<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 Rule 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:
- --------------------------------------------------------------------------------
(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:
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<PAGE> 2
FLORSHEIM GROUP INC.
FLORSHEIM LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2000 annual meeting of the stockholders of Florsheim Group Inc. (the
"Company") will be held at 10:00 a.m., local time, on Wednesday, May 17, 2000,
at Swissotel, 323 East Wacker Drive, Chicago, Illinois, for the following
purposes:
I. To elect ten directors;
II. To approve an amendment to the Company's 1994 Stock Option Plan; and
III. To transact such other business as may properly come before the meeting or
at any adjournment thereof.
The Board of Directors has fixed March 21, 2000 as the record date for the 2000
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,
Larry R. Solomon
Assistant Secretary
April 19, 2000.
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
2000 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 2000 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 1999 annual report to stockholders, which includes financial
statements for the fiscal year ended January 1, 2000, are expected to be mailed
to stockholders on or about April 18, 2000. 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 21, 2000 (the "Record
Date") are entitled to vote at the Meeting. On the Record Date there were
8,483,651 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 vote 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
Assistant 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 21, 2000
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 8 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) 66.2%
DIRECTORS AND EXECUTIVE OFFICERS:
Adam M. Aron.............................................. -- *
Bernard Attal............................................. -- *
Charles J. Campbell(4).................................... 79,700(3) *
Robert H. Falk............................................ 5,615,160(5) 66.2%
Michael S. Gross.......................................... 5,615,160(5) 66.2%
John J. Hannan............................................ 5,615,160(5) 66.2%
Joshua J. Harris.......................................... 5,615,160(5) 66.2%
John H. Kissick........................................... 5,615,160(5) 66.2%
Ronald J. Mueller......................................... 5 *
Michael D. Weiner......................................... 5,615,160(5) 66.2%
Richard J. Anglin......................................... 9,000(6) *
Thomas W. Joseph.......................................... 48,000(7) *
L. David Sanguinetti...................................... 18,000(8) *
Directors and executive officers as a group (13
persons)................................................ 5,769,865(9) 68.2%
</TABLE>
- ---------------
* Less than one percent
(1) Percentage calculated with reference to an aggregate of 8,483,651 shares of
Common Stock outstanding at March 21, 2000.
(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. The address for Apollo and Lion Advisors
is 1301 Avenue of the Americas, 38th Floor, New York, New York 10019.
(3) Shares for which Mr. Campbell shares voting and investment power.
(4) Mr. Campbell terminated employment with the Company June 22, 1999.
(5) 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.
3
<PAGE> 6
(6) Represents shares subject to options that are exercisable to acquire 9,000
shares of Common Stock.
(7) Represents shares subject to options that are exercisable (or will become
exercisable by May 17, 2000) to acquire 48,000 shares of Common Stock.
(8) Represents shares subject to options that are exercisable (or will become
exercisable by May 17, 2000) to acquire 18,000 shares of Common Stock.
(9) Includes an aggregate of shares subject to options that are exercisable (or
will become exercisable by May 17, 2000) to acquire 75,000 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 2001
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 2001. 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>
Adam M. Aron, 45.............................................. 1997
Chairman of the Board and Chief Executive Officer of Vail
Resorts, Inc. and Director of Crestline Capital Corp.,
Sunterra Corporation and Vail Resorts, Inc.
Bernard Attal, 36............................................. 1996
President of Heights Advisors
Director of Samsonite Corporation
Peter P. Corritori, Jr., 46................................... 2000
Chairman and Chief Executive Officer of Florsheim Group Inc.
Robert H. Falk, 61............................................ 1996
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Converse, Inc. and Samsonite Corporation
Michael S. Gross, 38.......................................... 1996
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Allied Waste Industries,Inc., Breuners Home
Furnishings, Inc., Converse, Inc., Encompass Services
Corp., Rare Medium, Inc., Saks Incorporated and United
Rentals, Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
FLORSHEIM
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
- ---------------------------------------------------------------- ---------
<S> <C>
John J. Hannan, 47............................................ 1994
Officer and director of Apollo Capital Management, Inc. and
Lion Capital Management, Inc.(a)
Director of Aris Industries, Inc., Converse, Inc. and United
Auto Group, Inc.
Joshua J. Harris, 35.......................................... 1994
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Breuners Home Furnishings, Inc., Converse, Inc.,
NRT, Inc. and Quality Distribution, Inc.
John H. Kissick, 58........................................... 1994
Officer of Lion Capital Management, Inc. and Consultant to
Apollo Capital Management, Inc.(a)
Director of Continental Graphics Holdings, Inc., Converse,
Inc. and Quality Distribution, Inc.
Ronald J. Mueller, 65......................................... 1994
Retired President and Chief Executive Officer of Florsheim
Michael D. Weiner, 47......................................... 1995
Officer of Apollo Capital Management, Inc. and Lion Capital
Management, Inc.(a)
Director of Continental Graphics Holdings, Inc., Converse,
Inc., NRT, Inc. and Quality Distribution, 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. Aron has served as Chairman of the Board and Chief Executive Officer of Vail
Resorts, Inc., a mountain resort operator, since July 1996, and prior thereto he
served as President and Chief Executive Officer of Norwegian Cruise Line Ltd.
from July 1993 until July 1996; Mr. Corritori served as President of Gant USA
and President of The Designer Group operating divisions of Phillip Van Heusen
Corporation, a diversified apparel and footwear company, from February 1991
until December 1999; Mr. Mueller served as President and Chief Executive Officer
of Florsheim from November 1994 until October 1995, and 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.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN
On March 23, 2000, the Board of Directors adopted an amendment (the
"Amendment") to the Company's 1994 Stock Option Plan to increase the number of
shares of common stock authorized to be issued thereunder from 800,000 to
1,000,000. The Amendment was adopted subject to stockholder approval at the
Annual meeting. The principal terms of the 1994 Plan as amended by the Amendment
(the "1994 Plan"), are summarized below. The Board of Directors believes it is
in the best interest of the Company to increase the number of shares authorized
to be issued under the 1994 Plan. The 1994 Plan authorizes grants to key
employees, including officers of Florsheim and its subsidiaries, of incentive
and non-qualified options to purchase shares of Common Stock. The 1994 Plan
authorizes an aggregate of 800,000 of Common Stock to be issued thereunder
(subject to adjustments for stock splits, stock dividends and certain other
circumstances).
The Charles J. Campbell Stock Option Plan (the "Campbell Plan") was
terminated by the Board of Directors on March 23, 2000. The number of shares of
Common Stock available for issuance under the Campbell Plan was 250,000. The
additional 200,000 shares authorized under the 1994 Plan are intended to
replenish the shares being terminated under the Campbell Plan.
5
<PAGE> 8
DESCRIPTION OF THE 1994 PLAN
Administration of the 1994 Plan is vested in the Compensation Committee,
the members of which are ineligible to receive grants under the 1994 Plan. The
Compensation Committee has general supervisory and interpretive authority and
may determine, subject to the provisions of the 1994 Plan, the individuals to
whom grants will be made, the types of options to be granted, and the number of
shares to be granted and the terms of exercise of options. The 1994 Plan will
terminate in October 2004, subject to the right of the Board to amend, alter, or
discontinue the 1994 Plan prior to such date; provided that no such amendment,
alteration, or discontinuation shall be made which would impair an existing
optionee's rights without the optionee's consent or which, without the approval
of stockholders, would increase the number of shares of Common Stock reserved
for issuance, change the individuals eligible to receive grants or extend the
maximum option period under the 1994 Plan.
The 1994 Plan authorizes grants to key employees, including officers of
Florsheim and its subsidiaries, of incentive and non-qualified options to
purchase shares of Common Stock. The Compensation Committee has discretion to
grant non-qualified options at less than 100% of the fair market value per share
of the Florsheim Common Stock on the date of grant. Incentive stock options must
be granted with an exercise price of not less than 100% of the fair market value
per share of Common Stock on the date of grant. Option prices are payable, in
full and in cash, upon the exercise of an option. On March 21, 2000, options to
purchase 440,850 shares of Common Stock were outstanding under the 1994 Plan.
The maximum numbers of shares with respect to which option may be granted to any
individual during any calendar year and during the term of the 1994 Plan are
300,000 and 500,000, respectively. The number of shares of Common Stock issuable
under the 1994 Plan and to any optionee under the 1994 Plan is subject to
adjustment in the event of any reclassification, split-up, stock dividend or
like capital adjustment. In the event of a reorganization, merger,
consolidation, sale of substantially all of the assets, or liquidation affecting
the Company, options granted under the 1994 Plan shall confer upon the holder
the right to consideration payable in such transaction to a holder of the number
of share of Common Stock which were subject to the optionee. All options granted
under the 1994 Plan become exercisable in the event of a "Change of Control," as
defined in the 1994 Plan, and, in the case of options granted on or after March
15, 1996, termination of employment by the Company or by the optionee as a
result of a material breach by the Company of any employment agreement between
the optionee and the Company.
Grants under the 1994 Plan are exercisable at such dates as the
Compensation Committee may in its discretion determine and provide for in
particular grants. The term of each grant shall be not more than ten years from
the date of grant of the option. Generally, options may be exercised only during
the term of employment or within one month following termination of employment.
In the event of the death of an optionee while employed, options may be
exercised within six months after death. In the event an optionee's employment
terminates by reason of retirement or permanent disability, options may be
exercised within three months after termination of employment. Each option is
non-transferable except by will or the applicable laws of descent and
distribution and is exercisable during the lifetime of the optionee only by the
optionee.
The federal income tax consequences with respect to awards under the 1994
Plan differ depending on the form of stock options granted and certain other
circumstances. Grants and exercises of incentive stock options are not taxable
events. However, upon the subsequent disposition of shares acquired upon
exercise, the optionee will generally realize, as long-term capital gain or
loss, the difference between the sale price and the option price, provided the
shares are held by the optionee for one year after the date of exercise and two
years after the date of grant; however, if the shares are disposed of before the
expiration of the one-year and two-year holding periods, the optionee generally
will realize ordinary compensation income at the time of the disposition limited
to the lesser of (a) the gain, if any, or (b) the excess of the fair market
value of the shares at the time the option was exercised over the option price.
Florsheim generally will be entitled to a deduction equal to the ordinary
compensation income realized by the optionee. Grants of non-qualified stock
options are not taxable events. However, upon exercise, the optionee generally
will realize ordinary compensation income equal to the excess of the fair market
value of the shares so acquired over the option price. Florsheim generally will
be entitled to a deduction equal to the ordinary compensation income realized by
the optionee.
6
<PAGE> 9
COMPENSATION AND ORGANIZATION OF BOARD OF DIRECTORS
The Board met four times during the fiscal year ended January 1, 2000.
Except for Mr. Gross who missed 75% of the Audit Committee meetings, 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.
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 Mr.
Harris, and which did not meet during the fiscal year ended January 1, 2000, 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. Harris, Chairman, and
Mr. Gross, and which met four times during the fiscal year ended January 1,
2000, 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 Mr. Harris,
and which did not meet but did act by unanimous consent during the fiscal year
ended January 1, 2000. The Compensation Committee 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.
7
<PAGE> 10
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
three individuals other than the Chief Executive Officer who were serving as
executive officers at January 1, 2000 and who received salary and bonus of at
least $100,000 in 1999 and an additional individual who served as an executive
officer during the last completed fiscal year but was not serving as such at
January 1, 2000 (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(1)................... 1999 279,154 0 250,000(2) -- --
Chairman, President and 1998 463,750 68,250 -- -- 300
Chief Executive Officer 1997 453,269 96,028 -- -- 300
Richard J. Anglin........................ 1999 202,692 25,200 -- -- 300(3)
Executive Vice President and 1998 188,558 18,500 10,300 -- --
Chief Financial Officer 1997 19,070 -- 4,884 -- --
L. David Sanguinetti..................... 1999 286,000 35,600 -- -- 300(3)
Executive Vice President and 1998 280,288 33,000 -- -- 300
Chief Operating Officer 1997 268,942 49,748 8,795 -- 300
Thomas W. Joseph......................... 1999 180,000 46,500 -- -- 300(3)
Senior Vice President, President, 1998 165,865 26,600 -- -- 300
International Division 1997 145,000 26,308 -- -- 300
</TABLE>
- ---------------
(1) Mr. Campbell terminated his employment with the Company on June 22, 1999.
(2) Mr. Campbell received this additional compensation pursuant to the Campbell
Severance Agreement described on Page 11 below.
(3) Amounts shown consist of 401(k) savings plan matching contributions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 1, 2000, Messrs. Gross and Harris 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 $400,000 plus out-of-pocket expenses for a term
expiring December 30, 2000. The Consulting Agreement is automatically renewable
for successive one year terms unless terminated by the Board. Apollo and Lion
Advisors, Florsheim's controlling stockholders, have the contractual right to
require Florsheim to file registration statements concerning Apollo's and Lion
Advisors' shares and include Apollo's and Lion Advisors' shares in registration
statements otherwise filed by Florsheim. Costs and expenses of preparing such
registration statements are required to be paid by Florsheim.
8
<PAGE> 11
STOCK OPTIONS
The following table discloses options granted to Named Officers during the
fiscal year ended January 1, 2000.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OF OPTION TERM(1)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME OPTIONS GRANTED # FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ----------------- ------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Anglin........... 25,000 32% $4.66 9-1-09 73,266 185,671
L. David Sanguinetti........ 25,000 32% $4.66 9-1-09 73,266 185,671
Thomas W. Joseph............ 15,000 19% $4.66 9-1-09 43,960 111,403
</TABLE>
- ---------------
(1) The dollar amounts under these columns assume 5% and 10% Common Stock
appreciation above the referenced exercise price and are the result of
assumed rates set forth in the rules promulgated by the Securities and
Exchange Commission. Consequently, such values are not intended to forecast
possible future appreciation, if any, of the Common Stock price of the
Company. The Company did not use an alternative formula for a grant date
valuation, as the Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or volatile
factors. There can be no assurance that the dollar amounts reflected in
these columns will be achieved. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock and
overall market conditions, as well as the executive officer's continued
employment through the vesting period.
The following table contains information concerning options exercised
during fiscal year 1999 and unexercised stock options held as of January 1,
2000.
AGGREGATED OPTION EXERCISES AND YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES JANUARY 1, 2000(#) JANUARY 1, 2000($)
ACQUIRED ON VALUE --------------------------- ---------------------------------
NAME EXERCISE # REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles J. Campbell(1)....... -- -- -- -- -- --
Richard J. Anglin............ -- -- 9,000 46,000 -- --
Thomas W. Joseph............. -- -- 43,500 31,500 $118,050(2)(3) --
L. David Sanguinetti......... -- -- 13,500 41,500 -- --
</TABLE>
- ---------------
(1) Mr. Campbell terminated his employment with the Company on June 22, 1999.
(2) Value presented is based upon (i) the difference between the $2.8125 per
share closing price of the Common Stock on the Nasdaq National Market on
December 31, 1999 and (ii) the exercise price of unexercised-in-the-money
options.
(3) Value presented is based upon (i) the difference between the $2.8125 per
share closing price of the Common Stock on the Nasdaq National Market on
December 31, 1999 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 Furniture Brands International, Inc.
("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").
9
<PAGE> 12
RETIREMENT PLANS
Mr. Joseph participated in the Furniture Brands International, Inc. ("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 8 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, Mr. Joseph's 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.
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> <C>
125,000....................... 26,831 35,775 44,718 53,662 62,606
150,000....................... 32,643 43,525 54,406 65,287 76,168
175,000....................... 38,456 51,275 64,093 76,912 89,731
200,000....................... 44,268 59,025 73,781 88,537 103,293
225,000....................... 50,081 66,775 83,468 100,162 116,856
250,000....................... 55,893 74,525 93,156 111,787 130,418
300,000....................... 67,518 90,025 112,531 135,037 157,543
400,000....................... 90,768 121,025 151,281 181,537 211,793
450,000....................... 102,393 136,525 170,656 204,787 238,918
500,000....................... 114,018 152,025 190,031 228,037 266,043
550,000....................... 125,643 167,525 209,406 251,287 293,168
600,000....................... 137,268 183,025 228,781 274,537 320,293
650,000....................... 148,893 198,525 248,156 297,787 347,418
</TABLE>
As of January 1, 2000, Messrs. Anglin, Joseph and Sanguinetti, respectively, had
2, 28, and 3 years credited service under the combined plans.
CERTAIN AGREEMENTS
Florsheim had 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, 1999 (the "Employment Term"). Effective June 22,
1999, Mr. Campbell resigned from the Company and terminated the Campbell Employ-
10
<PAGE> 13
ment Agreement. The Campbell Employment Agreement provided 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 75% 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 in 1995 to Mr. Campbell to purchase shares of Florsheim
Common Stock, which has been repaid in full; and (vi) in connection with Mr.
Campbell's relocation to Chicago in 1995, 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 which was subsequently
sold by Florsheim.
Mr. Campbell entered into a Settlement and Release Agreement with the
Company effective June 22, 1999 ("Campbell Settlement Agreement"). The Campbell
Settlement Agreement provides for: (i) the payment to Mr. Campbell of $500,000
over an eighteen month period; (ii) the maintenance of Mr. Campbell's health
insurance until June 30, 2000; (iii) the vesting of 200,000 options that would
have otherwise vested on September 5, 1999; and (iv) the accrual of credited
service towards the pension plan until September 5, 2000. Amounts paid by
Florsheim to Mr. Campbell in 1999 pursuant to the Campbell Employment Agreement
and Campbell Settlement Agreement are included in the Summary Compensation Table
on page 8 above.
Florsheim has an Employment Agreement with Mr. Corritori, dated March 23,
2000 (the "Corritori Employment Agreement"), providing for an initial employment
term commencing on March 23, 2000 and continuing until March 22, 2003. On each
March 23, the Employment Term will be automatically extended for an additional
year unless Florsheim or Mr. Corritori provide notice to the other to the
contrary. The Corritori Employment Agreement provides for: (i) the employment of
Mr. Corritori as the Chairman of the Board and Chief Executive Officer (and in
such other officer positions as may be designated by the Board); (ii) the
payment to Mr. Corritori of a salary at an annual rate of not less than $485,000
(the "Base Compensation"); (iii) the entitlement of Mr. Corritori to earn an
annual bonus of up to 75% of the Base Compensation; (iv) a grant of options to
purchase 275,000 shares of Common Stock pursuant to the 1994 Plan; and (v) in
connection with Mr. Corritori's relocation to Chicago, payment of reasonable
moving, temporary housing and housing closing costs and expenses.
If Mr. Corritori's employment is terminated by Florsheim other than for
Cause (as defined in the Corritori Employment Agreement), death or disability,
Mr. Corritori will be entitle to receive as severance, for the balance of the
Employment Term or two years whichever is greater, an amount equal to Mr.
Corritori's Base Compensation plus his annual bonus, to the extent it was earned
in the year of termination.
EMPLOYMENT SECURITY AGREEMENTS
On December 13, 1999, the Company entered into an Employment Security
Agreement with each of Richard J. Anglin and L. David Sanguinetti (the "Anglin
and Sanguinetti Employment Agreements"). The Anglin and Sanguinetti Employment
Agreements provide that, for termination other than for Cause (as defined in the
Employment Agreements) or termination by the employee for Good Reason (as
defined in the Anglin and Sanguinetti Employment Agreements), Messrs. Anglin and
Sanguinetti will each receive one and one-half times the amount equal to (i)
such employee's annual base salary rate (at the highest rate in effect) and (ii)
the average incentive payment made to such employee for the immediately
preceding two fiscal years.
On December 13, 1999, the Company also entered into an Employment Security
Agreement with Mr. Thomas W. Joseph (the "Joseph Employment Agreement"). The
Joseph Employment Agreement provides that, for termination other than for Cause
(as defined in the Employment Agreements) or termination by Mr. Joseph for Good
Reason (as defined in the Joseph Employment Agreements), Mr. Joseph will each
receive an amount equal to (i) his annual base salary rate (at the highest rate
in effect) and (ii) the average incentive payment made to Mr. Joseph for the
immediately preceding two fiscal years.
11
<PAGE> 14
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, which did not meet but did act by unanimous
consent, (i) recommended increased base salary levels for Messrs. Anglin, Joseph
and Sanguinetti and other executive positions, (ii) established bonus parameters
based upon performance against pre-determined financial targets and (iii)
recommended the continuation of the Florsheim Executive Incentive Plan for 2000.
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."
Section 162(m) of the tax 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 tax code.
Michael S. Gross, Chairman
Joshua J. Harris
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 for the past five fiscal years. 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.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Florsheim Group [
] 100.00 66.67 104.44 112.21 84.44 49.99
S&P 500 + 100.00 137.58 169.17 225.60 290.08 351.12
S&P Retail Stores -- Footware T 100.00 135.59 225.39 151.89 148.67 176.32
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that all filings required to be made during fiscal
year 1999 were made on a timely basis.
CERTAIN TRANSACTIONS
On March 4 and May 6, 1998, the Company granted an interest-free bridge
loan in the amount of $225,000 to Richard J. Anglin, Vice President, Chief
Financial Officer, in connection with Mr. Anglin's relocation to the Chicago
area. Compensation imputed as relating to the interest-free benefit associated
with the loan, which did not bear interest until November 6, 1998, is reflected
in the "Other Annual Compensation" column of the Summary Compensation Table on
page 7 above. Beginning on November 6, 1998, the loan became subject to interest
at 8.5% per year. This loan was paid in full in November 1999.
For information regarding certain transactions effectuated in connection
with the retention and employment of Mr. Campbell, see "EXECUTIVE COMPENSATION
- -- Certain Agreements."
13
<PAGE> 16
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 2001 ANNUAL MEETING
Stockholder proposals submitted for inclusion in Florsheim's proxy
materials for the 2001 annual meeting should be addressed to the Assistant
Secretary of Florsheim and must be received at Florsheim's executive offices not
later than December 20, 2000. 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,
Larry R. Solomon
Assistant Secretary
April 19, 2000.
14
<PAGE> 17
PROXY Florsheim Group Inc. Proxy
FLORSHEIM
PROXY FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints P.P. Corritori Jr., 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 17,
2000, 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: A. Aron, B. Attal, P.P. Corritori Jr., R.H. Falk,
M.S. Gross, J.J. Hannan, J.J. Harris, J.H. Kissick,
R.J. Mueller and M.D. Weiner,
II. Approval of an amendment to the Company's 1994 Stock Option Plan,
III. 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. [ ]
[ ]
A VOTE FOR ITEMS 1, 2, AND 3 IS RECOMMENDED BY THE BOARD OF DIRECTORS.
SHARES WILL BE SO VOTED UNLESS YOU OTHERWISE INDICATE.
For All
1. Election of Directors. For Withheld Except
Nominees: (see reverse) [ ] [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
For All
For Withheld Except
2. Approval of an amendment to the [ ] [ ] [ ]
Company's 1994 Stock Option Plan.
3. In their discretion, to transact such
other business as may properly
come before the meeting or any
adjournment thereof.
Date:
---------------------------------------------
Signature(s):
-------------------------------------
Signature(s):
-------------------------------------
NOTE: (PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. EXECUTOR,
ADMINISTRATOR, TRUSTEE, ETC. SHOULD SO INDICATE.)
