<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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)
(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 29, 1999
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1999
Dear Shareholder:
It is a pleasure for us to extend to you a cordial invitation to attend the
1999 Annual Meeting of Shareholders of The Talbots, Inc. to be held at 10:00
a.m. on May 27, 1999 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 ZETCHER
ARNOLD B. ZETCHER
President and Chief
Executive Officer
<PAGE> 3
THE TALBOTS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1999
------------------------
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
27, 1999, at 10:00 a.m., for the following purposes:
1. To elect eight directors.
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the 1999 fiscal year.
3. To act upon such other business as may properly come before the
Annual Meeting.
Shareholders of record at the close of business on April 8, 1999 are
entitled to notice of and to vote at the Annual Meeting or at any postponement
or adjournment.
By order of the Board of Directors,
RICHARD T. O'CONNELL, JR.
Secretary
April 29, 1999
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 27, 1999
PROXY STATEMENT
This Proxy Statement is being furnished to the shareholders of The Talbots,
Inc. (the "Company" or "Talbots") 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 27, 1999, at 10:00 a.m., at BankBoston,
N.A., 100 Federal Street, Boston, Massachusetts and at any postponement or
adjournment (the "Annual Meeting"). At the Annual Meeting, shareholders are
being asked to vote on (1) the election of eight directors and (2) the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the 1999 fiscal year.
This Proxy Statement, Notice of Annual Meeting and accompanying proxy are
first being mailed to shareholders on or about May 3, 1999.
GENERAL
The holders of shares of common stock of the Company of record at the close
of business on April 8, 1999 are entitled to vote such shares at the Annual
Meeting. On April 8, 1999, there were 31,159,803 shares of common stock of the
Company outstanding. 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.
Proxies marked "abstain" on a matter will be considered to be represented
at the Annual Meeting, but not voted for such purposes. Abstentions will be
disregarded and will have no effect on the election of directors, but will have
the same effect as a vote against the ratification of the appointment of
auditors. Broker non-votes, that is, shares registered in the names of brokers
or other "street name" nominees for which proxies are voted on some but not all
matters and as to which non-voted matters the broker indicates that it does not
have discretionary authority, would be considered to be represented at a
shareholders' meeting but would be considered to be voted only as to those
matters actually voted on. At this Annual Meeting, brokers will have
discretionary authority to vote on each of the matters being proposed.
Shares of common stock represented by a properly executed proxy received in
time for the Annual Meeting 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
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the 1999 fiscal year and, with respect to any other matters properly submitted
to 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
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<PAGE> 5
voting in person at the Annual Meeting. 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 and for ratification of the appointment of Deloitte & Touche LLP
as the Company's independent auditors for the 1999 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. The Board of Directors
recommends that shareholders vote "FOR" such nominees for director.
Set forth below is a brief description of the background of each nominee
for director. All nominees are current directors of the Company, except for Isao
Tsuruta who is a new nominee for director. Masaharu Isogai, a director of the
Company since 1993, is retiring from the Board of Directors.
TAKUYA OKADA
Mr. Okada, 73, 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, 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. Okada is the father of Motoya Okada, a Director of the Company.
ARNOLD B. ZETCHER
Mr. Zetcher, 58, 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, and prior to that, Chairman and Chief Executive
Officer of Kohl's Food Stores, another BATUS division. Mr. Zetcher also served
as Chairman and Chief Executive Officer of Bonwit Teller in New York and served
in various capacities during his 10 years with Federated Department Stores.
2
<PAGE> 6
EIJI AKIYAMA
Mr. Akiyama, 66, was elected a Director of the Company in 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.
ELIZABETH T. KENNAN
Ms. Kennan, 61, was elected a Director of the Company in 1993. Ms. Kennan
was the 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 Capital Companies, 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.
H. JAMES METSCHER
Mr. Metscher, 42, joined Talbots as Executive Vice President and Chief
Merchandising Officer in November 1998 and was appointed a Director in March
1998. Mr. Metscher was employed by Liz Claiborne, Inc. from 1993 to 1996, first
as President of its First Issue division and later as President of the Liz
Claiborne Retail Division. From 1996 to 1998 he was President and Chief
Executive Officer of The Custom Foot, a venture capital backed specialty
footwear company. See "New Executive Vice President" on page 8. Mr. Metscher had
also been employed by Talbots from 1984 to 1993, holding positions of increasing
responsibility including Vice President, Merchandising and finally Vice
President, Product Development.
MOTOYA OKADA
Mr. Motoya Okada, 47, was elected a Director of the Company in 1993. Mr.
Okada has been President of JUSCO since 1997 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.
ISAO TSURUTA
Mr. Tsuruta, age 49, is currently Senior Vice President of JUSCO USA, a
wholly owned subsidiary of JUSCO. Mr. Tsuruta joined JUSCO in 1989 and started
his career as Assistant Vice President of JUSCO USA. Mr. Tsuruta was promoted to
Vice President & Deputy General Manager of JUSCO USA in 1990 and became Senior
Vice President of JUSCO USA in 1996.
MARK H. WILLES
Mr. Willes, 57, has been a Director of the Company since 1988. He is the
Chairman of the Board, President and Chief Executive Officer and a Director of
The Times Mirror Company and 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 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
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<PAGE> 7
management or otherwise compensated as a consultant or advisor to the Company
receives an annual retainer of $23,000 plus expenses. The chairperson of each
Board committee receives 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.
In fiscal 1998, the Board of Directors held four meetings, the Audit
Committee held two meetings and the Compensation Committee held one meeting.
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, 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 the determination 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, 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 compensation
information for the Company's Chief Executive Officer and the other four most
highly compensated executive officers of the Company and for Mr. Shulman who was
an executive officer of the Company during fiscal 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------------
----------------------------------- NUMBER OF
OTHER ANNUAL SECURITIES ALL OTHER
FISCAL COMPENSATION RESTRICTED STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARD(S)($)(3) OPTIONS(#) ($)(4)
- ------------------------------- ------ --------- -------- ------------ ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Arnold B. Zetcher, President 1998 718,500 814,800 -- 873,348 100,000 32,223
and Chief Executive Officer 1997 718,500 195,600 -- -- 90,000 39,827
1996 697,500 461,100 -- -- 100,000 41,487
H. James Metscher, Executive 1998 136,538 -- -- 387,038 25,000 --
Vice President, Chief
Merchandising Officer(1)
Edward L. Larsen, Senior Vice 1998 273,824 160,200 -- 217,597 23,000 11,119
President, Finance, Treasurer 1997 273,824 37,700 -- -- 20,700 15,620
and Chief Financial Officer 1996 265,848 97,600 -- -- 23,000 15,905
Stuart M. Stolper, Senior Vice 1998 262,469 171,300 -- 217,597 23,000 10,857
President, Human Resources 1997 262,469 39,700 -- -- 20,700 10,557
1996 254,824 93,600 -- -- 23,000 16,461
Richard T. O'Connell, Jr., 1998 223,727 140,900 -- 217,597 23,000 8,156
Senior Vice President, Legal 1997 223,727 33,800 -- -- 20,700 8,896
and Real Estate, and Secretary 1996 217,210 79,800 -- -- 23,000 4,500
Mark Shulman, Former Executive 1998 532,731 180,000 543,635(2) 414,470* 50,000 1,400,000(5)
Vice President, Chief Operating 1997 153,462 40,000 -- 299,130 130,000 --
Officer and Chief Merchandising
Officer
</TABLE>
- ---------------
* Mr. Shulman forfeited all of his 1998 restricted stock award (28,000 shares
valued at $769,720 at 1998 fiscal year end) and part of his 1997 restricted
stock award (6,000 shares valued at $164,940 at 1998 fiscal year end) in
connection with his separation from employment in December 1998.
(1) Mr. Metscher joined the Company as Executive Vice President and Chief
Merchandising Officer in November 1998. Mr. Metscher's annual salary in
fiscal 1998 was $450,000.
(2) Represents (i) relocation costs including selling costs, relocation
allowance and offset, and temporary housing of $329,957, and (ii) tax
obligation reimbursement of $213,678 related to such costs.
(3) Restricted stock awards vest in one-third increments beginning in the third
year from the grant date. Holders of restricted stock are entitled to
receive all declared dividends. The number and value of such restricted
stock at the end of fiscal 1998 for each of the current executive officers
named above is: Mr. Zetcher, 59,000 shares, $1,621,910; Mr. Metscher, 15,000
shares, $412,350; Mr. Larsen, 14,700 shares, $404,103; Mr. Stolper, 14,700
shares, $404,103; and Mr. O'Connell, 14,700 shares, $404,103.
(4) The amounts shown for each executive, other than Mr. Shulman, as to fiscal
1998 represent Company contributions to the Company's Retirement Savings
Voluntary Plan and the Supplemental Savings Plan.
(5) Represents amount payable pursuant to termination of employment agreement.
Option Grants in Last Fiscal Year. The table below shows information
regarding grants of stock options made to the named executive officers during
fiscal 1998 under the Company's 1993 Executive Stock Based
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<PAGE> 9
Incentive Plan. The amounts shown for each of the named executive officers as
potential realizable values are based on arbitrarily assumed annualized rates of
stock price appreciation of five percent and ten percent over the full ten year
term of the options. These potential realizable values are based solely on
arbitrarily assumed rates of appreciation specified in applicable regulations
promulgated by the Securities and Exchange Commission ("SEC"). Actual gains, if
any, on option exercises and common stock holdings are dependent on the future
performance of the Company's common stock and overall stock market conditions.
There can be no assurance that the potential realizable values shown in this
table will be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM($)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
- ------------------------ ------------- ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Arnold B. Zetcher 100,000 19.0 14.8125 02/10/08 931,550 2,360,731
H. James Metscher 25,000 4.7 25.8125 11/23/08 405,834 1,028,462
Edward L. Larsen 23,000 4.4 14.8125 02/10/08 214,257 542,968
Stuart M. Stolper 23,000 4.4 14.8125 02/10/08 214,257 542,968
Richard T. O'Connell, Jr. 23,000 4.4 14.8125 02/10/08 214,257 542,968
Mark Shulman 50,000 9.5 14.8125 12/20/01 465,775 1,180,366
</TABLE>
- ---------------
(1) Options become exercisable in one-third increments beginning one year from
date of grant, except for Mr. Shulman whose 1998 options became exercisable
in 1999 in connection with his termination of employment.
(2) Represents the market value of the Company's common stock on the date of
grant.
Option Exercises and Year-End Option Holdings. The following table shows
information regarding option exercises during fiscal 1998 as well as fiscal 1998
year-end option holdings for each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON REALIZED OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Arnold B. Zetcher -- -- 432,564/193,334 1,164,059/1,422,450
H. James Metscher -- -- 0/ 25,000 0/ 42,188
Edward L. Larsen -- -- 98,557/ 44,467 260,273/ 327,164
Stuart M. Stolper -- -- 98,557/ 44,467 260,273/ 327,164
Richard T. O'Connell, Jr. -- -- 98,557/ 44,467 260,273/ 327,164
Mark Shulman 20,000 83,750 23,333/ 50,000 59,791/ 634,350
</TABLE>
Retirement Benefits. The Company has a tax-qualified defined benefit plan
for salaried employees that provides pensions payable at retirement to each
eligible employee. The Company also has a supplemental retirement plan for
certain of its salaried employees that 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
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<PAGE> 10
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 30, 1999 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 9,300 18,599 27,899 37,198 46,498 55,798 55,798
150,000 11,300 22,599 33,899 45,198 56,498 67,798 67,798
175,000 13,300 26,599 39,899 53,198 66,498 79,798 79,798
200,000 15,300 30,599 45,899 61,198 76,498 91,798 91,798
225,000 17,300 34,599 51,899 69,198 86,498 103,798 103,798
250,000 19,300 38,599 57,899 77,198 96,498 115,798 115,798
300,000 23,300 46,599 69,899 93,198 116,498 139,798 139,798
350,000 27,300 54,599 81,899 109,198 136,498 163,798 163,798
400,000 31,300 62,599 93,899 125,198 156,498 187,798 187,798
450,000 35,300 70,599 105,899 141,198 176,498 211,798 211,798
500,000 39,300 78,599 117,899 157,198 196,498 235,798 235,798
550,000 43,300 86,599 129,899 173,198 216,498 259,798 259,798
600,000 47,300 94,599 141,899 189,198 236,498 283,798 283,798
650,000 51,300 102,599 153,899 205,198 256,498 307,798 307,798
700,000 55,300 110,599 165,899 221,198 276,498 331,798 331,798
750,000 59,300 118,599 177,899 237,198 296,498 355,798 355,798
800,000 63,300 126,599 189,899 253,198 316,498 379,798 379,798
850,000 67,300 134,599 201,899 269,198 336,498 403,798 403,798
900,000 71,300 142,599 213,899 285,198 356,498 427,798 427,798
950,000 75,300 150,599 225,899 301,198 376,498 451,798 451,798
1,000,000 79,300 158,599 237,899 317,198 396,498 475,798 475,798
1,050,000 83,300 166,599 249,899 333,198 416,498 499,798 499,798
1,100,000 87,300 174,599 261,899 349,198 436,498 523,798 523,798
1,150,000 91,300 182,599 273,899 365,198 456,498 547,798 547,798
1,200,000 95,300 190,599 285,899 381,198 476,498 571,798 571,798
1,250,000 99,300 198,599 297,899 397,198 496,498 595,798 595,798
1,300,000 103,300 206,599 309,899 413,198 516,498 619,798 619,798
1,450,000 115,300 230,599 345,899 461,198 576,498 691,798 691,798
1,500,000 119,300 238,599 357,899 477,198 596,498 715,798 715,798
</TABLE>
The years of credited service under the two plans at January 30, 1999 for
Messrs. Zetcher, Metscher, Larsen, Stolper, O'Connell and Shulman were 11, 10,
8, 21, 12 and 1, respectively. Covered compensation under the pension plan and
the supplemental retirement plan at January 30, 1999 for Messrs. Zetcher,
Metscher, Larsen, Stolper, O'Connell and Shulman was $1,208,951, $176,288,
$384,071, $360,306, $303,361 and $447,616, 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 for any benefits paid
or payable from a predecessor pension plan but are not subject to deduction for
social security.
7
<PAGE> 11
New Executive Vice President. H. James Metscher was appointed by the Board
of Directors in November 1998 as Executive Vice President and Chief
Merchandising Officer of the Company, and was appointed a director of the
Company in March 1999. Prior to his employment by Talbots, Mr. Metscher had been
president and chief executive officer of The Custom Foot from November 1996 to
May 1998. The Custom Foot, a venture capital backed specialty footwear company,
discontinued its business in May 1998 and initiated a liquidation of assets. In
connection with his employment by Talbots, Mr. Metscher entered into an
employment agreement with Talbots, with Compensation Committee approval, on
terms, including base salary, incentive bonus, stock options and restricted
stock (see "Summary Compensation Table" and "Employment Agreements and Change in
Control Agreements") at a negotiated level commensurate with securing the
services of an individual with his management and retail experience.
Employment Agreements and Change in Control Agreements. The Company has
employment agreements with each of Mr. Zetcher and Mr. Metscher (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. Metscher's agreement continues until the end of fiscal 2001 and is renewable
for three year terms thereafter unless at least six months notice of nonrenewal
is given. Neither executive may 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. Metscher's agreement provides for his employment as Executive Vice
President and Chief Merchandising Officer of the Company at a base salary, to be
reviewed annually, of not less than his 1998 base salary of $450,000. Mr.
Metscher's agreement also provides for his eligibility to receive a bonus each
year pursuant to the MIP with a minimum guaranteed bonus of $150,000 for fiscal
1999. Mr. Metscher 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
8
<PAGE> 12
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.
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. Shulman whose
employment as an executive officer of the Company ended in December 1998. The
agreement provided that if Mr. Shulman's employment was terminated by the
Company without cause he was entitled to a separation allowance equal to two
times the sum of his base salary at the rate in effect at the time his
employment was terminated and the annual bonus paid to him for the year
immediately prior to the year in which his employment was terminated; in
satisfaction of this obligation he received a lump sum separation payment of
$1,400,000. In addition, pursuant to his employment agreement and separation
agreement he is entitled to a continuation of benefits under the executive
medical, dental, long-term disability and life insurance plans of the Company
for up to two years following termination and became vested in 50,000 shares of
nonqualified stock options awarded in 1998. He may exercise vested stock options
for up to three years. Mr. Shulman forfeited all of his other unvested stock
options. Mr. Shulman also forfeited all unvested restricted stock awards in
connection with such termination of employment, which had a 1998 fiscal year-end
value of $934,660.
The Company also has 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 1998
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 data
of compensation practices of the retail industry from independent compensation
consultants and trade group publications. From this published data the Company
compares positions of 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
9
<PAGE> 13
represent a broader range and are 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 for the Chief Executive Officer is established by
the Compensation Committee each year, and base salary for the Company's other
executive officers is established each year by the Chief Executive Officer,
subject to review and ratification by the Compensation Committee, based on the
Chief Executive Officer's evaluation and assessment of each individual's level
of responsibility and performance over the previous year.
Base salary ranges for the Company's executive officers including the Chief
Executive Officer for fiscal 1997 had been 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. For fiscal 1998, the Chief
Executive Officer recommended to the Compensation Committee that no change be
made in base salary for any of the named executive officers, based on the
financial performance of the Company for fiscal 1997.
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 1998 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 1998 the Company performance rating was based on the Company's earnings
per share in relation to a pre-established 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 1998, Company performance ratings against the pre-established
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 1998 ranged from 20% for certain officers up to
45% for the Chief Executive Officer). The weights assigned were 50% for Company
performance ratings and 50% for individual performance ratings.
For fiscal 1998 MIP awards, the Company's performance rating against the
earnings per share goal, which was internally established for MIP purposes, was
1.8. 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
1998 individual performance ratings for all executive officers including the
Chief Executive Officer. Individual performance ratings for the executive
officers named in the Summary Compensation Table averaged 1.39 for fiscal 1998.
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.
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 1998
were made at levels determined to be approximately the median for annual stock
grants of a group of certain retail companies considered by the Compensation
Committee and its outside compensation consultant. Restricted stock grants were
made to key executives, including the Chief Executive Officer, in an effort to
further align the interests of
10
<PAGE> 14
management with the Company's shareholders and to help retain key executives
during the restriction period. The specific number of restricted shares granted
was determined by the Compensation Committee in an effort to provide key
executives with the opportunity to earn above market median total compensation
based on stock price performance. Shares are restricted in that they may not be
sold or transferred until they vest. Shares vest in one-third installments on
the third, fourth and fifth anniversaries of the date of grant.
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 1999
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
11
<PAGE> 15
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 January 28,
1994 to January 29, 1999, 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 January 28, 1994 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
<TABLE>
<CAPTION>
DOW JONES RETAILERS - ALL
THE TALBOTS, INC. STANDARD & POOR'S 500 SPECIALTY
----------------- --------------------- -------------------------
<S> <C> <C> <C>
1/28/94 100 100 100
1/27/95 129 101 104
2/2/96 118 140 110
1/31/97 120 177 131
1/30/98 64 224 199
1/29/99 120 297 346
</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 had a consulting contract
with Mr. Isogai under which he has provided 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. Mr. Isogai has received an annual
fee of $250,000 plus expenses for his services.
Certain Transactions with Related Parties. In connection with the
Company's 1993 initial public offering, the Company, through its wholly owned
subsidiary The Classics Chicago, Inc. ("Classics Chicago"),
12
<PAGE> 16
purchased the Talbots trade name and certain other trademarks (the "Trademarks")
in all countries of the world other than Australia, New Zealand, Japan, China
and certain other Asian countries (the "Territory") 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
30, 1999, the amount due from Talbots Japan under this services agreement was
approximately $334,753. In addition, at January 30, 1999, approximately
$5,944,757 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 fiscal 1998, 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 30, 1999, the amount due from Talbots Japan under this
arrangement was $361,451.
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 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."
13
<PAGE> 17
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
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 April 1, 1999. 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. 19,610,819 62.7%
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 April 1, 1999, 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
5.0% of the outstanding common stock.
<TABLE>
<CAPTION>
NO. OF SHARES
OF COMMON
NAME OF BENEFICIAL OWNER STOCK(1)(2)
------------------------ -------------
<S> <C>
T. Okada....................... 29,999
A.B. Zetcher................... 584,515
E. Akiyama..................... 8,000
M. Isogai...................... 11,000
E.T. Kennan.................... 8,349
M. Okada....................... 8,000
I. Tsuruta..................... --
M.H. Willes.................... 12,999
</TABLE>
<TABLE>
<CAPTION>
NO. OF SHARES
OF COMMON
NAME OF BENEFICIAL OWNER STOCK(1)(2)
------------------------ -------------
<S> <C>
H.J. Metscher.................. 16,250
E.L. Larsen(3)................. 143,010
R.T. O'Connell, Jr............. 130,626
S.M. Stolper................... 134,180
M. Shulman*.................... 76,513
All executive officers and
directors as a group (18
persons)(4).................. 1,623,705
</TABLE>
14
<PAGE> 18
- ---------------
* 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, 59,000; Mr. Metscher 15,000; Mr. Larsen, 14,700;
Mr. Stolper, 14,700; Mr. O'Connell, 14,700; and all executive officers as a
group, 188,300. The listed shares also include shares subject to currently
exercisable stock options as follows: Mr. T. Okada, 9,999; Mr. Zetcher,
465,897; Mr. Akiyama, 6,000; Mr. Isogai 6,000; Ms. Kennan, 7,999; Mr. M.
Okada, 6,000; Mr. Willes, 7,999; Mr. Larsen, 96,223; Mr. Stolper, 106,223;
Mr. O'Connell, 106,223; Mr. Shulman, 73,333; and all executive officers and
directors as a group, 1,231,931.
(2) Messrs. T. Okada, E. Akiyama and M. Okada are directors or officers or both
of JUSCO and JUSCO USA and Mr. Tsuruta is an officer of 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 10,000 shares owned jointly with spouse.
(4) Includes 750 shares held by immediate family members, 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.
ITEM 2
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 1999 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 2000 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the Company's
2000 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 2000 Annual Meeting, not later than January 4, 2000.
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
15
<PAGE> 19
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 1998 FISCAL YEAR.
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.
1247-PS-99
16
<PAGE> 20
PROXY
THE TALBOTS, INC. ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1999
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 27, 1999, 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" PROPOSAL 1 AND 2. PLEASE VOTE PROMPTLY.
- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------
<PAGE> 21
[TALBOTS LOGO] THIS IS YOUR PROXY.
c/o EquiServe YOUR VOTE IS IMPORTANT.
P.O. Box 8040
Boston, MA 02266-8040
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 1998
* Company sales for fiscal 1998 increased 8% to $1,142.2 million. Comp store
sales grew 3.6% and catalog sales increased 6% over 1997.
* In November 1998, the Company appointed H. James Metscher, Executive Vice
President, Chief Merchandising Officer. Mr. Metscher was appointed to the
Company's Board of Directors in March 1999.
* During the fiscal year, the Company opened 39 new stores.
* During the fiscal year, the Company repurchased $20.1 million of its common
stock.
<TABLE>
<S> <C>
[1247-THE TALBOTS INC. EMPLOYEE PLAN][FILE NAME: TA239A.ELX][VERSION-1][4/26/99]
TA2329A DETACH HERE
- ----------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. ELECTION OF DIRECTORS
FOR AGAINST ABSTAIN
To elect the following Nominees as Directors: 2. SELECTION OF AUDITORS [ ] [ ] [ ]
Nominees: Takuya Okada, Arnold B. Zetcher, Eiji Akiyama To ratify the appointment of Deloitte &
Elizabeth T. Kennan, Motoya Okada, Isao Tsuruta and Touche LLP as auditors for the 1999
Mark H. Willes. fiscal year.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]______________________________________ MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(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> 22
PROXY
THE TALBOTS, INC. ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1999
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 27, 1999, 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" PROPOSAL 1 AND 2. PLEASE VOTE PROMPTLY.
- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------
<PAGE> 23
[TALBOTS LOGO] THIS IS YOUR PROXY.
c/o EquiServe YOUR VOTE IS IMPORTANT.
P.O. Box 8040
Boston, MA 02266-8040
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 1998
* Company sales for fiscal 1998 increased 8% to $1,142.2 million. Comp store
sales grew 3.6% and catalog sales increased 6% over 1997.
* In November 1998, the Company appointed H. James Metscher, Executive Vice
President, Chief Merchandising Officer. Mr. Metscher was appointed to the
Company's Board of Directors in March 1999.
* During the fiscal year, the Company opened 39 new stores.
* During the fiscal year, the Company repurchased $20.1 million of its common
stock.
<TABLE>
<S> <C>
[1247-THE TALBOTS INC. EMPLOYEE PLAN][FILE NAME: TAL38A.ELX][VERSION-4][4/20/99]
TAL38A DETACH HERE
- ----------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. ELECTION OF DIRECTORS
FOR AGAINST ABSTAIN
To elect the following Nominees as Directors: 2. SELECTION OF AUDITORS [ ] [ ] [ ]
Nominees: Takuya Okada, Arnold B. Zetcher, Eiji Akiyama To ratify the appointment of Deloitte &
Elizabeth T. Kennan, Motoya Okada, Isao Tsuruta and Touche LLP as auditors for the 1999
Mark H. Willes. fiscal year.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]______________________________________ MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(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 ______________
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