<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE SIRENA APPAREL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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
THE SIRENA APPAREL GROUP, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1996
------------------------
TO THE STOCKHOLDERS OF THE SIRENA APPAREL GROUP, INC.:
Notice is hereby given that the annual meeting (the "Meeting") of the
stockholders of The Sirena Apparel Group, Inc. (the "Company") will be held at
the Ramada Suites Hotel, 1089 Santa Anita Avenue, South El Monte, California
91733, on Wednesday, November 20, 1996 at 8:30 a.m. for the following purposes:
1. Election of Directors. To elect two persons to the Board of Directors of
the Company, to serve until the annual meeting of stockholders to be
held in fiscal year 2000 and until their successors have been elected
and qualified. The Board of Directors' nominees are Douglas Arbetman and
Eben S. Moulton.
2. Ratification of Appointment of Independent Auditors. To ratify the
appointment of Ernst & Young LLP as the Company's independent certified
public accountants for the fiscal year ending June 30, 1997.
3. Other Business. To transact such other business as properly may come
before the Meeting or any adjournment or adjournments thereof.
Only persons who are stockholders of record (the "Stockholders") at the
close of business on October 22, 1996 are entitled to notice of and to vote in
person or by proxy at the Meeting or any adjournment thereof.
The Proxy Statement which accompanies this Notice contains additional
information regarding the proposals to be considered at the Meeting, and
Stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, proxies are being solicited
by and on behalf of the Board of Directors of the Company. All proposals set
forth above are proposals of the Company. It is expected that these materials
first will be mailed to Stockholders on or about October 28, 1996.
IT IS IMPORTANT THAT ALL STOCKHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU THEN MAY WITHDRAW YOUR
PROXY AND VOTE IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE. IN ORDER TO FACILITATE THE PROVISION OF ADEQUATE ACCOMMODATIONS AT THE
MEETING, PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING.
By Order of the Board of Directors,
[SIG]
Douglas Arbetman,
Chief Executive Officer
Dated: October 28, 1996
<PAGE> 3
THE SIRENA APPAREL GROUP, INC.
10333 VACCO STREET
SOUTH EL MONTE, CALIFORNIA 91733
(818) 442-6680
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 20, 1996
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors") of The Sirena
Apparel Group, Inc. (the "Company") for use at the annual meeting (the
"Meeting") of the stockholders of the Company to be held on Wednesday, November
20, 1996, at the Ramada Suites Hotel, 1089 Santa Anita Avenue, South El Monte,
California 91733, at 8:30 a.m. and at any adjournment thereof. Douglas Arbetman
and Henry R. Mandell, the designated proxyholders (the "Proxyholders"), are
members of the Company's management. Only stockholders of record (the
"Stockholders") on October 22, 1996 (the "Record Date") are entitled to notice
of and to vote in person or by proxy at the Meeting and any adjournment thereof.
This Proxy Statement and the enclosed proxy card (the "Proxy") will be first
mailed to Stockholders on or about October 28, 1996.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting will be:
1. Election of Directors. To elect two persons to the Board of Directors of
the Company, to serve until the annual meeting of stockholders to be
held in fiscal year 2000 and until their successors have been elected
and qualified. The Board of Directors' nominees are Douglas Arbetman and
Eben S. Moulton.
2. Ratification of Appointment of Independent Auditors. To ratify the
appointment of Ernst & Young LLP as the Company's independent certified
public accountants for the fiscal year ending June 30, 1997.
3. Other Business. To transact such other business as properly may come
before the Meeting or any adjournment or adjournments thereof.
COST OF SOLICITATION OF PROXIES
This Proxy solicitation is made by the Board of Directors of the Company
and the Company will bear the costs of this solicitation, including the expense
of preparing, assembling, printing and mailing this Proxy Statement and any
other material used in this solicitation of Proxies. The solicitation of Proxies
will be made by mail and may be supplemented by telephone or other personal
contact to be made without special compensation by directors, officers and
employees of the Company. If it should appear desirable to do so to ensure
adequate representation at the Meeting, directors, officers and employees may
communicate with Stockholders, banks, brokerage houses, custodians, nominees and
others, by telephone, facsimile transmissions, telegraph, or in person to
request that Proxies be furnished. The Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding proxy materials to their principals. The total estimated
cost of the solicitation of Proxies is $10,000.
OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES
The authorized capital of the Company consists of (i) 25,000,000 shares of
common stock, $0.01 par value ("Common Stock"), of which 4,649,230 shares were
issued and outstanding on October 15, 1996 and
<PAGE> 4
(ii) 3,000,000 shares of Preferred Stock, none of which have been issued and are
outstanding. A majority of the outstanding shares of the Common Stock
constitutes a quorum for the conduct of business at the Meeting. Abstentions
will be treated as shares present and entitled to vote for purposes of
determining the presence of a quorum.
Each Stockholder is entitled to one vote, in person or by proxy, for each
share of Common Stock standing in his or her name on the books of the Company as
of the Record Date on any matter submitted to the Stockholders.
The Company's Certificate of Incorporation does not authorize cumulative
voting. In the election of directors, the candidates receiving the highest
number of votes will be elected. Each other proposal described herein requires
the affirmative vote of a majority of the outstanding shares of Common Stock
present in person or represented by proxy and entitled to vote at the Meeting.
Accordingly, broker non-votes and abstentions from voting on any matter, other
than the election of directors, will have the effect of a vote "AGAINST" such
matter.
Of the shares of Common Stock outstanding on October 15, 1996, 1,096,185
shares of Common Stock (or approximately 24% of the issued and outstanding
shares of Common Stock) were owned by Signal Capital Corporation ("Signal").
Signal has informed the Company that it will vote "FOR" the election of the
nominees to the Board of Directors identified herein and "FOR" the ratification
of the appointment of Ernst & Young LLP as the Company's independent auditors,
all as described herein.
A Proxy for use at the Meeting is enclosed. The Proxy must be signed and
dated by you or your authorized representative or agent. Telegraphed or cabled
Proxies are also valid. You may revoke a Proxy at any time before it is
exercised at the Meeting by submitting a written revocation to the Secretary of
the Company or a duly executed Proxy bearing a later date or by voting in person
at the Meeting.
If you hold Common Stock in "street name" and you fail to instruct your
broker or nominee as to how to vote such Common Stock, your broker or nominee
may, in its discretion, vote such Common Stock "FOR" the election of the Board
of Directors' nominees and "FOR" the other proposals described herein.
Unless revoked, the shares of Common Stock represented by Proxies will be
voted in accordance with the instructions given thereon. In the absence of any
instruction in the Proxy, such shares of Common Stock will be voted "FOR" the
election of the nominees for director identified herein and "FOR" the
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending June 30, 1997.
The enclosed Proxy confers discretionary authority with respect to any
other proposals which properly may be brought before the Meeting. As of the date
hereof, management is not aware of any other matters to be presented for action
at the Meeting. However, if any other matters properly come before the Meeting,
the Proxies solicited hereby will be voted by the Proxyholders in accordance
with the recommendations of the Board of Directors. Such authorization includes
authority to appoint a substitute nominee for any Board of Directors' nominee
identified herein where death, illness or other circumstance arise which prevent
such nominee from serving in such position and to vote such Proxy for such
substitute nominee.
2
<PAGE> 5
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of October 15, 1996 by each person known to the Company to be the beneficial
owner of more than five percent (5%) of the outstanding shares of Common Stock
(other than depositories), by each executive officer, director and nominee for
director of the Company, and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS(3)
--------------------------------------------- ----------------- ----------
<S> <C> <C>
Signal Capital Corporation................... 1,096,185 23.58%
U.S. Bancorp................................. 275,000 5.92
American Industries, Inc..................... 370,000 7.96
Douglas Arbetman(4).......................... 327,958 7.05
Nicholas B. Binkley(5)....................... 9,425 *
Jeffrey J. Holland(6)........................ -- --
Henry R. Mandell(7).......................... 81,317 1.75
Eben S. Moulton(8)........................... -- --
Arthur H. Warshaw(9)......................... 159,761 3.44
All directors and executive officers as a
group (six persons)........................ 578,461 12.44
</TABLE>
- ---------------
* Less than 1%.
(1) The address of Signal is 55 Ferncroft Road, Danvers, Massachusetts 01923.
The address of U.S. Bancorp is 111 S.W. Fifth Avenue, Portland, Oregon
97204. The address of American Industries, Inc. is 1750 N.W. Front Avenue,
Suite 106, Portland, Oregon 97209. The address of the directors and eecutive
officers of the Company is 10333 Vacco Street, South El Monte, California
91733.
(2) The named stockholder has sole voting power and investment power with
respect to the shares listed, subject to community property laws where
applicable.
(3) Shares which the person (or group) has the right to acquire within 60 days
after October 15, 1996 are deemed to be outstanding in calculating the
percentage ownership of the person (or group) but are not deemed to be
outstanding as to any other person or group.
(4) Includes 320,958 shares issuable upon the exercise of stock options granted
to Mr. Arbetman, the President and the Chief Executive Officer and a
director of the Company, pursuant to the Company's 1994 Employee Stock
Incentive Plan, as amended (the "Stock Incentive Plan").
(5) Includes 5,000 shares issuable upon the exercise of stock options granted to
Mr. Binkley, a director of the Company, pursuant to the Stock Incentive
Plan.
(6) Mr. Holland, a director of the Company, is a Senior Investment Manager of
Signal. Mr. Holland disclaims any interest in the shares of Common Stock
held by Signal.
(7) Includes 80,317 shares issuable upon the exercise of stock options granted
to Mr. Mandell, the Chief Financial Officer of the Company, pursuant to the
Stock Incentive Plan.
(8) Mr. Moulton, a director of the Company, is the President of Signal. Mr.
Moulton disclaims any interest in the shares of Common Stock held by Signal.
(9) Consists of shares issuable upon the exercise of stock options granted to
Mr. Warshaw, a director of the Company, pursuant to the Stock Incentive
Plan.
3
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Certificate of Incorporation of the Company provides that the number of
directors of the Company shall be specified in the Bylaws, but in no event shall
there be less than three directors. The Company's Bylaws currently provide for a
Board of Directors composed of five members. The Certificate of Incorporation
further provides that the Board of Directors shall be divided into three classes
which are elected for staggered three year terms. The term of each class expires
at the annual meeting of stockholders in 1997 (Class III), 1998 (Class I) and
1999 (Class II). Only the two members of Class III are to be elected at the
Meeting.
Douglas Arbetman and Eben S. Moulton, the nominees for director, have
indicated their willingness to serve and unless otherwise instructed, Proxies
will be voted in such a way as to effect, if possible, the election of Messrs.
Arbetman and Moulton. In the event that either nominee should be unable to serve
as a director, it is intended that the Proxies will be voted for the election of
such substitute nominee, if any, as shall be designated by the Board of
Directors. Management has no reason to believe that any nominee will be
unavailable.
None of the directors, nominees for director or executive officers were
selected pursuant to any arrangement or understanding, other than with the
directors and executive officers of the Company acting within their capacity as
such. There are no family relationships among directors or executive officers of
the Company as of the date hereof.
The directors and executive officers of the Company are set forth below.
Officers serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION CLASS OF DIRECTOR
- ------------------------- ---- ---------------------------- -----------------
<S> <C> <C> <C>
Douglas Arbetman 49 President, Chief Executive III
Officer and Director
Nicholas B. Binkley(1) 50 Director I
Jeffrey J. Holland(1)(2) 36 Director II
Henry R. Mandell 40 Executive Vice President, --
Chief Financial Officer and
Secretary
Eben S. Moulton(2) 50 Director III
Arthur H. Warshaw(2) 63 Director II
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
DOUGLAS ARBETMAN has been employed as the President and the Chief Executive
Officer and has been a director of the Company since February 1990. During 1989,
Mr. Arbetman was the President of Cherokee Swimwear. From 1987 to 1989, Mr.
Arbetman was President of Reebok Apparel, a division of Reebok International
Ltd. From 1982 to 1987, Mr. Arbetman was Vice President of Merchandising for
Cole of California. Prior to 1982, Mr. Arbetman held various management
positions and was a women's swimwear buyer for Bloomingdales and Robinsons
Department Stores.
NICHOLAS B. BINKLEY has been a director of the Company since October 26,
1994. Since July 1993, Mr. Binkley has been a partner in Forrest Binkley &
Brown, a venture capital firm located in Newport Beach, California. From 1977 to
1993, he was employed in various executive capacities by Security Pacific
Corporation and various of its subsidiaries, including as Chairman and Chief
Executive Officer of Security Pacific Financial Services System, Inc. and a
member of the investment committee of Security Pacific Venture Capital Group.
Following the merger of Security Pacific Corporation and BankAmerica
Corporation, Mr. Binkley served as Vice Chairman of the Board of BankAmerica
Corporation and Bank of America, a
4
<PAGE> 7
director and a member of the Office of the Chief Executive of Security Pacific
Corporation and a member of the Managing and Operating Policy Committee of
BankAmerica Corporation and Bank of America.
JEFFREY J. HOLLAND has been a director of the Company since January 1990.
Since 1987, Mr. Holland has been employed in various capacities by Signal,
including as a Senior Investment Manager since 1990. In January 1995, he became
a partner in Seacoast Capital, an investment firm which provides mezzanine and
equity capital to middle market companies. From 1982 to 1985, he was employed by
Arthur Andersen & Co. as a consultant in the Management Information Consulting
Division.
HENRY R. MANDELL has been employed as Senior Vice President, Chief
Financial Officer and Secretary of the Company since November 1990 and Executive
Vice President since November 1995. From 1985 to November 1990, Mr. Mandell was
employed in various executive capacities by Media Home Entertainment, a
manufacturer and distributor of video cassettes, including as Senior Vice
President, Finance and Administration, and as a director since 1987. From 1982
to 1985, Mr. Mandell held various financial positions with Oak Industries, a
publicly-held communications company listed on the New York Stock Exchange.
Prior to 1982, Mr. Mandell was employed by 20th Century-Fox Film Corporation and
by Arthur Young and Company where he qualified as a Certified Public Accountant.
EBEN S. MOULTON has been a director of the Company since January 1990.
Since 1984, Mr. Moulton has been employed in various executive capacities by
Signal, including as President since 1989. In January 1995, he became managing
partner of Seacoast Capital, an investment firm which provides mezzanine and
equity capital to middle market companies. From 1980 to 1984, he was a Vice
President of Bank of New England, and from 1977 to 1980, he was an Assistant
Vice President of Shawmut Bank. Mr. Moulton is a director of IEC Electronics
Corp., an electronics contract manufacturer.
ARTHUR H. WARSHAW has been a director of the Company since June 1994 and
has been a consultant to the Company since November 1989. Since 1987, he has
been the President of Apparel Management, Inc. a consulting and advisory firm,
and Editor of The Apparel Strategist, an industry business journal. From 1977 to
1986, Mr. Warshaw was Senior Vice President of Warnaco Inc.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee and a Compensation Committee,
each of which consists of two or more directors who serve at the discretion of
the Board of Directors.
The Audit Committee is chaired by Mr. Binkley, and its members are Messrs.
Binkley and Holland. The primary purposes of the Audit Committee are (i) to
review the scope of the audit and all non-audit services to be performed by the
Company's independent certified public accountants and the fees incurred by the
Company in connection therewith, (ii) to review the results of such audit,
including the independent accountants' opinion and letter of comment to
management and management's response thereto, (iii) to review with the Company's
independent accountants the Company's internal accounting principles, policies
and practices and financial reporting, (iv) to make recommendations regarding
the selection of the Company's independent accountants and (v) to review the
Company's quarterly financial statements prior to public issuance.
The Compensation Committee is chaired by Mr. Warshaw, and its members are
Messrs. Holland, Moulton and Warshaw. The purposes of the Compensation Committee
are (i) to review and recommend to the Board of Directors the salaries, bonuses
and perquisites of the Company's executive officers, (ii) to determine the
individuals to whom, and the terms upon which, awards under the Company's stock
incentive plan and profit sharing plan will be granted, (iii) to make periodic
reports to the Board of Directors as to the status of such plans and (iv) to
review and recommend to the Board of Directors additional compensation plans.
The Board of Directors met six times during fiscal 1996, and the Audit
Committee and the Compensation Committee of the Board of Directors met three
times and one time, respectively, during fiscal 1996. All of the persons who
were directors of the Company during fiscal 1996 attended at least 75% of the
total number of
5
<PAGE> 8
meetings of the Board of Directors and the total number of meetings held by all
committees on which they served during fiscal 1996.
PROCEDURES FOR STOCKHOLDER NOMINATIONS
The Board of Directors does not have a standing nominating committee. The
procedures for nominating directors, other than by the Board of Directors
itself, are set forth in the Bylaws. Nominations of individuals for election to
the Board of Directors at an annual meeting of stockholders may be made by any
stockholder of the Company entitled to vote for the election of directors at
that meeting who gives timely written notice to the Company. Such notice must be
received at the Company's principal executive offices not less than 90 calendar
days prior to the day and month on which, in the immediately preceding year, the
annual meeting for such year was held.
A stockholder's notice of intent to nominate must set forth as to each
proposed nominee all information relating to such person that is required to be
disclosed in solicitations of proxies pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended, including, but not
limited to, such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected. Such stockholder notice
must also set forth the name, age, business address, residence address and the
principal occupation or employment of the nominee and the name and address, as
they appear on the Company's books, of the nominating stockholder and the class
and number of shares of the Company's stock which are beneficially owned by such
stockholder.
Due to a determination by the Board of Directors to change the time for the
Company's annual meeting of stockholders from March to a time deemed more
appropriate in view of the Company's June 30 fiscal year end, the 90-day notice
requirement for receipt of stockholder nominations referred to above has been
extended. See "Proposals of Stockholders." All other requirements of the Bylaws
and of Regulation 14A relating to stockholder nominations will apply to
nominations to be made at the Meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the Company's directors, executive
officers and any person holding ten percent or more of the Common Stock are
required to report their ownership of Common Stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC") and to furnish
the Company with copies of such reports. Specific due dates for these reports
have been established and the Company is required to report in this Proxy
Statement any failure to file on a timely basis by such persons. It is the
Company's policy that all such reports be timely filed. Based solely upon a
review of copies of reports filed with the SEC prior to the Record Date, all
persons subject to the reporting requirements of Section 16(a) have filed all
required reports on a timely basis, with the following exceptions. Messrs.
Arbetman, Mandell and Warshaw were required to report, on or before July 10,
1996, options to purchase shares of Common Stock that were granted to them
pursuant to the Company's amended 1994 Stock Incentive Plan (the "Stock
Incentive Plan") on June 28, 1996. See "Director Compensation" and "Stock Option
Grants." Due to administrative inadvertence, these reports were not filed until
October 23, 1996.
DIRECTOR COMPENSATION
The Company pays to each director who is not employed by the Company or
affiliated with Signal $10,000 per year, payable in equal quarterly
installments, and reimburses such person for all expenses incurred by him in his
capacity as a director of the Company. The Board of Directors may modify such
compensation in the future. In addition, each director not employed by the
Company or affiliated with Signal, upon joining the Board of Directors, received
an option to purchase 5,000 shares of the Common Stock of the Company. Such
options have an exercise price equal to the fair market value of such shares on
the date of grant, are immediately exercisable and expire on the fifth
anniversary of the date of grant. Upon the completion of the Company's initial
public offering in August 1994, each of Messrs. Binkley and Warshaw was granted
options to purchase 5,000 shares of Common Stock at $4.75 per share, the initial
public offering price. Such options
6
<PAGE> 9
are immediately exercisable and expire on the fifth anniversary of the date of
grant. In addition, Mr. Warshaw was granted options to purchase 128,575 shares
of Common Stock at $4.75 per share, the initial public offering price, and
42,000 shares of Common Stock at $3.125 per share, the closing price on June 28,
1996, in consideration of consulting services rendered by him. Such additional
options are immediately exercisable and will expire on the fifth and tenth
anniversary of the dates of grant, respectively.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company for services rendered in all capacities during fiscal 1996 to each
person who acted in the capacity of an executive officer (the "Named
Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- ----------
----------------------------------- SECURITIES
OTHER UNDERLYING
ANNUAL RESTRICTED OPTIONS/ ALL OTHER
COMPENSATION STOCK SARS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) ($)(1) AWARDS($) (#)(2) PAYOUTS($) ($)(3)
- -------------------------------- --------- -------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas Arbetman,
President and Chief Executive
Officer....................... 350,000 39,375 16,031 -- 86,000 -- 1,500
Henry R. Mandell,
Executive Vice President,
Chief Financial Officer and
Secretary..................... 152,849 8,598 9,250 -- 22,000 -- 1,500
</TABLE>
- ---------------
(1) Consists of automobile lease, insurance, fuel and maintenance expenses,
premiums on supplemental long-term disability insurance and, for Mr.
Arbetman, premiums on key man life insurance payable to him.
(2) Consists of shares issuable pursuant to options granted under the Stock
Incentive Plan on June 28, 1996.
(3) Consists of reimbursement of medical and dental expenses not covered by
insurance plans provided by the Company to employees generally.
EMPLOYMENT AGREEMENTS
Effective as of August 19, 1994, the completion of its initial public
offering, the Company entered into an employment agreement with Mr. Arbetman
pursuant to which, as amended to date, he is entitled to (i) receive a minimum
annual base salary of $350,000, (ii) receive an annual bonus, up to 100% of his
base salary, based upon the satisfaction of performance goals to be determined
by the Board of Directors, (iii) participate in all plans sponsored by the
Company for employees in general, (iv) receive $500,000 of life insurance
payable as directed by him, (v) receive an option to purchase up to 267,150
shares of the Common Stock of the Company at the initial public offering price
and 86,000 shares of the Common Stock of the Company at the closing price on
June 28, 1996, and (vi) receive a $850 monthly automobile allowance, together
with reimbursement of expenses for insurance, fuel and maintenance. The
agreement, as amended, will terminate on November 15, 1998. In the event the
Company terminates Mr. Arbetman's employment before the end of the stated term
without cause or elects not to renew the agreement for a new three-year term, or
in the event Mr. Arbetman terminates his employment for specified causes, the
Company will be obligated to pay Mr. Arbetman an amount equal to his base salary
for twenty-four months. In the event the Company terminates his employment
before the end of the stated term with cause, the Company is obligated to pay
the base salary only through the date of termination.
Effective as of August 19, 1994, the completion of its initial public
offering, the Company entered into an employment agreement with Mr. Mandell
pursuant to which, as amended to date, he is entitled to (i) receive an annual
base salary of $160,000, (ii) receive an annual bonus, up to 50% of his base
salary, based upon the satisfaction of performance goals to be determined by the
Board of Directors, (iii) participate in all plans
7
<PAGE> 10
sponsored by the Company for employees in general, (iv) receive an option to
purchase up to 66,788 shares of the Common Stock of the Company at the initial
public offering price and 22,000 shares of the Common Stock of the Company at
the closing price on June 28, 1996, and (v) receive a $536 monthly automobile
allowance, together with reimbursement of expenses for insurance, fuel and
maintenance. The agreement, as amended, will terminate on November 15, 1997. In
the event the Company terminates Mr. Mandell's employment before the end of the
stated term without cause or elects not to renew the agreement for a new
two-year term, or in the event Mr. Mandell terminates his employment for
specified causes, the Company is obligated to pay Mr. Mandell an amount equal to
his base salary for twelve months. In the event the Company terminates his
employment before the end of the stated term with cause, the Company is
obligated to pay the base salary only through the date of termination.
STOCK OPTION GRANTS
The following table sets forth certain information concerning the grant of
stock options during fiscal 1996 to the Named Executives.
OPTION/SAR GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/ APPRECIATION
UNDERLYING SARS GRANTED EXERCISE FOR OPTION TERM(1)
OPTIONS/SARS TO EMPLOYEES OR BASE EXPIRATION ----------------------
NAME GRANTED IN FY 1996 PRICE DATE 5% 10%
- ---------------------------------- ------------ ------------ -------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Douglas Arbetman.................. 86,000(2) 53.3 $3.125 June 2006 $ 168,990 $ 427,850
Henry R. Mandell.................. 22,000(3) 13.6 3.125 June 2006 43,230 109,450
</TABLE>
- ---------------
(1) The Potential Realizable Value is the product of (a) the difference between
(i) the product of the closing sale price per share at the date of grant and
the sum of (A) 1 plus (B) the assumed rate of appreciation of the Common
Stock compounded annually over the term of the option and (ii) the per share
exercise price of the option and (b) the number of shares of Common Stock
underlying the option at June 30, 1996. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on a variety of factors, including market conditions
and the price performance of the Common Stock. There can be no assurance
that the rate of appreciation presented in this table can be achieved.
(2) Consists of shares which Mr. Arbetman has the right to purchase upon the
exercise of stock options granted pursuant to the Stock Incentive Plan,
which options became exercisable upon the date of grant.
(3) Consists of shares which Mr. Mandell has the right to purchase upon the
exercise of stock options granted pursuant to the Stock Incentive Plan,
which options became exercisable upon the date of grant.
8
<PAGE> 11
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to the
Named Executives concerning the exercise of options during fiscal 1996 and
unexercised options held by the Named Executives as of June 30, 1996.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1995
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 06/30/96 AT 06/30/96(1)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas Arbetman.......... 32,192 $ 56,336 320,958(2) -- 0 --
Henry R. Mandell.......... 8,471 14,824 80,317(3) -- 0 --
</TABLE>
- ---------------
(1) The value of unexercised "in-the-money" options is the difference between
the closing sale price of the Common Stock on June 28, 1996 ($3.125 per
share) and the exercise price of the option, multiplied by the number of
shares subject to the option.
(2) Consists of shares Mr. Arbetman has the right to purchase upon the exercise
of stock options granted pursuant to the Stock Incentive Plan at an exercise
price of between $3.125 and $4.75 per share, which options became
exercisable on the date of grant.
(3) Consists of shares Mr. Mandell has the right to purchase upon the exercise
of stock options granted pursuant to the Stock Incentive Plan at an exercise
price of between $3.125 and $4.75 per share, which options became
exercisable on the date of grant.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Report of the Compensation Committee of the Board of Directors shall
not be deemed filed under the Securities Act of 1993 (the "Securities Act") or
under the Securities Exchange Act of 1934 (the "Exchange Act").
REPORT OF THE COMPENSATION COMMITTEE
Since its inception, the Company has maintained the philosophy that
executive compensation should be competitive with that provided to others in the
women's swimwear industry to assist the Company in attracting and retaining
qualified executives critical to the Company's long-term success.
In connection with the Company's secondary public offering in November
1995, this Committee amended the then existing employment agreements with
Messrs. Arbetman and Mandell in order to be assured of their continued services
and their experience, knowledge and abilities which have been largely
responsible for the Company's success to date. In determining the salaries and
the perquisites provided in such agreements, the Committee considered, among
other things, (i) the net sales and net income history of the Company, both
before and after the employment of these individuals, (ii) the estimated near
and intermediate term results of operations of the Company, (iii) the position
of the Company in its industry, (iv) the expertise of these individuals, (v) the
current sales, net income, growth and capital structure of the Company and
comparable companies and (vi) salaries and perquisites of executives of
comparable companies.
At the beginning of fiscal 1996, the Committee established individual
performance objectives for each executive officer and performance objectives for
the Company as a whole. Payment of discretionary bonuses in fiscal 1996 was
based upon a subjective assessment of such individual's actual and potential
contribution to the Company. In the case of Mr. Arbetman, the Committee was
particularly influenced by the fact that, notwithstanding the Company's failure
to achieve certain targets with regard to net sales, net income and inventory
turnover, Mr. Arbetman was instrumental in the successful completion of the
Company's secondary stock offering. In the case of Mr. Mandell, the Committee
was particularly influenced by the fact that,
9
<PAGE> 12
notwithstanding the Company's failure to achieve certain targets with regard to
net sales, net income and inventory turnover, Mr. Mandell was instrumental in
the successful completion of the Company's secondary stock offering and in
sustaining the level of market making and analyst coverage of the Company's
Common Stock.
Executive officers are also permitted to participate in the benefit plans
provided to employees generally. The incremental cost to the Company of the
benefits provided to Messrs. Arbetman and Mandell under these plans averaged
approximately 4% percent of their base salaries in fiscal 1996.
In addition, the Company believes that stock ownership by key employees,
including executive officers, provides valuable incentives for such persons, who
will benefit as the Common Stock price increases, and that stock-based
performance compensation arrangements are beneficial in aligning employees' and
stockholders' interests by creating common incentives related to the possession
by management of an economic interest in the appreciation of the Company's
Common Stock. In support of these objectives, the Company granted stock options
to key employees through its stock incentive plan.
Dated: October 28, 1996 THE COMPENSATION COMMITTEE
Jeffrey J. Holland
Eben S. Moulton
Arthur H. Warshaw
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on Common Stock with (i) the cumulative
total return of the NASDAQ market index and (ii) the cumulative total return of
companies with the standard industrial code (SIC) code 2339 over the period from
August 16, 1994 through October 15, 1996. The component entities of SIC Code
2339 were generated by Media General Financial Service, Inc. All the entities in
SIC Code 2339 were incorporated into the peer group. The graph assumes an
initial investment of $100 and the reinvestment of dividends. The graph is not
necessarily indicative of future price performance.
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-----------------------------------------------
1994 1995 1996 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
SIRENA APPAREL GR INC. 100.00 173.68 65.79 52.63
INDUSTRY INDEX 100.00 116.56 140.34 136.74
BROAD MARKET 100.00 109.15 137.40 125.81
</TABLE>
10
<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1990, the Company retained Apparel Management, Inc., a
corporation substantially owned by Arthur H. Warshaw, to provide management
services. In fiscal 1994, 1995 and 1996, the Company paid Apparel Management,
Inc. $222,000, $213,000 and $211,000, respectively, for such services. Apparel
Management, Inc. is entitled to receive consulting fees at the rate of $20,000
per month under its current agreement with the Company which terminates on June
30, 1999.
LIMITATION ON LIABILITY AND INDEMNIFICATION
The Amended and Restated Certificate of Incorporation of the Company limits
the liability of the Company's directors for monetary damages arising from a
breach of their fiduciary duties to the Company and its stockholders, except to
the extent otherwise required by the Delaware General Corporation Law. Such
limitation of liability does not affect the availability of equitable remedies
such as injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by applicable law, including
circumstances in which indemnification is otherwise discretionary. Such
provisions may require the Company, among other things, (i) to indemnify its
officers and directors against certain liabilities that may arise by reason of
their status or service as directors or officers provided such persons acted in
good faith and in a manner reasonably believed to be in the best interests of
the Company and, with respect to any criminal action, had no cause to believe
their conduct was unlawful, (ii) to advance the expenses actually and reasonably
incurred by its officers and directors as a result of any proceeding against
them as to which they could be indemnified and (iii) to obtain directors' and
officers' insurance if available on reasonable terms. There is no action or
proceeding pending or, to the knowledge of the Company, threatened which may
result in a claim for indemnification by any director, officer, employee or
agent of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP as the Company's
independent certified public accountants for the fiscal year ending June 30,
1997. Ernst & Young LLP, the Company's accountants for the fiscal year ended
June 30, 1996, performed audit services for fiscal 1996 which included the
examination of the consolidated financial statements of the Company and services
relating to filings with the Securities and Exchange Commission. All
professional services rendered by Ernst & Young LLP during fiscal 1996 were
furnished at customary rates and terms. Representatives of Ernst & Young LLP
will be invited to be present at the Meeting, will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions from stockholders.
Stockholders are being asked to ratify the appointment of Ernst & Young LLP
as the Company's independent public accountants for the fiscal year ending June
30, 1997. Ratification of the proposal requires the affirmative vote of a
majority of the shares of Common Stock represented and voting at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
OF THE COMPANY.
11
<PAGE> 14
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to present proposals
at stockholder meetings. Any such proposal to be included in the proxy statement
for the Company's 1998 annual meeting of stockholders must be submitted to the
Company by a stockholder on or before June 26, 1997, in a form that complies
with applicable regulations.
Stockholders were previously advised that, in order to be presented at the
Meeting, stockholder proposals would have to be received by the Company on or
before December 26, 1996. This deadline contemplated a meeting date on or about
March 27, 1997. Earlier this year, the Board of Directors determined to change
the time for the Company's annual meeting from March to a time deemed more
appropriate in view of the Company's June 30 fiscal year end. Pursuant to the
Company's Bylaws, if less than forty (40) days notice of the date of an annual
meeting is given to stockholders, the deadline for receipt of stockholder
proposals must be extended to allow stockholders until the close of business on
the tenth day following the day on which notice of the meeting is mailed to
notify the Company of such a proposal. Accordingly, in order to be considered
for presentation at the Meeting, a Stockholder's proposal, including nominations
for election to the Board of Directors, must be received by the Company, in a
form that complies with applicable regulations, on or before November 7, 1996.
ANNUAL REPORT
The Company's Annual Report of the fiscal year ended June 30, 1996
accompanies or has preceded this Proxy Statement. The Annual Report contains
consolidated financial statements of the Company and its subsidiaries and the
report thereon of Ernst & Young LLP, the Company's independent auditors.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS REQUIRED TO BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE EXCHANGE ACT FOR THE
FISCAL YEAR ENDED JUNE 30, 1996, BY WRITING TO THE COMPANY AT 10333 VACCO
STREET, SOUTH EL MONTE, CALIFORNIA 91733, ATTENTION: HENRY R. MANDELL.
OTHER BUSINESS
Management knows of no business which will be presented for consideration
at the Meeting other than as stated in the Notice of Meeting. If, however, other
matters are properly brought before the Meeting, it is the intention of the
Proxyholders to vote the shares represented by the Proxies on such matters in
accordance with the recommendation of the Board of Directors and authority to do
so is included in the Proxy.
By Order of the Board of Directors,
[SIG]
Douglas Arbetman,
Chief Executive Officer
Dated: October 28, 1996
12
<PAGE> 15
REVOCABLE PROXY REVOCABLE PROXY
THE SIRENA APPAREL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 20, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder(s) of The Sirena Apparel Group, Inc. (the
"Company") hereby nominates, constitutes and appoints Douglas Arbetman and Henry
R. Mandell, and each of them, the attorney, agent and proxy of the undersigned,
with full power of substitution, to vote all stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company (the "Meeting") to be held at the Ramada Suites Hotel, 1089 Santa Anita
Avenue, South El Monte, California 91733 on Wednesday, November 20, 1996 at 8:30
a.m., and any adjournments thereof, as fully and with the same force and effect
as the undersigned might or could do if personally thereat, as follows:
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS / / FOR the nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary to vote for the nominees listed below
below)
Nominees and the year their terms expire: Douglas Arbetman........... 2000
Eben S. Moulton............ 2000
</TABLE>
(Instructions: To withhold authority to vote for any nominee whose name appears
above, write that nominee's name in the space provided below)
- --------------------------------------------------------------------------------
2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Ernst & Young LLP as the Company's independent public
accountants for the year ending June 30, 1997.
For / / Against / / Abstain / /
3. OTHER BUSINESS. In their discretion, the proxyholders are authorized to
transact such other business as may properly come before the Meeting and
any adjournment or adjournments thereof.
For / / Against / / Abstain / /
Please Sign and Date on Reverse Side
<PAGE> 16
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE AND "FOR" RATIFICATION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. IF ANY OTHER BUSINESS IS PRESENTED AT
THE MEETING, THIS PROXY SHALL BE VOTED BY THE PROXYHOLDERS IN ACCORDANCE WITH
THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS.
The undersigned hereby ratifies and confirms all that said attorneys and
proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.
Date:
- --------------------------- -------------------------
(Number of Shares)
-------------------------
(Name of Stockholder,
Printed)
-------------------------
(Signature of
Stockholder)
-------------------------
(Name of Stockholder,
Printed)
-------------------------
(Signature of
Stockholder)
(Please date this Proxy
and sign your name as it
appears on your stock
certificate(s).
Executors,
administrators, trustees,
etc., should give their
full titles. All joint
owners should sign.)
I (We) do / / do not / /
expect to attend the
Meeting.
This Proxy will be voted "FOR" the election of the nominees whose names appear
above unless authority to do so is withheld. Unless "AGAINST" or "ABSTAIN" is
indicated on the reverse hereof, this Proxy will be voted "FOR" ratification of
the appointment of Ernst & Young LLP as the Company's certified public
accountants. PLEASE SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN
THE POSTAGE PREPAID ENVELOPE PROVIDED.
