<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Sections 240.14a-11(c) or Sections 240.14a-
12
MAXWELL SHOE COMPANY INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MAXWELL SHOE COMPANY INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
[_] 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>
[LOGO OF MAXWELL
SHOE COMPANY INC.
APPEARS HERE]
MAXWELL SHOE COMPANY INC.
101 SPRAGUE STREET, P.O. BOX 37
READVILLE (BOSTON), MASSACHUSETTS 02137-0037
February 19, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Maxwell Shoe Company Inc. on Thursday, March 20, 1997 at 10:00 a.m., at the
Bank of Boston, 100 Federal Street, Boston, Massachusetts 02110. Members of
your Board of Directors and management look forward to greeting those
stockholders who are able to attend.
The accompanying Notice and Proxy Statement describe the matters to be acted
upon at the meeting.
It is important that your shares be represented and voted at the meeting.
Whether or not you plan to attend, please sign, date and mail the enclosed
proxy card at your earliest convenience. If you attend the meeting, you may
withdraw your proxy and vote in person.
Your interest and participation in the affairs of the Company are greatly
appreciated.
Respectfully,
/s/ Maxwell V. Blum
Maxwell V. Blum
Chairman of the Board and
Chief Executive Officer
<PAGE>
MAXWELL SHOE COMPANY INC.
101 SPRAGUE STREET, P.O. BOX 37
READVILLE (BOSTON), MASSACHUSETTS 02137-0037
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 20, 1997
----------------
TO THE STOCKHOLDERS OF MAXWELL SHOE COMPANY INC.:
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
Maxwell Shoe Company Inc. will be held at the Bank of Boston, 100 Federal
Street, Boston, Massachusetts on Thursday, March 20, 1997 at 10:00 a.m., for
the following purposes:
1. To elect seven directors; and
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on February 17, 1997
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ Marjorie W. Blum
Marjorie W. Blum
Vice President and Secretary
Readville (Boston), Massachusetts
February 19, 1997
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
MAXWELL SHOE COMPANY INC.
101 SPRAGUE STREET, P.O. BOX 37
READVILLE (BOSTON), MASSACHUSETTS 02137-0037
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 20, 1997
----------------
GENERAL INFORMATION
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are being mailed on or about February 19, 1997 in connection with the
solicitation of proxies by the Board of Directors of Maxwell Shoe Company Inc.
(the "Company") for use at the 1997 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at Bank of Boston, 100 Federal
Street, Boston, Massachusetts on Thursday, March 20, 1997, at 10:00 a.m., and
any adjournment or postponement thereof. At the Annual Meeting, the Company's
stockholders will be asked to elect seven directors and to vote on such other
matters as may properly come before the Annual Meeting.
Throughout this Proxy Statement, fiscal 1997, fiscal 1996, fiscal 1995 and
fiscal 1994 shall represent the fiscal years ending October 31, 1997, October
31, 1996, October 31, 1995 and October 31, 1994, respectively.
PERSONS MAKING THE SOLICITATION
The Company is making this solicitation and will bear the expenses of
preparing, printing and mailing proxy materials to the Company's stockholders.
In addition, proxies may be solicited personally or by telephone or facsimile
by officers or employees of the Company, none of whom will receive additional
compensation therefore. The Company will also reimburse brokerage houses and
other nominees for their reasonable expenses in forwarding proxy materials to
beneficial owners of the Company's Class A Common Stock.
VOTING AT THE MEETING
Stockholders of record at the close of business on February 17, 1997 of the
Company's Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), and Class B Common Stock, par value $.01 per share ("Class B Common
Stock"), are entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof. On that date, 2,525,000 shares of Class A
Common Stock and 5,063,317 shares of Class B Common Stock were outstanding and
entitled to vote. Each outstanding share of Class A Common Stock entitles the
holder thereof to one vote and each outstanding share of Class B Common Stock
entitles the holder to ten votes.
The seven nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted for them shall be
elected as directors. Votes withheld from any director are counted for
purposes of determining of the presence or absence of a quorum for the
transaction of business. The Company believes that abstentions should be
counted for purposes of determining whether a quorum is present at the Annual
Meeting for the transaction of business. In the absence of controlling
precedent to the contrary, the Company intends to count broker non-votes as
present or represented for purposes of determining the absence of a quorum for
the transaction of business.
Stockholders do not have the right to cumulate their votes in the election
of directors.
<PAGE>
REVOCABILITY OF PROXY
A proxy may be revoked by a stockholder prior to the voting at the Annual
Meeting by written notice to the Secretary of the Company, by submission of
another proxy bearing a later date or by voting in person at the Annual
Meeting. Such notice or later proxy will not affect a vote on any matter taken
prior to the receipt thereof by the Company. The mere presence at the Annual
Meeting of the stockholder who has appointed a proxy will not revoke the prior
appointment. If not revoked, the proxy will be voted at the Annual Meeting in
accordance with the instructions indicated on the Proxy Card by the
stockholders or, if no instructions are indicated, will be voted FOR the slate
of directors described herein, and as to any other matter that may be properly
brought before the Annual Meeting, in accordance with the judgment of the
proxyholders.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 10, 1997, information
relating to the beneficial ownership of the Company's common stock by each
person known to the Company to be the beneficial owner of more than five
percent of the outstanding shares of Class A Common Stock or Class B Common
Stock, by each director, by each of the executive officers named below, and by
all directors and executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AS OF FEBRUARY 10, 1997
------------------------------------------------
*****CLASS A***** *****CLASS B*****
% OF
NUMBER OF % OF NUMBER OF % OF COMMON STOCK
NAME SHARES(1)(2) CLASS SHARES(1) CLASS VOTING POWER(1)
---- -------------- ------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Maxwell V. Blum(3)...... 8,500(4) 0.24% 878,440 17.35% 16.21%
Mark J. Cocozza......... 912,212(4)(5) 25.34% -- -- 1.68%
Betty Ann Blum.......... 16,150(4) 0.45% 1,693,137 33.44% 31.25%
Marjorie W. Blum........ 16,150(4) 0.45% 1,693,137 33.44% 31.25%
David Andelman(6)....... -- -- 798,603 15.77% 14.73%
James J. Tinagero....... 17,000(4) 0.47% -- -- 0.03%
Stephen A. Fine......... 15,000(7) 0.42% -- -- 0.03%
Jonathan K. Layne....... 15,000(7) 0.42% -- -- 0.03%
Malcolm L. Sherman...... 15,000(7) 0.42% -- -- 0.03%
FMR Corp.(8)............ 785,000 21.80% -- -- 1.45%
Wynnefield Partners
Small Cap Value,
L.P.(9)................ 145,100 4.03% -- -- 0.27%
All officers and
directors as a group
(nine persons)......... 1,022,112 28.39% 4,264,714 84.23% 80.52%
</TABLE>
(1) Each executive officer and director has sole voting and investment power
with respect to the shares listed. The shares owned by each person, or by
the group, and the shares included in the total number of shares
outstanding have been adjusted, and the percentage owned (or the
percentage of common stock voting power, as the case may be) (where the
percentage exceeds 1%) has been computed, in accordance with Rule 13d-
3(d)(1) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The address of each of the executive officers and
directors is 101 Sprague Street, P.O. Box 37, Readville (Boston),
Massachusetts 02137-0037.
(2) If shares of Class B Common Stock are owned by the same person or group,
excludes shares of Class B Common Stock convertible into a corresponding
number of shares of Class A Common Stock.
(3) Excludes 798,603 shares held in trust for the benefit of Mr. Blum's wife,
as to which Mr. Blum disclaims beneficial ownership. See Note 6 below.
(4) Gives effect to the issuance of 8,500, 23,800, 16,150, 16,150, and 17,000
shares of Class A Common Stock upon exercise of stock options which are
exercisable within 60 days of this filing and held by Mr. Blum, Mr.
Cocozza, Ms. Betty Ann Blum, Ms. Marjorie W. Blum and Mr. Tinagero
respectively.
2
<PAGE>
(5) Gives effect to the issuance of 888,412 shares of Class A Common Stock
upon exercise of a currently exercisable stock option held by Mr. Cocozza.
(6) Holds shares as trustee for the benefit of Mr. Blum's wife.
(7) Gives effect to the issuance of 15,000 shares of Class A Common Stock upon
exercise of currently exercisable stock options.
(8) This information is based solely on a Schedule 13G dated February 14, 1996
filed with the Securities and Exchange Commission. The address of FMR
Corp. is 82 Devonshire Street, Boston, Massachusetts 02109.
(9) This information is based solely on a joint Schedule 13D dated January 16,
1997 filed with the Securities and Exchange Commission by Wynnefield
Partners Small Cap Value, L. P. (with respect to 140,000 shares) and
Wynnefield Small Cap Value Offshore Fund Ltd. (with respect to 5,100
shares). The address of Wynnefield Partners Small Cap Value, L. P. is One
Penn Plaza, Suite 4720, New York, New York 10119.
ELECTION OF DIRECTORS
A Board of seven directors is to be elected at the 1997 Annual Meeting. The
persons named in the Proxy Card as proxies for this meeting will vote in favor
of each of the following nominees as directors of the Company unless otherwise
indicated by the stockholder on the Proxy Card. Directors elected at the 1997
Annual Meeting will hold office until the next annual meeting of stockholders
of the Company, and until their successors are duly elected and qualified,
except in the event of their death, resignation, or removal. Management has no
reason to believe that any of the nominees will be unable or unwilling to
serve if elected. If any nominee should become unavailable prior to the
election, the accompanying Proxy Card will be voted for the election in his or
her stead of such other person as the Board of Directors may recommend.
NOMINEES
The nominees for election as directors of the Company are Maxwell V. Blum,
Mark J. Cocozza, Betty Ann Blum, Marjorie W. Blum, Stephen A. Fine, Jonathan
K. Layne, and Malcolm L. Sherman, all of whom are presently serving as members
of the Company's Board of Directors. See "Management-Executive Officers and
Directors" for additional information concerning the nominees.
BOARD OF DIRECTOR'S RECOMMENDATION.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
SLATE OF NOMINEES SET FORTH ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS.
3
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER
NAME AGE POSITION OR DIRECTOR SINCE
---- --- -------- -----------------
<S> <C> <C> <C>
Maxwell V. Blum 71 Chairman of the Board and Chief Executive Officer 1976
Mark J. Cocozza 48 President, Chief Operating Officer and Director 1987
Betty Ann Blum 46 Executive Vice President and Director 1979
Marjorie W. Blum 41 Vice President--Sales, Secretary and Director 1981
James J. Tinagero 44 Executive Vice President 1996
Richard J. Bakos 49 Vice President and Chief Financial Officer 1993
Stephen A. Fine(1) 48 Director 1994
Jonathan K. Layne(1) 43 Director 1994
Malcolm L. Sherman(1) 65 Director 1994
</TABLE>
(1) Member of the Audit Committee and of the Compensation and Stock Option
Committee.
Each director holds office until the next annual meeting of stockholders or
until his or her successor has been elected and qualified. Officers are
appointed by and serve at the discretion of the Board of Directors.
Mr. Maxwell V. Blum founded the Company's business in 1949 and has served as
the Company's Chairman of the Board and Chief Executive Officer since its
incorporation in 1976. Mr. Blum has more than forty years' experience in the
footwear industry. Mr. Blum is the father of Ms. Betty Ann Blum and Ms.
Marjorie Blum and Mr. Blum's wife is the first cousin of Mr. Malcolm L.
Sherman.
Mr. Mark J. Cocozza has served as President and Chief Operating Officer
since October, 1993 and prior to that served as President of Mootsies Tootsies
Division since joining the Company in 1987. Prior to joining the Company, Mr.
Cocozza served as President of the Sperry Top-Sider division of Stride Rite
Corp. Mr. Cocozza has more than twenty years' experience in the footwear
industry.
Ms. Betty Ann Blum, the daughter of Mr. Blum, joined the Company in 1979.
Ms. Blum has served as Executive Vice President of the Company since October
1993 and prior to that served as President of Mootsies Tootsies and Jones New
York Footwear Divisions and as President of the Company. Ms. Blum has been a
director since 1980.
Ms. Marjorie W. Blum, the daughter of Mr. Blum, joined the Company in 1981
and since then has served as Vice President--Sales, supervising national
accounts and catalog sales for the Mootsies Tootsies division. Ms. Blum has
been a director and Secretary since January, 1994.
Mr. James J. Tinagero joined the Company as Executive Vice President in
April 1996 and was President and Director of International Sales & Marketing
Corporation, a New York based consulting firm for consumer products companies,
from 1993 to 1996. Mr. Tinagero served as Executive Vice President of
Bonaventure Textiles, U.S.A., a women's apparel company from 1992 to 1993, as
President of Albert Nipon, a women's designer dress company from 1991 to 1992,
and as President of Anne Klein and Company, a designer sportswear company from
1987 to 1991. From 1980 to 1987, he held various executive positions with
Stride Rite Corporation.
Mr. Richard J. Bakos joined the Company in 1987 as Controller and since
October 1993 has served as Vice President of Finance and Chief Financial
Officer. Before joining the Company, Mr. Bakos was Group Vice President of
Finance and Administration for the Boswell Fashion Group of the Wingspread
Corporation. He has more than twenty years' experience in the apparel and
footwear industry.
4
<PAGE>
Mr. Stephen A. Fine, who has served as a member of the Board of Directors of
the Company since May 1994, has been a Director, President and Chief Operating
Officer of the Biltrite Corporation, a manufacturer of a variety of rubber and
plastic products, since 1985, and from 1982 to 1985 he served as Executive
Vice-President of Biltrite. From 1970 to 1982, he held various executive
positions with American Biltrite Inc. Mr. Fine is also a director of K-Swiss
Inc., a manufacturer of athletic footwear.
Mr. Jonathan K. Layne, who has served as a member of the Board of Directors
of the Company since May 1994, has been a partner in the law firm of Gibson,
Dunn, & Crutcher LLP since 1987, where he specializes in corporate and
securities law matters. From 1979 to 1986 he was an associate of the same law
firm. Mr. Layne is also a member of the Board of Directors of Amwest Insurance
Group, Inc., an insurance holding company, The Finish Line, Inc., a retailer
of brand name athletic and leisure footwear, activewear and accessories, and
K-Swiss Inc., a manufacturer of athletic footwear.
Mr. Malcolm L. Sherman, who has served as a member of the Board of Directors
of the Company since May 1994, has served as Chairman of the Board and Chief
Executive Officer of EKCO Group Inc., a manufacturer and distributor of
household goods, since 1996 and as a member of its Board of Directors since
1994. Mr. Sherman is also a member of the Board of Directors of One Price,
Inc., a company engaged in the apparel business, since 1991. Mr. Sherman has
served as Chairman of the Board of Steth Tech Corporation, a developer of
medical devices from 1990 to 1996, as Chairman of the Board of Advisors of
Gordon Brothers, a liquidation and asset based lending firm, from 1993 to
1996, as Chairman of the Board of K. T. Scott Ltd., a company engaged in the
home decor business, from 1990 to 1995, as President and Chief Executive
Officer of Morse Shoe, Inc., a footwear retailer, from 1992 to 1993, as a
member of the Board of Directors of United States Trust Co. from 1980 to 1993,
and as a member of the Board of Directors of Compu Chem Labs Inc., a company
specializing in drugs of abuse and environmental testing, from 1982 to 1993.
In July 1995, K. T. Scott Ltd. filed a petition for bankruptcy under Chapter
11 of federal bankruptcy laws (which case was converted to a Chapter 7
proceeding in November 1995). Mr. Sherman is the first cousin of Mr. Blum's
wife.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 4 meetings in fiscal 1996 and all directors
attended at least 75% of the meetings of the Board and Committees of which
they were members.
The Board of Directors has two committees. The Audit Committee is comprised
of Messrs. Fine, Layne and Sherman. The Compensation and Stock Option
Committee is comprised of Messrs. Fine, Layne and Sherman. There is no
committee performing the function of a Nominating Committee.
The Audit Committee held 2 meetings during fiscal 1996. The responsibilities
of the Audit Committee include recommending to the Board the selection of the
independent auditors and reviewing the Company's internal accounting controls.
The Audit Committee is authorized to conduct such reviews and examinations as
it deems necessary or desirable with respect to the Company's accounting and
internal control practices and policies, and the relationship between the
Company and its independent auditors, including the availability of Company
records, information and personnel.
The Compensation and Stock Option Committee met 7 times during fiscal 1996.
The Compensation and Stock Option Committee focuses on executive compensation,
the administration of the Company stock option and stock purchase plans and
making decisions on the granting of discretionary bonuses.
5
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during fiscal years 1996, 1995, and 1994 for the
person who was Chief Executive Officer at the end of the last fiscal year and
the four other most highly compensated executive officers of the Company
("Named Officers") whose salary and bonus exceeded $100,000 in fiscal year
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------- ----------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1)(2)(3) COMPENSATION AWARD(S)($) OPTIONS/SAR'S(#)
- --------------------------- ---- ------------ ----------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Maxwell V. Blum......... 1996 $500,000 $ 212,000 -- 20,000
CEO and Chairman 1995 $475,000 $ 175,000 -- -- 15,000
of the Board 1994 $596,250 $1,256,667 $ 10,000(4) -- --
Mark J. Cocozza......... 1996 $425,000 $ 182,000 60,000
President and Chief 1995 $400,000 $ 90,000 -- -- 40,000
Operating Officer 1994 $268,752 $ 70,417 $2,471,272(5) -- 888,412(6)
Betty Ann Blum.......... 1996 $275,000 $ 122,000 35,000
Executive Vice 1995 $265,000 $ 90,000 -- -- 30,000
President 1994 $222,915 $ 866,667 -- -- --
Marjorie W. Blum........ 1996 $275,000 $ 122,000 35,000
Vice President-- 1995 $265,000 $ 90,000 -- -- 30,000
Sales 1994 $222,915 $ 866,667 -- -- --
James J. Tinagero(7).... 1996 $126,875 $ 64,000 -- -- 150,000
Executive Vice 1995 -- -- -- -- --
President 1994 -- -- -- -- --
</TABLE>
(1) For the period from the closing of the Company's initial public offering
on May 18, 1994 through the end of fiscal 1994, Mr. Blum, Mr. Cocozza, Ms.
Betty Ann Blum and Ms. Marjorie Blum were compensated at annualized base
rates of $450,000, $350,000, $250,000, and $250,000 respectively, and were
paid bonuses in the amount of $100,000,$45,834, $45,833 and $45,833
respectively. Prior to May 18, 1994, Mr. Blum, Mr. Cocozza, Ms. Betty Ann
Blum and Ms. Marjorie Blum were compensated at annualized base rates of
$720,000, $213,000, $200,000, and $200,000 respectively.
(2) The 1996 bonus amounts shown reflect bonuses earned under the Company's
Senior Management Incentive Plan for fiscal 1996 and paid in fiscal 1997.
For Mr. Blum, Mr. Cocozza, Ms. Betty Ann Blum, Ms. Marjorie Blum and Mr.
Tinagero, these bonuses amounted to $201,000, $171,000, $111,000, $111,000
and $53,000 respectively.
(3) The 1996 bonus amounts shown reflect bonuses earned under the Company's
Acquisition Bonus Plan for fiscal 1996 and paid in fiscal 1997. For Mr.
Blum, Mr. Cocozza, Ms. Betty Ann Blum, Ms. Marjorie Blum and Mr. Tinagero,
these bonuses amounted to $11,000 each.
(4) Consists of amounts paid to the Company by a chain of children's footwear
stores affiliated with Mr. Blum's family and subsequently distributed to
Mr. Blum. See "Certain Transactions".
(5) Consists of deferred incentive compensation accrued in prior years and
paid in fiscal 1994. See "Certain Transactions".
(6) In connection with the grant of this option, the Company recorded a
$7,000,000 one-time compensation expense in the first quarter of fiscal
1994. See "Certain Transactions".
(7) Mr. Tinagero joined the Company on April 8, 1996 and the salary and bonus
amounts shown reflect payments made from such date through October 31,
1996.
6
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and Mr. Cocozza have entered into an employment agreement that
expires in January 1999, subject to automatic renewal each year thereafter
unless either the Company or Mr. Cocozza gives the other party six months
notice of its or his intention not to renew the agreement. Pursuant to this
agreement, Mr. Cocozza was compensated for the period from the completion of
the Company's initial public offering through the end of fiscal 1994 at an
annualized base rate of $350,000. Thereafter, Mr. Cocozza's annual base salary
will be established by the Compensation and Stock Option Committee. Mr.
Cocozza's base salary for fiscal 1996 was set by the Compensation and Stock
Option Committee at $425,000 and was recently established by such Committee at
$446,250 for fiscal 1997. Mr. Cocozza's bonus for years after fiscal 1994 will
be determined from an incentive based formula to be established by the
Compensation and Stock Option Committee. Such Committee adopted a Senior
Management Incentive Plan commencing for fiscal 1996 in which senior
executives of the Company, including Mr. Cocozza, are eligible to receive
annual bonuses based upon the Company's performance. See "Compensation and
Stock Option Committee Report". The employment agreement also provides for
customary perquisites. If there is a change of control of the Company and if
Mr. Cocozza is terminated in connection therewith, he will be entitled to a
severance payment equal to 1.5 times his total compensation for the 12-month
period immediately prior to the change of control, in addition to the other
payments that the Company is obligated to make to Mr. Cocozza in the event he
is terminated or deemed to be terminated by the Company without cause (whether
or not in connection with a change of control). Mr. Cocozza has agreed that if
the employment agreement is terminated prior to its scheduled expiration (or
prior to the scheduled expiration of the extended term of the agreement, if
any), he will not compete against the Company for a period of 12-months
following the termination of the agreement, subject to certain exceptions.
The Company and Mr. Tinagero have entered into an at will employment
agreement effective April 8, 1996. Under the terms of this agreement, Mr.
Tinagero's annual base salary was established at $225,000, subject to an
annual review. If Mr. Tinagero is terminated during the first year of
employment, he is entitled to a two month severance payment and after one year
of employment, he is entitled to a six month severance payment. Mr. Tinagero
is eligible to earn a bonus as specified in the Company's Senior Management
Incentive Plan. See "Compensation and Stock Option Committee Report". As a
condition of employment, Mr. Tinagero was granted an option to purchase
150,000 shares of the Company's Class A Common Stock at a per share exercise
price of $6.00 (the fair market value on the date of grant). Of such 150,000
options, 100,000 vest over a four year period commencing on the first
anniversary of the grant date (17% each at the end of years one and two and
33% each at the end of years three and four) and 50,000 options vest over the
same four year schedule with the vesting commencing date tied to the earlier
of the closing by the Company of an acquisition and April 8, 2002. Such 50,000
options started vesting on August 20, 1996 upon the closing of the Company's
acquisition of the Sam & Libby trademarks and tradenames. Mr. Tinagero's
agreement also provides that he will be granted an additional 50,000 options
at a per share exercise price of $6.00 (the fair market value of the Class A
Common Stock on the date of hire) in the event the Company consummates a
second acquisition during his employment with the Company. The agreement also
provides that all of the above described 200,000 options would automatically
vest upon a change of control of the Company.
DIRECTOR COMPENSATION
Directors who are employees of the Company are not compensated for serving
as directors. Directors who are not employees of the Company are each paid
$20,000 per annum and an additional $1,000 per meeting for attending regular
and special meetings and $500 per meeting for committee meetings of the Board
of Directors and are reimbursed for expenses incurred in attending regular,
special and committee meetings. Each non-employee director also receives an
annual grant of options to purchase 5,000 shares of Class A Common Stock. See
"Stock Incentive Plan."
PROFIT SHARING PLAN
The Company established a 401(k) Profit Sharing Plan effective January 1,
1991. After the attainment of age 21 and the completion of six months of
service, an employee becomes a participant in the Plan on the next
7
<PAGE>
January 1 or July 1. Contributions made to the Plan by the Company are in the
form of 401(k) contributions elected by the participants, and a discretionary
profit sharing contribution in an amount determined each year by the Board of
Directors. The Plan document governing the Plan is in the form of a NABEP
Prototype Defined Contribution Retirement Plan and Non-standardized Profit
Sharing CODA Adoption Agreement.
STOCK INCENTIVE PLAN
The 1994 Stock Incentive Plan (the "Stock Plan") was approved by the Board
of Directors and the stockholders of the Company on January 30, 1994. Every
employee of the Company or any of its subsidiaries is eligible to be
considered for the grant of Awards (as defined below) under the Stock Plan.
The Stock Plan authorizes the Committee (as defined below) to enter into any
type of arrangement with an eligible employee that, by its terms, involves or
might involve the issuance of Class A Common Stock, or any other security or
benefit with a value derived from the value of the Class A Common Stock. The
Stock Plan also provides for the automatic grant of options to nonemployee
directors of the Company. See "Nonemployee Director Options."
The maximum number of shares of Class A Common Stock that may be issued
pursuant to Incentive Options granted under the Stock Plan is 750,000. The
maximum number of shares of Class A Common Stock that may be issued pursuant
to all Awards (including Incentive Options) and Nonemployee Director Options
granted under the Stock Plan is 750,000. As of February 14, 1997, there were
749,700 options granted (45,000 for Nonemployee Directors), no options
exercised, 78,850 options canceled, 670,850 options outstanding, and 79,150
options available for future grant under the Stock Plan. Outstanding options
are exercisable at prices varying from $5.00 to $10.38 per share.
The purposes of the Stock Plan are to enable the Company and its
subsidiaries to attract, retain and motivate their employees and consultants
by providing for or increasing their proprietary interest in the Company, and
to attract, retain and motivate the Nonemployee Directors of the Company (as
defined below) and further align their interest with those of the Company's
stockholders by providing for or increasing the proprietary interest of such
directors in the Company.
The Stock Plan is administered by the Compensation and Stock Option
Committee of the Board of Directors (the "Committee"). The members of the
Committee are appointed by the Board of Directors and serve on the Committee
until replaced. The Committee determines, within the limitations of the Stock
Plan, which eligible employees of the Company shall be recommended for Awards
under the Stock Plan, the terms and conditions of such grant or sale and the
number of shares to be optioned or sold. In addition, the Committee has the
sole authority to (i) adopt, amend and rescind rules and regulations for the
administration of the Stock Plan, (ii) construe and interpret the Stock Plan,
the rules and regulations regarding the Stock Plan, and the agreements
evidencing Awards under the Stock Plan, (iii) determine the terms and
conditions of the Nonemployee Director Options that are automatically granted
pursuant to the Stock Plan, and (iv) to make all other determinations deemed
necessary or advisable for the administration of the Stock Plan. Commencing
November 1, 1996, option grants will be recommended by the Committee to the
full Board for approval in order for such option grants to comply with
recently enacted rule changes by the Securities and Exchange Commission.
The Stock Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") and is not required to be qualified
under Section 401(a) of the Internal Revenue Code (the "Code").
Nonemployee Director Options
Each person who becomes a Nonemployee Director after the effective date of
the Stock Plan will automatically be granted, upon becoming a Nonemployee
Director, a Nonemployee Director Option to purchase 5,000 shares of Class A
Common Stock. Each year, on the first business day following the date of the
annual meeting of stockholders of the Company, or any adjournment thereof, at
which directors of the Company are elected, each Nonemployee Director will
automatically be granted an immediately exercisable option (a "Nonemployee
Director Option") to purchase 5,000 shares of Class A Common Stock.
8
<PAGE>
Each Nonemployee Director Option granted under the Stock Plan will be
exercisable in full upon the date of grant of such Nonemployee Director
Option. Each Nonemployee Director Option granted under the Stock Plan will
expire upon the first to occur of the following: (1) the second anniversary of
the date upon which the optionee shall cease to be a Nonemployee Director; or
(2) the tenth anniversary of the Date of Grant of such Nonemployee Director
Option.
Set forth below is information concerning the award of stock options under
the Stock Plan and otherwise to the Named Executive Officers in the fiscal
year ended October 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------- VALUE AT ASSUMED
% OF ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE
SECURITIES GRANTED TO FAIR MARKET APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR VALUE ON OPTION TERM(3)
OPTIONS IN FISCAL BASE DATE OF EXPIRATION ---------------------
NAME GRANTED(#)(1) YEAR(2) PRICE($) GRANT($) DATE 5%($) 10%($)
---- ------------- ------------- ----------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Maxwell V. Blum......... 20,000 5.23% $ 6.25 $ 6.25 1/19/06 78,625 199,250
Mark J. Cocozza......... 60,000 15.69% $ 6.25 $ 6.25 1/19/06 235,875 597,750
Betty Ann Blum.......... 35,000 9.15% $ 6.25 $ 6.25 1/19/06 137,594 348,668
Marjorie W. Blum........ 35,000 9.15% $ 6.25 $ 6.25 1/19/06 137,594 348,668
James J. Tinagero(4).... 150,000 39.20% $ 6.00 $ 6.00 4/8/06 566,100 1,434,600
</TABLE>
(1) The term of each stock option is 10 years. Except as provided in footnote
4 below, 17% of the options vest on each of the first and second
anniversaries of the date of grant and 33% of the options vest on the
third and fourth anniversaries of the date of grant. The exercise price
for each stock option is equal to the fair market value of the underlying
shares on the date of grant.
(2) The total number of stock options granted to employees in fiscal 1996 by
the Company was 367,500, each at a per share exercise price from $5.00 to
$6.25.
(3) These amounts represent certain assumed rates of appreciation. Actual
gains, if any, on stock option exercises depend on the future performance
of the Class A Common Stock, as well as the optionholders' continued
employment through vesting periods. Therefore, the amounts reflected in
this table will not necessarily be achieved.
(4) Of the 150,000 options granted to Mr. Tinagero, 100,000 options vest in
accordance with the schedule set forth in footnote 1 above and 50,000
options commenced vesting on August 20, 1996 and vest over a four year
period, with 17% of such options vesting on each of the first and second
anniversaries of August 20, 1996 and 33% of such options vesting on the
third and fourth anniversaries of August 20, 1996.
9
<PAGE>
Shown below is information with respect to the unexercised options to
purchase Class A Common Stock held by the Named Executive Officers as of
October 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY END($)(1)
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- -------------------- ----------------
<S> <C> <C> <C> <C>
Maxwell V. Blum......... 0 0 8,500/26,500 1,275/6,225
Mark J. Cocozza......... 0 0 912,212/76,200 4,556,937/18,675
Betty Ann Blum.......... 0 0 16,150/48,850 2,231/10,894
Marjorie W. Blum........ 0 0 16,150/48,850 2,231/10,894
James J. Tinagero....... 0 0 17,000/133,000 10,625/83,125
</TABLE>
(1) Represents the difference between the closing price of the Company's Class
A Common Stock on the NASDAQ National Market System on October 31, 1996
($6.625) and the exercise price of the options.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") determines executive officers' salaries and bonuses and
administers and recommends grant awards under the Stock Plan.
SUMMARY OF COMPENSATION POLICIES FOR CEO AND EXECUTIVE OFFICERS
The Company's philosophy is to maintain compensation programs which attract,
retain and motivate senior management with economic incentives which are
linked to financial performance and increased stockholder value. The key
elements of the Company's executive compensation program consist of a base
salary, potential for an annual bonus directly linked to overall Company
performance and the grant of stock options and other stock incentive awards
intended to align executive officer and stockholder economic interests.
Generally, in formulating compensation arrangements for executives other than
the Chief Executive Officer, the Committee solicits recommendations from the
Chief Executive Officer, which it considers, modifies and approves.
Salaries
The Committee was formed in May 1994 after the Company's initial public
offering. During the period November 1, 1993 through May 18, 1994, the closing
date of the Company's initial public offering, Messrs. Blum and Cocozza and
Ms. Betty Ann Blum and Ms. Marjorie Blum received salaries at the annual rate
described in Note 1 to the Summary Compensation table. The reductions in
annual compensation paid to such executives following May 18, 1994 were
intended to adjust compensation from a level appropriate for a privately held
company where the executive officers are also the stockholders to a level
appropriate for a public company. For fiscal 1996, the Committee established
salaries at levels that reflect the Committee's assessment of prevailing
salary levels among companies in the footwear and related industries and
considered each executive's level of responsibility, talent and skills. The
base salary of Mr. Cocozza is subject to the terms of an employment agreement
between Mr. Cocozza and the Company, which agreement was approved by the Board
of Directors of the Company prior to the consummation of the Company's initial
public offering.
10
<PAGE>
Performance Bonuses
The payment of performance bonuses to the Company's executive officers is a
significant element of the Company's executive compensation program.
Performance bonuses are designed to reward executive officers for the
achievement of corporate goals and individual performance in achieving such
goals and to compensate executive officers on the basis of the Company's
financial results. Performance bonuses during fiscal 1996 were based on
specific formulae linked to the financial results of the Company as specified
in the Company's Senior Management Incentive Plan. Under this plan, executive
officers could earn up to 100% of their salary as a bonus upon the Company
attaining predetermined net income and return on asset goals. In fiscal 1996,
the percentage of salary paid as a bonus under such plan was 40.3%.
In addition, an Acquisition Bonus Plan was established during fiscal 1996
pursuant to which eligible executive officers are entitled to receive 1% of
the acquisition price for qualifying transactions in which the Company
acquires the assets or securities of specified companies. During fiscal 1996,
the Company paid five executive officers $11,000 each for a total of $55,000
as a result of the completion of the acquisition by the Company of the Sam &
Libby trademarks and tradenames.
Stock Incentive Awards
Stock incentive awards are also an important element of the Company's
executive officer compensation program. Such awards are designed to strengthen
management's long-term perspective on the Company's performance. Compensation
derived from stock options or other stock-based awards are intrinsically
related to long term corporate performance and stockholder value. Stock-based
incentive awards are awarded at the discretion of the Committee based on a
variety of factors, including the executive officer's level of responsibility
and such officer's ability to affect stockholder value, as well as the
officer's demonstrated past and expected future performances. The Committee
also takes into consideration prior stock option awards to the executive
officer and the individual's overall equity position in the Company. The
Committee believes that stock options and stock ownership by the Company's
executive officers, as well as other members of the Company's senior
management, other key employees and nonmanagement directors, are an essential
element in aligning the interests of these individuals with those of the
stockholders and thereby enhancing stockholder value. The grant of 367,500
stock options to a total of 18 employees was approved by the Committee in
fiscal 1996. Each of the options so granted vests and become exercisable
incrementally over a four year period. The four year vesting schedule
associated with the options assures the long term nature of this incentive
compensation tool.
CEO COMPENSATION
The Committee believes the Chief Executive Officer's compensation should be
heavily influenced by Company performance. In evaluating the compensation of
Maxwell V. Blum, the Company's Chief Executive Officer, the Committee
considered the financial results of the Company, the compensation paid to
executives in similar positions in the footwear industry, and Mr. Blum's
contribution to and length of service with the Company. The Committee also
considered the substantial equity interest in the Company held by Mr. Blum and
Mr. Blum's family and recognized that this equity interest serves to
substantially align Mr. Blum's incentives with those of the Company's other
stockholders. Based on these factors, the Committee approved Mr. Blum's fiscal
1996 base salary. As discussed above with respect to the payment of
performance bonuses, the amount of Mr. Blum's bonus for fiscal 1996 was based
on the formula specified in the Company's Senior Management Incentive Plan as
well as in the Acquisition Bonus Plan.
Beginning in 1994, a federal law generally disallows the corporate tax
deduction for certain compensation paid in excess of $1,000,000 annually to
each of the chief executive officer and the four other most highly paid
executive officers of publicly held companies. One of the exceptions to the
deduction limit is for "performance-based compensation." To qualify as
"performance-based," compensation payments must be made from a plan that is
administered by a committee of outside directors. In addition, the material
terms of the plan must be disclosed to and approved by stockholders, and the
committee must certify that the performance goals were achieved before
payments can be awarded.
11
<PAGE>
The Committee intends to design the Company's compensation programs to
conform with the legislation and newly adopted final regulations so that total
compensation paid to any employee will not exceed $1,000,000 in any one year,
except for compensation payments in excess of $1,000,000 which qualify as
"performance-based" or are otherwise exempt from the new law. However, the
Company may pay compensation which is not deductible in limited circumstance
when prudent management of the Company so requires.
SUMMARY
The Committee believes that the current compensation arrangements provide
the Chief Executive Officer and the other executive officers with incentive to
perform at superior levels and in a manner which is directly aligned with the
economic interests of the Company's stockholders.
COMPENSATION AND STOCK OPTION
COMMITTEE
Stephen A. Fine
Jonathan K. Layne
Malcolm L. Sherman
February 17, 1997
The above report of the Compensation and Stock Option Committee will not be
deemed to be incorporated by reference into any filing by the Company under
the Securities Act of 1933 or the Exchange Act, except to the extent that the
Company specifically incorporates the same by reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Fine, Layne and Sherman comprise the Compensation and Stock Option
Committee.
Mr. Layne is a partner of the law firm of Gibson, Dunn, & Crutcher LLP,
which has provided legal services to the Company. The Company expects that
such law firm will continue to render legal services to the Company in the
future.
Commencing July 1, 1995, Mr. Sherman agreed to provide financial and other
consulting services to the Company on a regular basis for an annual consulting
fee of $50,000, payable monthly. During the fiscal year ended October 31,
1996, Mr. Sherman received $25,000 for rendering such services. The consulting
arrangement was terminated as of April 30, 1996.
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
COMPARISON OF THIRTY MONTH CUMULATIVE TOTAL RETURN
AMONG MAXWELL SHOE COMPANY INC. CLASS A COMMON STOCK,
NASDAQ STOCK MARKET INDEX AND PEER GROUP INDEX(1)
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MAXWELL MG GROUP NASDAQ
SHOE CO. INDEX MARKET INDEX
<S> <C> <C> <C>
5/18/94(2) 100.00 100.00 100.00
7/29/1994 86.96 108.03 100.48
10/31/1994 93.48 113.63 105.67
1/31/1995 86.96 114.36 97.90
4/28/1995 73.91 115.84 108.79
7/31/1995 58.70 131.75 122.70
10/31/1995 39.13 139.87 124.83
1/31/1996 45.65 142.33 125.43
4/30/1996 43.48 174.13 140.66
7/31/1996 52.17 195.57 128.52
10/31/1996 57.61 219.73 143.92
</TABLE>
ASSUMES $100 INVESTED ON MAY 18, 1994
ASSUMES DIVIDENDS REINVESTED
- --------
(1) The Peer Group Index chosen was Media General Industry Group 552-Footwear.
(2) The first day of trading of the Class A Common Stock on the NASDAQ National
Market System.
13
<PAGE>
CERTAIN TRANSACTIONS
The following is a description of certain transactions during the fiscal
year ended October 31, 1996 in which officers and Directors of the Company and
its affiliates or families had a direct or indirect interest.
One of the Company's customers is a chain of six children's footwear stores
which had been owned or controlled by members of the family of Mr. Maxwell V.
Blum, Chairman and Chief Executive Officer of the Company. Mr. Mark J.
Cocozza, President of the Company, had owned a minority interest in three of
the six stores. These stores were sold during fiscal 1996. Total sales by the
Company to these stores during fiscal 1996 while Mr. Blum and Mr. Cocozza had
an ownership position in them was $233,000. Terms offered to these stores were
comparable to terms offered to other customers purchasing similar amounts of
comparable products. In the past, certain of these stores have paid fees to
the Company in exchange for management and accounting services, although
neither Mr. Blum nor Mr. Cocozza was actively involved in the day-to-day
business of these stores. Such fees aggregated $19,000 in fiscal 1996.
Mr. Cocozza and the Company agreed to terminate, effective as of the
completion of the Company's May 1994 initial public offering, a Deferred
Incentive Compensation Agreement entered into in 1988 (the "Compensation
Agreement"). In exchange for his consent to terminate the Compensation
Agreement, Mr. Cocozza was granted a nontransferable option to acquire 888,412
shares of Class A Common Stock at an exercise price of $1.50 per share. The
number of shares subject to the option and the option exercise price were
determined through negotiations between Mr. Cocozza and the Company. The
option is exercisable in whole or in part from time to time during a 15-year
period beginning on January 26, 1995 (the "Exercisability Date"). If following
the Exercisability Date Mr. Cocozza ceases to be employed by the Company for
any reason, his option will cease to be exercisable upon the earlier of (i)
the stated expiration of the option and (ii) the first anniversary of the date
as of which Mr. Cocozza ceased to be employed by the Company.
Prior to its initial public offering in May 1994, the Company was treated
for federal and state income tax purposes as a S Corporation under Subchapter
S of the Internal Revenue Code and comparable state tax laws. In connection
with the Company's reorganization, reincorporation and initial public
offering, the Company in March and May 1994 made distributions of S
Corporation earnings in the aggregate amount of $20,227.000, of which
$4,025,082 was distributed to Mr. Maxwell V. Blum, $6,553,571 was distributed
to Ms. Betty Ann Blum, $6,553,571 was distributed to Ms. Marjorie Blum and
$3,094,776 was distributed to a trust for the benefit of the wife of Mr.
Maxwell V. Blum (collectively, the "Principal Stockholders").
The Company and the Principal Stockholders have entered into a tax
indemnification agreement (the "Tax Agreement"). Subject to certain
limitations, the Tax Agreement provides for indemnification to the Principal
Stockholders or to the Company in the event of an adjustment by a taxing
authority that shifts federal and certain state income taxes to the Principal
Stockholders or to the Company, respectively, between periods before and after
the date of termination of the Company's status as a S Corporation. The Tax
Agreement also provides for certain adjustments to the S Corporation dividends
that were paid in connection with the Company's initial public offering in
certain circumstances if the Company determines that such amounts differed in
the aggregate from the previously undistributed S Corporation earnings.
The Company entered into arrangements in fiscal 1994 with the Principal
Stockholders and Mr. Cocozza pursuant to which the Company, under certain
circumstances, will be required to register their shares of common stock
(including shares issuable upon the exercise of Mr. Cocozza's option) under
the Securities Act.
In fiscal 1994, the Company entered into separate but identical indemnity
agreements (the "Indemnity Agreements") with each director and executive
officer of the Company. The Indemnity Agreements provide that the Company will
indemnify the director or officer (the "Indemnitee") against any amounts that
he or she becomes legally obligated to pay in connection with any claim
against him or her based upon any act, omission, neglect or breach of duty
that he or she may commit, omit or suffer while acting in his or her capacity
as a director and/or officer of the Company; provided that such claim: is not
based upon the Indemnitee's gaining
14
<PAGE>
any personal profit or advantage to which he or she is not legally entitled;
(ii) is not for an accounting of profits made from the purchased or sale by
the Indemnitee of securities of the Company within the meaning of Section
16(b) of the Exchange Act or similar provisions of any state law, and (iii) is
not based upon the Indemnitee's knowingly fraudulent, deliberately dishonest
or willful misconduct. The Indemnity Agreements also provide that all costs
and expenses incurred by the Indemnitee in defending or investigating such
claim shall be paid by the Company in advance of the final disposition thereof
unless the Company, independent legal counsel, the stockholders of the Company
or court of competent jurisdiction determines that: (i) the Indemnitee did not
act in good faith and in a manner that he or she reasonably believed to be in
or not opposed to the best interests of the Company; (ii) in the case of any
criminal action or proceeding, the Indemnitee had reasonable cause to believe
his or her conduct was unlawful; or (iii) the Indemnitee intentionally
breached his or her duty to the Company or its stockholders. Each Indemnitee
has undertaken to repay the Company for any costs or expenses so advanced if
it shall ultimately be determined by a court of competent jurisdiction in a
final, nonappealable adjudication that he or she is not entitled to
indemnification under the Indemnity Agreements.
The Company believes that the terms of all transactions between the Company
and the Principal Stockholders, the officers and directors of the Company and
Gibson, Dunn & Crutcher LLP, or any of their affiliates, described above or
under "Compensation Committee Interlocks and Insider Participation" are no
less favorable to the Company than terms that could have been obtained from
unaffiliated third parties.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP was the Company's certified public accountant for fiscal
1996. The appointment of auditors is approved annually by the Board of
Directors which is based in part on the recommendation of the Audit Committee.
In making its recommendation, the Audit Committee reviewed both the audit
scope and estimated audit fees for the coming year. Stockholder approval is
not sought in connection with this selection. A representative of Ernst &
Young LLP will be present at the Annual Meeting and will be given an
opportunity to make a statement if he desires to do so and will respond to
questions from stockholders.
15
<PAGE>
PROPOSALS OF STOCKHOLDERS
Proposals which stockholders intend to present at the 1998 Annual Meeting of
Stockholders of the Company must be received by the Secretary of the Company
at its principal offices 101 Sprague Street, Readville (Boston), Massachusetts
02137 no later than October 22, 1997.
MISCELLANEOUS
The Company's Annual Report to Stockholders for the fiscal year ended
October 31, 1996, including the financial statements and related notes
thereto, together with the report of the independent auditors and other
information with respect to the Company, accompanies this Proxy Statement.
The Company is not aware of any other business to be presented at the Annual
Meeting. If matters other than those described should properly arise at the
meeting, the proxies will vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors,
/s/ Marjorie W. Blum
Marjorie W. Blum
Vice President and Secretary
Readville (Boston), Massachusetts
February 19, 1997
16
<PAGE>
PROXY
DETACH HERE
MAXWELL SHOE COMPANY INC.
CLASS A COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS
MARCH 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and the accompanying Proxy Statement for the 1997 Annual
Meeting and, revoking all prior proxies, constitutes and appoints MAXWELL V.
BLUM, MARJORIE BLUM, BETTY ANN BLUM and MARK J. COCOZZA and each of them (and,
if two or more of them act hereunder, by action of a majority of them),
attorneys of Class A Common Stock, $.01 par value, of Maxwell Shoe Company Inc.
(the "Company") which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held at 10:00
a.m. (local time)on Thursday, March 20, 1997 at the Bank of Boston, 100 Federal
Street, Boston, Massachusetts, and at any adjournment or postponement thereof.
All proxies shall be voted as directed, or, if no direction is given, for the
nominees on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE. THIS
PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED IN THE
PROXY STATEMENT AND ACCORDING TO THE JUDGMENT OF THE PROXIES WITH RESPECT TO
ITEM 2. -----------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------------
<PAGE>
DETACH HERE
[X]Please mark votes as in this example.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MAXWELL SHOE
COMPANY INC.
1. ELECTION OF DIRECTORS
Nominees: Maxwell V. Blum, Mark J. Cocozza, Betty Ann Blum, Majorie W. Blum,
Stephen A. Fine, Jonathan K. Layne and Malcolm L. Sherman
FOR WITHHELD
[_] [_]
[_]
-----------------------------------
For all nominees except as noted above
2. In the discretion of the proxyholders with respect to any other matter which
may properly come before the 1997 Annual Meeting and at any adjournment or
postponement thereof. The Board of Directors is presently not aware of any
other matters that will be presented at the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please date and sign exactly as your name or names appear hereon. If more than
one registered owner, all should sign. Executors, administrators, trustees,
guardians, attorneys and corporate officers should indicate their fiduciary
capacity or full title when signing.
Signature: Date
---------------------------- ----------------------
Signature: Date
---------------------------- ----------------------
