<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 14a-11(c) or Rule 14a-12
FLORSHEIM 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
FLORSHEIM GROUP INC.
FLORSHEIM LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 annual meeting of the stockholders of Florsheim Group Inc. (the
"Company") will be held at 10 a.m., local time, on Thursday, May 15, 1997, at
the Swissotel, 323 East Wacker Drive, Chicago, Illinois, for the following
purposes:
I. To elect ten directors; and
II. To transact such other business as may properly come before the meeting or
at any adjournment thereof.
The board of directors has fixed March 17, 1997 as the record date for the 1997
annual meeting. Accordingly, only stockholders of record at the close of
business on such date will be entitled to notice of the meeting and to vote at
the meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS,
Thomas E. Poggensee
Treasurer, Secretary, Controller
and Chief Accounting Officer
April 14, 1997.
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY FORM, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
FLORSHEIM GROUP INC.
200 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601-1014
------------------------
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Florsheim Group
Inc. ("Florsheim" or the "Company"), 200 North LaSalle Street, Chicago, Illinois
60601-1014, for use during the 1997 annual meeting of stockholders and at any
adjournments thereof (the "Meeting"), for the purposes set forth in the
accompanying notice of annual meeting of stockholders.
The cost of solicitation of proxies will be borne by Florsheim. In addition
to the use of the mails, proxies may be solicited personally or by telephone or
telegram by officers, directors or employees of Florsheim or its subsidiaries
who will not be specially compensated for such services. In addition, Florsheim
has engaged Morrow & Co. to assist in the solicitation from brokers, bank
nominees and institutional holders for a fee of $5,000 plus out-of-pocket
expenses. The notice of meeting, this proxy statement, the form of proxy and
Florsheim's 1996 annual report to stockholders, which includes financial
statements for the fiscal year ended December 28, 1996, are expected to be
mailed to stockholders on or about April 15, 1997. A list of the stockholders of
the Company entitled to vote at the Meeting will be available for inspection at
the Company's offices during normal business hours by any stockholder for the
ten days prior to the Meeting.
VOTING AT THE MEETING
Holders of shares of common stock of Florsheim, without par value ("Common
Stock"), of record at the close of business on March 17, 1997 (the "Record
Date") are entitled to vote at the Meeting. On the Record Date there were
8,346,051 shares of Common Stock outstanding. Each stockholder entitled to vote
shall have the right to one vote for each share of Common Stock outstanding in
such stockholder's name.
The Company presently has no other class of stock outstanding and entitled
to be voted at the Meeting. The presence in person or by proxy of stockholders
entitled to cast a majority of all votes entitled to be cast at the Meeting
constitutes a quorum. The election of directors requires a plurality of the
votes cast. A majority of the votes cast, a quorum being present, generally is
required to take action with respect to any other matter that may properly be
brought before the Meeting.
Shares cannot be voted at the Meeting unless the holder of record is
present in person or by proxy. The enclosed proxy form is a means by which a
stockholder may authorize the voting of his or her shares at the Meeting. The
shares of Common Stock represented by each properly executed proxy form will be
voted at the Meeting in accordance with each stockholder's directions.
Stockholders are urged to specify their choices by marking the appropriate boxes
on the enclosed proxy form; if no choice has been specified, the shares will be
voted as recommended by the Board. If any other matters are properly presented
to the Meeting for action, the proxy holders will vote the proxies (which confer
discretionary authority to vote on such matters) in accordance with their
judgment.
With regard to the election of directors, votes may be cast in favor of or
withheld from any or all nominees. Votes that are withheld with respect to this
matter will be excluded entirely from the vote and will have no effect, other
than for purposes of determining the presence of a quorum. Abstentions typically
will have no impact upon other proposals as may be properly presented at the
Meeting since such matters generally require approval by a majority of the votes
cast.
Brokers who hold shares in street name for customers have the authority
under the rules of the various stock exchanges to vote on certain items when
they have not received instructions from beneficial owners. Brokers that do not
receive instructions are entitled to vote those shares with respect to the
election of directors.
1
<PAGE> 4
Execution of the accompanying proxy will not affect a stockholder's right
to attend the Meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by giving written or oral notice of revocation to the
Secretary of the Company, or by delivering a subsequently executed proxy form,
at any time before the proxy is voted.
Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy form whether or not you plan to attend the
Meeting. If you plan to attend the Meeting to vote in person and your shares are
registered with the Company's transfer agent in the name of a broker or bank,
you must secure a proxy form from the broker or bank assigning voting rights to
you for your shares.
2
<PAGE> 5
FLORSHEIM SECURITY OWNERSHIP
The following table sets forth certain information as of March 17, 1997
regarding the beneficial ownership of shares of Common Stock by (i) each person
known by Florsheim to beneficially own more than five percent of the outstanding
shares of Common Stock, (ii) each director of Florsheim, (iii) each "Named
Officer" identified in the Summary Compensation Table on page 7 below and (iv)
all directors and executive officers of Florsheim, as a group. Unless noted
otherwise, each person has sole voting and investment power over the shares
listed as beneficially owned.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME NUMBER OF SHARES PERCENTAGE OF CLASS(1)
- ---- ---------------- ----------------------
<S> <C> <C>
5% STOCKHOLDERS:
Apollo Investment Fund, L.P.
c/o CICB Bank and Trust Company
(Cayman) Limited
Edward Street
Georgetown, Grand Cayman,
Cayman Islands, British West Indies
and
Lion Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577................................ 5,615,160(2) 67.3%
DIRECTORS AND EXECUTIVE OFFICERS:
Bernard Attal............................................. -- *
Charles J. Campbell....................................... 129,700(3) *
Robert H. Falk............................................ 5,615,160(4) 67.3%
Michael S. Gross.......................................... 5,615,160(4) 67.3%
John J. Hannan............................................ 5,615,160(4) 67.3%
Joshua J. Harris.......................................... 5,615,160(4) 67.3%
John H. Kissick........................................... 5,615,160(4) 67.3%
Richard B. Loynd.......................................... 43,566(5) *
Ronald J. Mueller......................................... 5 *
Michael D. Weiner......................................... 5,615,160(4) 67.3%
Thomas W. Joseph.......................................... 4,500(6) *
Scott J. Reiss............................................ -- *
L. David Sanguinetti...................................... -- *
Larry J. Svoboda.......................................... 2,033(7) *
Gregory J. Van Gasse...................................... 17,000(8) *
Directors and executive officers as a group (15
persons)................................................ 5,809,931(9) 69.6%
</TABLE>
- -------------------------
* Less than one percent
(1) Percentage calculated with reference to an aggregate of 8,346,051 shares of
Common Stock outstanding at March 17, 1997.
(2) Includes (i) 2,808,142 shares owned by Apollo Investment Fund, L.P.
("Apollo") and (ii) 2,807,018 shares held by Lion Advisors, L.P. ("Lion
Advisors") for the benefit of an investment account under management over
which Lion Advisors has sole investment, voting and dispositive power. Lion
Advisors is affiliated with Apollo Advisors, L.P. ("Apollo Advisors"), the
managing general partner of Apollo.
(3) Includes 79,700 shares for which Mr. Campbell shares voting and investment
power, and shares subject to exercisable options to acquire 50,000
additional shares.
3
<PAGE> 6
(4) Messrs. Falk, Gross, Hannan, Harris, Kissick and Weiner (collectively
"Apollo Directors") are associated with Apollo and Lion Advisors. Each
Apollo Director disclaims beneficial ownership of and a personal pecuniary
interest in the shares beneficially owned by Apollo and Lion Advisors.
(5) Includes 40,000 shares for which Mr. Loynd shares voting and investment
power.
(6) Represents shares subject to exercisable options to acquire 4,500 shares.
(7) Includes 2,033 shares for which Mr. Svoboda shares voting and investment
power.
(8) Includes 2,500 shares for which Mr. Van Gasse shares voting and investment
power, and shares subject to exercisable options to acquire 14,500
additional shares.
(9) Includes an aggregate of shares subject to exercisable options to acquire
69,000 shares of Common Stock by all directors and executive officers, as a
group.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
Each of the ten nominees named below and on the following page has been
nominated for election as a director of the Company to serve until the 1998
annual meeting of stockholders, and until his successor has been duly elected
and qualified. Each nominee is currently a director of the Company with a term
expiring in 1997. All nominees have consented to be named and to serve if
elected. If so authorized, the persons named in the accompanying proxy form
intend to vote for the election of each nominee. Stockholders who do not wish
their shares to be voted for a particular nominee may so indicate in the space
provided on the proxy form.
The ten directors are to be elected by a plurality of the votes cast. If
one or more of the nominees should become unavailable to serve at the time of
the Meeting, the shares represented by proxy will be voted for the remaining
nominees and for any substitute nominee or nominees designated by the Board. If
no substitute is designated, the size of the Board may be reduced. The Board
knows of no reason why any of the nominees will be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
IDENTIFIED BELOW.
There follows a brief description of each nominee's principal occupation
and business experience, age and directorships held in other corporations.
<TABLE>
<CAPTION>
FLORSHEIM
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
- ---------------------------------------------------------------- ---------
<S> <C>
Bernard Attal, 33............................................... 1996
President of Heights Advisors
Director of Culligan Water Technologies, Inc. and Samsonite
Corporation
Charles J. Campbell, 52......................................... 1995
Chairman of the Board, President and Chief Executive Officer
of Florsheim
Robert H. Falk, 58.............................................. 1996
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Converse Inc., Culligan Water Technologies, Inc.
and Samsonite Corporation
Michael S. Gross, 35............................................ 1994
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Breuners Home Furnishings, Inc., Converse Inc.,
Furniture Brands International, Inc., Proffitt's, Inc., and
UROHEALTH, Inc.
John J. Hannan, 44.............................................. 1994
Officer and director of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.(a)
Director of Aris Industries, Inc., Converse Inc., Furniture
Brands International, Inc. and United Auto Group, Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
FLORSHEIM
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
- ---------------------------------------------------------------- ---------
<S> <C>
Joshua J. Harris, 32............................................ 1994
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Converse Inc. and Furniture Brands International,
Inc.
John H. Kissick, 55............................................. 1994
Officer of Lion Capital Management, Inc. and Consultant to
Apollo Capital Management, Inc.(a)
Director of Converse Inc., Food 4 Less Holdings, Inc.,
Furniture Brands International, Inc. and Continental
Graphics Holdings, Inc.
Richard B. Loynd, 69............................................ 1994
Chairman of the Board of Furniture Brands International, Inc.
Director of Converse Inc. and Emerson Electric Co.
Ronald J. Mueller, 62........................................... 1994
Retired President and Chief Executive Officer of Florsheim
Michael D. Weiner, 44........................................... 1995
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Applause, Inc., Capital Apartment Properties,
Inc., Continental Graphics Holdings, Inc., Converse, Inc.
and Furniture Brands International, Inc.
</TABLE>
- ---------------
(a) Apollo Capital Management, Inc. ("Apollo Capital") is the general partner of
Apollo Advisors, the managing general partner of Apollo, a securities
investment fund. Lion Capital Management, Inc. ("Lion Capital") is the
general partner of Lion Advisors, which serves as a financial advisor to and
representative for certain institutional investors. Lion Advisors is
affiliated with Apollo Advisors.
Each of the director nominees has held the same position or other executive
positions with the same employer during the past five years, except as follows:
Mr. Attal has been the President of Heights Advisors, a financial advisor and
representative for certain European institutional investors with respect to
their investments in the United States, since April 1995; prior thereto he
served as Vice President of Credit Lyonnais Securities Inc. from June 1992 until
April 1995 and as chief financial officer of the financial services division of
Altus Finance S.A., a French merchant bank, from 1988 until June 1992; Mr.
Campbell has been Chairman of the Florsheim Board since September 1995 and
President and Chief Executive Officer of Florsheim since October 1995; prior
thereto he served as Chairman, President and Chief Executive Officer of Crystal
Brands, Inc., a multi-division apparel company, from August 1993 until February
1995 and as President and Chief Executive Officer of Munsingwear Inc., a
manufacturer and marketer of branded men's sportswear from 1989 until August
1993; Mr. Falk has been an officer of Apollo Capitol and Lion Capital since
April 1992, and prior thereto, he was a senior partner with the law firm of
Skadden, Arps, Slate, Meagher & Flom; Mr. Mueller served as President and Chief
Executive Officer of Florsheim from November 1994 until October 1995; prior
thereto he served as President of The Florsheim Shoe Company Division of
Furniture Brands International, Inc. ("FBI") and as Vice-President of FBI from
1985 until November 1994.
5
<PAGE> 8
COMPENSATION AND ORGANIZATION OF BOARD OF DIRECTORS
The Board met four times during the fiscal year ended December 28, 1996.
Each director attended at least 75% of the total number of meetings of the Board
and committees of the Board on which he served. Except as described below, each
director is paid a monthly fee of $1,000 and a fee of $1,500 plus expenses for
each meeting of the Board attended. In addition, for attending a meeting of a
committee of the Board, each is paid a fee of $800 plus expenses if the director
is a member of the committee or $900 plus expenses if the director is the
Chairman of the committee. Such fees are not paid to directors who are employees
of Florsheim or a subsidiary of Florsheim. Pursuant to an agreement, dated as of
November 17, 1994, Richard B. Loynd was paid a fee of $50,000 on an annual basis
plus out-of-pocket expenses for his services. This agreement terminated in
accordance with its terms on May 15, 1996.
The Board has a number of standing committees, including an Executive
Committee, an Audit Committee and an Executive Compensation and Stock Option
Committee. The Board does not currently have a Nominating Committee.
The Executive Committee, which is composed of Mr. Gross, Chairman, and
Messrs. Campbell and Harris, has the full power of the Board between meetings,
with specified limitations relating to major corporate matters.
The Audit Committee, which currently consists of Mr. Loynd, Chairman, and
Messrs. Gross and Harris, and which met four times during the fiscal year ended
December 28, 1996: recommends the selection and retention of independent
accountants; reviews auditing and financial accounting and reporting matters,
the adequacy of internal accounting controls and asset security, audit fees and
expenses, and compliance with the code of corporate conduct; and counsels
regarding auditing and financial accounting and reporting matters.
The Executive Compensation and Stock Option Committee (the "Compensation
Committee"), which currently consists of Mr. Gross, Chairman, and Messrs. Harris
and Loynd, and which met two times during the fiscal year ended December 28,
1996: reviews and recommends compensation of officers and directors; administers
supplementary retirement, performance incentive and stock option plans; and
counsels regarding compensation of other key employees, management development
and succession, and major personnel matters.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table shows, for the fiscal year depicted, compensation
awarded to, earned by or paid to the Chief Executive Officer of the Company, the
four most highly compensated individuals other than the Chief Executive Officer
who were serving as executive officers at December 28, 1996 and an additional
individual who served as an executive officer during the last completed fiscal
year but was not serving as such at December 28, 1996 (collectively the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND POSITION YEAR $ $ $ # $
----------------- ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles J. Campbell............... 1996 437,000 186,649 237,815(1) -- 300(2)
Chairman; President and 1995 134,461 94,683 31,335 250,000 --
Chief Executive Officer 1994 -- -- -- -- --
Thomas W. Joseph.................. 1996 140,000 37,198 -- 30,000 300(2)
President, 1995 120,000 23,880 -- -- 300
International Division 1994 119,231 27,016 72,500 15,000 300
Scott J. Reiss.................... 1996 130,730 38,835 30,901(3) 30,000 --
Vice President, 1995 -- -- -- -- --
Product Development 1994 -- -- -- -- --
L. David Sanguinetti.............. 1996 174,461 30,006 113,131(4) 30,000 --
Executive Vice President, 1995 -- -- -- -- --
Chief Operating Officer and 1994 -- -- -- -- --
President, Retail Division
Larry J. Svoboda(5)............... 1996 150,144 45,465 -- 30,000 53,650(6)
Vice-President, Finance, Chief 1995 143,000 40,755 7,294 -- 300
Financial Officer and Secretary 1994 142,231 47,692 -- 40,000 300
(until October 1996)
Gregory J. Van Gasse.............. 1996 160,000 30,672 -- 30,000 300(2)
Vice-President, Marketing and 1995 148,000 29,452 7,294 -- 300
Director, New Products Division 1994 147,231 33,960 -- 40,000 300
</TABLE>
- ---------------
(1) Amount paid to Mr. Campbell arising from his relocating in the Chicago area,
including approximately $100,000 in respect of the sale of his old residence
in excess of the appraised value thereof, closing costs and other relocation
expenses and approximately $115,000 as a reimbursement for taxes payable by
Mr. Campbell as a result of the foregoing payments.
(2) Amounts shown consist of 401(k) savings plan matching contributions.
(3) Amount paid to Mr. Reiss arising from his relocating to the Chicago area,
including approximately $13,900 in respect of closing costs incurred upon
the sale of his old residence, other relocation expenses and approximately
$10,700 as a reimbursement for taxes payable by Mr. Reiss as a result of the
foregoing payments.
(4) Amount paid to Mr. Sanguinetti arising from his relocating to the Chicago
area, including approximately $29,900 in respect of closing costs incurred
upon the sale of his old residence, other relocation expenses and
approximately $41,500 as a reimbursement for taxes payable by Mr.
Sanguinetti as a result of the foregoing payments.
(5) Mr. Svoboda resigned and ceased employment with Florsheim in October 1996.
(6) Represents (i) repurchase by Florsheim in November 1996 of an exercisable
option to purchase 10,000 shares of Florsheim Common Stock from Mr. Svoboda
for a total of $53,350 ; and (ii) $300 consisting of 401(k) savings plan
matching contributions.
7
<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 28, 1996, Messrs. Gross, Harris and
Loynd each served as members of the Compensation Committee. Messrs. Gross and
Harris are associated with Apollo Advisors, Apollo and Lion Advisors. Florsheim
has entered into an agreement with Apollo Advisors pursuant to which Apollo
Advisors provides corporate advisory, financial and other consulting services to
Florsheim (the "Consulting Agreement"). A fee under the Consulting Agreement is
payable at an annual rate of $400,000 plus out-of-pocket expenses for a term
expiring December 31, 1997. The Consulting Agreement is automatically renewable
for successive one year terms unless terminated by the Board. Apollo and Lion
Advisors, Florsheim's controlling stockholders, have the contractual right to
require Florsheim to file registration statements concerning Apollo's and Lion
Advisors' shares and include Apollo's and Lion Advisors' shares in registration
statements otherwise filed by Florsheim. Costs and expenses of preparing such
registration statements are required to be paid by Florsheim.
STOCK OPTIONS
The following table discloses options granted to the Named Officers during
the fiscal year ended December 28, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM(1)
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------
NAME # FISCAL YEAR ($/SH) DATE 5% 10%
---- ---------- ------------ -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Joseph...................... 30,000 9.93 5.00 3/15/06 94,334 239,061
Scott J. Reiss........................ 30,000 9.93 5.00 5/15/06 94,334 239,061
L. David Sanguinetti.................. 30,000 9.93 5.00 5/15/06 94,334 239,061
Larry J. Svoboda...................... 30,000 9.93 5.00 3/15/06 94,334 239,061
Gregory J. Van Gasse.................. 30,000 9.93 5.00 3/15/06 94,334 239,061
</TABLE>
- ---------------
(1) The dollar amounts under these columns assume 5% and 10% Common Stock
appreciation above the referenced exercise price and are the result of
assumed rates set forth in the rules promulgated by the Securities and
Exchange Commission. Consequently, such values are not intended to forecast
possible future appreciation, if any, of the Common Stock price of the
Company. The Company did not use an alternative formula for a grant date
valuation, as the Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or volatile
factors. There can be no assurance that the dollar amounts reflected in
these columns will be achieved. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock and
overall market conditions, as well as the executive officer's continued
employment through the vesting period.
8
<PAGE> 11
The following table contains information concerning unexercised stock
options held as of December 28, 1996. None of the Named Officers exercised any
options during 1996.
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 28, 1996(#) DECEMBER 28, 1996($)
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles J. Campbell............................ 50,000 200,000 10,416(1) 41,666(1)
Thomas W. Joseph............................... -- 45,000 -- 208,800(1)
Scott J. Reiss................................. -- 30,000 -- 18,750(1)
L. David Sanguinetti........................... -- 30,000 -- 18,750(1)
Gregory J. Van Gasse........................... 10,000 60,000 63,350(2) 208,800(2)
</TABLE>
- ---------------
(1) Value presented is based upon (i) the difference between the $5.625 per
share closing price of the Common Stock on the Nasdaq National Market on
December 27, 1996 and the exercise price of unexercised-in-the-money
options.
(2) Value presented is based upon (i) the difference between the $5.625 per
share closing price of the Common Stock on the Nasdaq National Market on
December 27, 1996 and the exercise price of unexercised-in-the-money options
and (ii) the contractual right to receive a cash payment upon the exercise
of certain options, which was established in connection with the Company's
spin-off (the "Distribution") from FBI in order to preserve a portion of the
value associated with FBI options that were exchanged for Florsheim options
(the "Florsheim Cash Spread Rights").
RETIREMENT PLANS
Messrs. Joseph, Svoboda and Van Gasse were participants in the FBI
Retirement Plan, a noncontributory, defined benefit pension plan designed to
provide retirement benefits upon normal retirement at age 65. Covered
remuneration is base salary and incentive compensation (reported, respectively,
as "Salary" and "Bonus" in the Summary Compensation Table on page 7 of this
proxy statement), and, based on straight life annuity annual benefits at normal
retirement, is the greater of (i) the sum of 1.1% of final average compensation
(the highest 5 consecutive calendar years of the last ten years) multiplied by
years of credited service up to a maximum of 35 years and 0.45% of final average
compensation in excess of "covered compensation" as defined by the IRS
multiplied by credited service up to a maximum of 35 years, without deduction
for Social Security benefits (the "Final Average Pay Formula"), or (ii) a total
of career average accruals for each year of plan participation equal to 1.95% of
covered remuneration without deduction for Social Security benefits. As of the
date of the Distribution, such officers' benefits under the FBI Retirement Plan
were frozen and additional defined benefits started to accrue under Florsheim
Group Inc. Retirement Plan, a noncontributory, defined benefit pension plan
designed to provide retirement benefits upon normal retirement at age 65, which
Florsheim has been obligated to fund for benefits accruing after the date of the
Distribution. It is expected that the combined benefits under both pension plans
will be substantially similar to benefits that would have accrued under the FBI
Retirement Plan if such officers remained employees of FBI until retirement at
age 65. Benefits payable pursuant to provisions of the foregoing retirement
plans may be limited by applicable laws and regulations. A supplemental
retirement plan ("SERP") has been adopted by Florsheim to provide for payments
from general funds to executive officers of any retirement income that would
otherwise be payable pursuant to its retirement plan in the absence of any such
limitations.
9
<PAGE> 12
The following table shows the estimated annual aggregate benefits payable
at normal retirement under the Final Average Pay Formula taking into account (i)
the combined benefits of the FBI and Florsheim plans, (ii) the effects of
integration with Social Security benefits and (iii) the effects of the Company's
SERP as described above.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
125,000........................... $ 27,201 $ 36,268 $ 45,335 $ 54,402 $ 63,469
150,000........................... 33,014 44,018 55,023 66,027 77,032
175,000........................... 38,826 51,768 64,710 77,652 90,594
200,000........................... 44,639 59,518 74,398 89,277 104,157
225,000........................... 50,451 67,268 84,085 100,902 117,719
250,000........................... 56,264 75,018 93,773 112,527 131,282
300,000........................... 67,889 90,518 113,148 135,777 158,407
400,000........................... 91,139 121,518 151,898 182,277 212,657
450,000........................... 102,764 137,018 171,273 205,527 239,782
500,000........................... 114,389 152,518 190,648 228,777 266,907
550,000........................... 126,014 168,018 210,023 252,027 294,032
600,000........................... 137,639 183,518 229,398 275,277 321,157
650,000........................... 149,264 199,018 248,773 298,527 348,282
</TABLE>
As of December 28, 1996, Messrs. Campbell, Joseph, Reiss, Sanguinetti, Svoboda
and Van Gasse, respectively, had 0, 25, 0, 0, 8 and 5 years credited service
under the combined plans.
CERTAIN AGREEMENTS
Florsheim has an employment agreement with Mr. Campbell, dated September 7,
1995 and amended on December 29, 1995 (the "Campbell Employment Agreement"),
providing for an initial employment term commencing on September 11, 1995 and
continuing until September 30, 1998 (the "Employment Term"). On each September
30 beginning in 1997 the Employment Term will be automatically extended for an
additional year unless either Florsheim or Mr. Campbell provides notice to the
other to the contrary. The Campbell Employment Agreement provides for: (i) the
employment of Mr. Campbell as the Chairman of the Board (and in such other
officer positions as may be designated by the Board); (ii) the payment to Mr.
Campbell of a salary at an annual rate of not less than $437,000 (the "Base
Compensation"); (iii) the entitlement of Mr. Campbell to earn an annual bonus of
up to 65% of the Base Compensation pursuant to the Florsheim Group Inc.
Executive Incentive Program (the "Florsheim Executive Incentive Plan"); (iv) a
grant of options to purchase 250,000 shares of Florsheim Common Stock pursuant
to the Florsheim Group Inc. Charles J. Campbell Stock Option Plan, as amended
and restated (the "Campbell Plan"), which was made on September 7, 1995; (v) the
provision of a loan to Mr. Campbell to purchase shares of Florsheim Common
Stock, which has been repaid in full as described below; and (vi) in connection
with Mr. Campbell's relocation to Chicago, payment of reasonable moving,
temporary housing and housing closing costs and expenses and the purchase by
Florsheim of a house formerly belonging to Mr. Campbell. Amounts paid by
Florsheim to Mr. Campbell in 1996 pursuant to the Campbell Employment Agreement
are included in the Summary Compensation Table on page 7 above.
If Mr. Campbell's employment is terminated by Florsheim other than for
Cause (as defined in the Campbell Employment Agreement), death or disability,
Mr. Campbell will be entitled to receive as severance, payable monthly for the
balance of the Employment Term (but for not less then two years if termination
is prior to September 30, 1998), an amount equal to Mr. Campbell's Average
Annual Compensation (as defined below). In the event that Mr. Campbell's
employment is terminated within two years following a Change of Control (as
defined below) the combined Base Compensation, bonus and severance paid
following the date of the Change of Control must be at least two times Mr.
Campbell's Average Annual Compensation. The term
10
<PAGE> 13
"Average Annual Compensation" is defined in the Campbell Employment Agreement to
mean the annualized base salary plus bonus paid during the twenty-four month
period (or such shorter period during which the Campbell Employment Agreement is
in effect) preceding the date of termination without Cause or the date of the
Change of Control, as the case may be. The term "Change of Control" is defined
in the Campbell Employment Agreement to mean any of the following events: (a)
the acquisition (other than from Florsheim or by Apollo Advisors or Lion
Advisors or their affiliates) of 30% or more of either the then outstanding
shares of Common Stock of Florsheim or the combined voting power of Florsheim's
then outstanding voting securities entitled to vote generally in the election of
directors if the beneficial ownership of the acquiror of such shares exceeds the
beneficial ownership of Common Stock and the combined voting power of
Florsheim's then outstanding voting securities held by any person or entity that
acquired such securities from Florsheim and by Apollo Advisors or Lion Advisors
(and their affiliates); (b) individuals who are presently members of the Board
of Directors (the "Incumbent Board") or individuals who are nominated or elected
by a vote of the Incumbent Board shall cease to constitute a majority of the
members of the Board; (c) the approval by Florsheim's stockholders and not by a
majority of the Incumbent Board of (i) a merger, consolidation or other
reorganization, immediately following which the stockholders prior to such
reorganization do not, own, directly or indirectly, more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, (ii) a liquidation or dissolution of Florsheim, or (iii) the sale of
all or substantially all of the assets of Florsheim.
EXECUTIVE COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Among its responsibilities, the Compensation Committee reviews the
compensation of the officers of Florsheim and makes recommendations to the Board
concerning executive compensation matters.
In its deliberations, the Compensation Committee is guided by certain
fundamental considerations, including the need to attract and retain talented,
key executives, the need to provide both short-term and long-term incentives to
focus executive performance on the achievement of Company objectives and the
development and implementation of compensation policies, plans and programs
which seek to enhance the profitability of the Company, and thus stockholder
value, by aligning closely the financial interests of the Company's senior
management with those of its stockholders.
The Compensation Committee met two times in the fiscal year ended December
28, 1996 and (i) recommended increased base salary levels for Messrs. Joseph,
Svoboda and Van Gasse and other executive positions, (ii) established bonus
parameters based upon performance against pre-determined financial targets,(iii)
recommended the continuation of the Florsheim Executive Incentive Plan for 1996,
and (iv) approved grants of stock option awards under the Florsheim Group Inc.
1994 Stock Option Plan, as amended and restated (the "1994 Plan").
The Company's compensation program for senior management is comprised of
base salary, annual performance bonuses, longer term incentive compensation in
the form of stock options and benefits available generally to the Company's
employees.
Base salary levels for each of the Company's executive officers (i) are set
generally to be competitive with other retail and footwear companies and
companies of comparable size, (ii) take into consideration the position's
complexity, responsibility and need for special expertise, and (iii) take into
account individual experience and performance.
During each fiscal year, the Compensation Committee considers the
desirability of granting to officers and other employees of the Company stock
options under the 1994 Plan. The objective of the 1994 Plan is to align senior
management and stockholder interests by creating a strong and direct link
between the executive's accumulation of wealth and stockholder return and to
enable executives to develop and maintain a significant ownership position in
Florsheim Common Stock. See "Summary Compensation Table" and "Aggregated Fiscal
Year End Option Values."
11
<PAGE> 14
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), disallows a public company's income tax deductions for employee
remuneration exceeding $1,000,000 per year paid to the chief executive officer
and the other four most highly compensated officers. There is an exception,
however, for qualified "performance-based compensation." The Company has been
advised that, under Section 162(m) and the final regulations thereunder, grants
made under the 1994 Plan prior to the 1996 annual meeting of stockholders and
grants under the Campbell Plan represent qualified "performance-based
compensation" pursuant to Section 162(m) of the Code.
In determining the base salary of Mr. Campbell, who became the Chairman of
Florsheim in September 1995 and its President and Chief Executive Officer in
October 1995, the Compensation Committee considered pay levels of chief
executive officers of companies comparable to the Company and Mr. Campbell's
experience in the apparel and branded men's sportswear industries and salary
requirements in light of such experience. The Compensation Committee authorized
the Campbell Employment Agreement in order to establish significant incentives,
such as above-market option grants, Common Stock purchase requirements and
annual bonus incentives, that are performance based and closely aligned with the
creation of stockholder value.
Michael S. Gross, Chairman
Joshua J. Harris
Richard B. Loynd
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return (assuming
reinvestment of dividends), following assumed investment of $100 in shares of
Common Stock on November 21, 1994, the first date Common Stock was traded on the
Nasdaq National Market. The indices shown below are included for comparative
purposes only and do not necessarily reflect Florsheim's opinion that such
indices are an appropriate measure of the relative performance of the Common
Stock.
<TABLE>
<CAPTION>
Measurement Period The Florsheim
(Fiscal Year Covered) Shoe Company S&P 500 Index S&P Shoe Index
<S> <C> <C> <C>
11/21/94 100 100 100
12/31/94 60.8 97.8 109.4
12/30/95 40.5 134.2 148.4
12/28/96 63.5 165.4 246.6
</TABLE>
<TABLE>
<CAPTION>
11/21/94 12/31/94 12/30/95 12/28/96
-------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Florsheim Group Inc. .......................... [ ] 100 60.8 40.5 63.5
S&P 500 Index.................................. + 100 97.8 134.2 165.4
S&P Shoe Index................................. T 100 109.4 148.4 246.6
</TABLE>
CERTAIN TRANSACTIONS
In January 1996, pursuant to the terms of the 1994 Plan, Florsheim
repurchased an exercisable option to purchase 18,000 shares of Florsheim Common
Stock from Mr. Mueller for a total of $89,280. Such sum included $70,830
representing the value of the Florsheim Cash Spread Rights associated with such
options and $18,450 representing the difference between the aggregate per share
closing price of the Common Stock on the Nasdaq National Market on the date of
the repurchase and the aggregate exercise price of such options.
In November 1996, pursuant to the terms of the 1994 Plan, Florsheim
repurchased an exercisable option to purchase 10,000 shares of Florsheim Common
Stock from Mr. Svoboda for a total of $53,350. Such sum included $39,350
representing the value of the Florsheim Cash Spread Rights associated with such
option and $14,000 representing the difference between the aggregate per share
closing price of the Common Stock on the Nasdaq National Market on the date of
the repurchase and the aggregate exercise price of such option.
Pursuant to the terms of an employment agreement between Mr. Mueller and
Florsheim, dated September 15, 1995, as amended on December 29, 1995 (the
"Mueller Employment Agreement"), which
13
<PAGE> 16
agreement supersedes a previous agreement dated October 1, 1994, upon the
election by Mr. Mueller to voluntarily terminate his employment with Florsheim
in December 1995, Florsheim became obligated to provide Mr. Mueller certain
severance payments described below. Until December 31, 1997 Florsheim will,
subject to compliance by Mr. Mueller with the other terms of the Mueller
Employment Agreement: (i) pay Mr. Mueller as and when normally payable his Base
Compensation (an amount equal to $280,400, representing the highest annual
salary rate paid to Mr. Mueller at any time during the 1994 or 1995 fiscal
years, plus a one-time payment of $10,000) and Annual Bonus (a cash payment
equal to $133,801, representing the highest annual bonus paid or payable to Mr.
Mueller pursuant to the Florsheim Executive Incentive Plan with respect to the
1994 or 1995 fiscal years) and (ii) continue paying premiums under the existing
split dollar life insurance arrangement. Under such split dollar life insurance
arrangement, a substantial percentage of premiums paid by Florsheim may be
recoverable by Florsheim or its assignee at the earlier of age 65 or the death
of Mr. Mueller and the residual cash value will accrue for the benefit of Mr.
Mueller or his beneficiary.
For information regarding certain transactions effectuated in connection
with the retention and employment of Mr. Campbell, see "EXECUTIVE COMPENSATION
- -- Certain Agreements."
OTHER MATTERS
Neither the Board nor management knows of any matters other than those
items set forth above that will be presented for consideration during the
Meeting. However, if other matters should properly come before the meeting, it
is intended that the persons named in the proxies will vote, act and consent in
accordance with their best judgment with respect to any such matters.
PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals submitted for inclusion in Florsheim's proxy
materials for the 1998 annual meeting should be addressed to the Secretary of
Florsheim and must be received at Florsheim's executive offices not later than
December 15, 1997. Upon receipt of any such proposal, Florsheim will determine
whether or not to include such proposal in the proxy statement and proxy form in
accordance with SEC regulations governing the solicitation of proxies.
By order of the Board of Directors,
Thomas E. Poggensee
Treasurer, Secretary, Controller
and Chief Accounting Officer
April 14, 1997.
14
<PAGE> 17
FLORSHEIM GROUP INC.
[Florsheim Logo]
PROXY PROXY
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C.J. Campbell, M.S. Gross, and J.J. Harris, and
each of them with power of substitution, proxy or proxies to represent the
undersigned, and to vote all shares of Common Stock the undersigned would be
entitled to vote, at the annual meeting of the stockholders of Florsheim Group
Inc. to be held at 10 a.m., local time, on Wednesday, May 15, 1997, at the
Swissotel, 323 East Wacker Drive, Chicago, Illinois, and at any adjournment
thereof, upon the items set forth in the proxy statement for the meeting and
identified below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
I. Election of Ten directors:
Nominees: B. Attal, C.J. Campbell, R.H. Falk, M.S. Gross,
J.J. Hannan, J.J. Harris, J.H. Kissick, R.B. Loynd,
R.J. Mueller and M.D. Weiner.
II. In their discretion, upon such other matters as may properly come
before the meeting.
PLEASE SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE
SIDE AND RETURN PROMPTLY.
SEE REVERSE
SIDE
<PAGE> 18
FLORSHEIM GROUP INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
1. Election of Directors.
Nominees: (see reverse)
For, except vote withheld from the following
nominee(s):
___________________________________________
For Withheld For All
All From All Except
[ ] [ ] [ ]
2. In their discretion, to transact such other business as may properly come
before the meeting or any adjournment thereof.
A VOTE FOR ITEMS 1, 2, AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
SHARES WILL BE SO VOTED UNLESS YOU OTHERWISE INDICATE.
Date:____________________________________________________
Signature(s):____________________________________________
Signature(s):____________________________________________
NOTE: (PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. EXECUTOR, ADMINISTRATOR,
TRUSTEE, ETC. SHOULD SO INDICATE.)
