<PAGE> 1
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
DECKERS OUTDOOR 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
DECKERS OUTDOOR CORPORATION
April 15, 1999
Dear Stockholder:
We cordially invite you to attend our 1999 Annual Meeting of Stockholders
to be held at 5:00 p.m. on Monday, May 17, 1999 at the Radisson Hotel Santa
Barbara, 1111 East Cabrillo Boulevard, Santa Barbara, California 93103. Enclosed
are the Notice of Annual Meeting, Proxy Statement and a Proxy Card relating to
the Annual Meeting which we urge you to read carefully. Also enclosed is the
Company's 1998 Annual Report to Stockholders on Form 10-K. Whether or not you
expect to attend the Annual Meeting, please sign and date the enclosed Proxy
Card and return it as promptly as possible to ensure that your shares will be
voted. Properly executed Proxy Cards received by the Company prior to the Annual
Meeting will be voted in accordance with the instructions indicated in such
cards. Because mail delays occur frequently, it is important that the enclosed
Proxy Card be returned well in advance of the meeting.
ON BEHALF OF YOUR
BOARD OF DIRECTORS
DOUGLAS B. OTTO
Chairman of the Board,
Chief Executive Officer
and President
<PAGE> 3
DECKERS OUTDOOR CORPORATION
495A S. FAIRVIEW AVENUE, GOLETA, CALIFORNIA 93117
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1999
TO THE STOCKHOLDERS OF
DECKERS OUTDOOR CORPORATION
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Deckers Outdoor Corporation, a Delaware corporation (the
"Company"), will be held at the Radisson Hotel Santa Barbara, 1111 East Cabrillo
Boulevard, Santa Barbara, California 93103, on Monday, May 17, 1999, beginning
at 5:00 p.m., local time. The Annual Meeting will be held for the following
purposes:
1. To elect two (2) directors of the Company to serve as Class III
directors until the Annual Meeting of Stockholders to be held in 2002.
2. To ratify the selection of KPMG LLP as the Company's independent
auditors.
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
The Board of Directors has fixed March 26, 1999 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any postponements or adjournments thereof, and only stockholders of
record at the close of business on that date are entitled to such notice and to
vote at the Annual Meeting.
A list of stockholders entitled to vote at the Annual Meeting will be
available at the offices of the Company for ten (10) days prior to the Annual
Meeting.
We hope that you will use this opportunity to take an active part in the
affairs of the Company by voting on the business to come before the Annual
Meeting either by executing and returning the enclosed Proxy Card or by casting
your vote in person at the Annual Meeting.
STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. A STAMPED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. IF A STOCKHOLDER RECEIVES MORE THAN
ONE PROXY CARD BECAUSE HE OR SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR
ADDRESSES, EACH PROXY CARD SHOULD BE COMPLETED AND RETURNED.
BY ORDER OF THE BOARD OF DIRECTORS
DOUGLAS B. OTTO
Chairman of the Board,
Chief Executive Officer
and President
Goleta, California
April 15, 1999
<PAGE> 4
DECKERS OUTDOOR CORPORATION
495A S. FAIRVIEW AVENUE
GOLETA, CALIFORNIA 93117
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1999
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Deckers Outdoor Corporation, a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 5:00 p.m., local time, on May 17, 1999, at the
Radisson Hotel Santa Barbara, 1111 East Cabrillo Boulevard, Santa Barbara,
California 93103, and any postponements or adjournments thereof for the purposes
set forth in the accompanying Notice of Annual Meeting. This Proxy Statement and
the accompanying Form of Proxy were first mailed to stockholders on or about
April 15, 1999.
RECORD DATE AND VOTING
March 26, 1999 has been fixed as the record date (the "Record Date") for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting, and any postponements or adjournments thereof. As of March 26,
1999, there were 8,555,369 outstanding shares of the Company's common stock, par
value $.01 per share (the "Common Stock"). No shares of the Company's preferred
stock, par value $.01 per share, were outstanding as of that date. A majority of
the shares of Common Stock entitled to vote, present in person or represented by
proxy, will constitute a quorum at the meeting.
Each share of Common Stock issued and outstanding on the Record Date is
entitled to one vote on any matter presented for consideration and action by the
stockholders at the Annual Meeting. With respect to all matters other than the
election of directors, the affirmative vote of a majority of shares of the
Company's Common Stock present in person or represented by proxy at the meeting
and entitled to vote on the subject matter will be the act of the stockholders.
Directors will be elected by a plurality of the votes of the shares of the
Company's Common Stock present in person or represented by proxy and entitled to
vote on the election of directors. Abstentions will be treated as the equivalent
of a negative vote for the purpose of determining whether a proposal has been
adopted and will have no effect for the purpose of determining whether a
director has been elected. Unless otherwise instructed, proxies solicited by the
Company will be voted "FOR" the nominees named herein for election as director,
"FOR" the ratification of the selection of KPMG LLP as the Company's independent
auditors, and in their discretion upon such other business as may properly come
before such meeting or any and all postponements or adjournments thereof.
With respect to brokers who are members of the New York Stock Exchange, the
New York Stock Exchange Rules ("NYSE Rules") generally require that when shares
are registered in street or nominee name, its member brokers must receive
specific instructions from the beneficial owners in order to vote on certain
proposals. However, the NYSE Rules do not require specific instructions in order
for a broker to vote on the election of the Class III directors and on
ratification of the selection of the Company's independent auditors. If a member
broker indicates on the proxy that such broker does not have discretionary
authority as to certain shares to vote on any proposal that does require
specific instructions, those shares will not be considered as present and
entitled to vote with respect to that matter. Pursuant to Delaware law, a broker
non-vote will not be treated as present or voting in person or by proxy on the
proposal. A broker non-vote will have no effect for the purpose of determining
whether a director has been elected.
A stockholder giving a proxy has the power to revoke it at any time before
it is exercised by giving written notice of revocation to the Secretary of the
Company, by executing a subsequent proxy, or by attending the Annual Meeting and
voting in person. Subject to any such revocation, all shares represented by
properly executed proxies will be voted in accordance with the specifications on
the enclosed proxy card.
1
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws state that the Board of Directors shall consist of
not less than one nor more than seven members. The specific number of Board
members within this range is established by the Board of Directors and is
currently set at six. The Company's Certificate of Incorporation provides that
the Board shall be classified into three classes of directors, which classes
serve staggered three-year terms. The Board consists of two Class I directors,
two Class II directors and two Class III directors. The current term of each
Class I director expires at the Annual Meeting of Stockholders to be held in
2000, the current term of each Class II director expires at the Annual Meeting
of Stockholders to be held in 2001, and the current term of each Class III
director expires at the Annual Meeting of Stockholders to be held in 1999. The
Board of Directors is proposing Douglas B. Otto and Gene E. Burleson, who are
now serving as Class III directors, for election as Class III directors at the
Annual Meeting. Each of the Class III directors elected at the Annual Meeting
will serve until the Annual Meeting of Stockholders to be held in 2002, until
such director's successor has been duly elected and qualified or until such
director has otherwise ceased to serve as a director. To the Company's
knowledge, each nominee is and will be available to serve. The nominees have
supplied the following background information to the Company:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING THE LAST 5 YEARS,
OTHER BUSINESS DIRECTOR
NAME AGE EXPERIENCE AND DIRECTORSHIPS SINCE
---- --- --------------------------------------------- --------
<S> <C> <C> <C>
Douglas B. Otto................... 47 Co-founder of the Company in 1973 and an 1982
executive officer of the Company since that
time, Chairman of the Board and Chief
Executive Officer of the Company since 1982,
President of the Company since March 1999 and
from 1982 through May 1998, and Chief
Financial Officer of the Company from June
1990 through December 1992.
Gene E. Burleson.................. 58 Chief Executive Officer and a Director of 1993
Vitalink Pharmacy Services, Inc., a provider
of pharmacy services to nursing facilities,
from February 1997 to August 1997, President
and a Director of GranCare, Inc., a provider
of routine and specialty medical care and
rehabilitative services, from October 1989 to
December 1990, Chief Executive Officer and a
Director of GranCare, Inc. from December 1990
to February 1997, and Chairman of the Board
of GranCare, Inc. from January 1994 to
November 1997. Currently, he is a Director of
Alternative Living Services, Inc., Mariner
Post-Acute Network, Inc. and Walnut Financial
Services, Inc.
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE
"FOR" THE ELECTION OF THE ABOVE NOMINEES.
2
<PAGE> 6
MANAGEMENT
The directors and executive officers of the Company are set forth below.
The following table includes information with respect to each director and
executive officer of the Company.
<TABLE>
<CAPTION>
CLASS OF
NAME AGE POSITION DIRECTOR
---- --- -------- --------
<S> <C> <C> <C>
Douglas B. Otto................... 47 Chairman of the Board, Chief Executive III
Officer and President
Peter C. Benjamin................. 55 Vice President and Chief Operating Officer
Ronald D. Page.................... 59 Senior Executive Vice President I
M. Scott Ash...................... 34 Chief Financial Officer and Secretary
Patrick C. Devaney................ 44 Vice President -- Global Sourcing, Production
and Development
William "Red" Hovis............... 50 Senior Vice President -- Sales
Gene E. Burleson.................. 58 Director III
Rex A. Licklider.................. 56 Director II
Karl F. Lopker.................... 47 Director II
Diana M. Wilson................... 40 Director I
</TABLE>
Douglas B. Otto, co-founder of the Company in 1973, has served as an
executive officer since that time and as Chairman of the Board and Chief
Executive Officer since 1982. He has also served as President since March 1999
and from 1982 through May 1998 and Chief Financial Officer from June 1990
through December 1992.
Peter C. Benjamin has been Vice President and Chief Operating Officer since
March 1999 and Managing Director of Deckers Japan, Inc., the Company's
subsidiary responsible for distribution of the Company's products throughout
Japan, since July 1997. Mr. Benjamin has been President since 1993 of Pacific
Resources Holding, Inc., an agency for the Japanese outdoor market. Previously,
he was Chief Financial Officer and Chief Operating Officer for The North Face,
Inc. from March 1992 to March 1993 and was a Vice President of Odyssey USA,
Inc., from January 1991 to March 1992.
Ronald D. Page joined the Company as a sales manager in May 1991, became
Vice President -- Sales in January 1993 and Executive Vice President -- Sales in
August 1995. Mr. Page was Managing Director -- European Operations from March
1997 to March 1999. In March 1999, he became Senior Executive Vice President and
he has been a Director of the Company since August 1993.
M. Scott Ash has been Chief Financial Officer since January 1997 and
Secretary since March 1999. Prior to such time, Mr. Ash served as Controller of
the Company, beginning in January 1993. Prior to joining the Company, he was
employed by Dole Food Company, Inc. from August 1992 to January 1993 as Manager
of Corporate Reporting. Previously he was a Senior Manager at KPMG LLP where he
was employed from September 1986 to August 1992. Mr. Ash is a Certified Public
Accountant.
Patrick C. Devaney has been the Company's Vice President -- Global
Sourcing, Production and Development since November 1997. Prior to joining the
Company, Mr. Devaney was employed by Mizuno USA where he was Director of Global
Footwear from February 1990 to June 1997 and was a Global Product/ Marketing
Manager for Reebok International from 1985 to December 1989.
3
<PAGE> 7
William "Red" Hovis has been the Company's Senior Vice President -- Sales
since July 1998. Prior to joining the Company, he was employed by Kappa USA as
Vice President -- Sales and Marketing from August 1997 to June 1998. Previously,
he was Vice President of Sales -- Footwear for Fila USA from June 1995 to July
1997. Prior to this, he was employed by Mizuno USA where he was Vice President
and General Manager for Footwear from 1993 to 1995 and Vice President of Sales
and Marketing for Footwear from 1992 to 1993.
Gene E. Burleson has been a Director of the Company since September 1993.
From February 1997 to August 1997, Mr. Burleson was Chief Executive Officer and
a Director of Vitalink Pharmacy Services, Inc., a provider of pharmacy services
to nursing facilities. From October 1989 to February 1997, Mr. Burleson was
employed by GranCare, Inc., a provider of routine and specialty medical care and
rehabilitative services, where he served as President and a Director from
October 1989 to December 1990 and as Chief Executive Officer and a Director from
December 1990 to February 1997. He assumed the position of Chairman of the Board
of GranCare, Inc. in January 1994 and served in this capacity until November
1997. Mr. Burleson is also a Director of Alternative Living Services, Inc.,
Mariner Post-Acute Network, Inc. and Walnut Financial Services, Inc.
Rex A. Licklider has been a Director of the Company since September 1993.
From 1975 until February 1992, Mr. Licklider served as Chairman of the Board and
Chief Executive Officer of Com Systems, Inc., a long distance telecommunications
company. From February 1992 to January 1993, Mr. Licklider was Chairman of the
Board of Resurgens Communications Group, with whom Com Systems, Inc. had merged.
Mr. Licklider is a founder and Director of Pentium Investments, Inc. and a
Director and Vice Chairman of The Sports Club Company.
Karl F. Lopker has been a Director of the Company since May 1995 and was
originally a co-founder of the Company in 1973. Since 1979, Mr. Lopker has been
Chief Executive Officer and a Director of QAD Inc., a developer and marketer of
computer software.
Diana M. Wilson has been a Director of the Company since February 1997. In
March 1999, she resigned from the Company and all offices held but continues to
be a Director. Prior to her resignation, she was President of the Company from
May 1998 to March 1999. She was Chief Operating Officer of the Company and the
Chief Executive Officer of Ugg Holdings, Inc. from August 1995 to March 1999 and
was the Secretary of the Company from August 1993 to March 1999. She served as
Vice President of the Company from August 1995 to May 1998. She served as Chief
Financial Officer from January 1993 to January 1997 and served as Controller of
the Company from August 1990 to January 1993. Prior to joining the Company, she
was employed by KPMG LLP from January 1988 to April 1990. Ms. Wilson is a
Certified Public Accountant.
For information concerning beneficial ownership of Common Stock by
directors and executive officers, see "Security Ownership of Certain Beneficial
Owners and Management" below.
CERTAIN RELATIONSHIPS
On April 18, 1997, in order to increase the equity interest in the Company
for Diana M. Wilson, the former President and Chief Operating Officer, the
Company issued Ms. Wilson a $624,000 note to purchase 100,000 shares of the
Company's Common Stock at the fair market value on that date. The note bears
interest at 6.39% and is secured by the stock so acquired and by any severance
pay, including any unpaid bonuses. Ms. Wilson resigned from the Company in March
1999 and the Company is currently in negotiations with her regarding the
settlement of the outstanding loan. The largest aggregate amount of indebtedness
outstanding at any time during 1998 was $694,938, including accrued interest of
$70,938. As of February 28, 1999, the balance outstanding was $702,340,
including accrued interest of $78,340.
In October 1998, the Company loaned $100,000 to Ronald D. Page to fulfill a
margin call received by Mr. Page on his stock in the Company. The loan was
repaid in December 1998. The largest amount of indebtedness outstanding at any
time during 1998 was $100,932, including $932 of interest at 4.97%.
4
<PAGE> 8
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
Audit Committee -- The Board has a standing Audit Committee that reviews
the audit and control functions of the Company, the Company's accounting
principles, policies and practices and financial reporting, the scope of the
audit conducted by the Company's auditors, the fees and all non-audit services
of the independent auditors and the independent auditors' opinion and letter of
comment to management and management's response thereto. The committee met two
times during 1998. At the date of this Proxy Statement the Audit Committee was
comprised of Messrs. Burleson, Licklider, and Lopker.
Compensation Committee -- The Board has a Compensation Committee (the
"Compensation Committee") that is authorized to review and recommend to the
Board the salaries, bonuses and prerequisites of the Company's executive
officers. The Compensation Committee also reviews and recommends to the Board
any new compensation or retirement plans and administers the Company's 1993
Employee Stock Incentive Plan (the "1993 Plan") and the Company's 1995 Employee
Stock Purchase Plan (the "1995 Plan"). The committee met three times during
1998. At the date of this Proxy Statement the Compensation Committee was
comprised of Messrs. Burleson, Licklider and Lopker.
DIRECTOR ATTENDANCE
In 1998, the Company held four meetings of the Board of Directors. During
1998, all of the directors attended at least 75% of the aggregate of the
meetings of the Board and of the committees of which they were members, except
for Ron Page who was working in Europe as Managing Director -- European
Operations.
DIRECTOR COMPENSATION
Standard Compensation -- Directors who are not employees of the Company or
its subsidiaries ("Nonemployee Directors") receive an Annual Retainer to be paid
as follows: $11,000 in cash, or, at the option of a Nonemployee Director,
exercised ten days prior to the start of each year, in Common Stock of the
Company at a 20% discount off the price of the shares at the closing price at
the beginning of the year; and 2,000 shares of the Common Stock of the Company
per year. On January 1, 1999 and every three years thereafter, the Board sets
the number of shares for the following three years. For 1999 through 2001, the
Board reaffirmed the terms above, except that the annual 2,000 shares awards per
year for both 1999 and 2000 were issued and fully vested effective January 1,
1999. Additionally, Nonemployee Directors receive $1,500 for each meeting of the
Board and $1,000 for each separately scheduled committee meeting that they
attend plus reimbursement of any expenses they may incur with respect to such
meetings. Committee Chairmen receive additional annual retainer fees of $4,000.
Directors who are employees of the Company or its subsidiaries serve as
directors without compensation.
Stock Options -- Nonemployee Directors receive additional compensation in
the form of stock options granted automatically under the 1993 Plan. Upon their
initial election to the Board of Directors, Nonemployee Directors automatically
receive options to purchase 10,000 shares of Common Stock. Such options vest in
annual one-third installments, with the first such installment vesting on the
first anniversary of the date of grant of such option. In addition, beginning on
the fourth annual meeting of stockholders after a Nonemployee Director is first
elected, such Nonemployee Director will automatically be granted each year
options to purchase 2,000 shares of Common Stock. Such additional options will
be fully vested and exercisable at the time of grant. All options granted to
Nonemployee Directors have an exercise price equal to the fair market value of
the shares on the date of grant of such option.
5
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the years ended December 31, 1998, 1997
and 1996, the reportable compensation paid or awarded to the Chief Executive
Officer and to each of the four other most highly compensated executive officers
of the Company who were executive officers of the Company at December 31, 1998
and received compensation in excess of $100,000 in such year (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
---------------------------------- UNDERLYING
OTHER ANNUAL OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (#) COMPENSATION
--------------------------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas B. Otto................ 1998 $275,000 $ -- -- 180,000 $116,000(1)
Chief Executive Officer 1997 275,000 250,000 -- -- 120,000(1)
1996 274,000 250,000 -- -- --
Diana M. Wilson(4)............. 1998 240,000 13,000 -- 180,000 --
President, Chief Operating 1997 238,000 123,000 -- -- --
Officer and Secretary 1996 180,000 76,000 -- -- --
Ronald D. Page................. 1998 150,000 61,000 57,000(2) 80,000 --
Managing Director -- 1997 150,000 30,000 61,000(2) 20,000 --
European Operations and 1996 150,000 91,000 -- -- --
Executive Vice President --
Sales
Robert M. Beatty(4)............ 1998 119,000 43,000 -- 35,000 --
Vice President -- Operations
and Finance
Patrick C. Devaney............. 1998 116,000 31,000 -- 45,000 8,000(3)
Vice President -- Global
Sourcing, Production and
Development
</TABLE>
- ---------------
(1) In 1997, the Company entered into a split-dollar life insurance agreement
with a trust established by Douglas B. Otto, pursuant to which the Company
and the trust will share in the premium costs of life insurance policies
that pay cumulative death benefits upon the death of Mr. Otto. The portion
of the premium equal to the value of the economic benefit is paid by the
trust, with the Company paying the remainder of the premiums. The amounts
above, $116,000 in 1998 and $120,000 in 1997, reflect the present value of
the economic benefit to Mr. Otto of the portion of the premium paid by the
Company in 1998 and 1997, respectively. Upon surrender of the policy or
payment of the death benefits thereunder, the Company is entitled to
repayment of an amount equal to the cumulative payments previously paid by
the Company.
(2) Mr. Page worked in Europe as Managing Director-European Operations from
March 1997 to March 1999. As a result, he received living allowances
totalling $57,000 in 1998 and $61,000 in 1997.
(3) In connection with Mr. Devaney's acceptance of employment, the Company
reimbursed him for $8,000 of relocation costs in 1998.
(4) Ms. Wilson and Mr. Beatty both resigned from the Company in March 1999.
6
<PAGE> 10
The following table sets forth information with respect to options to
purchase shares of the Company's Common Stock granted in 1998 to the Named
Executive Officers.
STOCK OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS RATES OF STOCK
GRANTED APPRECIATION FOR
TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(#) IN 1998 (PER SHARE) DATE 5% 10%
---- ---------- ---------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Douglas B. Otto................. 50,000 5.4% $6.875 05-15-2008 $216,000 $548,000
130,000 14.1% 1.563 12-09-2008 128,000 324,000
Diana M. Wilson................. 50,000 5.4% 6.875 05-15-2008 216,000 548,000
130,000 14.1% 1.563 12-09-2008 128,000 324,000
Ronald D. Page.................. 80,000 8.6% 1.563 12-09-2008 79,000 199,000
Robert M. Beatty................ 35,000 3.8% 1.563 12-09-2008 34,000 87,000
Patrick C. Devaney.............. 10,000 1.1% 7.875 02-11-2008 50,000 126,000
35,000 3.8% 1.563 12-09-2008 34,000 87,000
</TABLE>
- ---------------
(1) The 5% and 10% assumed rates of appreciation are specified under the rules
of the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
The following table sets forth, for the Named Executive Officers,
information with respect to options exercised, unexercised options and year-end
option values, in each case with respect to options to purchase shares of the
Company's Common Stock.
AGGREGATED OPTION EXERCISES IN 1998 AND
1998 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998(#) DECEMBER 31, 1998
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas B. Otto.............. -- $ -- 70,000 110,000 $12,600 $69,300
Diana M. Wilson.............. 21,250 135,363 192,000 228,000 12,600 69,300
Ronald D. Page............... -- -- 41,000 96,000 6,300 44,100
Robert M. Beatty............. -- -- 12,500 57,500 2,205 19,845
Patrick C. Devaney........... -- -- 9,500 45,500 2,205 19,845
</TABLE>
EMPLOYMENT AGREEMENTS
Effective January 1992, Douglas B. Otto entered into a five-year employment
agreement with the Company, which was subsequently extended through 2001. Such
employment agreement provides for an annual salary of $260,000, with annual cost
of living increases and a bonus of up to $500,000 per year, determined by the
Compensation Committee, based upon the operating results of the Company. In the
event Mr. Otto's employment agreement is terminated for any reason, including
"For Cause" as defined therein, Mr. Otto will receive an annual payment of
$260,000 and his existing employee benefits for five years from the date of
termination. After any termination of employment, Mr. Otto may not compete with
the Company for one year in the United States (except in Montana and Wyoming).
The Company may not terminate such employment agreement except "For Cause."
Diana M. Wilson, who resigned from the Company in March 1999, had entered
into an employment agreement with the Company, effective August 4, 1995, which
was subsequently amended on April 18, 1997, effective January 1, 1997 through
December 31, 1999. As amended, the agreement provided for an annual salary of
$240,000 with a potential bonus of up to $240,000. In order to increase Ms.
Wilson's equity interest in
7
<PAGE> 11
the Company, the agreement also provided for a loan by the Company to Ms. Wilson
to purchase up to 100,000 shares of the Company's common stock at fair market
value on April 18, 1997. The promissory note bears interest at 6.39% and is
secured by the stock so acquired and, under certain circumstances, by any
severance pay, including any unpaid bonuses. In connection with her employment
agreement, Ms. Wilson was granted an option to purchase 200,000 shares of the
Company's common stock at an exercise price of $9.50, the fair market value of
the Company's common stock on the date of grant. This option vested with respect
to 20,000 shares on August 4, 1995 and the remainder vests in annual 36,000
share installments on August 4, 1996 through August 4, 2000. Upon Ms. Wilson's
resignation in March 1999, these stock options expired. The Company is currently
in negotiations with Ms. Wilson regarding the settlement of the outstanding loan
and her severance.
In 1998, Mr. Otto and Ms. Wilson both agreed to reduce their maximum
available bonuses for 1998 by $375,000 and $125,000, respectively, in exchange
for 50,000 stock options each. Such options were granted in May 1998 at fair
market value on the date of grant, vest over a four year period and expire in
2008. For 1999, Mr. Otto and Ms. Wilson agreed to reduce their maximum available
bonuses for 1999 by $500,000 and $225,000, respectively, in exchange for 130,000
stock options each. Such options were granted in December 1998 at fair market
value on the date of grant, vest over a four year period and expire in 2008.
Upon Ms. Wilson's resignation in March 1999, all of her unexercised stock
options expired.
In March 1999, Peter Benjamin entered into an employment agreement with the
Company through December 31, 2000. The agreement provides for a base salary of
$180,000 for each of 1999 and 2000, a $60,000 guaranteed bonus for 1999 and a
potential bonus of up to $180,000 for 2000. For 1999, Mr. Benjamin is also
entitled to a potential bonus related to the financial performance of Deckers
Japan. In connection with his employment agreement, Mr. Benjamin was granted an
option to purchase 130,000 shares of the Company's common stock at an exercise
price of $2.13, the fair market value of the Company's common stock on the date
of grant. This option vests over a four year period. In the event that
termination of employment occurs for reasons other than: (1) cause, or (2)
voluntary termination, he will receive six months' severance plus committed
incentives. In the event that there is a change of control and termination, or
constructive termination, Mr. Benjamin will receive twelve months of severance,
including minimum guarantees, plus the acceleration of vesting of all stock
options.
The other officers of the Company do not have employment agreements with
the Company and serve at the pleasure of the Board.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors,
consisting entirely of directors who have never served as officers or employees
of the Company or any of its subsidiaries, except for Mr. Lopker who was
formerly the President of the Company from 1976 to 1982, determines and
administers the compensation of the Company's executive officers. Set forth
below are the principal factors underlying the Committee's philosophy used in
setting compensation.
Compensation Philosophy -- At the direction of the Board of Directors, the
Committee endeavors to ensure that the compensation programs for executive
officers of the Company and its subsidiaries are competitive and consistent in
order to attract and retain key executives critical to the Company's long-term
success. The Committee believes that the Company's overall financial performance
should be an important factor in the total compensation of executive officers.
At the executive officer level, the Committee has a policy that a significant
proportion of potential total compensation should consist of variable,
performance-based components, such as stock options, stock awards and bonuses,
which can increase or decrease to reflect changes in corporate and individual
performance. These incentive compensation programs are intended to reinforce
management's commitment to enhancement of profitability and stockholder value.
The Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance in determining the level and
composition of compensation for the chief executive
8
<PAGE> 12
officer and other executive officers. While the Committee considers such
corporate performance measures as net sales, net income and earnings per share,
the Committee does not apply any specific quantitative formula in making
compensation decisions. The Committee also appreciates the importance of
achievements that may be difficult to quantify, and accordingly recognizes
qualitative factors, such as successful supervision of major corporate projects,
demonstrated leadership ability and contributions to industry and community
development. For 1998, the most important qualitative factors in determining
incentive compensation awards to executive officers were the Committee's
assessments of their contributions to the Company's stockholder value, sales and
net earnings per share.
The Committee also evaluates the total compensation of the Company's chief
executive officer and other executive officers in light of information regarding
the compensation practices and corporate financial performance of similar
companies in the Company's industry. However, the Committee does not target a
specific percentile range within the peer group compensation structure in
determining compensation for executive officers. From time to time, the
Committee also receives assessments and advice regarding the Company's
compensation practices from independent compensation consultants.
Relationship of Performance to Compensation -- Compensation that may be
earned by the executive officers in any fiscal year consists of base salary,
cash bonus and stock options. Salaries are reviewed periodically and adjusted as
warranted to reflect sustained individual performance. The Committee focuses
primarily on total annual compensation, including incentive awards and cash
bonuses, rather than base salary alone, as the appropriate measure of executive
officer performance and contribution.
The executive officers receive incentive compensation awards based on
individual goals and milestones established for each officer at the beginning of
each year and other factors as determined by the Committee. Such officers
receive compensation for the subsequent attainment of these goals.
The 1993 Employee Stock Incentive Plan (the "1993 Plan") authorizes the
Committee to make grants and awards of stock options, stock appreciation rights,
restricted stock and other stock-based awards. The Committee grants stock
options to executive officers, as well as other employees of the Company and its
subsidiaries below the executive officer level. Executive officers are eligible
to receive stock option grants, which the Committee approves from time to time
as it deems appropriate.
In approving grants and awards under the 1993 Plan, the quantitative and
qualitative factors and industry comparisons outlined above will be considered.
The number of options previously awarded to and held by executive officers is
reviewed but is not an important factor in determining the size of current
option grants.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Committee considers the anticipated
tax treatment to the Company and to the executives of various payments and
benefits. Some types of compensation payments and their deductibility (e.g., the
spread of exercise of non-qualified options) depend upon the timing of an
executive's vesting or exercise of previously granted rights. Further,
interpretations of and changes in the tax laws and other factors beyond the
Committee's control also affect the deductibility of compensation.
Chief Executive Officer Compensation -- Douglas B. Otto entered into a five
year employment agreement, effective January 1992, and subsequently extended
through 2001. Such employment agreement provides for an annual salary of
$260,000, with annual cost of living increases, and provides for a bonus of up
to $500,000 per year, determined by the Compensation Committee, based upon a
combination of factors including the Company's common stock price and the
operating results of the Company.
Mr. Otto and the Company agreed to reduce the maximum potential bonus
amount available for 1998 from $500,000 to $125,000, in exchange for 50,000
stock options. Such stock options were granted at fair market value on the date
of grant, vest over a four year period and expire in 2008. With respect to the
remaining maximum potential bonus amount, the Committee established targets for
sales, earnings per share and stockholder value at the beginning of the year.
The established targets for 1998 were not achieved, and as a result, Mr. Otto
did not receive a cash bonus for 1998.
9
<PAGE> 13
In December 1998, the Committee established the compensation of the
Company's Chief Executive Officer and its other executive officers for fiscal
year 1999. In each case, the Committee's decision was based upon the principles
and procedures outlined above. For 1999, Mr. Otto agreed to forego his entire
1999 potential cash bonus in exchange for 130,000 stock options. Such options
were granted in December 1998 at fair market value on the date of grant, vest
over four years and expire in 2008. The Company's other executive officers also
agreed to forego the majority of their 1999 bonuses in exchange for stock
options on similar terms, ranging from 130,000 stock options for Ms. Wilson, the
Company's former President, to 35,000 stock options for the remaining executive
officers. Upon Ms. Wilson's resignation in March 1999, all of her unexercised
stock options expired.
COMPENSATION COMMITTEE
Gene E. Burleson
Rex A. Licklider
Karl F. Lopker
The Report of the Compensation Committee on Executive Compensation shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the date of this Proxy Statement, the members of the Compensation
Committee were Messrs. Burleson, Licklider and Lopker, none of whom was an
officer or employee of the Company or any of its subsidiaries during fiscal year
1999 or is a former officer or employee of the Company or any of its
subsidiaries, except for Mr. Lopker who was formerly the President of the
Company from 1976 to 1982.
10
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the Nasdaq Composite Index and a peer group index for
the five-year period commencing December 31, 1993 and ending December 31, 1998.
The data represented below assumes $100 invested in each of the Company's Common
Stock, the Nasdaq Composite Index and the peer group index on December 31, 1993.
The stock performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
COMPARISON OF TOTAL RETURN (ASSUMING DIVIDEND REINVESTMENT)
<TABLE>
<CAPTION>
DECKERS OUTDOOR
CORPORATION NASDAQ COMPOSITE ATHLETIC SHOE COMPOSITE
--------------- ---------------- -----------------------
<S> <C> <C> <C>
December 31, 1993 100.00 100.00 100.00
December 31, 1994 69.40 105.00 125.80
December 31, 1995 31.90 136.20 169.00
December 31, 1996 38.20 169.20 269.70
December 31, 1997 41.70 207.00 189.60
December 31, 1998 12.20 292.00 164.50
</TABLE>
* Athletic Shoe Composite peer group index consisting of Saucony Inc., K-Swiss,
Nike Inc., Reebok International Ltd., Rocky Boots & Shoes Inc., The Stride
Rite Corporation, The Timberland Company, Vans Inc., Wolverine World Wide
Inc., Fila Holding SPA, and Kenneth Cole Productions.
11
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following security ownership information is set forth, as of February
28, 1999, with respect to certain persons or groups known to the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock and
with respect to each director of the Company, each of the Named Executive
Officers, and all current directors, nominees and executive officers as a group
(nine persons). Other than as set forth below, the Company is not aware of any
other person who may be deemed to be a beneficial owner of more than 5% of the
Company's Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2),(5) PERCENT OF CLASS
------------------- --------------------------- ----------------
<S> <C> <C>
Douglas B. Otto(3)............................. 3,793,552 44.1%
Diana M. Wilson................................ 338,599 3.9%
Ronald D. Page................................. 201,621 2.4%
Robert M. Beatty............................... 19,199 *
Patrick C. Devaney............................. 11,500 *
Gene E. Burleson............................... 63,565 *
Rex A. Licklider(4)............................ 133,674 1.6%
Karl F. Lopker................................. 28,465 *
Henry George Luken, III(6)..................... 440,065 5.2%
All directors and executive officers as a group
(nine persons)............................... 4,611,675 51.7%
</TABLE>
- ---------------
(1) The address of each beneficial owner is 495A S. Fairview Avenue, Goleta,
California 93117, unless otherwise noted.
(2) Unless otherwise noted, sole voting and dispositive power are possessed with
respect to all shares of Common Stock owned.
(3) Includes (a) 3,044,852 shares held by the Douglas B. Otto Trust as to which
Mr. Otto has sole voting and investment power, (b) 293,950 shares held as
trustee for the Tiffany Jade Otto Trust, of which Mr. Otto has sole voting
and investment power, (c) 293, 950 shares held as trustee for the Ty Dylan
Bard Otto Trust, of which Mr. Otto has sole voting and investment power, and
(d) 90,800 shares held by the Edgecliff Foundation, a charitable foundation
formed by Mr. Otto, of which Mr. Otto is the Chairman of the Board of
Directors.
(4) Includes 131,674 shares held by the Licklider Living Trust as to which Mr.
Licklider has joint voting and investment power.
(5) Includes shares under stock options that are presently exercisable or are
exercisable within 60 days for the following: Douglas B. Otto -- 70,000;
Diana M. Wilson -- 218,000; Ronald D. Page -- 38,000; Robert M.
Beatty -- 19,000; Patrick C. Devaney -- 11,500; Gene E. Burleson -- 2,000;
Rex A.
Licklider -- 2,000; Karl F. Lopker -- 10,000; and all directors and
executive officers as a group -- 392,000. In March 1999, Ms. Wilson and Mr.
Beatty both resigned from the Company. Upon their resignations, all of their
unexercised stock options expired.
(6) This information is based solely on a Schedule 13D filed by Mr. Luken on
September 29, 1998. Mr. Luken's address is 900 Fairway lane, Soddy Daisy,
Tennessee 37379.
* Percentage of shares beneficially owned does not exceed 1% of the class so
owned.
12
<PAGE> 16
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own more
than 10% of the Common Stock (collectively "Section 16 Persons") to file initial
reports of ownership (Forms 3) and reports of changes in ownership of Common
Stock (Forms 4 and Forms 5) with the Securities and Exchange Commission as well
as the Company.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations from each Section 16 Person
known to the Company that no other reports were required, during the fiscal year
ended December 31, 1998, all Section 16(a) filing requirements applicable to its
Section 16 Persons were complied with except that Diana M. Wilson and M. Scott
Ash each filed a Form 5 on March 12, 1999 reporting the exercise of stock
options which were reportable on Form 4, due February 10, 1998.
13
<PAGE> 17
PROPOSAL NO. 2
INDEPENDENT AUDITORS
For the 1998 fiscal year, KPMG LLP provided audit services which included
examination of the Company's annual consolidated financial statements. Upon the
recommendation of the Audit Committee, the Board has selected KPMG LLP to
provide audit services to the Company and its subsidiaries for the fiscal year
ending December 31, 1999. The stockholders are being requested to ratify such
selection at the Annual Meeting. A representative of KPMG LLP will attend the
Annual Meeting to make any statements he or she may desire and to respond to
appropriate stockholder questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE ELECTION OF KPMG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR 2000 ANNUAL MEETING
Any proposal relating to a proper subject which an eligible stockholder may
intend to present for action at the Company's 2000 Annual Meeting of
Stockholders and which such stockholder may wish to have included in the proxy
materials for such meeting in accordance with the provisions of Rule 14a-8
promulgated under the Exchange Act must be received as far in advance of the
meeting as possible in proper form by the Secretary of the Company at 495A S.
Fairview Avenue, Goleta, California 93117 and in any event not later than
December 16, 1999. It is suggested that any such proposal be submitted by
certified mail, return receipt requested.
OTHER BUSINESS OF THE ANNUAL MEETING
Management is not aware of any matters to come before the Annual Meeting or
any postponement or adjournment thereof other than the election of directors and
the ratification of the selection of the Company's independent auditors.
However, inasmuch as matters of which management is not now aware may come
before the meeting or any postponement or adjournment thereof, the proxies
confer discretionary authority with respect to acting thereon, and the persons
named in such proxies intend to vote, act and consent in accordance with their
best judgment with respect thereto, provided that, to the extent the Company
becomes aware a reasonable time before the Annual Meeting of any matter to come
before such meeting, the Company will provide an opportunity to vote by proxy
directly on such matter. Upon receipt of such proxies in time for voting, the
shares represented thereby will be voted as indicated thereon and as described
in this Proxy Statement.
14
<PAGE> 18
MISCELLANEOUS
The solicitation of proxies is made on behalf of the Company and all the
expenses of soliciting proxies from stockholders will be borne by the Company.
In addition to the solicitation of proxies by use of the mails, officers and
regular employees may communicate with stockholders personally or by mail,
telephone, telegram or otherwise for the purpose of soliciting such proxies, but
in such event no additional compensation will be paid to any such persons for
such solicitation. The Company will reimburse banks, brokers and other nominees
for their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of shares held of record by such persons.
BY ORDER OF THE BOARD OF DIRECTORS
DOUGLAS B. OTTO
Chairman of the Board,
Chief Executive Officer and
President
Goleta, California
April 15, 1999
15
<PAGE> 19
PROXY
DECKERS OUTDOOR CORPORATION
495A S. Fairview Avenue
Goleta, California 93117
This Proxy is solicited on Behalf of the Board of Directors of Deckers Outdoor
Corporation. The undersigned hereby appoints Douglas B. Otto and M. Scott Ash,
and each of them, as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes each of them to represent and to vote as
designated below, all the shares of common stock of Deckers Outdoor Corporation
held of record by the undersigned on March 26, 1999, at the Annual Meeting of
Shareholders to be held on May 17, 1999 and any postponements or adjournments
thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 20
Please mark
your votes as [X]
indicated in
this example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
WITHHOLD
AUTHORITY
FOR to vote for
the nominees the nominees
listed below. listed below. FOR AGAINST ABSTAIN
1. ELECTION OF CLASS III DIRECTORS. 2. TO RATIFY THE SELECTION OF
Instruction: To withhold authority KPMG LLP AS THE COMPANY'S [ ] [ ] [ ]
to vote for a nominee listed below, [ ] [ ] INDEPENDENT AUDITORS.
strike a line through the nominee's
name. 3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before
such meeting or any and all postponements or
Nominees: Douglas B. Otto adjournments thereof.
Gene E. Burleson YES NO
Do You Plan to Attend
the Meeting? [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder.
If no direction is made, the Proxies will vote for the
nominees listed above, for the ratification of the
selection of KPMG LLP as the Company's independent
auditor and in their discretion on matters described
in Item 3.
Signature(s) ________________________________________________________________________________ Dated _______________________, 1999
Please sign exactly as the name appears above. When shares are held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation, please sign
in full corporate name by the President or other authorized officer. If a partnership, please sign in the partnership name
by an authorized person.
- ----------------------------------------------------------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
</TABLE>
