<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
Sola International
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
SOLA INTERNATIONAL INC.
2420 SAND HILL ROAD, SUITE 200
MENLO PARK, CALIFORNIA 94025
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, AUGUST 13, 1999
----------------
To the Stockholders of Sola International Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Sola
International Inc., a Delaware corporation, will be held at the Quadrus
Conference Center, 2400 Sand Hill Road, Menlo Park, California 94025, on
Friday, August 13, 1999 at 10:00 a.m. (local time) for the following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified.
2. To ratify the Company's Management Incentive Plan.
3. To transact such other business as may properly be brought before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on June 18, 1999 as
the record date for determination of the stockholders entitled to notice and
to vote at the Annual Meeting and only holders of record of the Company's
common stock on said date will be entitled to receive notice of and to vote at
the meeting.
Stockholders are cordially invited to attend the Annual Meeting. Whether or
not you plan to attend the meeting, please mark, sign, date and return the
enclosed proxy. The giving of your Proxy will not affect your right to vote in
person in the event you find it convenient to attend the meeting. You may
revoke the Proxy at any time before the closing of the polls at the meeting by
delivery to the Company of a subsequently executed proxy or a written notice
of revocation or by voting in person at the meeting. Attendance at the Annual
Meeting will be limited to stockholders and invited guests of the Company.
By order of the Board of Directors,
Steven M. Neil
Secretary
June 30, 1999
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
<PAGE>
SOLA INTERNATIONAL INC.
----------------
PROXY STATEMENT IN CONNECTION WITH
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, AUGUST 13, 1999
This Proxy Statement is furnished to stockholders of Sola International
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board of
Directors") of proxies to be voted at the Annual Meeting of Stockholders of
the Company to be held at the Quadrus Conference Center, 2400 Sand Hill Road,
Menlo Park, California 94025, on Friday, August 13, 1999, at 10:00 a.m. (local
time), and any adjournments thereof (the "Annual Meeting"). Action will be
taken at the Annual Meeting to elect Directors of the Company and to ratify
the appointment of the Company's independent auditors.
Holders of record of outstanding shares of the Company's Common Stock, $.01
par value (the "Common Stock"), at the close of business on June 18, 1999, are
entitled to vote at the Annual Meeting or any adjournments thereof. Voting
rights are vested exclusively in the holders of the Common Stock. Each share
of Common Stock outstanding on the record date will be entitled to one vote on
all matters to be voted upon. Shares held as treasury shares by the Company
are not entitled to vote. As of the close of business on the record date, June
18, 1999, 24,868,233 shares of Common Stock were outstanding. This Proxy
Statement, the accompanying form of proxy and the Company's annual report to
stockholders for the fiscal year ended March 31, 1999 are being mailed on or
about June 30, 1999 to each stockholder entitled to vote at the meeting.
VOTING AND REVOCATION OF PROXIES
When proxies in the enclosed form are returned properly executed, the shares
represented thereby will be voted at the meeting and, where instructions have
been given by the stockholder, will be voted in accordance therewith. If the
stockholder does not otherwise specify, the stockholder's shares of Common
Stock will be voted for the election of the nominees set forth in the Proxy
Statement as directors of the Company and in support of the ratification of
the Management Incentive Plan. If any other matter is properly presented for
action at the meeting, the persons named in the enclosed proxy will vote on
such matter in their discretion.
The holders of a majority in number of the total outstanding shares of
Common Stock entitled to vote at the meeting, present in person or represented
by proxy, constitute a quorum. Assuming a quorum is present, the affirmative
vote of a plurality of the votes cast at the meeting and entitled to vote in
the election will be required for the election of directors and the
affirmative vote of a majority of the votes cast at the meeting and entitled
to vote thereon will be required to act on all other matters to come before
the Annual Meeting, including ratification of the Management Incentive Plan.
Pursuant to the law of the State of Delaware, where the Company is
incorporated, as well as the provisions of the Company's Certificate of
Incorporation and By-Laws, abstentions, but not broker non-votes, will be
counted as votes cast against the proposal being considered. Votes will be
counted by employees of the Boston Equiserve LP, the Company's independent
transfer agent and registrar.
Any proxy may be revoked by the stockholder, either by attending the meeting
and voting in person or by submitting a revocation in writing to the Company
(including a subsequent signed proxy) at any time prior to the closing of the
polls at the meeting.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven directors. Seven
directors are to be elected at the Annual Meeting to hold office as directors
until the 2000 Annual Meeting of Stockholders or until their respective
successors have been duly elected and qualified. Unless otherwise directed,
proxies in the accompanying form will be voted FOR the nominees listed below.
All nominees have consented to be named and to serve if elected. If any one or
more of the nominees is unable to serve or for good cause will not serve,
proxies will be voted for the substitute nominee or nominees, if any, proposed
by the Board of Directors. The Board has no knowledge that any nominee will or
may be unable to serve or will or may withdraw from nomination. Each nominee
will be elected if he receives the affirmative vote of a plurality of the
votes cast by holders of shares of Common Stock at the Annual Meeting.
The Board of Directors proposes the election of the following directors of
the Company for a term of one year. All of the nominees are presently
directors of the Company. Set forth below for each nominee is his name, age,
the year in which he became a director of the Company, all positions and
offices with the Company which he holds, if any, his principal occupations
during at least the last five years and any additional directorships in
publicly-held companies or registered investment companies. References to the
Company include the Company and its predecessors.
IRVING S. SHAPIRO, 82, has been Chairman of the Board of the Company since
December 1994. Mr. Shapiro is Of Counsel to Skadden, Arps, Slate, Meagher &
Flom LLP. He was Chairman and Chief Executive Officer of E.I. du Pont de
Nemours and Company from 1974 to 1981. He is Chairman of the Board of Marvin &
Palmer Associates, Inc., and is a director of J.P. Morgan Florida Federal
Savings Bank, Pediatric Services of America Inc., and Gliatech, Inc.
JOHN E. HEINE, 55, has served as Chief Executive Officer and President of
the Company since November 1981 and served as Chairman of the Board of the
Company from September 1993 to December 1994. Mr. Heine joined the Company in
1981 as Managing Director of Sola International Holdings, Ltd. and previously
held general management positions with Southern Farmers Holdings, Ltd. in
Adelaide and H.J. Heinz in Melbourne, Australia.
DOUGLAS D. DANFORTH, 76, has been a director of the Company since December
1994. He was Chairman and Chief Executive Officer of Westinghouse Electric
Corporation from 1983 to 1987. He is a director of Daltile Inc.
HAMISH MAXWELL, 72, has been a director of the Company since December 1994.
Mr. Maxwell was Chairman of the Executive Committee of the Board of Directors
of Philip Morris Companies Inc. from September 1991 through April 1995 and was
Chairman and Chief Executive Officer of such company from 1984 to 1991. He is
a director of Bankers Trust Company and Bankers Trust New York Corporation,
and Chairman of WPP Group plc.
JACKSON L. SCHULTZ, 73, has been a director of the Company since November
1995. Mr. Schultz joined Wells Fargo Bank in 1970, retiring in 1990 as Senior
Vice President responsible for Public and Governmental Affairs.
MAURICE J. CUNNIFFE, 66, has been a director of the Company since December
1996. He is Chairman and Chief Executive Officer of American Optical
Corporation, a company of which he has been sole shareholder since 1982.
A. WILLIAM HAMILL, 51, has been a director of the Company since December
1996. Mr. Hamill was Executive Vice President and Chief Financial Officer of
Union Camp Corporation from 1996 through April 1999. From 1993 through 1996,
he was a partner in SCI Investors Inc. and a director of Custom Papers Group
Inc. From 1991 to 1993, he was Senior Vice President and Chief Financial
Officer of Specialty Coatings International Inc. From 1975 through 1990, Mr.
Hamill was with Morgan Stanley & Co. Incorporated, where he was a Managing
Director.
2
<PAGE>
INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the business
and affairs of the Company, as provided by Delaware law, and conducts its
business through meetings of the Board and two standing committees: Audit and
Compensation. In addition, from time to time, special committees may be
established under the direction of the Board when necessary to address
specific issues. The Company has no nominating or similar committee.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held six meetings during fiscal 1999.
Each current director, except for Mr. Maurice Cunniffe, who attended four of
the six meetings, attended 75% or more of the aggregate of (i) meetings of the
Board held during the period for which he served as a director and (ii)
meetings of all committees held during the period for which he served on those
committees. Mr. Cunniffe attended 75% of the regularly scheduled Board
meetings of the Company, and attended one of two special meetings held during
the fiscal year ended March 31, 1999. For the special meeting that Mr.
Cunniffe was unable to attend, he communicated his support for the proposal
before that meeting to the Company.
The Compensation Committee is responsible for executive compensation,
including setting the Company's compensation philosophy and policies,
recommending to the Board of Directors the compensation to be paid to the
Chief Executive Officer and determining the compensation for all other
executive officers. The Compensation Committee is also responsible for
administering the Company's executive compensation plans and programs,
including the Sola Investors Inc. Stock Option Plan, the Sola International
Inc. Stock Option Plan and the Management Incentive Plan. The Committee
consists of Hamish Maxwell (Chairman), Irving S. Shapiro and A. William
Hamill. The Committee held two meetings during fiscal 1999.
The Audit Committee's principal functions are to review the scope of the
annual audit of the Company by its independent auditors, review the annual
financial statements of the Company and the related audit report of the
Company as prepared by the independent auditors, recommend the selection of
independent auditors each year and review the Company's internal controls and
accounting policies and procedures. The Audit Committee reports its findings
and recommendations to the Board of Directors for appropriate action. The
Audit Committee consists of Douglas D. Danforth (Chairman), Jackson L. Schultz
and Irving S. Shapiro, who are not executive officers or employees of the
Company or any of its subsidiaries. The Company's Audit Committee held
two meetings during fiscal 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions with respect to compensation are made by the Compensation
Committee of the Company. The members of the Compensation Committee as of
March 31, 1999 were Hamish Maxwell, Irving S. Shapiro and A. William Hamill.
DIRECTOR COMPENSATION
Directors who are full time employees of the Company receive no compensation
for serving on the Board of Directors or its committees. During fiscal 1999,
non-employee directors received an annual fee of $20,000, except for the
Chairman who received an annual fee of $40,000, and $500 for each Board
meeting attended. The same fee structure will be continued for fiscal 2000.
Directors are permitted to receive all or a portion of their annual retainer
fee in the form of options to acquire shares of Common Stock. Directors are
reimbursed for traveling costs and other out-of-pocket expenses incurred in
attending meetings. Directors who serve on the Audit Committee or the
Compensation Committee receive no additional compensation for committee
meetings held on the same date as a Board meeting and received $500 in fiscal
1999 (and will receive $500 in fiscal 2000) for each committee meeting held on
a date on which there is or was no Board meeting.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by (a) each person who is known to the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock (based on a review by the Company of filings with the Securities
and Exchange Commission), (b) each director of the Company, (c) each of the
executive officers named in the Summary Compensation Table and (d) all
directors and executive officers of the Company as a group. Except as
otherwise indicated, the persons or entities listed below have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them, except to the extent such power may be shared with a spouse.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS(1)
- ---- ------------------ ----------
<S> <C> <C>
DIRECTORS:
Irving S. Shapiro (2)........................... 27,253 *
Douglas D. Danforth (3)......................... 18,881 *
John E. Heine (4)............................... 473,636 1.9
Hamish Maxwell (5).............................. 55,805 *
Jackson L. Schultz (6).......................... 7,227 *
Maurice J. Cunniffe (7)......................... 94,959 *
A. William Hamill (8)........................... 5,959 *
NAMED EXECUTIVE OFFICERS:
James H. Cox (9)................................ 152,849 *
Steven M. Neil (10)............................. 41,100 *
Stephen J. Lee (11)............................. 117,019 *
Theodore Gioia (12)............................. 79,334 *
All directors and executive officers as a group
(14 persons)................................... 1,277,296 5.0
</TABLE>
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* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1) Based on 24,866,482 shares of Common Stock outstanding on May 28, 1999.
Calculations of percentage of beneficial ownership assume the exercise by
only the respective named stockholder of all options for the purchase of
Common Stock held by such stockholder which are exercisable within 60 days
of May 28, 1999.
(2) Mr. Shapiro's shares are held by a trust of which Mr. Shapiro is both
trustee and sole beneficiary. Includes 8,042 shares of Common Stock
issuable upon exercise of options that are exercisable within 60 days from
May 28, 1999.
(3) Includes 2,062 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(4) Includes 397,261 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999 and 76,375 shares of
Common Stock held by a trust for which Mr. Heine and members of his family
are trustees and beneficiaries. Mr. Heine is also a Named Executive
Officer.
(5) Includes 805 shares of Common Stock issuable upon exercise of options that
are exercisable within 60 days from May 28, 1999.
(6) Includes 4,227 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(7) Includes 1,959 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(8) Includes 1,959 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(9) Includes 115,270 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(10) Includes 33,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(11) Includes 84,457 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
(12) Includes 67,747 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from May 28, 1999.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth in summary form all compensation for all
services rendered in all capacities to the Company paid or accrued during the
fiscal year ended March 31, 1999 ("fiscal 1999"), the fiscal year ended March
31, 1998 ("fiscal 1998") and the fiscal year ended March 31, 1997 ("fiscal
1997"), to the Chief Executive Officer of the Company and the four other most
highly compensated individuals who were serving as executive officers of the
Company on March 31, 1999 (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------- ---------------------
NAME AND BONUS OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) ($) COMPENSATION (1)($) OPTIONS/SARS (#) COMPENSATION (2)($)
------------------ ---- ---------- -------- ------------------- --------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Heine........... 1999 $541,193 $ 46,079 $ 69,294(3) -- $6,786
President and Chief 1998 517,221 607,716 85,185(3) -- 5,674
Executive Officer 1997 460,661 206,057 102,102(3) -- 5,020
James H. Cox............ 1999 $315,159 $ 29,786 $ 6,830 -- $7,931
Executive Vice 1998 314,952 347,828 4,735 -- 7,161
President, Assistant 1997 302,329 81,540 4,810 5,000 6,382
Secretary and
Assistant Treasurer
Steven M. Neil.......... 1999 $250,000 $ 17,656 $304,939(4) 5,000 $1,566
Executive Vice 1998 117,468 102,575 50,354(4) 80,000 782
President, Secretary 1997 -- -- -- -- --
and Treasurer
Stephen J. Lee.......... 1999 $261,251 $ 17,541 $ 57,389(5) -- $6,446
Vice President, 1998 247,056 216,904 74,275(5) -- 5,827
Human Resources 1997 225,261 76,346 91,789(5) -- 5,319
Theodore Gioia.......... 1999 $193,856 $ 13,691 -- -- $5,257
Vice President, 1998 188,264 166,847 -- -- 5,416
Strategic Planning 1997 181,022 62,318 -- -- 4,971
</TABLE>
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(1) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits was less than the lesser of $50,000 or 10% of the total annual
salary and bonus reported for the named executive officer.
(2) Reflects payments made in fiscal 1999 by the Company (i) as matching
contributions under the Sola Optical USA 401(k) Savings Plan on behalf of
Messrs. Cox, Lee and Gioia in the amount of $4,800, $4,800 and $4,567,
respectively, and (ii) for term life insurance benefits for Messrs. Heine,
Cox, Neil, Lee and Gioia in the amounts of $6,786, $3,131, $1,566, $1,646
and $690, respectively.
(3) Includes payments to Mr. Heine for expatriate accommodation allowances in
the amount of $38,461 for fiscal 1999, $52,884 for fiscal 1998 and $74,647
for fiscal 1997.
(4) Includes $154,733 during fiscal 1999, and $32,543 in fiscal 1998, paid to
Mr. Neil for the reimbursement of relocation costs.
(5) Includes payments to Mr. Lee for expatriate accommodation allowances in
the amount of $25,739 for fiscal 1999, $35,391 for fiscal 1998 and $48,260
for fiscal 1997.
5
<PAGE>
OPTION GRANT TABLE
This table sets forth information concerning individual grants of stock
options made during fiscal 1999 to each of the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (2)
----------------------------------------------- ----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTION/SARS
UNDERLYING GRANTED TO
OPTION/SARS EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
---- ----------- ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
John E. Heine........... --
James H. Cox............ --
Steven M. Neil.......... 5,000(1) 0.8% $27.125 8/14/2008 $85,293.83 $216,151.32
Stephen J. Lee.......... --
Theodore Gioia.......... --
</TABLE>
- --------
(1) The option will become exercisable with respect to one-fifth of the shares
covered thereby on each of August 14, 1999, 2000, 2001 and 2002. One-fifth
is exercisable immediately. In the event of a change in control of the
Company the option will become fully vested and immediately exercisable.
(2) The 5% and 10% annual rates of appreciation are over the term of the
option outstanding as of the end of fiscal year 1999 which is ten years
from the date of grant, and such assumed rates are set forth in accordance
with rules and regulations adopted by the SEC and do not represent the
Company's estimate of stock price appreciation.
OPTION EXERCISE TABLE
This table sets forth information concerning each exercise of stock options
during the last completed fiscal year by each of the named executive officers
and the number of shares covered by both exercisable and unexercisable options
to acquire Common Stock granted to the named executive officers under the
Company's option plans as of March 31, 1999.
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON EXERCISE VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
OF OPTIONS/ REALIZED OPTIONS/SARS AT OPTIONS/SARS AT
REDEMPTION OF SARS OPTIONS/SARS FISCAL YEAR-END FISCAL YEAR-END(1)
-------------------- ------------ ------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Heine........... -- -- 397,261 -- $933,563 --
James H. Cox............ -- -- 115,270 2,000 263,835 --
Steven M. Neil.......... -- -- 33,000 52,000 -- --
Stephen J. Lee.......... 1,909 $77,579 86,366 -- 202,960 --
Theodore Gioia.......... 1,345 54,459 69,092 -- 162,366 --
</TABLE>
- --------
(1) Values for "in-the-money" options represent the positive spread between
$9.71, the exercise price of outstanding options, and the closing price of
$12.06 per share of Common Stock at March 31, 1999, as reported on the New
York Stock Exchange. 3,000 exercisable and 2,000 unexercisable options
held by James H. Cox, and all of the exercisable and unexercisable options
held by Steven M. Neil, have exercise prices higher than the stock price
as of March 31, 1999 and therefore are not in-the-money options at fiscal
year-end.
6
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and Mr. Heine entered into a severance agreement dated November
20, 1996. Pursuant to this agreement if the Company elects to terminate Mr.
Heine's employment other than for Cause (cause is defined as willful
misconduct, neglect of duties, or any act or omission, any or all of which
materially adversely affects the Company's business; or conviction of a
felony) or if Mr. Heine terminates his employment under certain circumstances,
the Company is required to continue his compensation, including annual salary
and an average of the past three years Management Incentive Plan payments made
to him, for a 24 month period. In addition, for a 24 month period Mr. Heine
may continue to participate in any and all benefit plans the Company regularly
provides its other executives, including, but not limited to, health, dental,
vision, pension and other retirement plans, and receive outplacement
assistance and consultation up to a maximum of $25,000. If, within two years
of a change of control (as defined in the agreement), the Company elects to
terminate Mr. Heine's employment other than for Cause or if Mr. Heine
terminates his employment with the Company under certain circumstances, the
Company shall pay Mr. Heine in cash an amount equal to 2.99 times the sum of
the amount of Mr. Heine's annual salary in effect immediately prior to the
date of such termination plus the average of the Management Incentive Plan
compensation paid to him over the immediately prior three years. The agreement
also contains covenants not to compete, covenants not to solicit, and
invention assignment and confidentiality clauses.
The Company and each of Messrs. Cox, Lee, Neil and Gioia are parties to a
severance agreement. Pursuant to these agreements, each executive will be
entitled to receive severance benefits if the executive's employment with the
Company is terminated for any reason other than "cause," if the executive is
regularly assigned duties that materially diminish his position as an
executive or in certain other circumstances. The term "cause" includes (i)
willful misconduct, neglect of duties or any act or omission any or all of
which materially adversely affects the Company's business or (ii) conviction
of a felony. The executive will not be entitled to severance benefits if he
freely resigns his employment with the Company.
The severance benefits provided by these severance agreements include (1)
the executive's annual salary immediately prior to the termination of
employment, plus the average of management incentive plan compensation paid
over the three immediately preceding years, which will be received for the
longer of 12 months or one month per completed year of service up to a maximum
of 18 months, (2) any and all benefit plans the Company regularly provides its
other executives or employees including, but not limited to, health, dental,
vision, pension or other retirement plans, for the longer of 12 months or one
month per completed year of service, up to a maximum of 18 months and (3)
outplacement assistance in the form of professional consultation and
administrative assistance up to a maximum of $25,000.
The Company entered into a letter agreement with Mr. Steven Neil on
September 2, 1997. Pursuant to this agreement Mr. Neil was employed as
Executive Vice President and Chief Financial Officer of the Company. The
agreement provided that Mr. Neil would receive a $250,000 annual salary,
subject to discretionary review increases annually. The agreement also
provided that Mr. Neil would participate in the Company's management incentive
plan and other medical, insurance and benefit plans. Under the terms of the
agreement, the Company loaned Mr. Neil $300,000, interest free, structured as
an IRS Relocation Loan. The Company also made an equity investment in Mr.
Neil's home in the amount of $745,000.
PENSION PLANS
Prior to the sale by Pilkington plc of the Company in December 1993, Mr. Cox
and Mr. Gioia were participants in the Pilkington Visioncare Pension Plan. In
December 1993 the Company implemented the Sola Optical Pension Plan, which is
currently intended, together with the Pilkington Visioncare Pension Plan, to
provide substantially the same benefit that would have been payable had Mr.
Cox and Mr. Gioia continued active participation under the Pilkington
Visioncare Pension Plan, as it existed on December 1, 1993, until retirement.
To that end, retirement benefits under the basic formula of the Sola Optical
Pension Plan currently are substantially identical to the Pilkington
Visioncare Pension Plan for a given level of compensation and service.
7
<PAGE>
Mr. Heine does not participate in the Sola Optical Pension Plan. In lieu of
his participation in the Sola Superannuation Plan (in Australia), Mr. Heine
earns an equivalent pension under a separate Expatriate Superannuation
Agreement with the Company. Under this agreement, the Company will be required
to make a lump sum payment for the benefit of Mr. Heine upon his termination
of service or retirement from the Company based on the benefits he would have
accrued under the Sola Superannuation Plan had he continued his participation
therein. Payments under the Sola Superannuation Plan generally are based on
years of service and final average compensation. The estimated lump sum
benefit for the benefit of Mr. Heine, including benefits accrued by Mr. Heine
as a member of the Sola Superannuation Plan prior to his relocation to Menlo
Park, California, upon normal retirement from the Company at age 65 is
Australian $2,202,077 (U.S.$1,396,370 based on a conversion rate of Australian
$1.577 to the U.S.$). Mr. Lee did not participate in the Pilkington Visioncare
Pension Plan; however, he does participate in the Sola Optical Pension Plan.
The following table shows estimated annual benefits payable upon retirement
to Messrs. Cox, Neil, Lee and Gioia under the Sola Optical Pension Plan in
combination (to the extent applicable) with the Pilkington Visioncare Pension
Plan. The Sola Optical Pension Plan will provide the amount of the benefit to
Messrs. Cox and Gioia in excess of a portion of the amount accrued by them
under the Pilkington Visioncare Pension Plan as of December 1, 1993; assuming
retirement at age 65, the amount of annual benefit payable by the Pilkington
Visioncare Pension Plan to Mr. Cox and Mr. Gioia which will be offset from the
Sola Optical Pension Plan will be $16,929.48 and $6,571.92, respectively.
Assets of the Pilkington Visioncare Pension Plan were not transferred to the
Company from Pilkington in connection with the sale of the Company from
Pilkington and the Company has no obligation under the Pilkington Visioncare
Pension Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000............................... $26,500 $35,333 $44,167 $53,000 $61,833
150,000............................... 32,222 42,963 53,704 64,445 75,186
175,000............................... 33,138 44,184 55,230 66,276 77,322
200,000............................... 33,138 44,184 55,230 66,276 77,322
225,000............................... 33,138 44,184 55,230 66,276 77,322
250,000............................... 33,138 44,184 55,230 66,276 77,322
300,000............................... 33,138 44,184 55,230 66,276 77,322
350,000............................... 33,138 44,184 55,230 66,276 77,322
400,000............................... 33,138 44,184 55,230 66,276 77,322
450,000............................... 33,138 44,184 55,230 66,276 77,322
500,000............................... 33,138 44,184 55,230 66,276 77,322
</TABLE>
The years of credited service as of March 31, 1999 for Messrs. Cox, Neil,
Lee and Gioia are 13.25, 1.47, 5.25 and 9.36, respectively.
Benefits under the Sola Optical Pension Plan are not offset by Social
Security benefits. The amounts shown are based upon certain assumptions,
including retirement of the employee at exactly age 65 on March 31, 1999 and
payment of the benefit under the basic form of the Sola Optical Pension Plan,
a single life annuity for the life of the participant. The amounts will change
if the payment is made under any other form permitted by the Sola Optical
Pension Plan, or if an employee's retirement occurs after March 31, 1999,
since the Social Security Wage Base of such an employee (one of the factors
used in computing the annual retirement benefits) will reflect higher Social
Security tax bases for years after 1999. The Sola Optical Pension Plan
provides a higher level of benefits for the portion of compensation above the
compensation levels on which Social Security benefits are based.
The remuneration levels shown represent the five year average of annual
compensation covered by the Sola Optical Pension Plan as of March 31, 1999.
Compensation covered by the Sola Optical Pension Plan includes regular base
salary, hourly wages, shift differentials, overtime, vacation and sick leave
pay,
8
<PAGE>
commissions, sales bonus, amounts deferred under any tax qualified plan of the
Company and amounts paid pursuant to management bonus plans or other formally
adopted incentive compensation plans. The current compensation covered by the
Sola Optical Pension Plan for Messrs. Cox, Lee and Gioia differs substantially
(by more than 10%) from that set forth in the Summary Compensation Table under
the aggregate of the "Salary" and "Bonus" columns because the amount of
compensation which may be covered under a tax qualified pension plan is
limited by the Internal Revenue Code.
The pension amounts shown for remuneration in excess of the compensation cap
($160,000 for 1998) are based upon the compensation cap in each year, as
required by law. The IRC Section 415 defined benefit limit was $130,000 for
1999, but it did not provide any further limitation on the amounts calculated.
COMPENSATION COMMITTEE REPORT ON
COMPENSATION OF EXECUTIVE
OFFICERS OF THE COMPANY
The Company's Compensation Committee is responsible for executive
compensation, including setting the Company's compensation philosophy and
policies, recommending to the Board of Directors the compensation to be paid
to the Chief Executive Officer and determining the compensation for the other
executive officers. The Compensation Committee is also responsible for
administering the Company's executive compensation plans and programs,
including the Company's stock option plans. The Compensation Committee reviews
the Company's executive compensation program on at least an annual basis to
ensure that the program continues to meet the goals of its compensation
policy.
COMPENSATION POLICY
The Compensation Committee has designed the Company's executive compensation
program (i) to attract qualified executive officers from a global pool of
talent, (ii) to reward, motivate and retain the Company's executive officers
and (iii) to align the interests of its executive officers with those of the
Company's stockholders by linking the executives' annual cash and long-term
incentive compensation to Company performance.
The Company's compensation program consists of three basic components: base
salary; annual cash incentive-based compensation; and long-term compensation
in the form of stock options. The Compensation Committee's goal has been to
base a greater portion of the executives' compensation on Company performance.
The Company also provides perquisites to its executive officers to maintain
the Company's competitive status in attracting and retaining executive
officers in a competitive global market.
BASE SALARY
The Compensation Committee reviews base salary levels of the executive
officers annually. Adjustments, if any, are made effective April 1. Salary
ranges for each executive officer are determined by the Compensation Committee
using a two-step process. First, the level and functional responsibilities of
the position held by each executive officer is evaluated using the Hay Guide
Chart Job Evaluation Method. Second, based on such evaluation, salary ranges
for each position are determined using marketplace data provided by Hay
Management Consultants and periodically cross-checked with other market
surveys published by Mercer, Cullen-Egan-Dell and other compensation
consultants. Historically, a mid-point base salary has been established around
the 75th percentile among a select group of companies, with a minimum salary
at 80% of the mid-point and a maximum salary at 120% of the mid-point. An
executive officer's progression through the salary range is based upon the
Compensation Committee's evaluation of the individual's job performance. In
fiscal 1999, executive officers received no salary increases.
The group of companies to which the Company compares itself with respect to
base salary compensation of its executives is not the same as the group to
which it compares itself on the Performance Graph. For the U.S. market the
comparison group for base salary purposes is comprised of visioncare,
healthcare and technology companies whose businesses are concentrated on the
west coast of the United States. The Compensation
9
<PAGE>
Committee selected these companies because it believes that they are the
companies with respect to which the Company must remain competitive in order
to attract and retain qualified executives to work at its Northern California
locations. For other market places worldwide the comparison group consists of
all multinational and medium to large local companies in the specific market
place. The comparison group used in the Performance Graph is comprised of the
Company's worldwide competitors.
ANNUAL CASH INCENTIVE COMPENSATION
The Compensation Committee views the annual cash incentive compensation
component of its program as a significant element in attaining its goal of
closely linking Company performance with executive compensation by providing
additional annual cash compensation based on the Company's achievement of
objective financial performance targets.
During fiscal 1995, the Compensation Committee, with the approval of the
Board of Directors, adopted a management incentive plan (the "Management
Incentive Plan") for fiscal years commencing after fiscal 1995 to provide
annual performance-based cash bonuses to officers designated by the
Compensation Committee. Under the Management Incentive Plan, each designated
officer has the opportunity to receive a performance-based cash bonus based on
the Company's achievement of certain pre-established performance targets
related to "operating profit," "trading cash flow" and "working capital", in
each instance as measured on a Company-wide and/or regional basis.
The Compensation Committee establishes target award percentages for each
participant, which is the percentage of a participant's salary that will be
awarded depending on the percentage of the performance target which is
attained. The Compensation Committee will determine whether to establish
maximum target award percentages. The maximum award which any participant may
receive in a fiscal year under the Management Incentive Plan is $1 million.
The Compensation Committee does not have discretion to increase the amount of
a participant's award payable under the plan after the establishment of the
relevant performance targets and target award percentages. Awards are paid
annually upon certification by the Compensation Committee of achievement of
the relevant performance targets at such time and in such manner as the
Compensation Committee shall determine.
The amount of an executive's bonus for fiscal 1999 was based on the
Company's level of achievement measured against its pre-established
performance targets. A bonus equal to 33% of the target bonus amount was
payable if 95% of the performance targets for working capital for fiscal 1999
were achieved. A bonus equal to 40% of the target bonus was payable if
"trading profit" attained fiscal 1998 levels. A bonus in excess of 100% of the
target bonus amount was payable if greater than 100% of the performance
targets was achieved. No bonus was payable if the Company did not achieve at
least 95% of its performance targets for working capital, and no bonus was
payable if fiscal 1998 "trading profit" was not achieved.
Prior to the commencement of fiscal 1999, the Compensation Committee
maintained target bonus awards equal to 80% of base salary for Mr. Heine, 70%
of base salary for Mr. Cox and 60% of base salary for each of the other
executive officers, in each instance payable only upon attainment of 100% of
the performance targets. The Compensation Committee determined such
percentages to be appropriate based on market surveys of executive
compensation, including the Executive Compensation Reports published by Hay
Management Consultants.
Based on the Company's performance for fiscal 1999, Messrs. Cox, Neil, Lee
and Gioia, respectively, realized bonus awards equal to approximately 9%, 7%,
7% and 7% of their base salary.
STOCK OPTION PLANS
The Compensation Committee believes that the stock option component of its
executive compensation program causes the executives' interests to be more
closely aligned with those of the Company's stockholders because the value of
the options is linked directly to the price of the Company's stock. The
Compensation
10
<PAGE>
Committee awarded stock options to the executive officers prior to fiscal 1995
under the Company's then existing stock option plan. Such plan has been
amended to provide that no options would be granted thereunder after February
28, 1995 and the International Stock Option Plan has been adopted by the
Company.
In light of previous awards made to Mr. Heine and the other named executive
officers, the Compensation Committee determined that it was not appropriate to
grant such persons options under the International Stock Option Plan during
fiscal 1999, except for Mr. Neil, who was granted options to purchase 5,000
shares at an option exercise price of $27.125.
In fiscal 1998 the Board of Directors amended the Sola International Inc.
Stock Option Plan to provide for the issuance of an additional 1,690,000
shares of Common Stock, which was ratified by the shareholders at the fiscal
1998 Annual General Meeting. The amendment will enable the Compensation
Committee to make option grants to current optionholders and an expanded group
of key management worldwide over forthcoming years as well as to attract and
retain executive officers.
PERQUISITES
The Company provides a company car allowance and supplemental medical
coverage to certain named executive officers and an ex-patriate allowance for
housing to each named executive officer who has relocated to California from
outside the United States. The foregoing perquisites are provided to executive
officers because the Compensation Committee believes that they are necessary
to attract and retain executive talent in a global market. Mr. Heine, a former
resident of Australia, is provided with each of the foregoing benefits.
CEO COMPENSATION
The Compensation Committee determines Mr. Heine's compensation on the same
basis and under the same philosophy it uses in determining the compensation of
other executive officers. As discussed above, the goal of the Compensation
Committee is to link a significant portion of the compensation of its
executive officers, including Mr. Heine, to Company performance. In fiscal
1999 Mr. Heine's salary was not increased.
To further link Mr. Heine's compensation to Company performance, a
substantial amount of Mr. Heine's potential compensation for fiscal 1999 was
tied to the Company's achievement of certain objective financial targets
described above under the Management Incentive Plan. Based on the Company's
performance for fiscal 1999, Mr. Heine realized a bonus award equal to
approximately 9% of his base salary.
In light of the stock option awards made in December 1993 the Compensation
Committee determined no stock option awards were appropriate for Mr. Heine in
fiscal 1999.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a deduction to any publicly-held corporation for compensation paid
in excess of $1 million in a taxable year to its chief executive officer or
any of the four other most highly-compensated executive officers employed by
the Company on the last day of its taxable year.
The Company has structured and administered its management incentive plan
and stock option plans with the intent that compensation paid to the executive
officers thereunder will not be subject to the deduction limitation of Section
162(m).
Respectfully submitted,
Hamish Maxwell, Chairman
Irving S. Shapiro
A. William Hamill
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested on
February 23, 1995 in each of the Common Stock of the Company, Standard &
Poor's 500 Index and the Dow Jones World Stock Index--Medical Supplies, the
latter of which the Company finds representative given the inclusion of
certain competitors of the Company in such index. The return of the Standard &
Poor's 500 Index is calculated assuming reinvestment of dividends. The Company
has not paid any dividends. The graph covers the period from February 23,
1995, when the Company's Common Stock was first offered to the public, through
March 31, 1999. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
Comparison of Cumulative Total Return
of Sola International Inc., S&P 500 and Dow Jones
World Stock Index - Medical Supplies
[GRAPH]
<TABLE>
<CAPTION>
S&P 500 DJWSI- Medical Supplies Sola International Inc.
<S> <C> <C> <C>
2/23/95 100 100 100
3/31/95 102.6 104 130.3
3/31/96 132.2 125.3 188.6
3/31/97 155.1 153.4 140.2
3/31/98 225.65 186.71 251.13
3/31/99 263.46 226.93 73.11
</TABLE>
12
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into agreements to provide indemnification for its
directors and executive officers in addition to the indemnification provided
for in the Company's Amended and Restated Certificate of Incorporation and
Amended and Restated By-Laws. The Company has also purchased directors and
officers insurance for its directors and executive officers.
The Company and Mr. Steven M. Neil, Executive Vice President, Finance, Chief
Financial Officer, Secretary and Treasurer, entered into an employment
agreement dated September 2, 1997. Under the terms of the agreement, amongst
other things, the Company loaned Mr. Neil $300,000, interest free, structured
as an IRS Relocation Loan.
The Company rents certain premises in Southbridge, Massachusetts from a
company owned by Mr. Maurice Cunniffe, a Director of the Company. Rents
payable under the terms of the rental agreement during fiscal 1999 amounted to
approximately $544,000.
APPROVAL OF THE 1999 SOLA INTERNATIONAL INC.
MANAGEMENT INCENTIVE PLAN
GENERAL
Since 1995, the Company has paid bonuses pursuant to a management incentive
plan. This plan has been in place since the time of the Company's initial
public offering, and as a result was not subject to the federal tax deduction
limitation of Section 162 (m) of the Code for a period of five years.
The Compensation Committee of the Board of Directors adopted the 1999 Sola
International Inc. Management Incentive Plan (the "Incentive Plan") on June
15, 1999. This Incentive Plan, which shareholders are now being asked to
ratify, is essentially the same as the prior plan except that it differs by
the addition of several performance criteria on which target awards may be
based and the increase in the maximum amount that can be paid to a single
individual in any fiscal year under the plan.
The purpose of the Incentive Plan is to enhance the Company's ability to
attract, reward, motivate and retain executive officers and to align their
interests with those of the Company's stockholders by providing additional
compensation based on the Company's achievement of objective performance
targets.
The Compensation Committee has designed and intends to implement the
Incentive Plan so that compensation payable under the plan constitutes
"performance-based compensation," that is not subject to the federal tax
deduction limitation of Section 162(m) of the Code. Accordingly, the material
terms of the Incentive Plan are being submitted to the Company's stockholders
for approval for a five year term.
SUMMARY OF THE INCENTIVE PLAN
The principal provisions of the Incentive Plan are summarized below. This
summary, however, does not purport to be complete and is qualified in its
entirety by reference to the Incentive Plan which has been included as
Appendix A to this Proxy Statement.
The Incentive Plan will be administered by the Compensation Committee. The
Compensation Committee selects participants, determines the performance
criteria and targets applicable to each participant and establishes the amount
of compensation payable to each participant upon achievement of such targets.
The Compensation Committee has full authority to establish the rules and
regulations relating to the Incentive Plan and to interpret those rules and
regulations.
Participation in the plan is limited to executive officers designated by the
Compensation Committee. There are approximately 10 individuals eligible to
participate in the Incentive Plan. Awards under the Incentive Plan
13
<PAGE>
will be based upon the Company's, a subsidiary's, a division's or an
executive's achievement of one or more objective performance targets which are
based on one or more of the following criteria: (1) sales, (2) operating
profit, (3) net profit, (4) trading cash flow, (5) measures of working
capital, (6) return on assets, (7) return on investments, (8) return on
equity, (9) measures of economic value added or (10) any combination of the
foregoing.
The Compensation Committee will establish target award percentages for each
participant, which are the percentages of a participant's salary that will be
awarded based on the percentage of the participant's performance target which
is attained. The Compensation Committee will establish the performance targets
and related award percentages before the expiration of 25% of the relevant
performance period, but no later than 90 days after its commencement. The
Compensation Committee will not have discretion to increase the amount of a
participant's award payable under the plan after the establishment of the
relevant performance targets. Awards will be paid annually upon certification
by the Compensation Committee of attainment of the relevant performance
targets at such time and in such manner as the Compensation Committee shall
determine. The maximum award which any participant may receive in a fiscal
year under the Incentive plan is $2 million.
The Incentive Plan requires approval by the affirmative vote of a majority
of the votes cast at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. PROXIES WILL BE
VOTED FOR APPROVAL OF THE INCENTIVE PLAN UNLESS OTHERWISE SPECIFIED IN THE
PROXY.
RELATIONSHIP WITH
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP, independent auditors, served as the Company's
independent auditors for the fiscal year ended March 31, 1999. The Board of
Directors, upon the recommendation of the Audit Committee, has selected Ernst
& Young LLP, as the Company's independent auditors for the fiscal year ending
March 31, 2000. A representative of Ernst & Young LLP will be in attendance at
the 1999 Annual Meeting, will have an opportunity to make a statement if such
representative desires to do so, and will be available to respond to
appropriate questions.
STOCKHOLDERS' PROPOSALS FOR THE
2000 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received at the Company's principal offices,
2420 Sand Hill Road, Suite 200, Menlo Park, California 94025, Attention:
Secretary, for inclusion in the Company's Proxy Statement and form of proxy
relating to that Annual Meeting no later than March 2, 2000. Proposals, as
well as any questions related thereto, should be submitted in writing to the
Secretary of the Company. Proposals may be included in the proxy statement for
the 2000 Annual Meeting if they comply with certain rules and regulations
promulgated by the U.S. Securities and Exchange Commission and with certain
procedures described in the Company's By-Laws, a copy of which may be obtained
from the Secretary of the Company.
Any shareholder proposal submitted with respect to the Company's fiscal year
2000 annual meeting of shareholders, which proposal is submitted outside the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934, will be
considered untimely if notice thereof is received by the Company after May 16,
2000; provided, however, that in the event that the fiscal year 2000 annual
meeting is scheduled to be held on a date more than thirty (30) days prior to
or delayed by more than sixty (60) days after the date of the anniversary of
the fiscal year 1999 annual meeting, notice by the stockholder in order to be
timely must be received not later
14
<PAGE>
than the later of the close of business ninety (90) days prior to such notice
of the date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made.
EXPENSES OF SOLICITATION
The solicitation of proxies in the form enclosed is made on behalf of the
Board of Directors of the Company. All expenses relating to the solicitation
will be borne by the Company. In addition to the solicitation of proxies by
use of the mails, some of the officers, directors and regular employees of the
Company and its subsidiaries, none of whom will receive additional
compensation therefor, may solicit proxies in person or by telephone,
telegraph or other means. As is customary, the Company will, upon request,
reimburse brokerage firms, banks, trustees, nominees and other persons for
their out-of-pocket expenses in forwarding proxy materials to their
principals.
OTHER MATTERS
The persons named in the enclosed form of proxy have no intention of
bringing before the meeting for action any matter other than as specifically
referred to above, nor has management or the Board of Directors any such
intention, and none of such persons, management or the Board of Directors is
aware of any matters which may be presented by others. If any such business
should properly come before the meeting, the persons named in the form of
proxy intend to vote thereon in accordance with their best judgment.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
The directors, executive officers and ten percent stockholders of the
Company are required to file reports of their ownership of the Company's
Common Stock with the Securities and Exchange Commission and the New York
Stock Exchange pursuant to Section 16(a) of the Securities Exchange Act of
1934. 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 of such reporting requirements were satisfied
during fiscal 1999.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO EACH PERSON WHOSE PROXY IS
BEING SOLICITED, UPON WRITTEN REQUEST, A COPY OF ITS ANNUAL REPORT ON FORM 10-
K FOR THE FISCAL YEAR ENDED MARCH 31, 1999, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES BUT EXCLUDING EXHIBITS). COPIES OF ANY EXHIBITS THERETO ALSO WILL BE
FURNISHED UPON THE PAYMENT OF A REASONABLE DUPLICATING CHARGE. REQUESTS IN
WRITING FOR COPIES OF ANY SUCH MATERIALS SHOULD BE DIRECTED TO SOLA
INTERNATIONAL INC., 2420 SAND HILL ROAD, SUITE 200, MENLO PARK, CALIFORNIA
94025, ATTENTION: INVESTOR RELATIONS.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors,
Steven M. Neil
Secretary
Menlo Park, California
June 30, 1999
A copy of the Company's Annual Report for the fiscal year ended March 31,
1999, including financial statements, accompanies this Proxy Statement. The
Annual Report is not to be regarded as proxy soliciting material or as a
communication by means of which any solicitation is to be made.
15
<PAGE>
APPENDIX A
1999 SOLA INTERNATIONAL INC.
MANAGEMENT INCENTIVE PLAN
1. Purpose The purpose of the Sola International Inc. Management Incentive
Plan is to enhance the ability of Sola International Inc. to attract,
motivate, reward and retain executive officers and to align their interests
with those of the Company's stockholders by providing additional cash
compensation to designated executive officers of the Company based on the
achievement of objective performance targets.
2. Definitions
(a) "Award" shall mean an incentive award earned by a Participant under the
Plan for a Performance Period.
(b) "Base Salary" for a Performance Period shall mean the Participant's
annual base salary at the commencement of such Performance Period. Annual base
salary does not include Awards under the Plan, long-term incentive awards,
imputed income from such programs as executive life insurance, or nonrecurring
earnings such as moving expenses, and is based on salary earnings before
reductions for such items as contributions under Section 401(k) of the
Internal Revenue Code of 1986, as amended.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Committee" shall mean the Compensation Committee of the Board.
(e) "Company" shall mean Sola International Inc., its successors and
assigns.
(f) "Disability" shall mean permanent disability, as provided in the
Company's long-term disability plan.
(g) "Division" shall mean a division of the Company as may be designated by
the Committee.
(h) "Participant", for any Performance Period, shall mean an executive
officer selected to participate in the Plan for such Performance Period.
(i) "Performance Criteria" shall mean (1) sales, (2) operating profit, (3)
net profit, (4) trading cash flow, (5) measures of working capital, (6) return
on assets, (7) return on investment, (8) return on equity, (9) measures of
economic value added or (10) any combination of the foregoing.
(j) "Performance Period" shall mean the fiscal year of the Company or any
other period designated by the Committee with respect to which an Award is
earned.
(k) "Performance Target" shall mean a target for a Performance Period which
is expressed in one or more Performance Criteria and upon the attainment of
which a Participant earns an Award. Performance Targets may be in respect of
the performance of the Company and its Subsidiaries (which may be on a
consolidated basis), a Division, a region or any combination of the foregoing,
or on an individualized basis. Performance Targets may be absolute or relative
and may be expressed in terms of a progression within a specified range.
(l) "Plan" shall mean this Sola International Inc. Management Incentive
Plan, as from time to time amended and in effect.
(m) "Retirement" shall mean retirement at the Company's normal retirement
age or early retirement with the prior written approval of the Company.
(n) "Subsidiary" shall mean a corporation as defined in Section 424(f) of
the Internal Revenue Code of 1986, as amended, with the Company being treated
as the employer corporation for purposes of this definition.
A-1
<PAGE>
(o) "Target Award Percentage" for a Participant with respect to any
Performance Period shall mean the percentage of the Participant's Base Salary
that the Participant would earn as an Award for that Performance Period
determined based upon the attainment of a Performance Target applicable to
such Participant.
3. Eligibility
Participation in the Plan for a Performance Period shall be limited to those
executive officers who, because of their significant impact on the current and
future success of the Company, the Committee selects, in accordance with
Section 5 of this Plan, to participate in the Plan for that Performance
Period.
To be eligible to receive an Award for any Performance Period a Participant
must be actively employed by the Company on each day of the Performance Period
and on the Award payment date.
4. Administration
The administration of the Plan shall be consistent with the purpose and the
terms of the Plan. The Plan shall be administered by the Committee. Each
member of the Committee shall be an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended. The Committee
shall have full authority to establish the rules and regulations relating to
the Plan, to interpret the Plan and those rules and regulations, to select
Participants in the Plan, to determine the Performance Periods, Performance
Targets and Target Award Percentages applicable to each Participant and the
amount of compensation payable to each Participant upon the achievement of
such targets, to approve all the Awards, to decide the facts in any case
arising under the Plan and to make all other determinations and to take all
other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate;
provided, however, that the Committee shall not be authorized to increase the
amount of the Award that would otherwise be payable pursuant to the terms of
the Plan. The Committee's administration of the Plan, including all such rules
and regulations, interpretations, selections, determinations, approvals,
decisions, delegations, amendments, terminations and other actions, shall be
final and binding on the Company, the Subsidiaries, their respective
stockholders and all employees of the Company and the Subsidiaries, including
the Participants and their respective beneficiaries.
5. Determination of Awards
For each Performance Period, the Committee shall designate and establish the
executive officers, if any, who shall be Participants during that Performance
Period and the Performance Targets and Target Award Percentages for each such
Participant, in each case, before the expiration of 25% of the relevant
Performance Period, but no later than 90 days after the commencement of such
Performance Period. The Performance Targets shall be based on one or more
Performance Criteria. The Committee shall prepare schedules with respect to
each Performance Period, which will be treated as part of the Plan for that
Performance Period, setting forth (x) the Participants, (y) each Participant's
Target Award Percentages and (z) each Participant's Performance Targets, in
each case, for that Performance Period. The Committee shall notify each
Participant of his or her Target Award Percentages and Performance Targets for
the Performance Period. The Committee will determine whether to establish a
maximum Target Award Percentage for any Performance Target.
The amount of a Participant's Award is equal to the product of his or her
Target Award Percentage and his or her Base Salary.
The maximum amount of Awards that any Participant may receive with respect
to any fiscal year of the Company during which the Plan is in effect is $2
million.
6. Changes to the Target
The Committee shall change the Performance Targets to reflect (i) a change
in corporate capitalization involving the Company or any of its Subsidiaries,
(ii) a merger, consolidation, separation, reorganization, partial
A-2
<PAGE>
or complete liquidation, acquisition or disposition involving the Company or
any of its Subsidiaries, (iii) a product liability judgment or a reserve in
respect thereof in excess of $500,000, (iv) adjustments for inter-company
accounts outside budgeted/agreed trading terms, (v) exchange gains or losses
versus budgeted exchange rates, (vi) impact of unbudgeted product sourcing
changes, (vii) impact of unbudgeted transfer pricing changes imposed by the
Company's group finance department, (viii) impact of unbudgeted items that are
externally mandated and for which forgiveness has been agreed prior to the
commencement of the relevant Performance Period and (ix) accounting
adjustments unrelated to business operations; provided, however, that there
shall be no forgiveness for opening balance sheet differences from budget.
7. Payment of Awards
Within three (3) months after the close of the fiscal year in which a
Performance Period occurs, the Committee shall review and approve each
Participant's Award. The Committee shall certify in writing prior to payment
of any Award that the relevant Performance Targets were satisfied. The
aggregate amount of Awards shall be paid after such certification at such time
and in such manner as the Committee shall determine.
8. Limitations on Rights to Payment of Awards
No Participant shall have any right to receive payment of an Award under the
Plan for a Performance Period unless the Participant remains in the employ of
the Company through the payment date of the Award.
9. Amendments
The Committee may at any time amend (in whole or in part) this Plan. No such
amendment which adversely affects any Participant's rights to or interest in
an Award earned prior to the date of the amendment shall be effective unless
the Participant shall have agreed thereto. All Awards are intended not to be
subject to the deduction limitation of Section 162(m) of the Internal Revenue
Code of 1986, as amended. The Committee shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to Awards if the
ability to exercise such discretion or the exercise of such discretion itself
would cause the compensation attributable to such Awards to be subject to such
deduction limitation.
10. Termination
The Committee may terminate this Plan (in whole or in part) at any time. In
the case of such termination, the following provisions of this Section 10
shall apply notwithstanding any other provisions of the Plan to the contrary:
(i) The Committee shall promulgate administrative rules applicable to
Plan termination, pursuant to which each affected Participant shall
receive, with respect to each Performance Period which has commenced on or
prior to the effective date of the Plan termination (the "Termination
Date") and for which the Award has not yet been paid, an amount equal to
the amount his Award would have been had the Plan not been terminated
(prorated for the Performance Period in which the Termination Date
occurred), subject to reduction in the discretion of the Committee.
(ii) Each Award payable under this Section 10 shall be paid at such time
as the Committee shall determine.
11. Miscellaneous Provisions
(a) This Plan is not a contract between the Company and the executive
officers or the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any individual any right
to be a Participant or retained in the employ of the Company. The Company is
under no obligation to continue the Plan.
A-3
<PAGE>
(b) A Participant's right and interest under the Plan may not be assigned or
transferred, and any attempted assignment or transfer shall be null and void
and shall extinguish, in the Company's sole discretion, the Company's
obligation under the Plan to pay Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund, or to make any other segregation of
assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards paid any taxes or
other amounts required by law to be withheld.
(e) Nothing contained in the Plan shall limit or affect in any manner or
degree the normal and usual powers of management exercised by the officers and
the Board of Directors or committees thereof to change the duties or the
character of employment of any employee (including any executive officer) of
the Company or to remove the individual from the employment of the Company at
any time, all of which rights and powers are expressly reserved.
12. Effective Date
The Plan shall be effective on the date that it is approved by the
Committee.
A-4
<PAGE>
IMPORTANT INFORMATION
SOLA INTERNATIONAL INC.
1999 ANNUAL MEETING
Sola International Inc.'s Annual Meeting of
Stockholders will be held at the Quadrus
Conference Center, 2400 Sand Hill Road, Menlo
Park, California 94025 on Friday, August 13,
1999, at 10:00 a.m. (local time).
1377-PS-99
<PAGE>
PROXY
SOLA INTERNATIONAL INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SOLA INTERNATIONAL INC. FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON AUGUST 13, 1999
The undersigned hereby appoints John E. Heine, James H. Cox and Steven
M. Neil, and each of them, as attorneys and proxies with full power of
substitution, to vote for and on behalf of the undersigned all shares of common
stock of Sola International Inc. held of record by the undersigned on June 18,
1999, at the Sola International Inc. Annual Meeting of Stockholders to be held
on August 13, 1999 and at any adjournment thereof, upon the following matters
and upon any other business that may properly come before the meeting, as set
forth in the related Notice of Annual Meeting and Proxy statement, both of
which have been received by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREOWNER. IF THIS PROXY IS EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR
NOMINEES AND IN FAVOR OF THE RATIFICATION OF THE COMPANY'S MANAGEMENT INCENTIVE
PLAN.
Please indicate your vote for the election of directors on the other
side. The nominees for director are: Maurice J. Cunniffe, Douglas D. Danforth,
A. William Hamill, John E. Heine, Hamish Maxwell, Irving S. Shapiro and Jackson
L. Schultz.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
[X] Please mark
votes as in
this example.
The Board of Directors recommends a vote "For All Nominees" on proposal 1
and a vote "For" proposal 2.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors. FOR AGAINST ABSTAIN
Nominees: Maurice. J. Cunniffe, Douglas 2. Ratification of the Company's [ ] [ ] [ ]
D. Danforth A. William Hamill, John E. Heine, Management Incentive Plan
Hamish Maxwell, Irving S. Shapiro and
Jackson L. Schultz
FOR ALL NOMINEES [ ] [ ] WITHHELD FROM ALL NOMINEES
[ ] ______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign the proxy and return it promptly whether or not you
expect to attend. Give full title if an attorney, executor,
administrator, trustee, guardian, etc. If a corporation, please
sign in full corporate name by authorized officer. If a partnership,
please sign in partnership name by authorized person. For an account
in the name of two or more persons, each should sign, or if one signs,
he or she should attach evidence of authority.
</TABLE>
Signature:___________________ Date:_____ Signature:______________ Date:_____
