<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 [ ] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
THE TALBOTS, INC.
(Name of Registrant as Specified In Its Charter)
THE TALBOTS, INC.
(Name of Person(s) Filing Proxy Statement)
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:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[TALBOTS LOGO]
April 15, 1998
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1998
Dear Shareholder:
It is a pleasure for us to extend to you a cordial invitation to attend the
1998 Annual Meeting of Shareholders of The Talbots, Inc. to be held at 10:00
a.m. on May 21, 1998 at BankBoston, N.A., first floor auditorium, 100 Federal
Street, Boston, Massachusetts. The Notice of the Annual Meeting, Proxy Statement
and form of proxy are enclosed with this letter.
Your vote at the Annual Meeting is important to Talbots and we ask you to
complete, sign and return the enclosed proxy. Please mark the appropriate box on
the proxy card if you plan to attend.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Arnold B. Zetcher
ARNOLD B. ZETCHER
President and Chief
Executive Officer
<PAGE> 3
THE TALBOTS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1998
------------------------
To Talbots Shareholders:
The Annual Meeting of Shareholders of The Talbots, Inc. will be held at
BankBoston, N.A., 100 Federal Street, Boston, Massachusetts, on Thursday, May
21, 1998, at 10:00 a.m., for the following purposes:
1. To elect eight directors.
2. To ratify the amendment to the 1993 Executive Stock Based Incentive
Plan to increase the number of authorized shares.
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the 1998 fiscal year.
4. To act upon such other business as may properly come before the
Annual Meeting.
Shareholders of record at the close of business on April 2, 1998 are
entitled to notice of and to vote at the Annual Meeting or at any postponement
or adjournment thereof.
By order of the Board of Directors,
RICHARD T. O'CONNELL, JR.
Secretary
April 15, 1998
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE ANNUAL
MEETING, PLEASE COMPLETE THE ENCLOSED PROXY AND RETURN IT PROMPTLY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 4
THE TALBOTS, INC.
175 BEAL STREET
HINGHAM, MASSACHUSETTS 02043
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1998
PROXY STATEMENT
This Proxy Statement is being furnished to the shareholders of The Talbots,
Inc. (the "Company") in connection with the solicitation of proxies by the Board
of Directors of the Company for use at the Annual Meeting of Shareholders to be
held on Thursday, May 21, 1998, at 10:00 a.m., at BankBoston, N.A., 100 Federal
Street, Boston, Massachusetts and at any postponement or adjournment thereof
(the "Annual Meeting"). At the Annual Meeting, shareholders are being asked to
consider and vote on (1) the election of eight directors, (2) the increase in
the number of authorized shares under The Talbots, Inc. 1993 Executive Stock
Based Incentive Plan (the "1993 Executive Stock Based Incentive Plan"), and (3)
the ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 1998 fiscal year.
This Proxy Statement, Notice of the Annual Meeting and accompanying proxy
are first being mailed to shareholders on or about April 22, 1998.
GENERAL
The holders of shares of common stock of the Company of record at the close
of business on April 2, 1998 are entitled to vote such shares at the Annual
Meeting. On April 2, 1998, there were outstanding 31,805,415 shares of common
stock. The presence in person or by proxy of the holders of a majority of the
shares outstanding on the record date is necessary to constitute a quorum for
the transaction of business.
Each shareholder is entitled to one vote, in person or by proxy, for each
share of common stock held as of the record date on each matter to be voted on
at the Annual Meeting. Directors are elected by the affirmative vote of a
plurality of the votes cast at the Annual Meeting.
Abstentions and broker non-votes will be included in determining the number
of shares present or represented at the Annual Meeting for purposes of
determining whether a quorum exists. In determining whether a proposal submitted
to shareholders has received the requisite votes for approval, abstentions
generally would be counted and would have the same effect as a vote against the
proposal and broker non-votes would not be counted and would have no effect on
the outcome of that vote. However, neither abstentions nor broker non-votes will
be counted as votes cast in connection with determining the plurality required
to elect directors or the ratification of the increase in authorized shares
under the 1993 Executive Stock Based Incentive Plan, and will have no effect on
the outcome of those votes. Broker non-votes occur when a broker nominee does
not vote on one or more matters because it has not received instruction to vote
from the beneficial owner and does not have discretionary authority to vote on
such matter.
Shares of common stock represented by a proxy received in time for the
Annual Meeting and properly executed will be voted as specified in the proxy,
unless the proxy has previously been revoked. Unless contrary instructions are
given in the proxy, it will be voted by the persons designated in the proxy for
the election of the Board of Directors' nominees for director, for ratification
of the amendment to the 1993 Executive Stock Based Incentive Plan, for
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 1998 fiscal year and, with respect to any other
matters properly submitted to
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<PAGE> 5
shareholders at the Annual Meeting, as recommended by the Board of Directors or,
if no such recommendation is given, in their discretion.
A proxy may be revoked by filing with the Secretary of the Company, prior
to the exercise of the proxy, either a written revocation of that proxy or a new
proxy bearing a later date. A proxy may also be revoked by filing a written
notice of revocation with the Secretary of the Company at the meeting prior to
voting the proxy. Attendance at the Annual Meeting will not in itself constitute
revocation of a proxy.
This proxy solicitation is being made by the Company and the expense of
preparing, printing and mailing this Proxy Statement and proxy is being paid by
the Company. In addition to use of the mails, proxies may be solicited
personally or by telephone by regular employees of the Company without
additional compensation. The Company will reimburse banks, brokers and other
custodians, nominees and fiduciaries for their costs in sending proxy materials
to the beneficial owners of common stock.
More than a majority of the outstanding shares of common stock of the
Company is owned by JUSCO (U.S.A.), Inc., a Delaware corporation ("JUSCO USA"),
which is a wholly owned subsidiary of JUSCO Co., Ltd., a Japanese retail
conglomerate ("JUSCO"). JUSCO USA has advised the Company that it intends to
vote all such shares for the election of the nominees for director named in this
Proxy Statement, for ratification of the amendment to the 1993 Executive Stock
Based Incentive Plan and for ratification of the appointment of Deloitte &
Touche LLP as the Company's independent auditors for the 1998 fiscal year.
ITEM 1
ELECTION OF DIRECTORS
General. Directors will hold office until the next Annual Meeting and
until their successors are chosen and qualified. The Company has inquired of
each nominee and determined that each will serve if elected. In the event that
any of the nominees should become unavailable for election, the persons named in
the accompanying proxy intend to vote for such other person, if any, as the
Board of Directors may designate as a substitute nominee.
All nominees are current directors of the Company. Set forth below is a
brief description of the background of each nominee for director. The Board of
Directors recommends that shareholders vote "FOR" such nominees for director.
TAKUYA OKADA Director since 1988
Mr. Takuya Okada, age 72, has been Chairman of the Board of Directors of
the Company since 1988 and the President and a Director of JUSCO USA since 1988.
Mr. Okada has been Chairman of the Board of Directors and Chief Executive
Officer and a Representative Director of JUSCO, the Japanese parent corporation
of JUSCO USA, since 1984, and a Managing Director of JUSCO (Europe) B.V. since
1988. Mr. Okada is also a member of the Board of Directors of various other
affiliates of JUSCO. Mr. Takuya Okada is the father of Mr. Motoya Okada, a
Director of the Company.
ARNOLD B. ZETCHER Director since 1988
Mr. Zetcher, age 57, joined the Company as President in 1987. He has been
President, Chief Executive Officer and a Director of the Company since 1988. Mr.
Zetcher was Chairman and Chief Executive Officer of John Breuner Company, a home
furnishings division of BATUS in San Francisco, California, and prior to that,
Chairman and Chief Executive Officer of Kohl's Food Stores, another BATUS
division, in Wisconsin and Illinois. Mr. Zetcher also served as Chairman and
Chief Executive Officer of Bonwit Teller in New York, a high quality specialty
apparel chain, and served in various capacities during his 10 years with
Federated Department Stores.
2
<PAGE> 6
EIJI AKIYAMA Director since 1993
Mr. Akiyama, age 65, was elected a Director of the Company in November
1993. Mr. Akiyama has been Executive Vice Chairman and a Director of JUSCO since
1995 and was Executive Vice President and a Director of JUSCO from 1989, when he
joined JUSCO. Prior to 1989, Mr. Akiyama worked for The Dai-Ichi Kangyo Bank,
Limited, where he was a Director from 1985 to 1988, and a Managing Director from
1988 to 1989. Mr. Akiyama has been a Director of JUSCO USA since 1989.
MASAHARU ISOGAI Director since 1993
Mr. Isogai, age 58, was elected a Director of the Company in November 1993.
Mr. Isogai, who currently serves as a Senior Advisor to the Company and to JUSCO
USA, served as Executive Vice President and General Manager of JUSCO USA from
1989 to 1996 and as a Director of JUSCO from 1992 to 1996. Since 1994, Mr.
Isogai has served as Chairman of the Board of Revman Industries Inc., a home
furnishings company which is a subsidiary of JUSCO USA. From 1988 to 1989, he
was the Chief Representative of JUSCO in the United States.
ELIZABETH T. KENNAN Director since 1993
Ms. Kennan, age 60, was elected a Director of the Company in November 1993.
Ms. Kennan served as President of Mount Holyoke College from 1978 to 1995, at
which time she became President Emeritus, and served as President of Five
Colleges Incorporated from 1985 to 1994. Ms. Kennan also serves as a Director of
The Putnam Funds, Kentucky Home Mutual Life Insurance Company, Kentucky Home
Life Insurance Company, Bell Atlantic Corporation and Northeast Utilities. Ms.
Kennan is Chairperson of the Company's Audit Committee and a member of the
Company's Compensation Committee.
MOTOYA OKADA Director since 1993
Mr. Motoya Okada, age 46, was elected a Director of the Company in November
1993. Mr. Okada is President and a Director of JUSCO and was Senior Managing
Director of JUSCO from 1995 to 1997. Mr. Okada also served as Managing Director
of JUSCO from 1992 to 1995 and a Director of JUSCO from 1990 to 1992. Mr. Okada
was President of Talbots Japan Co., Ltd., a subsidiary of JUSCO, from 1990 to
1997. Mr. Okada has been a Director of JUSCO USA since 1992. Mr. Motoya Okada is
the son of Mr. Takuya Okada, the Chairman of the Board of Directors of the
Company.
MARK SHULMAN Director since 1997
Mr. Shulman, age 49, joined the Company in October 1997 as Executive Vice
President, Chief Operating Officer and Chief Merchandising Officer and was
elected a Director of the Company. Mr. Shulman formerly was President and Chief
Executive Officer of Younkers Department Stores, a division of Proffitt's, Inc.,
was Executive Vice President of Stage Stores, Inc. from 1994 to 1997 and was
President of the Leslie Fay Dress Division from 1993 to 1994. Mr. Shulman also
previously served as President and Chief Executive Officer of Henri Bendel, Inc.
and as President and Chief Executive Officer of Ann Taylor Stores.
MARK H. WILLES Director since 1988
Mr. Willes, age 56, has been a Director of the Company since 1988. He
currently serves as Chairman of the Board, President and Chief Executive Officer
and a Director of The Times Mirror Company and as Publisher of the Los Angeles
Times. Mr. Willes served in various executive management positions at General
Mills, Inc. from 1985 to 1995, including Vice Chairman, President and Chief
Operating Officer, Executive Vice President and Chief Financial Officer. Mr.
Willes also serves as a Director of Black & Decker
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<PAGE> 7
Corporation. Mr. Willes is Chairperson of the Company's Compensation Committee
and a member of the Company's Audit Committee.
Director Compensation; Attendance; Committees. The Chairman of the Board
of Directors receives an annual retainer of $50,000 plus expenses and each other
director who is not part of the Company's management or otherwise compensated as
a consultant or advisor to the Company receives an annual retainer of $23,000
plus expenses. Committee chairpersons receive an additional annual retainer of
$5,000. Pursuant to the 1995 Directors Stock Option Plan, a director who is not
an employee of the Company is entitled to receive annually upon election or
reelection to the Board of Directors an option to purchase between 3,000 and
5,000 shares of the Company's common stock at an exercise price equal to the
fair market value of the common stock as of the date of grant.
The Board of Directors held four meetings in fiscal 1997. The Audit
Committee and the Compensation Committee each held two meetings in fiscal 1997.
There is no standing nominating committee. Each director attended all of the
meetings of the Board of Directors and of the Committees of which he or she was
a member. Mr. Willes and Ms. Kennan are the current members of both the Audit
Committee and the Compensation Committee.
Audit Committee. The Audit Committee functions as a communication point
among non-Audit Committee directors, the independent auditors, the internal
audit personnel and the Company's management as their respective duties relate
to financial accounting, reporting and internal controls. The Audit Committee
assists the Board of Directors in fulfilling its responsibilities with respect
to accounting policies, internal controls, financial and operating controls,
standards of corporate conduct and performance, and reporting practices of the
Company and the sufficiency of auditing. Ms. Kennan is Chairperson of the Audit
Committee.
Compensation Committee. The principal responsibilities of the Compensation
Committee include determination and administration of compensation for the
senior officers of the Company including salary and incentive based plans,
determination of awards under and administration of the Company's 1993 Executive
Stock Based Incentive Plan, and ongoing review, in consultation with Company
executive management, the Board of Directors, and outside compensation
consultants as necessary, of the policies relating to compensation of the
Company's senior officers, with the goal of encouraging superior Company
performance. Mr. Willes is Chairperson of the Compensation Committee.
4
<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information on
compensation earned by the Company's Chief Executive Officer and the other four
most highly compensated executive officers of the Company during fiscal 1997,
and by Mr. Hinkley who was an executive officer of the Company for a portion of
fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------
AWARDS(2)
----------------------------
ANNUAL COMPENSATION NUMBER OF
----------------------------- RESTRICTED SECURITIES ALL OTHER
FISCAL STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS(s)($) OPTIONS/SARs# ($)(4)
- ------------------------------- ------ --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Arnold B. Zetcher, President 1997 718,500 195,600 -- 90,000 39,827
and Chief Executive Officer 1996 697,500 461,100 -- 100,000 41,487
1995 637,500 540,000 -- 100,000 38,685
Mark Shulman, Executive Vice 1997 153,462(1) 40,000 299,130(3) 130,000 --
President, Chief Operating
Officer and Chief Merchandising
Officer
Edward L. Larsen, Senior Vice 1997 273,824 37,700 -- 20,700 15,620
President, Finance, Treasurer 1996 265,848 97,600 -- 23,000 15,905
and Chief Financial Officer 1995 250,800 115,462 -- 23,000 15,809
Stuart M. Stolper, Senior Vice 1997 262,469 39,700 -- 20,700 10,557
President, Human Resources 1996 254,824 93,600 -- 23,000 16,461
1995 240,400 110,674 -- 23,000 15,340
Richard T. O'Connell, Jr., 1997 223,727 33,800 -- 20,700 8,896
Senior Vice President, Legal 1996 217,210 79,800 -- 23,000 4,500
and Real Estate, and Secretary 1995 203,000 93,456 -- 23,000 4,500
Clark J. Hinkley, Former 1997 367,981 -- -- -- 143,899(5)
Executive Vice President 1996 445,000 165,900 -- 50,000 24,032
and Chief Operating Officer 1995 419,650 208,000 -- 50,000 24,726
</TABLE>
- ---------------
(1) Mr. Shulman joined the Company as an executive officer in October 1997.
(2) In addition to the listed options, restricted stock awards were made on
November 18, 1993, the date of the Company's initial public offering
("IPO"). Restricted stock awards vest in thirds in years three, four and
five on the anniversary of the grant date. Holders of restricted stock are
entitled to receive all declared dividends. The number and value of the
restricted stock holdings at the end of fiscal 1997 for each of the named
executive officers is: Mr. Zetcher, 15,150 shares, $211,002; Mr. Larsen,
3,380 shares, $47,075; Mr. Stolper, 3,380 shares, $47,075; Mr. O'Connell,
3,380 shares, $47,075; and Mr. Hinkley, 6,864 shares, $95,598.
(3) Mr. Shulman was granted 12,000 shares of restricted stock in connection with
the commencement of his employment, 50% of which vested at that time and the
balance of which vests in February 1999. Mr. Shulman is entitled to receive
all dividends declared on such restricted stock. The value of such
restricted stock remaining unvested at the end of fiscal 1997 was $83,565.
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<PAGE> 9
(4) The amounts shown for each employee, other than Mr. Hinkley, as to fiscal
1997 represent Company contributions to the Retirement Savings Voluntary
Plan and the Supplemental Savings Plan.
(5) Pursuant to Mr. Hinkley's employment agreement and in connection with his
resignation as an executive officer, includes $105,733 of compensation paid
in fiscal 1997 following his resignation as an executive officer in November
1997 and $15,339 for reimbursement of legal expenses. See "Employment
Agreements and Change in Control Agreements" below. Also includes $4,500
contributed to the Retirement Savings Voluntary Plan and $18,327 contributed
to the Supplemental Savings Plan.
Option/SAR Grants in Last Fiscal Year. The table below shows information
regarding grants of stock options made to the named executive officers during
fiscal 1997 under the Company's 1993 Executive Stock Based Incentive Plan. The
amounts shown for each of the named executive officers as potential realizable
values are based on arbitrarily assumed annualized rates of stock price
appreciation of five percent and ten percent over the full ten year term of the
options, which would result in common stock prices of approximately $40.62 and
$64.68, respectively. These potential realizable values are based solely on
arbitrarily assumed rates of appreciation specified in applicable regulations
promulgated by the Securities and Exchange Commission (the "SEC"). Actual gains,
if any, on option exercises and common stock holdings are dependent on the
future performance of the Company's common stock and overall stock market
conditions. There can be no assurance that the potential realizable values shown
in this table will be achieved. No stock appreciation rights ("SARs") have been
granted or are outstanding.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM($)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME(1) GRANTED(#)(2) FISCAL YEAR ($/Sh)(4) DATE 5% 10%
- ------------------------ ------------- ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Arnold B. Zetcher 90,000 18.2 24.9375 10/27/07 1,411,475 3,576,956
Mark Shulman 130,000(3) 26.3 24.9375 10/27/07 2,038,798 5,166,714
Edward L. Larsen 20,700 4.2 24.9375 10/27/07 324,639 822,700
Stuart M. Stolper 20,700 4.2 24.9375 10/27/07 324,639 822,700
Richard T. O'Connell, Jr. 20,700 4.2 24.9375 10/27/07 324,639 822,700
</TABLE>
- ---------------
(1) Mr. Hinkley did not receive any options in 1997.
(2) Options become exercisable in one-third increments beginning one year from
date of grant.
(3) The listed stock options were granted in connection with Mr. Shulman's
commencement of employment. See "Employment Agreements and Change in Control
Agreements."
(4) Represents the market value of the Company's common stock on the date of
grant.
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<PAGE> 10
Option Exercises And Year-End Option Holdings. The following table shows
information regarding option exercises during fiscal 1997 as well as fiscal 1997
year-end option holdings for each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON REALIZED OPTIONS/SARs AT FY-END(#) OPTIONS/SARs AT FY-END($)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Arnold B. Zetcher -- -- 335,897/190,001 --/--
Mark Shulman -- -- --/130,000 --/--
Edward L. Larsen -- -- 76,323/ 43,701 --/--
Stuart M. Stolper -- -- 76,323/ 43,701 --/--
Richard T. O'Connell, Jr. -- -- 76,323/ 43,701 --/--
Clark J. Hinkley -- -- 161,557/ -- --/--
</TABLE>
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<PAGE> 11
Retirement Benefits. The Company has a tax-qualified defined benefit plan
for salaried employees which provides pensions payable at retirement to each
eligible employee. The Company also has a supplemental retirement plan for
certain of its salaried employees which provides generally for the payment of
supplemental benefits equal to that portion of pension benefits earned under the
terms of the pension plan for salaried employees in excess of certain statutory
limits. The amount of an employee's benefits depends on factors including final
average compensation and years of credited service up to thirty years. Benefits
vest after five years of service. The following table sets forth the aggregate
estimated annual retirement benefits as of January 31, 1998 under the two plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 125,000 9,341 18,681 28,022 37,363 46,703 56,044 56,044
150,000 11,341 22,681 34,022 45,363 56,703 68,044 68,044
175,000 13,341 26,681 40,022 53,363 66,703 80,044 80,044
200,000 15,341 30,681 46,022 61,363 76,703 92,044 92,044
225,000 17,341 34,681 52,022 69,363 86,703 104,044 104,044
250,000 19,341 38,681 58,022 77,363 96,703 116,044 116,044
300,000 23,341 46,681 70,022 93,363 116,703 140,044 140,044
350,000 27,341 54,681 82,022 109,363 136,703 164,044 164,044
400,000 31,341 62,681 94,022 125,363 156,703 188,044 188,044
450,000 35,341 70,681 106,022 141,363 176,703 212,044 212,044
500,000 39,341 78,681 118,022 157,363 196,703 236,044 236,044
550,000 43,341 86,681 130,022 173,363 216,703 260,044 260,044
600,000 47,341 94,681 142,022 189,363 236,703 284,044 284,044
650,000 51,341 102,681 154,022 205,363 256,703 308,044 308,044
700,000 55,341 110,681 166,022 221,363 276,703 332,044 332,044
750,000 59,341 118,681 178,022 237,363 296,703 356,044 356,044
800,000 63,341 126,681 190,022 253,363 316,703 380,044 380,044
850,000 67,341 134,681 202,022 269,363 336,703 404,044 404,044
900,000 71,341 142,681 214,022 285,363 356,703 428,044 428,044
950,000 75,341 150,681 226,022 301,363 376,703 452,044 452,044
1,000,000 79,341 158,681 238,022 317,363 396,703 476,044 476,044
1,050,000 83,341 166,681 250,022 333,363 416,703 500,044 500,044
1,100,000 87,341 174,681 262,022 349,363 436,703 524,044 524,044
1,150,000 91,341 182,681 274,022 365,363 456,703 548,044 548,044
1,200,000 95,341 190,681 286,022 381,363 476,703 572,044 572,044
1,250,000 99,341 198,681 298,022 397,363 496,703 596,044 596,044
1,300,000 103,341 206,681 310,022 413,363 516,703 620,044 620,044
</TABLE>
The years of credited service under the two plans at January 31, 1998 for
Messrs. Zetcher, Shulman, Larsen, Stolper, O'Connell and Hinkley were 10, 0, 7,
20, 11 and 10, respectively. Covered compensation under the pension plan and the
supplemental retirement plan at January 31, 1998 for Messrs. Zetcher, Shulman,
Larsen, Stolper, O'Connell and Hinkley was $1,085,111, $193,462, $364,265,
$337,773, $283,922 and $612,685, respectively. Covered compensation under the
two plans includes salary and bonus and any amounts deferred under any formal
plan of deferred compensation sponsored by the Company but excludes other forms
of compensation included in the Summary Compensation Table. Benefits set forth
in the Pension Plan Table are computed on the basis of a straight life annuity,
payable at age 65, and are subject to deduction
8
<PAGE> 12
for any benefits paid or payable from a predecessor pension plan but are not
subject to deduction for social security.
Employment Agreements and Change in Control Agreements. The Company has
employment agreements with each of Mr. Zetcher and Mr. Shulman (collectively the
"Executives" and individually an "Executive"). Mr. Zetcher's employment
agreement continues until the end of fiscal 1999 and is renewable for three year
terms thereafter unless at least six months prior notice of nonrenewal is given.
Mr. Shulman's agreement continues until the end of fiscal 2000 and is renewable
for three year terms thereafter unless at least six months notice of nonrenewal
is given. The Executives may not directly or indirectly engage in or carry on
any business in competition with the principal business of the Company for a
period of two years after the termination of employment with the Company if such
termination was made by such Executive without good reason or by the Company for
cause.
Mr. Zetcher's agreement provides for his employment as President and Chief
Executive Officer of the Company at a base salary, to be reviewed annually, of
not less than his 1993 base salary. Mr. Zetcher is also eligible to receive a
cash bonus each year pursuant to the Company's Management Incentive Plan
("MIP"). Mr. Shulman's agreement provides for his employment as Executive Vice
President, Chief Operating Officer and Chief Merchandising Officer of the
Company at a base salary, to be reviewed annually, of not less than his 1997
base salary of $570,000. Mr. Shulman's agreement also provides for his
eligibility to receive a bonus each year pursuant to the MIP with a minimum
guaranteed bonus of $40,000 for fiscal 1997 and a minimum guaranteed bonus for
fiscal 1998 of approximately forty percent of base salary. Mr. Shulman's
agreement also provided for the payment by the Company to Mr. Shulman's former
employer of a net amount of $300,000 in connection with securing a release from
his then employment agreement and from a non-competition obligation, which
amount, if Mr. Shulman should resign his employment with the Company before the
second anniversary of the date he was hired, is repayable by him in proportion
to the number of days remaining in such two-year period. Mr. Shulman is also
entitled to receive certain amounts in connection with his relocation. Each
Executive is also entitled to certain insurance, retirement and other benefits
and to reimbursement of certain expenses.
Each of these employment agreements also provides that if the employment of
the Executive is terminated by the Company without "cause" or by the Executive
for "good reason," the Executive will be entitled to a separation allowance in a
single lump payment equal to twice the sum of (i) his annual base salary at the
rate in effect at the time his employment was terminated and (ii) the annual
bonus paid or payable to him for the year immediately prior to the year in which
his employment was terminated. In addition, each Executive would be entitled to
benefits under the executive medical, dental and life insurance plans of the
Company for up to two years subsequent to termination. Each Executive would also
have the right to exercise his vested stock options for a period of not less
than three years from termination.
In the event there is a "change in control" of the Company, and, within 24
months thereafter, an Executive's employment is terminated either by the Company
without cause or by the Executive for good reason, the Executive will be
entitled to payment of an amount equal to (i) two times such Executive's annual
base salary (equal to the greater of the rate in effect on his termination date
or 180 days prior thereto) and the maximum bonus payable to him under the MIP in
effect as of the last full fiscal year prior to his termination date, (ii) the
maximum bonus payable to the Executive under the MIP for the year in which the
Executive's employment was terminated, pro rated for the portion of the year in
which the Executive was employed, and (iii) three times the present value of the
Executive's accrued benefits under the Company's supplemental retirement plan as
of the date of termination. Any grant of restricted stock made to the Executive
under the Plan will also provide for acceleration of vesting upon the
Executive's termination of employment within 24 months after a change in
control. The Executive would also be entitled to certain insurance and other
benefits after termination for up to two years.
9
<PAGE> 13
A "change in control" is defined generally to include significant changes
in the stock ownership of the Company and certain changes in the Company's Board
of Directors. "Good reason" is defined generally to include certain reductions
in duties or reporting responsibilities, certain unapproved relocations, certain
reductions in compensation or benefits, and material breaches of the agreement
by the Company. "Cause" is defined to include certain failures to perform,
felony conviction, certain conflicts of interest, repeated acts of material
misconduct, and material breaches of the agreement by the Executive.
The Company also had an employment agreement with Mr. Hinkley, who resigned
as an executive officer of the Company in November 1997, which provided that if
Mr. Hinkley's employment was terminated by the Company without cause or by Mr.
Hinkley for good reason, he was entitled to a separation allowance equal to two
times the sum of (i) his base salary at the rate in effect at the time his
employment was terminated and (ii) the annual bonus paid to him for the year
immediately prior to the year in which his employment was terminated. In
addition, the employment agreement provided that he would be entitled to a
continuation of benefits under the executive medical, dental, disability and
life insurance plans of the Company for up to two years following such
termination and would have the right to exercise his vested stock options for up
to three years following termination. In satisfaction of the Company's
obligations under such employment agreement, upon his resignation as an
executive officer in November 1997, Mr. Hinkley continued to receive his normal
salary and a proportional amount of his bonus from the Company in regular
payroll installments through February 1998, at which time the balance of his
separation allowance under his employment agreement was payable to him in a lump
sum of $1,104,319. For fiscal 1997, the total compensation paid to Mr. Hinkley
following his resignation as an executive officer was $105,733. Upon his
separation Mr. Hinkley retained the right to vest in his 6,864 shares of
restricted stock but forfeited his unvested stock options, was entitled to
continue his participation and benefit accrual under the Company's pension and
savings plans through February 1998, and will be entitled to a payment
representing the additional pension benefit he would have received had his
benefit accruals continued through December 2001.
The Company has also entered into a change in control agreement with each
of Messrs. Larsen, Stolper and O'Connell and certain other officers. Under each
agreement, if the Company terminates such officer's employment without cause
within twelve months following a "change in control", the Company will pay to
such officer an amount equal to the sum of (i) such officer's annual base salary
at the rate in effect on the date of termination and (ii) an amount calculated
in accordance with a formula which takes into account such officer's annual base
salary, the job level and performance of such officer, and the financial
performance of the Company. In addition, each officer would be entitled to
certain insurance and other benefits for up to one year after termination.
Report on Compensation of Executive Officers
Compensation matters for the Company's executive officers for fiscal 1997
were reviewed and approved by the Compensation Committee of the Board of
Directors.
The overall objective of the Company's executive compensation program is to
attract and retain the highest quality executives to manage and lead the
Company, and to provide annual and long term incentives to management, based on
both Company performance and individual performance, in order to build and
sustain value for shareholders.
The Company's compensation program for its executive officers consists of
three basic components: base salary, annual incentive compensation, and stock
based compensation.
In order to assess the general competitiveness of its overall pay structure
for senior management, at regular intervals the Company obtains published
surveys of compensation practices of the retail industry from independent
compensation consultants and trade group publications. From this published data
the Company
10
<PAGE> 14
compares positions of a similar size, scope and complexity. The companies
included in such published surveys of the general retail industry include both
apparel and nonapparel companies (the "retail survey group") and are a broader
range and not necessarily the same retail companies as included in the Peer
Group index of selected retail apparel companies set forth in the Performance
Graph below.
Base Salary. Base salary ranges for fiscal 1997 for the Company's
executive officers including the Chief Executive Officer were targeted to be
approximately at or near the 50th percentile range of base pay of the retail
survey group for positions of similar size, scope and complexity.
Base pay for fiscal 1997 for the Company's executive officers other than
the Chief Executive Officer was initially established by the Chief Executive
Officer, subject to review and ratification by the Compensation Committee, based
on his evaluation and assessment of each individual's level of responsibility
and performance over the previous year. The Chief Executive Officer's base pay
for fiscal 1997 was established by the Compensation Committee by reference to
general economic and industry conditions, relative Company performance and his
individual performance in leading the Company as assessed and evaluated by the
Compensation Committee. All of these factors were equally weighted except for
general economic conditions which had a lesser weighting. The evaluation and
assessment of the Chief Executive Officer's individual performance, which by its
nature was subjective, took into account the Company's earnings and financial
results, the Company's ongoing geographical expansion of stores and selling
space and the continuing development of new business concepts.
Management Incentive Plan. The Company believes that a substantial
percentage of each executive officer's compensation should be tied directly to
the financial performance of the Company as well as the executive's individual
performance. Annual incentive compensation for fiscal 1997 for executive
officers including the Chief Executive Officer was determined pursuant to the
Company's MIP. Cash incentive awards under the MIP are made annually to those
management employees who are in certain established position levels within the
Company including all executive officers.
Awards granted pursuant to the MIP are based on the following factors: a
Company financial performance rating and an individual performance rating. For
fiscal 1997 the Company performance rating was based on the Company's earnings
per share in relation to a preestablished earnings per share target. The
individual performance rating was based on a subjective evaluation and
assessment of each individual's performance during the year measured against his
or her responsibilities for the year.
For fiscal 1997, Company performance ratings against the preestablished
earnings goal ranged from zero to 1.8 and individual performance ratings ranged
from zero to 1.5. These ratings were combined with the participant's target
incentive participation rate (which is a percentage of base salary based on
position level and for fiscal 1997 ranged from 20% for certain officers up to
45% for the Chief Executive Officer position). The weights assigned were 50% for
Company performance ratings and 50% for individual performance ratings.
For fiscal 1997 MIP awards, the Company's performance rating against the
earnings per share goal, which was internally established for MIP purposes, was
0.55. The Chief Executive Officer made recommendations to the Compensation
Committee on the individual performance ratings for all executive officers other
than himself. The Compensation Committee then reviewed and finally approved the
fiscal 1997 individual performance ratings for all executive officers including
the Chief Executive Officer. Individual performance ratings for each executive
officer named in the Summary Compensation Table averaged 1.08 for fiscal 1997.
Stock Based Compensation. The Board of Directors and the Compensation
Committee are each of the view that stock ownership or its equivalent by
management serves to align the interests of management with the Company's
shareholders.
11
<PAGE> 15
Stock options are granted at fair market value at the time of grant and are
intended to align executive compensation opportunities with shareholder returns.
Stock options are intended to provide long term compensation, and future grants
of options or other awards will be periodically reviewed and determined by the
Compensation Committee of the Board. Stock options granted during fiscal 1997
were made at levels determined by the Compensation Committee to be slightly
below the median for annual stock grants of a group of certain retail companies
considered by the Compensation Committee and its outside compensation
consultant.
New Executive Vice President and Chief Operating Officer/Chief
Merchandising Officer. In connection with the employment of Mark Shulman, who
effective October 1997 became Executive Vice President, Chief Operating Officer,
Chief Merchandising Officer and a director of the Company, the Company, with
Compensation Committee approval, established a compensation package designed to
attract him to the Company. The goal of management was to locate the most
qualified individual possible from a broad range of potential candidates to fill
the position of Chief Operating Officer and Chief Merchandising Officer of the
Company and Mr. Shulman was selected after a comprehensive search process. Mr.
Shulman's compensation package including base salary, incentive bonus for fiscal
1997 and fiscal 1998, stock options and restricted stock (see "Summary
Compensation Table" and "Employment Agreements and Change In Control
Agreements") was established at a negotiated level commensurate with securing
from outside the Company the services of an individual with the unique talents
and experience of Mr. Shulman.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code, enacted in 1993, generally disallows a deduction to
publicly traded companies to the extent of excess compensation over $1 million
paid to the chief executive officer or to any of the four other most highly
compensated executive officers. Qualifying performance based compensation will
not be subject to the deduction limit if certain requirements are met. The
Company does not believe that Section 162(m) deduction limits for fiscal 1998
will be material in terms of net financial effect or number of persons covered
and therefore the Company does not intend to restructure fiscal 1998
compensation arrangements. The Company and the Compensation Committee will
continue to monitor this matter.
Compensation Committee
of the Board of Directors:
Mark H. Willes, Chairperson
Elizabeth T. Kennan
12
<PAGE> 16
Performance Graph
The following graph compares the percentage change in the cumulative total
shareholders' return on the Company's common stock on a year end basis, using
the last day of trading prior to the Company's fiscal year end, from November
19, 1993, the first trading day of the Company's common stock, to January 30,
1998, with the cumulative total return on the Standard & Poor's 500 Stock Index
and the Dow Jones Retailers-All Specialty Index for the same period. In
accordance with the rules of the SEC, the returns are indexed to a value of $100
at November 19, 1993 and assume that all dividends were reinvested.
COMPARISON OF YEAR END CUMULATIVE TOTAL RETURN OF TALBOTS,
S&P 500 INDEX, AND DOW JONES RETAILERS-ALL SPECIALTY INDEX
[TALBOTS PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DOW JONES
MEASUREMENT PERIOD STANDARD & POOR'S RETAILERS - ALL
(FISCAL YEAR COVERED) THE TALBOTS, INC. 500 SPECIALTY
<S> <C> <C> <C>
11/19/93 100 100 100
1/28/94 107 104 95
1/27/95 137 105 100
2/2/96 126 145 105
1/31/97 128 183 125
1/30/98 67 232 189
</TABLE>
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors is comprised of two outside
independent directors, Mark H. Willes and Elizabeth T. Kennan.
Mr. Isogai, a director of the Company, is Chairman of the Board of
Directors of Revman Industries Inc., a subsidiary of JUSCO USA. Mr. Zetcher,
President, Chief Executive Officer and a director of the Company, is also a
director of Revman Industries Inc. The Company has a consulting contract with
Mr. Isogai under which he provides advice with respect to strategic planning and
other related issues concerning the Company and maintains on behalf of the
Company a working relationship with banks and other financial institutions, in
particular Japanese banks. The Company compensates Mr. Isogai with an annual fee
of $250,000 plus
13
<PAGE> 17
expenses for his services, which fee is subject to annual adjustment. The
contract may be terminated by either party upon prior written notice at any time
following the fifth anniversary of the contract.
Certain Transactions With Related Parties. In connection with the
Company's IPO in 1993, the Company, through its wholly owned subsidiary The
Classics Chicago, Inc. ("Classics Chicago"), purchased the Talbots trade name
and certain other trademarks (the "Trademarks") in the "Territory" (being all
countries of the world other than Australia, New Zealand, Japan, China and
certain other Asian countries) from JUSCO (Europe) B.V. ("JUSCO (Europe)"), a
subsidiary of JUSCO. Under the trademark purchase agreement and a license
agreement with Classics Chicago, the Company also obtained the non-exclusive
right to manufacture products bearing the Trademarks outside the Territory for
export to the Territory and, for a royalty equal to 1% of net catalog sales
outside the Territory, to distribute catalogs bearing the Trademarks and to make
catalog sales to customers of the Company outside the Territory. Such catalog
license may be terminated by JUSCO (Europe) at any time with four months prior
written notice. Talbots Japan Co., Ltd. ("Talbots Japan"), a subsidiary of
JUSCO, is the non-exclusive licensee of the Trademarks within Japan and other
countries outside the Territory. Under the trademark purchase agreement, JUSCO
(Europe) retains the right in its discretion to disapprove the assignment by
Classics Chicago of any rights in the Trademarks in the Territory to any party.
Such retained right may be purchased by Classics Chicago at its option should
JUSCO (Europe) attempt to sell or otherwise transfer such retained right to a
third party or should JUSCO (Europe) and its affiliates cease to own a majority
of the Company's voting stock. The purchase price to Classics Chicago of such
retained right will be the lesser of the fair market value of such retained
right on the date of exercise of the option and $2.0 million. Classics Chicago
licenses the right to use the Trademarks to the Company and its other
subsidiaries.
The Company has a services agreement with Talbots Japan under which the
Company renders services, primarily in the merchandising and import operation
areas, as requested by Talbots Japan on a cost reimbursement basis. At January
31, 1998, the amount due from Talbots Japan under this services agreement was
approximately $980,504. In addition, at January 31, 1998, approximately
$7,268,706 was due to the Company from Talbots Japan for merchandise purchases.
The Company also realizes certain net expenses from time to time in the course
of its merchandising and sales relationship with Talbots Japan which are not
material in amount. During 1997, the Company also made its merchandising and
store management information systems available to Talbots Japan. The Company
charges back to Talbots Japan all one time and ongoing costs related to this
project. At January 31, 1998, the amount due from Talbots Japan under this
agreement was $284,864.
In February 1995, the Company implemented a stock repurchase program (the
"Repurchase Program") for the purchase of up to one million shares of the
Company's common stock over a two year period. In October 1995 the Company
completed the Repurchase Program and in November 1995 the Company extended the
Repurchase Program for the purchase of up to an additional $40 million of its
common stock over a period of up to an additional two years, which was
completed. The Repurchase Program was again extended in May 1997 for the
purchase of an additional $40 million of its common stock over a period of up to
an additional two years. Under the Repurchase Program, the Company repurchases
shares in the open market and purchases a proportionate number of shares from
JUSCO USA so as to maintain the same percentage stock ownership of the Company
between JUSCO USA and the public shareholders. The price of the common stock
purchased from JUSCO USA is equal to the weighted average price of the common
stock paid to the public shareholders.
JUSCO USA, the Company and its domestic subsidiaries entered into a tax
allocation agreement at the time of the Company's 1993 IPO for the allocation of
(1) consolidated federal income tax liability and any similar state or local
taxes and (2) all other taxes. Under the agreement, JUSCO USA, the Company and
its domestic subsidiaries would generally share the consolidated federal income
tax liability and liability for
14
<PAGE> 18
similar state and local taxes in accordance with their election for earnings and
profits purposes. However, the allocation would only be applicable as to any
year in which JUSCO USA owned at least 80% of the common stock of the Company
and since the date of the 1993 IPO, JUSCO USA has owned significantly less than
80% of the Company's common stock. See "Beneficial Ownership of Common Stock."
Concurrently with the Company's 1993 IPO, JUSCO USA entered into a
shareholder's agreement with the Company pursuant to which the Company agreed,
subject to certain limitations, to provide JUSCO USA with one demand
registration right per year, upon exercise of which the Company would be
obligated to register under the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities law, at the expense of JUSCO
USA, some or all of the Company's common stock beneficially owned by JUSCO USA.
The agreement also provides that if the Company proposes to register shares of
common stock under the Securities Act for its own account, then JUSCO USA has a
right to request that the Company register JUSCO USA's shares of Company common
stock. JUSCO USA will bear the incremental cost of registering its shares in any
such offering. If JUSCO USA's shares of the Company's common stock are not
included in two registrations of shares of common stock by the Company for the
Company's own account due to the judgment of the managing underwriter to exclude
JUSCO USA's shares, the Company will file an additional registration statement
to register JUSCO USA's shares, and expenses incurred in connection with such
additional registration will be paid by the Company. The Company and JUSCO USA
will indemnify each other against certain liabilities under the Securities Act
of 1933 in connection with any such registration statements.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Certain Beneficial Owners. The following table sets forth certain
information as to beneficial ownership of each person known to the Company to
own beneficially more than 5% of the outstanding common stock of the Company as
of March 1, 1998. Such beneficial owner has sole voting and investment power as
to such shares.
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
---------------- ---------------- ----------------
<S> <C> <C>
JUSCO (U.S.A.), Inc. 20,161,718 63.4%
520 Madison Ave.
New York, NY 10022
</TABLE>
Stock Ownership of Directors and Executive Officers. The following table
sets forth certain information as to beneficial ownership of the outstanding
common stock of the Company, as of March 1, 1998, by each director and nominee
of the Company, each of the individuals listed in the Summary Compensation
Table, and all executive officers and directors of the Company as a group.
Except as otherwise indicated, all persons listed below have sole voting and
investment power with respect to such shares. No director, nominee or executive
officer beneficially owns more than one percent of the total outstanding common
stock, and all directors and executive officers as a group own approximately
four percent of the total outstanding common stock.
<TABLE>
<CAPTION>
NO. OF SHARES NO. OF SHARES
OF COMMON OF COMMON
NAME OF BENEFICIAL OWNER STOCK(1)(2) NAME OF BENEFICIAL OWNER STOCK(1)(2)
------------------------ ------------- ------------------------ -------------
<S> <C> <C> <C>
T. Okada....................... 24,999 M. Okada....................... 5,000
A.B. Zetcher................... 393,771 M.H. Willes(3)................. 9,099
E. Akiyama..................... 5,000 M. Shulman..................... 9,180
M. Isogai...................... 8,000 E.L. Larsen.................... 98,200
E.T. Kennan.................... 4,349 R.T. O'Connell, Jr. ........... 90,042
</TABLE>
15
<PAGE> 19
<TABLE>
<CAPTION>
NO. OF SHARES NO. OF SHARES
OF COMMON OF COMMON
NAME OF BENEFICIAL OWNER STOCK(1)(2) NAME OF BENEFICIAL OWNER STOCK(1)(2)
------------------------ ------------- ------------------------ -------------
<S> <C> <C> <C>
S.M. Stolper................... 90,731 All executive officers and
C.J. Hinkley*.................. 187,284 directors as a group(4)...... 1,274,406
</TABLE>
- ---------------
* No longer an executive officer.
(1) The shares listed include shares of restricted stock granted, and subject to
forfeiture, under the Company's 1993 Executive Stock Based Incentive Plan,
as follows: Mr. Zetcher, 15,150; Mr. Shulman 6,000; Mr. Larsen, 3,380; Mr.
Stolper, 3,380; Mr. O'Connell, 3,380; Mr. Hinkley, 6,864, and all executive
officers as a group, 48,432. The listed shares also include shares subject
to currently exercisable stock options as follows: Mr. T. Okada, 4,999; Mr.
Zetcher, 335,897; Mr. Akiyama, 3,000; Mr. Isogai 3,000; Ms. Kennan, 3,999;
Mr. M. Okada, 3,000; Mr. Willes, 3,999; Mr. Larsen, 76,323; Mr. Stolper,
76,323; Mr. O'Connell, 76,323; Mr. Hinkley, 161,557; and all executive
officers and directors as a group 1,038,032. Does not include shares of
restricted stock or stock options granted or awarded subject to shareholder
approval at this Annual Meeting.
(2) Messrs. T. Okada, E. Akiyama, M. Okada and M. Isogai are directors of the
Company and, other than Mr. Isogai, each is a director or officer or both of
JUSCO and JUSCO USA. Each disclaims beneficial ownership of the common stock
of the Company owned by JUSCO USA and such shares are not included in their
individual share ownership.
(3) Includes 100 shares held by the son of Mr. Willes, as to which shares Mr.
Willes disclaims beneficial ownership.
(4) Includes 4,616 shares held by immediate family members or family trusts, as
to which shares beneficial ownership is disclaimed.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file reports regarding ownership of the
Company's common stock with the SEC, and to furnish the Company with copies of
all such filings. Based on a review of these filings, the Company believes that
all filings were timely made other than an amended Form 3 filed for Mr. Shulman
to indicate tax withholding shares on a grant of restricted stock.
ITEM 2
RATIFICATION OF AMENDMENT TO
1993 EXECUTIVE STOCK BASED INCENTIVE PLAN
The Company's shareholders are being asked to ratify and approve the action
of the Board of Directors in adopting an amendment to the Company's 1993
Executive Stock Based Incentive Plan (the "Plan"). The Plan was originally
adopted by the Company in November 1993. A general discussion of the principal
terms of the Plan and the proposed amendment are set forth below. This
discussion is qualified in its entirety by the full text of the Plan, a copy of
which has been filed with the Securities and Exchange Commission and is
incorporated herein by reference.
General. The Plan is intended to advance the interests of the Company and
its shareholders by providing incentives to certain key employees of the Company
and its affiliates and to certain other individuals
16
<PAGE> 20
who perform services for the Company and its affiliates. The Plan provides for
awards of nonqualified stock options, incentive stock options, stock
appreciation rights ("SARs"), restricted stock, performance grants, and other
types of awards. Each award may be granted alone or in conjunction with other
types of Plan awards. Shares issued under the Plan may be either authorized but
unissued shares, treasury shares, reacquired shares or any combination.
The Plan will expire by its terms in November 2003, but the Board of
Directors may prior to such date extend the term of the Plan for an additional
period of up to five years for the grant of awards other than incentive stock
options.
Proposed Amendment. The Plan currently authorizes the issuance of an
aggregate of not more than 2,650,000 shares of common stock. Of such original
1993 Plan authorization, approximately 154,004 of such shares remain available
under the Plan. Accordingly, the Board of Directors has approved an amendment to
the Plan to increase the authorized number of shares of common stock available
for awards under the Plan to 5,960,000 shares, subject to shareholder approval
at this Annual Meeting.
Eligibility for Participation. Key employees of the Company and other key
individuals performing services for the Company or any participating affiliate
are eligible for awards. The Compensation Committee has the authority in its
discretion to select key employees and key individuals. No non-employee director
of the Company or any affiliate is eligible for awards. Participating affiliates
are entities in which the Company has a substantial equity interest whose
participation is approved by the Company's Board of Directors and by the
affiliate.
The Company estimates that approximately 80 employees are currently
eligible to participate in the Plan. As of March 1, 1998, awards granted under
the Plan in fiscal 1998, subject to shareholder approval of this Proposal, are
set forth in the following table.
NEW PLAN BENEFITS
THE TALBOTS, INC.
1993 EXECUTIVE STOCK BASED INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER NUMBER OF
NAME AND POSITION OF OPTIONS(1) RESTRICTED SHARES(2)
- ----------------- ------------- --------------------
<S> <C> <C>
Arnold B. Zetcher, President and Chief Executive Officer.... 100,000 59,000
Mark Shulman, Executive Vice President, Chief Operating 50,000 28,000
Officer and Chief Merchandising Officer...................
Edward L. Larsen, Senior Vice President, Finance and Chief 23,000 14,700
Financial Officer.........................................
Stuart M. Stolper, Senior Vice President, Human Resources... 23,000 14,700
Richard T. O'Connell, Jr., Senior Vice President, Legal and 23,000 14,700
Real Estate...............................................
Executive Group (16 persons)................................ 381,500 235,800
Non-Executive Director Group................................ N/A N/A
Non-Executive Officer Employee Group........................ 83,500 0
</TABLE>
- ---------------
(1) Options to purchase the Company's common stock were granted at an exercise
price equal to the market value on the date of grant, and expire ten years
from the date of grant. The options become exercisable in one-third
increments beginning one year from the grant date.
(2) Awards of restricted common stock vest in annual one-third increments
beginning three years from the grant date.
17
<PAGE> 21
Administration and Amendment of the Plan. The Compensation Committee has
sole authority to administer the Plan, which includes the authority to determine
the type, size and terms of awards, the time when awards will be granted and any
performance objectives, to modify the terms of any award granted, to interpret
the terms of the Plan and awards, to establish, amend and rescind any rules
relating to the Plan, and to delegate certain administration of the Plan. The
Plan may be amended by the Board of Directors but no amendment shall be
effective unless and until the same is approved by the Company's shareholders if
the failure to obtain shareholder approval would adversely affect Plan
compliance with Rule 16b-3 under the Securities Exchange Act of 1934 or other
applicable law.
Stock Options. The Compensation Committee may grant stock options which
may be nonqualified stock options or incentive stock options. Options may not be
granted with an exercise price less than the fair market value of the common
stock on the grant date; however, in the case of incentive stock options granted
to an employee who owns common stock representing more than 10% of the voting
power of all classes of stock of the Company ("Ten Percent Employee"), incentive
stock options may not be granted with an exercise price less than 110% of the
common stock's fair market value on the grant date. The Compensation Committee
will determine the number of shares subject to each option. Options may be
exercised by payment of cash, delivery of common stock or a combination thereof,
in each case subject to the discretion of the Compensation Committee. The amount
of aggregate fair market value of common stock (determined at the time of grant)
with respect to which incentive stock options are exercisable for the first time
by a participant during any calendar year shall not exceed an amount determined
by the Compensation Committee.
Stock Appreciation Rights. The Compensation Committee may grant SARs,
which are rights to receive (without payment to the Company) cash, common stock,
other Company securities or property, or other forms of payment, or any
combination thereof, based on the increase in the value of the number of shares
of common stock specified in the SAR. The number of shares subject to each SAR
is determined by the Compensation Committee. Upon exercise of an SAR or the
surrender of any unexercised award or option attached to an SAR, the holder is
entitled to receive, without payment to the Company, the excess of the fair
market value, at the time of exercise, of the shares for which the SAR is
exercised or attached award surrendered, over the exercise price or stock option
price, as the case may be. The Compensation Committee is entitled in its
discretion to settle the obligation arising out of the exercise of an SAR, or
the surrender unexercised of any option or award attached to the SAR, by the
payment of cash, shares of common stock or other property, or any combination
thereof. An SAR may provide that it will be deemed to have been exercised at the
close of business on the business day preceding the expiration date of the SAR
or any attached option or award, or such other date as specified by the
Compensation Committee, if at such time such SAR has a positive value.
Reduction; Transferability; Exercise. The number of shares of common stock
subject to an outstanding option or SAR may be reduced on a share-for-share or
other appropriate basis, as determined by the Compensation Committee, to the
extent that shares under such option or SAR are used to calculate the cash,
common stock or other form of payment, or any combination thereof, received by
the Company pursuant to exercise of any other award that may be attached to such
option or SAR, or the extent that any other award granted in conjunction with
such option or SAR is paid. Options and SARs may not be sold, assigned,
transferred, pledged or otherwise disposed of except by will or the laws of
descent and distribution, and shall be exercisable during the grantee's lifetime
only by that individual.
Unless the Compensation Committee determines otherwise, no option or SAR
shall be exercisable for at least 12 months after the grant date, unless the
grantee ceases employment or performance of services before the expiration of
such 12-month period by reason of death or disability. Incentive stock options
granted to a Ten Percent Employee, and SARs which are attached to an incentive
stock option granted to a Ten Percent Employee, may not be exercisable after the
expiration of five years from their grant date, but any other SAR
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<PAGE> 22
or option may not be exercisable after the expiration of ten years from the
grant date. Any option or SAR may be exercised only at such time or times and in
such installments as the Compensation Committee may establish, and in the case
of an SAR, only if the option or other award, if any, to which it is attached is
at the time exercisable. Unless otherwise determined by the Compensation
Committee, an option or SAR is only exercisable during the period of the
grantee's employment with or service to the Company or an affiliate and for a
period of three months thereafter, except in the case of disability, early,
normal or deferred retirement under a qualified retirement program, death (or in
the case of all nonqualified options and all SARs except those attached to an
incentive stock option, related employment as referred to in the Plan or
termination without cause as referred to in the Plan), in which case the option
or SAR may be exercised for established periods beyond such three month period
or during such period of related employment.
Restricted Stock. The Compensation Committee determines the terms and
conditions of restricted stock grants. Common stock issued to a participant in
accordance with an award of restricted stock may not be sold, assigned,
transferred, pledged or otherwise disposed of, except by will or the laws of
descent and distribution, or as otherwise determined by the Compensation
Committee, during the restricted period determined by the Compensation
Committee. The Company has the option (exercisable on such terms, in such manner
and during such period as the Compensation Committee determines) to repurchase
shares subject to an award of restricted stock, at the price fixed by the
Compensation Committee when the award was made or amended, upon termination of
the participant's employment or service during the restricted period (except in
the case of related employment), the failure to pay to the Company taxes which
the Company determines are required to be withheld in respect of such shares
during the restricted period, or such other circumstances as determined by the
Compensation Committee in its discretion.
Unless otherwise determined by the Compensation Committee in its
discretion, a participant to whom an award of restricted stock has been made
will have, after the issuance of a stock certificate for the number of
restricted shares awarded and prior to the expiration of the restricted period
or the earlier repurchase, ownership of such shares including the right to vote
the shares and to receive dividends and other distributions made or paid with
respect to such shares, subject to the options, restrictions and limitations
imposed pursuant to the Plan. A participant with whom a restricted stock award
agreement is made to issue shares of common stock in the future, however, will
have no rights as a shareholder with respect to such shares until the actual
issuance of the stock certificates.
If a participant who has been in the continuous employment or performance
of services for the Company or an affiliate since the date the restricted stock
award was granted shall, while in such employment or performance of services,
die or terminate employment or performance by reason of disability, or early,
normal or deferred retirement under a qualified retirement program, and such
event shall occur after the date on which the award was granted and prior to the
end of the restricted period, the Compensation Committee may determine to cancel
the repurchase option and any other restrictions on all or any of the shares of
common stock subject to the award.
Performance Grants. The Compensation Committee may award performance
grants entitling the participant to receive a specified amount upon satisfaction
of performance objectives during an award period, all as established by the
Compensation Committee. The performance objectives will be based on such measure
or measures of performance as the Compensation Committee shall determine,
including the performance of the participant, the Company or any one or more of
its subsidiaries or one or more of their divisions or units, or any combination
of the foregoing, and may be applied on an absolute basis or be relative to
industry or other indices or any combination thereof. The Compensation Committee
shall determine whether the performance objectives have been satisfied, and the
actual value of performance grants, following the end of the award period or at
such other time or times as may be appropriate. Payment of any amount in
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<PAGE> 23
respect of the performance grants may be made to the participant in cash, common
stock or other forms of payment, or any combination thereof, as determined by
the Compensation Committee in its discretion.
The Compensation Committee will determine the value or range of values of a
performance grant to be awarded. The maximum value of each performance grant
will be (i) an amount fixed by the Compensation Committee at the time the
performance grant is made or amended thereafter, (ii) an amount which varies
from time to time based in whole or in part on the then current value of a share
of common stock, other Company securities or other property, or any other
combination thereof, or (iii) an amount that is determinable from criteria
specified by the Compensation Committee. Performance grants may be issued in
different classes or series having different names, terms and conditions. In the
case of a performance grant awarded in connection with a stock option, SAR,
restricted stock or any combination thereof, the performance grant may be
reduced on an appropriate basis to the extent that such associated award has
been exercised, paid, or otherwise received by the performance grant recipient,
as determined by the Compensation Committee.
Other Types of Awards. The Compensation Committee may make any other type
of award deemed by the Compensation Committee in its discretion to be consistent
with the purposes of the Plan, including awards, options or similar rights
granted with respect to unbundled stock units or components thereof, and awards
to participants who are foreign nationals or are employed or performing services
outside the United States.
Financial Assistance. The Company may provide financial assistance to any
person to whom an award has been granted to permit the exercise of an award, the
participation in the Plan and/or the payment of any taxes in respect thereof.
Such assistance may take such form as the Compensation Committee deems
appropriate, including a direct loan from the Company, a guarantee of the award
recipient's obligation by the Company, or the maintenance by the Company of
deposits with a third party lender.
Deferral of Compensation. The Compensation Committee is charged with
determining whether an award shall be made in conjunction with deferral of the
participant's salary, bonus or other compensation, or any combination thereof,
and whether any deferred amounts may be forfeited to the Company or to other
participants (or any combination thereof) under certain circumstances, subject
to increase or decrease in value based upon the attainment or non-attainment of
certain performance measures, and/or credited with income equivalents until the
date or dates of payment of the award, if any.
Deferred Payment of Awards. The Compensation Committee may specify that
the payment of all or any portion of cash, common stock or other form of payment
under an award shall be deferred until a later date. Deferrals shall be for such
periods or until the occurrence of such events, and upon such terms, as the
Compensation Committee in its discretion shall determine.
Amendment of Outstanding Awards. The terms of any outstanding award may be
amended from time to time by the Compensation Committee in its discretion in any
manner that it deems appropriate, including but not limited to acceleration of
the date of exercise of any award and/or payment thereunder, provided that no
such amendment shall adversely affect in a material manner any right of a
participant under the award without the participant's written consent unless the
Compensation Committee determines in its discretion that (i) there have occurred
or are about to occur significant changes in the participant's position, duties
or responsibilities or (ii) significant changes in conditions have or are
expected to have a substantial effect on all or any part of the Company or any
affiliate, the Plan or any award thereunder.
Change in Control. In the event of a change in control (as defined below)
of the Company, restrictions on restricted stock awards shall lapse, stock
options and SARs shall become immediately exercisable and fully vested, and
payment shall be made with respect to performance grants based on the assumption
that the
20
<PAGE> 24
specified performance objectives would have been attained by the end of the
performance period specified in the award. The effect of a change in control on
other awards shall be determined from time to time by the Compensation
Committee. Under the Plan, "change in control" means (i) the acquisition by any
person or persons acting in concert, other than the Company or any of its
subsidiaries or JUSCO USA or any of its subsidiaries or affiliates
(collectively, an "Acquiring Person"), of beneficial ownership, directly or
indirectly, of more than 25% of the combined voting power of the then
outstanding securities of the Company entitled to then vote generally in the
election of directors of the Company, and no other shareholder is the beneficial
owner of a percentage of such securities higher than that held by the Acquiring
Person, or (ii) the members of the Incumbent Board (as defined below) no longer
constitute a majority of the Board of Directors of the Company. The term
"Incumbent Board" means the Board of Directors as comprised on November 18, 1993
and includes any individual elected thereafter if nominated or approved by at
least two-thirds of the then incumbent Board of Directors, unless that
individual's election or nomination was approved as a result of either an actual
or threatened election contest or proxy contest, but does not include any
individual who is an affiliate, associate or designee of an Acquiring Person
having or proposing to acquire beneficial ownership, directly or indirectly, of
more than 10% of the combined voting power of the then outstanding securities of
the Company entitled to then vote generally in the election of directors.
Adjustment. In the event of any change in the Company's outstanding common
stock by reason of a stock split, stock dividend, split-up, split-off, spin-off,
recapitalization, merger, consolidation, rights offering, reorganization,
combination or exchange of shares, sale of all or part of the Company's assets,
a distribution to shareholders other than a normal cash dividend, or other
extraordinary or unusual event, and if the Compensation Committee determines
that such change equitably requires adjustment in the terms of any award or the
number of shares of common stock available for awards, the Compensation
Committee may make such adjustment.
Certain Federal Tax Consequences. The statements in the following
paragraphs reflect the Company's views of current interpretations of federal
income tax law. The law is technical and complex and the statements represent
only a general summary of some of the applicable provisions.
A participant receiving a stock option will not realize any compensation
income under the Internal Revenue Code, as amended (the "Code"), upon the grant
of the option. However, a participant will realize compensation income at the
time of exercise (except for options which are incentive stock options) in the
amount of the difference between the option price and the fair market value on
the date of exercise. The Company is entitled to a deduction at the time of
exercise equal to the amount of compensation income that is realized by the
employee. In the case of incentive stock options for which the holding period
requirements are satisfied, although no compensation income is realized upon
exercise, the excess of the fair market value on the date of exercise over the
option price is included in alternative minimum taxable income for alternative
minimum tax purposes. In the case of incentive stock options for which the
holding period requirements are not satisfied, the optionee will realize
ordinary income, in most cases equal to the difference between the option price
of the shares and the lesser of the fair market value of the shares on the
exercise date or the amount realized on the sale or exchange of the shares, and
the Company will be entitled to a corresponding deduction.
In the case of SARs granted either freestanding or in tandem with an
option, the participant will not realize any compensation income at the time of
the grant. However, the fair market value of stock or cash delivered pursuant to
the exercise of such SARs will be treated as compensation income taxable to the
participant at the time of exercise, and the Company will be entitled to a
deduction at the time of exercise equal to the amount of compensation income
that is realized by the participant.
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In the case of restricted stock or performance awards, the participant will
realize compensation income in an amount equal to the fair market value of such
stock or award less any amount paid for such stock or award at a time when the
participant's rights with respect to such stock or award are no longer subject
to a substantial risk of forfeiture unless the participant otherwise elects
pursuant to a special election provided in the Code. The Company will be
entitled to a deduction at the time and equal to the amount of compensation
income that is realized by the participant.
The federal income tax consequences of other types of awards will depend
upon the form such award takes.
ITEM 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors to make an examination of the accounts of the Company for
the 1998 fiscal year. Deloitte & Touche LLP has served as the Company's
independent auditors since 1988. Representatives of Deloitte & Touche LLP are
expected to be present at the Annual Meeting and will be available to respond to
appropriate questions and to make such statements as they may desire.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
1999 Annual Meeting of Shareholders must be received by the Secretary of the
Company, for inclusion in the Company's proxy statement, notice of meeting and
proxy relating to the 1999 Annual Meeting, not later than December 23, 1998.
The Company's Bylaws establish an advance written notice procedure for
shareholders seeking to nominate candidates for election as directors at any
annual meeting of shareholders, or to bring business before an annual meeting of
shareholders of the Company. The Bylaws provide that only persons who are
nominated by or at the direction of the Board, or by a shareholder who has given
timely written notice to the Secretary of the Company prior to the meeting at
which directors are to be elected, will be eligible to be considered for
election as directors of the Company. The Bylaws also provide that at any
meeting of shareholders only such business may be conducted as has been brought
before the meeting by or at the direction of the Board or, in the case of an
annual meeting of shareholders, by a shareholder who has given timely written
notice to the Secretary of the Company of such shareholder's intention to bring
such business before the meeting. Under the Bylaws, for any such shareholder
notice to be timely, such notice must be received by the Company in writing not
less than 60 days nor more than 90 days prior to the meeting, or in the event
that less than 70 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, to be timely, notice by the
shareholder must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting or such
public disclosure was made. Under the Bylaws, a shareholder's notice must also
contain certain information specified in the Bylaws.
SHAREHOLDERS, UPON WRITTEN REQUEST TO THE INVESTOR RELATIONS DEPARTMENT OF
THE COMPANY, 175 BEAL STREET, HINGHAM, MASSACHUSETTS 02043, MAY RECEIVE, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, REQUIRED TO BE FILED
WITH THE SEC FOR THE 1997 FISCAL YEAR.
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<PAGE> 26
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting as
recommended by the Board of Directors or, if no such recommendation is given, in
the discretion of the proxy holders.
23
<PAGE> 27
1247-PS-98
<PAGE> 28
[TALBOTS LOGO] THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of Shareholders,
please ensure that your shares are represented at the meeting by promptly
returning your proxy in the enclosed envelope.
COMPANY HIGHLIGHTS DURING FISCAL 1997
* In October 1997, the Company appointed Mark Shulman Executive Vice President,
Chief Operating Officer and Chief Merchandising Officer.
* During the fiscal year, the Company opened a net 68 new stores.
* During the fiscal year, the Company repurchased $27.5 million of its common
stock.
* In May 1997, the Company's Board of Directors approved an increase in the
quarterly cash dividend to $0.11 per share from $0.09 per share.
<TABLE>
TLB72 F DETACH HERE
- ----------------------------------------------------------------------------------------------------
<S> <C>
___ PLEASE MARK
| X | VOTES AS IN
|___| THIS EXAMPLE.
1. ELECTION OF DIRECTORS
FOR AGAINST ABSTAIN
To elect the following Nominees as 2. AMENDMENT OF 1993 __ __ __
Directors: EXECUTIVE STOCK BASED | | | | | |
INCENTIVE PLAN |__| |__| |__|
Nominees: Takuya Okada, Arnold B. To ratify the amendment
Zetcher, Eiji Akiyama, Mark Shulman, of The Talbots, Inc. 1993
Masaharu Isogai, Eilzabeth T. Kennan, Executive Stock Based
Motoya Okada, and Mark H. Willes. Incentive Plan to increase
the number of authorized
___ FOR ___ WITHHELD shares.
| | ALL | | FROM ALL
|___| NOMINEES |___| NOMINEES
FOR AGAINST ABSTAIN
___ 3. SELECTION OF AUDITORS __ __ __
| | To ratify the appointment | | | | | |
|___| _______________________________ of Deloitte & Touche LLP |__| |__| |__|
For all nominees except as as auditors for the 1998
noted above fiscal year.
MARK HERE FOR ___ MARK HERE IF YOU ___
ADDRESS CHANGE | | PLAN TO ATTEND | |
AND NOTE AT LEFT |___| THE MEETING |___|
(PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN
IN PARTNERSHIP NAME BY AUTHORIZED PERSON.)
Signature:__________________ Date:____________ Signature:_______________________ Date:____________
</TABLE>
<PAGE> 29
TLB72 2 DETACH HERE
PROXY
THE TALBOTS, INC. ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE TALBOTS, INC.
The undersigned hereby appoints Edward L. Larsen, Stuart M. Stolper, and
Richard T. O'Connell, Jr., and each or any of them, with power of substitution,
proxies for the undersigned and authorizes each of them to represent and vote,
as designated, all of the shares of stock of The Talbots, Inc. (the "Company")
which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at BankBoston, N.A., 100 Federal Street,
Boston, Massachusetts on May 21, 1998 at 10:00 a.m., and at any adjournments or
postponements of such meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO CONTRARY DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" PROPOSALS 1,2 AND 3. PLEASE VOTE PROMPTLY.
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
