecticut and specializing in acquisitions and
leveraged buy-outs.
Mr. Desai has served as a director of the Company since March 1993 and also
served as a director of the Company from June 1987 until July 1991. Mr. Desai is
the Founder, Chairman and President of
8
<PAGE>
Desai Capital Management Incorporated, a specialized equity investment
management firm in New York which manages the assets of various institutional
clients. Mr. Desai serves as a director of The Rouse Company, Finlay
Enterprises, Inc. and several privately-held companies.
Mr. Duerden, a director of the Company since October 1993, has served as
Chairman of the Board of Directors, Chief Executive Officer and President of
Dictaphone Corporation since August 1995. From 1988 to April 1995, Mr. Duerden
served Reebok International, Ltd. ("Reebok") in various capacities, most
recently as President and Chief Operations Officer. Prior to joining Reebok, Mr.
Duerden was employed by Xerox Corporation in a number of executive capacities.
Mr. Field, a director of the Company since July 1991, is currently engaged
in private investments as his principal occupation. Mr. Field served as Chairman
of Prudential Equity Investors, Inc., a subsidiary of The Prudential Insurance
Company of America, from April 1984 to July 1994.
Mr. Grayson, a director of the Company since October 1993, is currently
President of Robert Grayson & Associates, a retail consulting group and Chairman
of BGA Associates, a management consulting group. From June 1994 until April
1996 Mr. Grayson served as Chairman of the Board of Tommy Hilfiger Retail, Inc.,
a subsidiary of Tommy Hilfiger Corporation. From February 1992 until June 1994,
Mr. Grayson was engaged in consulting, private investments and charitable work.
From 1985 to 1992, Mr. Grayson served as President and Chief Executive Officer
of Lerner, New York. From 1983 until 1985, Mr. Grayson served as President and
Chief Executive Officer of The Limited Stores, a specialty store division of The
Limited, Inc. Mr. Grayson also serves as a director of Ann Taylor, Inc.
Mr. Phillips, a director of the Company since March 1992, has been engaged
in consulting, private investments and charitable work as his principal
occupation since January 1990. From May 1982 until May 1988, Mr. Phillips served
as Chairman of the Board and Chief Executive Officer of Ogilvy & Mather (the
Ogilvy Group), an international advertising agency headquartered in New York.
Mr. Phillips also served as a director and Chairman of the Executive Committee
of the Ogilvy Group from May 1988 through May 1989. Mr. Phillips also serves as
a director of Lillian Vernon, a publicly traded specialty mail-order catalog
house.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended February 1, 1997, the Company's
Board of Directors held five meetings and took certain actions by written
consent. During the 1996 fiscal year, no director attended fewer than 75 percent
of the aggregate of (i) the number of meetings of the Board of Directors held
during the period he served on the Board, and (ii) the number of meetings of
committees of the Board of Directors held during the period he served on such
committees.
Messrs. Field, Phillips and Duerden serve as members of the Compensation
Committee, which held three meetings during fiscal 1996 and took certain actions
by written consent. Mr. Field is Chairman of the Compensation Committee. The
Compensation Committee is responsible for setting and administering policies
that govern annual compensation of the Company's executive officers and
administers the Company's 1996 Executive Incentive Compensation Plan (the "1996
Plan").
Messrs. Hauslein, Desai and Grayson are members of the Audit Committee,
which held five meetings during fiscal 1996. Mr. Hauslein is Chairman of the
Audit Committee. The duties and
9
<PAGE>
responsibilities of the Audit Committee include (i) recommending to the full
Board the appointment of the Company's auditors and any termination of
engagement, (ii) reviewing the plan and scope of audits, (iii) reviewing the
Company's significant accounting policies and internal controls, (iv)
administration of the Company's compliance programs, and (v) having general
responsibility for all related auditing matters.
DIRECTOR COMPENSATION
The Company pays each of Messrs. Field, Phillips, Duerden, Hauslein, Desai
and Grayson an annual director's fee of $15,000, payable quarterly, a $2,500 fee
for each meeting of the Board of Directors attended and, if not held in
conjunction with a regular Board meeting, a $500 fee for each Board committee
meeting attended. The Company also reimburses all directors for all expenses
incurred in connection with their activities as directors. Such reimbursements
aggregated $25,423 in fiscal 1996.
Under the Company's prior Amended and Restated Stock Option Plan, each of
the Company's non-employee directors received options to purchase 6,000 shares
of Common Stock on March 21, 1996 at a per share exercise price of $30.50 and
become immediately exerciseable. Similar awards were granted on March 20, 1997
under the Company's 1996 Plan. The 1996 Plan provides that each non-employee
director shall automatically receive (i) on the date of his or her appointment
as a director of the Company, an option to purchase 40,000 shares of Common
Stock, and (ii), each year, on the day the Company issues its earnings release
for the prior fiscal year, an option to purchase 6,000 shares of Common Stock.
Such options have a per share exercise price equal to the closing sale price per
share of Common Stock on the day of grant as reported by The Nasdaq Stock Market
and generally become exercisable at the rate of 331/3% per year commencing on
the first anniversary of the date of grant.
The 1996 Plan also provides for an annual grant of 1,500 shares of
restricted stock to each non-employee director, which shares vest as provided in
the 1996 Plan. No such restricted stock grants were made in 1997 for the 1996
fiscal year because each non-employee director has waived such award.
Effective February 1997, the Company entered into a Consulting and
Management Service Agreement with Hauslein & Company, Inc. (the "Consultant") a
corporation owned and controlled by James N. Hauslein, the Company's Chairman of
the Board. Pursuant to the agreement, (i) the Consultant has agreed to cause Mr.
Hauslein to provide management and consulting services to the Company on a
substantially full-time basis, and (ii) the Company has agreed to pay the
Consultant an annual base cash consulting and management fee equal to $375,000,
payable in monthly installments, as well as reimburse the Consultant for certain
expenses. Either party may terminate the agreement upon 30 days' prior notice to
the other. Prior to February 1997, the Company paid to Mr. Hauslein a consulting
fee of $10,000 per month.
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
by the Company for services rendered during fiscal 1996, 1995 and 1994 to the
Company's Chief Executive Officer and the Company's four most highly compensated
executive officers, other than the Chief Executive Officer, who were serving as
executive officers as of February 1, 1997 (collectively the "Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
-------------------------------------------- NUMBER OF
FISCAL OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED(2)
- --------------------------- ----- ------ ----- --------------- -----------
<S> <C> <C> <C> <C> <C>
Jack B. Chadsey 1996 $434,616 $ - $ - 50,000
President and Chief 1995 346,153 350,000 - 82,000
Executive Officer 1994 287,500 325,000 - -
Edward L. Grund 1996 261,153 - - 20,000
Executive Vice President 1995 237,693 120,000 - 33,000
and General Manager- 1994 222,970 112,500 - 32,000
Sunglass Hut North America
Larry G. Petersen 1996 256,154 - - 20,000
Senior Vice President- 1995 228,077 117,500 53,495(4) 38,000
Finance and Chief 1994(3) 185,616 112,500 159,988(5) 100,000
Financial Officer
Sheila S. Arnold 1996 250,174 - - 20,000
Senior Vice President- 1995 229,231 115,000 - 30,000
Merchandising and Marketing 1994(3) 133,268 75,000 217,467(6) 100,000
Charles W. Mineo 1996 215,653 - - 7,500
Vice President-Real 1995 173,693 20,000 - 20,000
Estate and Construction 1994 165,503 47,000 - 14,000
</TABLE>
- ----------------
(1) Unless otherwise noted, the aggregate amount of perquisites and other
personal benefits provided to each Named Officer has been omitted because it
is less than the lesser of either $50,000 or 10% of the total of annual
salary and bonus of such officer.
(2) See "Option Grants Table" below for additional information about these
options granted in March 1996.
(3) Ms. Arnold and Mr. Petersen were hired in June 1994 and February 1994,
respectively. These figures include compensation from date of hire through
fiscal yearend 1994.
(4) Represents a $44,495 reimbursement of relocation expenses and a $9,000
automobile allowance.
(5) Represents a $150,611 reimbursement of relocation expenses and a $9,377
automobile allowance.
(6) Represents a $211,580 reimbursement of relocation expenses and a $5,887
automobile allowance.
11
<PAGE>
OPTION GRANTS TABLE
The following table sets forth certain information concerning grants of
stock options made during fiscal 1996 to the Named Officers.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN 1996 FISCAL YEAR
----------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
GRANTED TO STOCK PRICE APPRECIATION
NUMBER OF EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------------
NAME GRANTED(1) 1996 SHARE DATE 5% 10%
- ---- ------------- ------------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jack B. Chadsey ......... 50,000 14.8% $30.81 2006 $968,812 $2,455,160
Edward L. Grund ......... 20,000 5.9% $30.81 2006 $387,525 $ 982,064
Larry G. Petersen ...... 20,000 5.9% $30.81 2006 $387,525 $ 982,064
Sheila S. Arnold ...... 20,000 5.9% $30.81 2006 $387,525 $ 982,064
Charles W. Mineo ...... 7,500 2.2% $30.81 2006 $145,322 $ 368,274
</TABLE>
- ----------------
(1) Each of the options is a non-qualified stock option granted pursuant to the
Company's prior Amended and Restated Stock Option Plan, has an exercise
price equal to the market price of a share of Common Stock on the date of
grant, and vests in increments of 25% on each of the first four
anniversaries of the date of grant.
AGGREGATED OPTION EXERCISES IN 1996 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table sets forth certain information concerning option
exercises in fiscal 1996 and the number of stock options held by the Named
Officers as of February 1, 1997, and the value (based on the fair market value
of a share of stock at fiscal year-end) of in-the-money options outstanding as
of such date.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AS OF FEBRUARY 1, 1997 AS OF FEBRUARY 1, 1997
ACQUIRED ON VALUE ------------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ------------- -------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jack B. Chadsey ... 301,144 $4,249,163 395,656 111,500 $2,485,433 -
Edward L. Grund ... 36,250 $ 808,125 - 60,750 - -
Larry G. Petersen ... 34,500 $ 622,406 - 98,500 - -
Sheila S. Arnold ... - - 49,500 92,500 $ 28,875 $34,375
Charles W. Mineo ... - - 23,500 29,500 $ 88,125 -
</TABLE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS
The Company has no employment agreements with any Named Officers.
Each Named Officer holds options to purchase Common Stock granted under the
Company's Amended and Restated Stock Option Plan. To the extent not already
exercisable, such options
12
<PAGE>
generally become exercisable upon (i) a merger, consolidation or similar
corporate transaction in which ownership or more than 49% of the voting power of
the Company's voting stock is transferred, (ii) a merger or consolidation or
similar corporate transaction in which the Company does not survive, or (iii) a
sale or other disposition of all or substantially all of the Company's assets.
Each Named Officer also holds or is eligible to receive options and other awards
under the Company's 1996 Plan which provides that awards granted thereunder will
vest upon a "change in control" as defined therein. A "change in control"
generally includes any reorganization, merger, consolidation, liquidation,
dissolution or sale of substantially all assets of the Company, an acquisition
by any person, entity or group of 25% or more of the outstanding Common Stock or
25% or more of the voting power of the Company's outstanding voting securities,
or a change in the composition of the Board such that the persons constituting
the current Board, and subsequent directors approved by the current Board (or
approved by such subsequent directors), cease to constitute at least a majority
of the Board.
COMPENSATION COMMITEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE. Each member of the Compensation Committee is an
independent outside director. The Committee seeks to ensure that compensation
policy and programs appropriately support the successful execution of Sunglass
Hut's business strategy. The Chief Executive Officer ("CEO"), the Vice President
of Human Resources, and outside consultants are significant resources available
to the Committee in discharging its responsibilities.
The Compensation Committee approves all compensation policy and programs in
addition to all specific compensation actions for the CEO, Executive Vice
Presidents, Senior Vice Presidents and Vice Presidents ("executive officers") as
set forth in the Management table in this Proxy Statement.
COMPENSATION POLICY. Sunglass Hut's business strategy is to enhance its
position as the largest specialty retailer of sunglasses by providing consumers
a dominant selection of brand name sunglasses at everyday low prices in an
easy-to-shop environment that emphasizes customer service and education.
The Company believes that only through consistently successful execution of
this strategy can the long term value of Sunglass Hut to customers, suppliers,
employees, shareholders and the communities it serves be maximized and that such
execution can only be achieved by a motivated group of high-caliber executives
attracted and retained through competitive compensation programs.
COMPENSATION PROGRAMS. To implement its compensation policy, Sunglass Hut
has adopted compensation programs consisting of base salary, annual cash bonuses
and stock option grants for the CEO, other executive officers and other
management staff. These programs are performance oriented since major portions
of total compensation opportunities vary both with overall Company and
individual performance. At the 1996 Annual Meeting, the shareholders approved
the adoption of the 1996 Executive Incentive Compensation Plan which
incorporated all previous plans, increased the number of shares available and
broadened the types of stock-based awards that can be granted to attract and
retain the high-caliber management team required to meet the Company's business
objectives.
BASE SALARY. Salary ranges for each management position have been set to
reflect the underlying responsibilities and accountabilities of the position.
These salary ranges are reviewed annually and are
13
<PAGE>
benchmarked periodically to the salary ranges of similar positions in the retail
industry through various sources, including use of an outside compensation
consulting firm and comparison to a group of specialty retailers of similar
characteristics selected by the Compensation Committee. Salary increases are
based on an assessment of each individual's performance against the requirements
of the job (merit), and any adjustments necessary to bring high performing
executives to competitive levels (market parity).
The salary increases shown for fiscal year 1996 were granted in March of
1996 based on performance as described in last year's Proxy for the fiscal year
ended February 3, 1996, as well as selected market parity adjustments. Based on
performance for the fiscal year ended February 1, 1997, neither the CEO nor any
of the named Executives received salary increases, although one promotion
increase was awarded.
ANNUAL CASH BONUSES. Annual cash bonus awards are based on both Company
performance relative to an annual plan prepared before the beginning of each
fiscal year and approved by the Board of Directors, reflecting appropriate
progress toward the Company's long-term goals and individual contributions to
the achievement of the annual plan. Bonus awards may range from zero to various
percentages of base salary.
Company performance against the annual plan is assessed with respect to
such considerations as sales growth, including comparable store sales growth,
new store openings and the sales performance of new stores against plan; gross
profit and margin; store contribution and margin; net income and earnings per
share growth; and return on shareholders' equity. The assessment of individual
performance reflects such factors as the operating results of one or more
business segments for which an individual is accountable; the achievement of
specific goals assigned to an individual; the further development of the human
resources for which an individual is responsible; and contributions to the
overall team effort that are essential to the successful execution of the
Company's business strategy.
Neither the CEO nor any Named Executive received a cash bonus for
performance during the fiscal year ended February 1, 1997, since the Company
failed by a significant margin to meet its business plan.
STOCK OPTIONS. The Compensation Committee believes that long-term
incentives should constitute a larger portion of incentive compensation
potential than annual cash bonuses. The Committee further believes that
stock-based incentives are the appropriate long-term incentive because they
directly align management interest with shareholders' desire for long-term
common stock price appreciation.
Options granted at the time of employment reflect the responsibilities of
the new employee relative to those of other employees and competitive market
conditions existing at the time of employment. Annual stock option grants are
based on option ranges for each management position approved by the Compensation
Committee. Actual option grants depend upon executive level and the Compensation
Committee's assessment of Company and individual performance as previously
described.
Options are non-qualified, have a ten-year term and a per share exercise
price equal to the fair market value per share on the date of grant, vest
equally over three years and, as to vested options, are
14
<PAGE>
subject to exercise for three months following termination of employment with
certain exceptions. The options granted to Named Executives in fiscal year 1996
were based on performance for the fiscal year ended February 3, 1996 and have a
four year vesting schedule.
The annual cash bonus and stock option programs are benchmarked
periodically against the practices of other retail companies through the use of
an outside compensation consulting firm. These programs are also benchmarked
against the programs of other specialty retail companies of similar size.
SUMMARY. The Compensation Committee believes that the Company's
compensation programs are competitive with those of other specialty retailers of
similar size.
William S. Field, Chairman
John H. Duerden
William E. Phillips
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder returns on
the Company's Common Stock, based on the market prices of Common Stock from the
date of the Company's initial public offering in June 1993 through February 1,
1997, with the cumulative total return of the S&P Specialty Retail Index and S&P
500 Index.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
6/9/93 1/28/94 7/29/94 1/27/95 7/28/95 2/2/96 8/2/96 1/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sunglass Hut International 100 152.58 132.99 187.83 336.08 457.73 247.50 152.50
S&P Specialty Retail 100 93.46 88.83 74.04 82.90 86.52 117.32 112.38
S&P 500 100 107.39 102.80 105.52 126.28 142.64 148.61 176.36
</TABLE>
- ------------
(1) Assumes reinvestment of dividends.
16
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, served as
the Company's independent public accountants for the fiscal year ended February
1, 1997. The Board of Directors, on the recommendation of the Company's Audit
Committee, has selected Arthur Andersen LLP as the Company's independent public
accountants for the 1997 fiscal year. One or more representatives of Arthur
Andersen LLP are expected to be present at the Annual Meeting. Such
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
shareholders.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by a proxy
to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Securities and Exchange
Commission, a shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 1998 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's principal executive offices
no later than January 9, 1998.
By Order of the Board of Directors
James N. Hauslein
CHAIRMAN OF THE BOARD
Coral Gables, Florida
May 9, 1997
17
<PAGE>
SUNGLASS HUT INTERNATIONAL, INC.
255 ALHAMBRA CIRCLE
CORAL GABLES, FLORIDA 33134
THIS PROXY IS SOLICITED ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of Sunglass Hut International, Inc.,
a Florida corporation (the "Company"), hereby appoints Jack B. Chadsey and
Larry G. Petersen, and each of them, as proxies for the undersigned, each with
full power of substitution, for and in the name of the undersigned to act for
the undersigned and to vote, as designated on the reverse side of this proxy
card, all of the shares of stock of the Company that the undersigned is entitled
to vote at the 1997 Annual Meeting of Shareholders of the Company, to be held
on Wednesday, June 4, 1997 at 9:00 a.m., local time, at the Essex House Hotel,
160 Central Park South, New York, New York 10019, and at any adjournments or
postponements thereof.
<PAGE>
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS.
VOTE FOR ALL NOMINEES LISTED AT RIGHT EXCEPT VOTE WITHHELD FROM THE
FOLLOWING NOMINEE(S) (IF ANY)
[ ]
VOTE WITHHELD FROM ALL NOMINEES
[ ]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL
THE DIRECTOR NOMINEES LISTED IN PROPOSAL (1).
NOMINEES: Jack B. Chadsay
John H. Duerden
William S. Field
(Instruction: To withhold authority for an individual nominee, write that
nominee's name on the line provided below.)
_________________________________________________________________________
2. Upon such other business as may properly come before the Annual Meeting or
any adjournment thereof.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting, and any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED IN PROPOSAL (1) AT
LEFT.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED WITHIN THE UNITED STATES.
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company's 1996 Annual Report
to Shareholders.
DATE_________________________________________________________________________
SIGNATURE____________________________________________________________________
SIGNATURE (If held jointly)__________________________________________________
Note: Please sign exactly as your name appears hereon and mail it promptly even
though you now plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If partnership, please sign in the partnership name by
authorized person.
