<PAGE>
BRYLANE INC.
463 SEVENTH AVENUE
NEW YORK, NEW YORK 10018
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about March 13, 1998 to
the holders of record of the common stock par value $0.01 per share (the "Common
Stock"), of Brylane Inc., a Delaware corporation (the "Company") at the close of
business on or about March 6, 1998, in connection with the pending change of a
majority of the members of the Company's Board of Directors as contemplated by
those certain Stock Purchase Agreements, each dated as of February 19, 1998,
among FS Equity Partners II, L.P., a California limited partnership ("FSEP II"),
FS Equity Partners III, L.P., a Delaware limited partnership ("FSEP III"), FS
Equity Partners International, L.P., a Delaware limited partnership ("FSEP
Intl." and collectively with FSEP II and FSEP III, the "FS Parties") and Pinault
Printemps-Redoute, S.A., a company organized under the laws of France ("PPR")
and between M&P Distributing Company, a Nevada corporation ("M&P") and PPR
(collectively, the "Purchase Agreements"). You are receiving this Information
Statement in connection with the pending appointment of five persons designated
by PPR as members of the Company's Board of Directors, constituting a majority
thereof. As further set forth below, it is a condition to the closing of the
Purchase Agreements that (i) the three directors who are representatives of the
FS Parties and the two directors who are representatives of The Limited, Inc.
(the "Limited") will resign, (ii) the Board acting pursuant to Section 223(d) of
the Delaware General Corporation Law, will fill the resulting vacancies with
nominees of PPR (the "PPR Nominees") and (iii) the Board will increase the
number of directorships by one, filling such newly created vacancy with an
independent director who has not been identified as of the date hereof. This
Information Statement is required by Section 14(f) of the Securities Exchange
Act of 1934, as amended, and Rule 14f-1 thereunder. You are urged to read this
Information Statement carefully. You are not, however, required to take any
action in connection with this Information Statement.
Pursuant to the Purchase Agreements, PPR/1/ has agreed to purchase from the
FS Parties and M&P, and the FS Parties and M&P have agreed to sell to PPR, in
each case subject to the satisfaction of certain specified conditions, 4,389,294
shares and 2,573,762 shares of Common Stock, respectively. The shares being
purchased by PPR constitute all of the shares owned by the FS Parties and M&P
and represent in the aggregate 37.7% of the shares of Common Stock outstanding
on March 1, 1998. In addition, pursuant to the Purchase Agreements, PPR has
offered to purchase certain additional shares of Common Stock (up to an
aggregate of 1,821,044 shares including 619,584 shares issuable upon exercise of
options) from certain other shareholders of the Company (including certain
members of management) at the same price paid pursuant to the Purchase
Agreements ($51 per share). As a result of such purchases or as permitted under
the Governance Agreement to be entered into between PPR and the Company at the
closing of the transactions as contemplated by the Purchase Agreements, PPR is
not permitted to acquire more than 47.5% of the outstanding shares of Common
Stock during a three year period following the closing of the Purchase
Agreements unless such additional purchases are approved by the Board. The
closing market price of the Common Stock on March 12, 1998 was $58 1/16 per
share.
The information contained in this Information Statement concerning PPR and
PPR's nominees has been furnished to the Company by PPR, and the Company assumes
no responsibility for the accuracy or completeness of such information. All
other information contained in this Information Statement has been supplied by
the Company, and PPR assumes no responsibility for the accuracy or completeness
of such information.
- ------------------------------------
/1/ Pursuant to the Purchase Agreements, PPR may assign its right to purchase
the shares of Common Stock acquirable upon the closing of the Purchase
Agreements to any one or more direct or indirect majority-owned subsidiaries, or
affiliates controlled by PPR. As of the date hereof, PPR has not designated
such an assignee or assignees. As used herein, the term "PPR" shall refer to
PPR and any such assignee or assignees.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's capital stock as of March 1, 1998 of (i) each person
who is known by the Company to be the beneficial owner of more than 5% of any
class of the Company's capital stock, (ii) each director and certain executive
officers of the Company, individually, and (iii) all directors and executive
officers as a group. The table does not reflect PPR's purchases of Common Stock
as described in note 14 thereto.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2)(14) OF CLASS
- ------------------- ------------------------------------------------ ------------------- --------
<S> <C> <C> <C>
Common Stock Freeman Spogli & Co. Incorporated(3)(4).......... 4,389,294 24.9%
Common Stock The Limited, Inc.(5)............................. 2,573,762 14.6
Common Stock FMR Corp.(6)..................................... 1,609,800 9.1
Common Stock William C. Johnson............................... 52,109(7) *
Common Stock Peter J. Canzone................................. 350,333(8) 2.0
Common Stock Sheila R. Garelik................................ 90,916(9) *
Common Stock Robert A. Pulciani............................... 61,559(10) *
Preferred Stock Dhananjaya K. Rao................................ 12,500(11) *
Preferred Stock Carol Meyrowitz.................................. 6,000(12) *
Common Stock Ronald P. Spogli(4).............................. -- --
Common Stock John M. Roth(4).................................. -- --
Common Stock Mark J. Doran(4)................................. -- --
Common Stock Samuel P. Fried.................................. -- --
Common Stock William K. Gerber................................ -- --
Common Stock Peter M. Starrett................................ 4,000 *
Common Stock All directors and executive officers of Brylane
as a group (20 persons)................ 5,244,862(13) 28.8%
</TABLE>
- ---------------------
* Less than 1%.
(1) The persons and entities named in this table have sole voting power and
investment power with respect to all shares of Common Stock or Series A
Convertible Redeemable Preferred Stock (the "Preferred Stock") shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in this table and these notes.
(2) The Company has reserved for issuance, to officers, key employees, certain
members of the Board and consultants of the Company (or its subsidiaries),
options to purchase up to 2,479,584 shares of Company Common Stock.
(3) The shares shown as beneficially owned by Freeman Spogli & Co. Incorporated,
a private investment firm ("FS&Co.") are held of record as follows:
2,107,237 shares owned by FSEP II; 2,199,603 shares owned by FSEP III; and
82,454 shares owned by FSEP Intl. FS&Co. is the sole general partner of
FSEP II. FS Capital Partners, L.P. ("FS Capital"), an affiliate of FS&Co.,
is the sole general partner of FSEP III. FS Holdings, Inc. ("FSHI") is the
sole general partner of FS Capital. The sole general partner of FSEP
International is FS&Co. International, L.P. ("FS&Co. International"). The
sole general partner of FS&Co. International is FS International Holdings
Limited ("FS International Holdings"), an affiliate of FS&Co. As the
general partners of FSEP II, FS Capital (which is the general partner of
FSEP III), and FS&Co. International (which is the general partner of FSEP
International), respectively, FS&Co., FSHI and FS International Holdings
have the sole power to vote and dispose of the shares of the Company held by
each of FSEP II, FSEP III and FSEP International, respectively.
(4) Messrs. Spogli and Roth, each of whom is a member of the Board, and Mr.
Bradford M. Freeman, Mr. J. Frederick Simmons and Mr. William M. Wardlaw are
general partners of FS&Co., and Messrs. Spogli, Roth, Freeman, Simmons and
Wardlaw and Mr. Charles P. Rullman are the sole directors, officers and
shareholders
2
<PAGE>
of FSHI and FS International Holdings, and as such may be deemed to be the
beneficial owners of the shares indicated as beneficially owned by FS&Co.
Mr. Doran, a member of the Board, is affiliated with FS&Co., FS&Co.
International and FS Capital, and as such may be deemed to be the
beneficial owner of the shares indicated as beneficially owned by FS&Co.
Upon the closing of the transactions contemplated by the Purchase
Agreements, Messrs. Spogli, Roth and Doran will resign as members of the
Board. The business address of FS&Co. and its general partners, FSHI and
its sole directors, officers and shareholders, FS Capital, FSEP II and FSEP
III is 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California
90025. The business address of FS International Holdings, FS&Co.
International and FSEP International is c/o Paget-Brown & Company, Ltd.,
West Winds Building, Third Floor, P.O. Box 1111, Grand Cayman, George Town,
Cayman Islands, B.W.I. The business address of Mr. Doran is 599 Lexington
Avenue, 18th Floor, New York, New York 10022.
(5) All shares shown as beneficially owned by The Limited are held of record by
M&P Distributing Company. The business address of The Limited is 3 Limited
Parkway, Columbus, Ohio 43230.
(6) As reported in a Schedule 13G dated February 14, 1998 filed jointly with
the Securities and Exchange Commission (the "Commission") by FMR Corp.,
Edward C. Johnson 3d and Abigail P. Johnson, FMR Corp., Mr. Johnson and
Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., each have claimed sole dispositive power with
respect to 1,222,500 shares owned by certain management investment
companies registered under the Investment Company Act of 1940 and managed
by Fidelity (the "Funds"). Neither FMR Corp. nor Mr. Johnson has sole
voting power with respect to the 1,222,500 shares owned by the Funds, which
power resides with the Fund's Boards of Trustees. In addition, Mr. Johnson
and FMR Corp., through its control of Fidelity Management Trust Company
("FMTC"), a wholly-owned subsidiary of FMR Corp., each have claimed sole
voting and dispositive power with respect to 387,300 shares of Common Stock
beneficially owned by FMTC. Mr. Johnson and Ms. Johnson may be deemed to be
control persons of FMR Corp. The business address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109.
(7) Includes 36,666 shares of Common Stock issuable upon exercise of options.
(8) Includes 271,333 shares of Common Stock issuable upon exercise of options.
(9) Includes 56,416 shares of Common Stock issuable upon exercise of options
and 500 shares of Common Stock held by son.
(10) Includes 36,459 shares of Common Stock issuable upon exercise of options.
(11) Represents 12,500 shares of the Preferred Stock which are currently
convertible into Common Stock. In connection with the Purchase Agreements,
PPR has agreed that the Company may fully vest the 25,000 currently
unvested shares of Preferred Stock held by Mr. Rao.
(12) Represents 6,000 shares of the Preferred Stock which are currently
convertible into shares of Common Stock. In connection with the Purchase
Agreements, PPR has agreed that the Company may fully vest the 25,000
currently unvested shares of Preferred Stock held by Ms. Meyrowitz.
(13) Includes 4,389,293 shares of Common Stock beneficially owned by affiliates
of FS&Co.
(14) Pursuant to the Purchase Agreements and related transactions, PPR will
acquire the 4,389,293 shares owned by the FS&Co. affiliates, the 2,573,762
shares owned by The Limited's subsidiary, M&P, 328,900 shares owned by Mr.
Canzone (including 250,000 shares issuable upon exercise of options),
68,750 shares owned by Ms. Garelik (including 28,750 shares issuable upon
exercise of options), 61,459 shares owned by Mr. Pulciani (including 36,459
shares issuable upon exercise of options), 30,000 shares owned by Mr.
Silbert (including 10,000 shares issuable upon exercise of options), 10,000
shares owned by Mr. Johnson and an aggregate of 50,000 shares to be owned
by other members of management upon exercise of options. In addition, PPR
has had discussions with Mr. Rao and Ms. Meyrowitz concerning the purchase
in the future of the shares to be owned by Mr. Rao and Ms. Meyrowitz upon
conversion of their Preferred Stock.
3
<PAGE>
BOARD OF DIRECTORS
GENERAL
The Common Stock is the only class of voting securities of the Company
outstanding. Each share of Common Stock has one vote. As of March 1, 1998,
there were 17,606,741 shares of Common Stock outstanding. The Board currently
consists of eight members. Each director holds office until such director's
successor is elected and qualified or until such director's earlier resignation
or removal.
RIGHT TO NOMINATE DIRECTORS AND SOURCE OF FUNDS
Pursuant to the Governance Agreement to be entered into in connection with
the closing under the Purchase Agreements, the Company will use its best efforts
to have the Board include up to five nominees of PPR in the slate of nominees
presented by the Board for election at each stockholder meeting at which
directors are to be elected (such nominees who become directors, "PPR
Directors"); provided, if PPR's share ownership falls below the following
percentages (without PPR buying back up to the applicable percentage within 30
days), PPR agrees that the following number of PPR Nominees will resign and be
replaced by independent directors. If PPR's ownership falls below 40%, one PPR
Nominee will resign; if PPR's ownership falls below 30%, two PPR Nominees will
resign; and if PPR's ownership falls below 20%, three PPR Nominees will resign.
PPR will obtain the funds necessary to acquire the shares of Common Stock
to be purchased as indicated herein from bank borrowings.
INFORMATION CONCERNING THE PPR NOMINEES
Certain biographical information concerning the PPR Nominees is set forth
below.
Serge Weinberg, 47, has been President and Chief Executive Officer of
Pinault Printemps-Redoute SA since 1995. He joined Pinault Printemps-Redoute
SA in 1990 and was initially President and Chief Executive Officer of Companie
Francais d' Afrique Orientale and subsequently of Rexel SA, an affiliate of
Pinault Printemps-Redoute SA. He has been vice-chairman of Rexel Inc. since
March 1994 and is a Director of Rexel SA.
Hartmut Kramer, 51, will become Chairman and Chief Executive Officer of
Groupe La Redoute SA on April 1, 1998. He is at present and has been since
1989 a Managing Partner of Peek & Cloppenburg KG Dusseldorf, after having been
General Manager thereof since 1985.
Richard Simonin, 45, has been Chairman and Chief Executive Officer of SA
Redoute France since May 1997. Previously, he served as Chairman of Kenzo SA,
from September 1993 to April 1997 and for Givenchy from July 1992 to July 1996,
both of which companies are part of the L.V.M.H. group.
Antoine Metzger, 44, has been Chief Financial Officer of Groupe La Redoute
SA since 1991. Previously, he was Chief Financial Officer of SA Redoute France
(and its predecessor) from 1989 to 1991. Antoine Metzger joined La Redoute in
1985 and served as financial controller of SA Redoute France (and its
predecessor) until 1989. Antoine Metzger is non-executive Chairman of Ellos and
of Bernard SA. From 1996 to 1997, he was a board member of Goldkamp AG, which
filed for bankruptcy in 1997.
Johannes Loning, 34, has been Vice-President in charge of Corporate
Development of Groupe La Redoute SA since 1997. From 1988 to 1997, he was a
consultant with Mercer Management Consulting (and its predecessor).
Each of the foregoing individuals is a citizen of France, except for
Messrs. Kramer and Loning who are citizens of Germany. The business address of
Mr. Weinberg is Pinault Printemps-Redoute SA 18, Place Henri Bergson, 75381
Paris Cedex 08 France. The business address of Messrs. Kramer, Metzger and
Loning is La Redoute SA, 110, rue de Blanchemaille, 59051 Roubaix Cedex 01
France. The business address of Mr. Simonin is Group La Redoute SA, 57, rue de
Blanchemaille, 59082 Roubaix Cedex 02 France.
4
<PAGE>
CURRENT MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY
The following individuals are the current members of the Board of Directors
of the Company.
<TABLE>
<CAPTION>
NAME AGE* POSITION DIRECTOR SINCE
---- ---- -------- --------------
<S> <C> <C> <C>
Peter J. Canzone(3).......... 67 President, Chief Executive Officer, 1994
Chairman of the Board and Director
William C. Johnson(2)(3)..... 58 Vice Chairman of the Board and Director 1994
Mark J. Doran(4)............. 34 Director 1995
Samuel P. Fried(1)(4)........ 46 Director 1994
William K. Gerber(4)......... 44 Director 1994
John M. Roth(1)(3)(4)........ 39 Director 1994
Ronald P. Spogli(1)(4)....... 49 Director 1994
Peter M. Starrett(1)(2)(3)... 50 Director 1997
</TABLE>
_____________________
* As of March 11, 1998.
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Strategic Planning Committee.
(4) To resign upon the closing of the Purchase Agreements.
Mr. Canzone has been Chief Executive Officer of Brylane, L.P., a Delaware
limited partnership and a wholly-owned subsidiary of the Company ("Brylane" or
the "Partnership") and its predecessor since 1978 and also served as President
of Brylane and its predecessor from 1978 until July 1996. Mr. Canzone became a
member of the Board and President of Brylane Inc. in connection with the
Company's formation and was elected Chairman of the Board in June 1995. Between
1969 and 1978, Mr. Canzone was employed by Lane Bryant in a variety of
merchandising positions.
Mr. Johnson became a member of the Board in connection with the Company's
formation and was elected Vice Chairman of the Board in June 1995. From March
1990 until December 1994, Mr. Johnson served as Chief Executive Officer of
Grolier Incorporated. Prior to joining Grolier Incorporated, from 1982 to 1989,
Mr. Johnson served as Chairman of the Board and Chief Executive Officer of
Fingerhut Corporation.
Mr. Doran became a member of the Board in January 1995 and is one of the
FS&Co. nominees to the Board. Mr. Doran joined FS&Co. in 1988. Previously, Mr.
Doran was employed in the high yield bond department of Kidder Peabody & Co.
Incorporated.
Mr. Fried became a member of the Board in connection with the Company's
formation and is one of The Limited nominees to the Board. Mr. Fried has been
Vice President and General Counsel of The Limited since joining The Limited in
November 1991. Mr. Fried became Vice President, Secretary and General Counsel
of Intimate Brands, Inc., a subsidiary of The Limited, in May 1995, and Vice
President of Ambercrombie & Fitch Co. in June 1996. Prior to joining The
Limited, from February 1987 to October 1991, Mr. Fried served as Vice President,
Secretary and General Counsel of Exide Corporation.
Mr. Gerber became a member of the Board in connection with the Company's
formation and is one of The Limited nominees to the Board. Mr. Gerber has been
Vice President of Finance of The Limited since July 1993, Vice President of
Intimate Brands, Inc. since May 1995, and Vice President of Ambercrombie & Fitch
Co. since June 1996. From August 1987 to June 1993, Mr. Gerber was Vice
President and Corporate Controller of The Limited. Mr. Gerber joined The
Limited in 1983 and held various financial positions at The Limited Stores
division of The Limited between 1983 and 1987.
5
<PAGE>
Mr. Roth became a member of the Board in connection with the Company's
formation and is one of the FS&Co. nominees to the Board. Mr. Roth joined
FS&Co. in March 1988 and became a general partner in March 1993. Mr. Roth is
also a director of EnviroSource, Inc.
Mr. Spogli is a founding partner of FS&Co., a private investment firm that
was founded in 1983. Mr. Spogli became a member of the Board in connection with
the Company's formation and is one of the FS&Co. nominees to the Board. Mr.
Spogli is the Chairman of the Board and a Director of EnviroSource, Inc. Mr.
Spogli also serves on the Board of Directors of Buttrey Food and Drug Stores
Company.
Mr. Starrett became a member of the Board in May 1997. Mr. Starrett is
President of Warner Bros. Studio Stores Worldwide and has been employed by
Warner Bros. since May 1990. Before joining Warner Bros., Mr. Starrett was
President and Chief Executive Officer of Plymouth Lamston Stores Corporation
from July 1988 to April 1990. Prior to that, Mr. Starrett served as Chairman
and Chief Executive Officer of the Specialty Store Division of Federated
Department Stores from 1986 to 1988. Mr. Starrett is also a director of Petco
Animal Supplies, Inc. and Guitar Center, Inc.
The Board currently consists of three nominees of FS&Co., two nominees of
The Limited, the Chief Executive Officer of Brylane and two additional persons
elected by the nominees of the Board. Pursuant to a Stockholders Agreement by
and among the Company, affiliates of FS&Co., an affiliate of The Limited, Leeway
& Co., NYNEX, The TJX Companies, Inc. ("TJX") and WearGuard Corporation (the
"Stockholders Agreement") FS&Co. and The Limited are currently entitled to
nominate three and two directors, respectively. However, the number of
directors that each of FS&Co. and The Limited may nominate declines with the
percentage of Common Stock held by each of them. The Stockholders Agreement
will terminate upon the closing of the Purchase Agreements. Each of the current
members of the Board previously nominated by FS&Co. and by The Limited intends
to continue to serve until PPR's nominees have been appointed to the Board and
the resignation of such current members has become effective. Messrs. Johnson
and Starrett serve as independent directors on the Board and on the Audit
Committee.
Each member of the Board is elected to hold office until his respective
successor is elected and qualified. Officers serve at the discretion of the
Board.
COMMITTEES OF THE BOARD OF DIRECTORS OF THE COMPANY
The standing committees of the Board are the Audit Committee (the "Audit
Committee"), the Compensation Committee (the "Compensation Committee") and the
Strategic Planning Committee (the "Strategic Planning Committee"). The Audit
Committee, which presently consists of Messrs. Johnson and Starrett, met once
during the fiscal year ended January 31, 1998 ("fiscal 1997"). The Compensation
Committee, which presently consists of Messrs. Fried, Roth, Spogli and Starrett,
met twice during fiscal 1997 and took various actions by written consent. The
Strategic Planning Committee, which presently consists of Messrs. Canzone,
Johnson, Roth and Starrett, met once during fiscal 1997.
The Compensation Committee administers the Company's stock, option and
other compensation plans. The Audit Committee reviews the results and scope of
the audit and other services provided by the Company's independent auditors.
The Strategic Planning Committee addresses long-term strategic planning issues.
In conjunction with the transactions contemplated by the Purchase
Agreements and in light of the FS Parties' and M&P's significant share ownership
in the Company and representation on the Board, pursuant to Section 141 of the
Delaware General Corporation Law, the Board appointed a special committee
consisting of Mr. Starrett, an independent director, to approve and recommend to
the Board whether to approve the transactions contemplated by the Purchase
Agreements and the Governance Agreement.
6
<PAGE>
MEETINGS AND REMUNERATION
During fiscal 1997, the Board held four meetings and took various actions
by written consent. Each incumbent director attended at least 75% of the
aggregate of the total number of meetings held by the Board during fiscal 1997,
except Mr. Fried, and each incumbent director attended the total number of
meetings held by all committees of the Board during that period within which he
was a director or member of such committee of the Board.
The members of the Board, other than Mr. Starrett, do not receive
compensation for services on the Board but are reimbursed for their out-of-
pocket expenses in serving on the Board. No member of the Board receives
compensation for services on any committee of the Board. On May 22, 1997, Mr.
Starrett was granted an option to purchase 2,000 shares of Common Stock, at a
price of $29.875 per share, as well as an additional option to purchase 3,347
shares of Common Stock, at a price of $25.40 per share, pursuant to the Brylane
1996 Option Plan (as defined). In addition, Mr. Johnson has previously
purchased shares of Common Stock and has previously been granted options under
both the Brylane 1996 Performance Option Plan (as defined) and the Brylane 1996
Option Plan. See "--Compensation Committee Interlocks and Insider
Participation". There are no family relationships between any officers or
members of the Board.
EXECUTIVE OFFICERS
The following individuals are the current executive officers of Brylane
Inc., Brylane, L.P. or its subsidiaries.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME AGE POSITION WITH THE COMPANY SINCE
- ----------------------- --- ------------------------------------------------- ---------
<S> <C> <C> <C>
Peter J. Canzone....... 67 President, Chief Executive Officer, Chairman of 1978
the Board and Director
Sheila R. Garelik...... 52 President-Brylane 1989
Robert A. Pulciani..... 57 Executive Vice President, Chief Financial Officer, 1988
Secretary and Treasurer
Richard L. Bennett..... 65 Senior Vice President-Human Resources 1983
William G. Brosius..... 61 Senior Vice President-Operations/Customer Service 1979
Bruce G. Clark......... 53 Senior Vice President-Telemarketing 1983
Kevin Doyle............ 44 Vice President/General Manager-Roaman's 1996
Kevin McGrain.......... 43 Vice President/General Manager-Sears Business 1992
Carol Meyrowitz........ 44 Executive Vice President-Chadwick's Merchandising 1996
Loida Noriega-Wilson... 42 Vice President/General Manager-Lerner 1995
Dhananjaya K. Rao...... 49 President and Chief Executive Officer-Chadwick's 1996
Jules Silbert.......... 70 Senior Vice President-Marketing/New Business 1993
Development
Arlene Silverman....... 48 Senior Vice President/General Manager-Lane Bryant 1991
</TABLE>
____________________
* As of March 11, 1998.
None of the executive officers has any family relationship to any director
or to any other executive officer of the Company. Set forth below is a brief
description of the business experience for the executive officers except Mr.
Canzone. See "Members of the Board of Directors of the Company".
Ms. Garelik has been President of Brylane since July 1996. Ms. Garelik
served as Executive Vice President/President-Lane Bryant from the Brylane
Acquisition until July 1996, and served as Executive Vice
7
<PAGE>
President/General Manager of Roaman's from 1989 until the Brylane Acquisition
(as defined). Between 1969 and 1989, Ms. Garelik was employed by Brylane's
predecessor in a variety of merchandising positions.
Mr. Pulciani has been Executive Vice President, Chief Financial Officer and
Secretary of Brylane and its predecessor since May 1993. Mr. Pulciani became
the Treasurer of Brylane in connection with the Company's formation. Mr.
Pulciani joined Brylane in 1988, and served as Senior Vice President and Chief
Financial Officer from May 1988 to May 1993. Prior to joining Brylane, Mr.
Pulciani was Vice President and Controller of Carson Pirie Scott.
Mr. Bennett has been Senior Vice President-Human Resources of Brylane and
its predecessor since March 1986. Mr. Bennett joined Brylane in 1983, and
served as Vice President-Human Resources from 1983 to March 1986. Prior to
joining Brylane, Mr. Bennett was with Dayton Hudson from 1975 to 1983 as
Director of Employee Relations/Personnel.
Mr. Brosius has been Senior Vice President-Operations/Customer Service of
Brylane and its predecessor since October 1987. Mr. Brosius joined Brylane in
1969, and served as Vice President-Fulfillment from 1979 to October 1987.
Mr. Clark has been Senior Vice President-Telemarketing of Brylane and its
predecessor since May 1988. Mr. Clark also served as Senior Vice President-
MIS/Telemarketing from May 1988 to April 1997. Mr. Clark joined Brylane in
1983, and served as Vice President-MIS/Telemarketing from 1983 to May 1988.
Prior to joining Brylane, Mr. Clark was a Partner with Arthur Andersen & Co.
Mr. Doyle has been Vice President/General Manager-Roaman's since November
1996. Mr. Doyle joined Brylane in 1975 and served as Control Buyer, Assistant
Buyer, Associate Buyer, Buyer and Senior Buyer over a period of 14 years. Mr.
Doyle also served as Merchandise Director of Lane Bryant from August 1989 until
September 1993 and served as General Merchandise Manager of Roaman's from
September 1993 to November 1996.
Mr. McGrain was appointed Vice President/General Manager of the Company's
Sears Business in August 1995. Mr. McGrain joined Brylane in September 1988 and
was Vice President-Controller of Lerner from May 1992 to August 1995.
Ms. Meyrowitz has been Executive Vice President-Merchandising of the
Company's Chadwick's business since the Chadwick's Acquisition in December 1996.
From May 1996 to December 1996, Ms. Meyrowitz served as Executive Vice
President-Merchandising of Chadwick's, Inc. From March 1991 to May 1996, Ms.
Meyrowitz served as Senior Vice President and General Merchandise Manager of
Chadwick's, Inc. Previously, Ms. Meyrowitz was General Merchandise Manager at
Chadwick's from March 1990 to March 1991, and Vice President and Senior
Merchandise Manager from January 1989 to March 1990. Prior to that, Ms.
Meyrowitz was Vice President and Divisional Merchandise Manager of the Hit or
Miss Division of TJX from 1986 to 1989, and she was a Buyer at the Hit or Miss
Division from 1983 to 1986.
Ms. Noriega-Wilson joined Brylane in April 1995 as Vice President/General
Manager-Lerner. Prior to joining Brylane, Ms. Noriega-Wilson served as Vice
President of Merchandising of Montgomery Ward Direct from February 1993 to
February 1995. From September 1992 to January 1993, Ms. Noriega-Wilson served
as Vice President of Merchandising for Clegg Industries, an independent private
investment group. From 1988 to July 1992, Ms. Noriega-Wilson served as Vice
President of Merchandising & Marketing of Together Limited in London, England.
Prior to that, Ms. Noriega-Wilson was with Spiegel for 10 years, where she
served as Divisional Merchandise Manager from 1986 to 1988.
Mr. Rao has been President and Chief Executive Officer of the Company's
Chadwick's business since the Chadwick's Acquisition in December 1996. From May
1996 to December 1996, Mr. Rao served as President and Chief Executive Officer
of Chadwick's, Inc. From January 1995 to May 1996, Mr. Rao served as Senior
Vice President, Operations and Marketing of Chadwick's, Inc. Previously, Mr.
Rao worked at the T.J. Maxx Division of TJX from 1978 until 1995. His
management positions during such time included Senior Vice President of
8
<PAGE>
Distribution and Financial Planning and Analysis from November 1994 to January
1995, Senior Vice President of Distribution, Merchandise Planning and Inventory
Management from 1991 to 1994, Senior Vice President and Director of Distribution
from 1989 to 1991 and Vice President and Director of Distribution from 1981 to
1989.
Mr. Silbert has been Senior Vice President-Marketing/New Business
Development of Brylane since July 1995. From December 1993 to July 1995, Mr.
Silbert served as Vice President/New Business Development of Brylane. Prior to
joining Brylane, Mr. Silbert was President of The Silbert Group, Inc., an
independent management consulting firm, since April 1982. From 1978 to April
1982, Mr. Silbert served as the President of the retail stores division of the
Lane Bryant Company. From 1970 to 1978, Mr. Silbert served as the President of
the catalog retail division of the Lane Bryant Company.
Ms. Silverman has been Senior Vice President/General Manager-Lane Bryant
since August 1996 and previously served as Senior Vice President/General
Manager-Roaman's from February 1995 to August 1996. Ms. Silverman joined
Brylane in 1973, and served as Division Merchandise Manager from May 1989 to May
1991, and served as Vice President of Roaman's from May 1991 to February 1995.
EXECUTIVE COMPENSATION
The officers of Brylane Inc. are not compensated by Brylane Inc. for their
services to Brylane Inc. Officers of Brylane Inc. who are also officers of the
Partnership or its subsidiaries receive compensation from the Partnership or
these subsidiaries for their services to the Partnership. The following table
sets forth all compensation awarded to, earned by or paid to the Chief Executive
Officer and the other four most highly compensated executive officers (the
"Named Executive Officers") for their services to the Partnership for (i) the
fiscal year ended January 31, 1998 ("Fiscal 1997"), (ii) the fiscal year ended
February 1, 1997 ("Fiscal 1996"), and (iii) the fiscal year ended January 27,
1996 ("Fiscal 1995").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION OPTIONS TO ALL OTHER
---------------------- PURCHASE COMPEN-
NAME AND PRINCIPAL POSITION PERIOD SALARY(1) BONUS(1)(2) COMMON STOCK SATION(4)
- ------------------------------------------------------ ----------- --------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Peter J. Canzone...................................... Fiscal 1997 $577,917 $326,332 25,000(5) $135,849
President, Chief Executive Officer Fiscal 1996 552,750 421,464 24,000(6) 118,358
and Chairman of the Board 250,000(7)
Fiscal 1995 520,500 196,602 20,000(6) 106,393
Sheila R. Garelik..................................... Fiscal 1997 400,583 208,783 17,000(5) 83,336
President of Brylane Fiscal 1996 364,542 244,484 18,000(6) 69,009
43,750(7)
Fiscal 1995 318,500 155,043 10,000(6) 65,125
Robert A. Pulciani.................................... Fiscal 1997 312,750 163,598 15,000(5) 64,841
Executive Vice President, Chief
Financial Officer, Secretary and
Treasurer
Fiscal 1996 286,583 185,059 12,000(6) 55,166
36,459(7)
Fiscal 1995 266,750 85,383 6,000(6) 52,767
Dhananjaya K. Rao..................................... Fiscal 1997 375,637 435,000 17,000(5) 127,549
President and Chief Executive Fiscal 1996 51,327(8) -- 25,000(6) 5,515
Officer--Chadwick's 8,302(9)
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION OPTIONS TO ALL OTHER
---------------------- PURCHASE COMPEN-
NAME AND PRINCIPAL POSITION PERIOD SALARY(1) BONUS(1)(2) COMMON STOCK SATION(4)
- ------------------------------------------------------ ----------- --------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Carol Meyrowitz....................................... Fiscal 1997 345,659 410,000 15,000(5) 121,623
Executive Vice President--Chadwick's Merchandising Fiscal 1996 49,063(8) -- 25,000(6) 5,451
6,397(9)
</TABLE>
_____________________
(1) Included in the aggregate of salary and bonus is an amount of compensation
that was deferred at the election of each Named Executive Officer. For
fiscal 1997, Messrs. Canzone, Pulciani and Rao and Mmes. Garelik and
Meyrowitz elected to defer $90,425, $119,087, $22,411, $152,342 and $22,990,
respectively, of their aggregate salary and bonus for such period. For
fiscal 1996, Messrs. Canzone and Pulciani and Ms. Garelik, elected to defer
$97,421, $115,581, and $152,256, respectively, of their aggregate salary and
bonus for such period. For fiscal 1995, Messrs. Canzone and Pulciani and
Ms. Garelik, elected to defer $71,710, $46,818 and $111,911, respectively,
of their aggregate salary and bonus for such period.
(2) For Messrs. Canzone and Pulciani and Ms. Garelik, bonuses were earned during
the six-month seasons ended July 29, 1995, February 3, 1996, August 3, 1996,
February 1, 1997, August 1, 1997 and January 31, 1998, but were not paid
until August 1995, February 1996, August 1996, February 1997, August 1997
and February 1998, respectively. See "--Performance Bonus Program" for a
discussion of Brylane's bonus program in which such individuals are entitled
to participate. For Mr. Rao and Ms. Meyrowitz, bonuses were earned during
fiscal 1997, but will not be paid until March 1998. See "--Chadwick's
Management Incentive Plan" and "Chadwick's Long Range Management Incentive
Plan" for a discussion of the bonus program in which such individuals are
entitled to participate.
(3) For each of the periods set forth in the table above, no Named Executive
Officer received aggregate Other Annual Compensation in excess of the lesser
of $50,000 or 10% of the total of such officer's salary and bonus, nor did
any such Named Executive Officer receive any restricted stock award, stock
appreciation right or payment under any long-term incentive plan. Pursuant
to the exchange transaction in which Brylane Inc. acquired, directly and
indirectly, through the acquisition of wholly-owned subsidiaries, a 100%
ownership in the Partnership in exchange for shares of the Common Stock of
Brylane Inc. (the "Incorporation Plan"), an option to purchase one share of
Common Stock was issued in substitution for each outstanding option to
purchase one partnership unit granted in fiscal 1995, fiscal 1996 or fiscal
1997 under either of the 1995 Partnership Unit Option Plan or the 1993
Performance Partnership Unit Option Plan.
(4) In fiscal 1997, fiscal 1996 and fiscal 1995, the amounts shown for Messrs.
Canzone and Pulciani and for Ms. Garelik consist of approximately $5,000,
$5,000 and $5,000, respectively, under a supplemental medical benefits plan.
In fiscal 1997 and fiscal 1996, the amounts in each year shown for Mr. Rao
and Ms. Meyrowitz consist of $26,494 and $4,076, respectively, for a car
allowance. The balance of such amounts for all such individuals consist of
deferred compensation in the form of a matching contribution by the
Partnership under the Deferred Compensation Plan, a cash contribution by the
Partnership under the Retirement Plan, and a contribution by the Partnership
under the Supplemental Retirement Plan, where applicable. See "--Deferred
Compensation Plan" and "--Retirement Plans". In 1997, Messrs. Canzone,
Pulciani and Rao and Mmes. Garelik and Meyrowitz earned (i) $54,255,
$28,581, $48,142, $36,562 and $45,427, respectively, under the Deferred
Compensation Plan; (ii) $10,838, $10,838, $10,838, $10,838, and $10,838,
respectively, under the Retirement Plan (which will not be paid until April
1998); and (iii) $65,756, $20,422, $42,075, $30,936, and $38,864,
respectively, under the Supplemental Retirement Plan. In 1996, Messrs.
Canzone, Pulciani and Rao, and Mmes. Garelik and Meyrowitz, earned (i)
$58,453, $28,299, $785, $36,542 and $750, respectively, under the Deferred
Compensation Plan; (ii) $10,119, $10,119, $654, $10,119 and $625,
respectively, under the Retirement Plan (which was not paid until April
1997); and (iii) $44,786, $11,748 and $17,348, respectively, under the
Supplemental Retirement Plan. In 1995, Messrs. Canzone and Pulciani and Ms.
Garelik, earned (i) $43,026, $21,128 and $28,413, respectively, under the
Deferred Compensation Plan; (ii) $10,164, $10,164 and $10,164, respectively,
under the Retirement Plan (which was not paid until May 1996); and (iii)
$48,203, $16,475 and $21,548, respectively, under the Supplemental
Retirement Plan.
(5) These options were granted to the Named Executive Officers in 1997 pursuant
to Brylane's 1996 Stock Option Plan.
10
<PAGE>
(6) These options were granted to the Named Executive Officers in 1995 and 1996
pursuant to the Partnership's 1995 Partnership Unit Option Plan.
(7) These options were granted to certain of the Named Executive Officers in
1993 pursuant to the Partnership's 1993 Performance Partnership Unit Option
Plan.
(8) Reflects amounts earned as salary during such fiscal year by each of Mr. Rao
and Ms. Meyrowitz, respectively, since December 9, 1996, their date of hire
by the Company in connection with the Partnership's acquisition of the
Chadwick's of Boston catalog of TJX in December 1996 (the "Chadwick's
Acquisition").
(9) These options were granted pursuant to the Partnership's 1995 Partnership
Unit Option Plan in connection with the Chadwick's Acquisition in exchange
for certain of such individuals' options to purchase TJX Common Stock.
EMPLOYMENT AGREEMENTS
B.L. Management Services, Inc., an indirect, wholly-owned subsidiary of the
Company ("B.L. Management"), has entered into employment agreements with each of
Messrs. Canzone, Pulciani, Silbert and McGrain, and Mmes. Garelik, Noriega-
Wilson and Silverman, which agreements commenced on May 1, 1996. These
agreements provide for annual salaries for each of these individuals which
currently are $580,000, $315,000, $305,000, $185,000, $402,000, $222,000 and
$240,000, respectively. In addition, the Partnership has entered into
comparable employment agreements with each of Messrs. Bennett, Brosius and Clark
which provide for annual salaries which currently are $220,000, $220,000 and
$220,000, respectively. Each of the employment agreements entered into by B.L.
Management and the Partnership will expire on or about April 30, 1998, but will
be automatically renewed for one-year terms thereafter, unless notice is given
as specified in such employment agreements. On July 15, 1996, B.L. Management
entered into an amendment to the employment agreement with Ms. Garelik which
reflects Ms. Garelik's promotion to President of the Partnership and her
corresponding increased compensation and bonus plan participation. In the event
that the employment of any of these individuals is terminated without "cause" or
the individual resigns for "good reason" (as such terms are defined in the
employment agreements), Brylane will be required to pay such individual's base
salary (reduced by any salary earned from other sources) for the greater of (i)
the remainder of the term of the applicable employment agreement or (ii) nine
months (or six months in the case of one executive). The employment agreements
also provide for (i) the payment of one year's salary upon termination of
employment by reason of death or disability (less any amounts paid to such
individuals under any disability plans), and (ii) with respect to the
termination of any of these individuals other than for "cause", the payment of a
pro rata portion of any bonuses or incentive compensation payable with respect
to any period commencing prior to the date of such individual's termination. In
addition, the employment agreements provide that each executive will not compete
with Brylane for a period of twelve months after termination (subject to certain
exceptions), unless the executive terminates his or her employment for "good
reason".
The Partnership has entered into employment agreements with each of Mr. Rao
and Ms. Meyrowitz, which agreements commenced on December 9, 1996 and will
continue for a three-year term. These agreements provide for annual salaries of
$375,000 for Mr. Rao and $350,000 for Ms. Meyrowitz and for participation in
Chadwick's performance bonus programs. Upon termination of these employment
agreements, the Partnership has agreed, subject to certain conditions, to enter
into new employment agreements on terms substantially similar to those contained
in the employment agreements described above for B.L. Management. Prior to this
time, in the event the employment of either of these individuals is terminated
without "cause" or if the individual resigns for "good reason" (as such terms
are defined in the employment agreements) the Partnership will be required to
pay such individual's base salary (reduced by compensation from other employment
after the first 12 months of the period) for the longer of (i) one year or (ii)
the remainder of the term of the applicable employment agreement, continue
certain benefits, and make prorated bonus payments. The Rao and Meyrowitz
employment agreements also provide for the payment of an amount equal to two
times such individual's annual base salary, along with certain additional
benefits, in the event such individual's employment terminates under certain
circumstances for the two year period following a "change of control" (as
defined). Upon a change of control, whether or not an individual's employment
terminates, the agreements provide for the immediate, lump sum payment of
certain bonus amounts. In addition, these employment agreements provide that,
subject to certain exceptions, such executives will not compete with the
Partnership for a period of 12 months after termination of employment by the
Company under certain circumstances.
11
<PAGE>
Under the Purchase Agreements, PPR has stated that it intends to cause B.L.
Management to enter into new three year employment agreements to replace the
existing employment agreements with Messrs. Canzone, Pulciani, Silbert, McGrain,
Bennett, Clark, Brosius and Rao and Mmes. Garelik, Noriega-Wilson, Silverman and
Meyrowitz on terms substantially similar to those contained in each individual's
existing employment agreement. PPR has also confirmed that it supports the
Company's intention to execute new three year employment agreements with Daniel
Carr, Robert Evans, Henry Wren, Kevin Doyle and Lawrence Kinney, each of whom is
a senior officer of the Company. The execution of such agreements is a
condition to the obligations of the FS Parties and M&P to consummate the closing
of the Purchase Agreements, and it is anticipated that such agreements will be
executed immediately prior to such closing.
STOCK SUBSCRIPTION PLANS
The Company has adopted the Brylane Inc. 1996 Stock Subscription Plan (the
"Brylane Subscription Plan"), which in part acts as a successor to a stock
subscription plan (as amended, the "Subscription Plan") adopted by VP Holding
Corporation ("VP Holding") in connection with the acquisition of the Lane
Bryant, Roaman's and Lerner catalog businesses formerly owned by The Limited,
Inc. (the "Brylane Acquisition"). Participants in the Brylane Subscription Plan
are all of the members of management of Brylane other than the Named Executive
Officers, Messrs. Johnson, Bennett and Brosius, and Ms. Noriega-Wilson. In
addition, the Company has adopted the Brylane Inc. 1996 Senior Management Stock
Subscription Plan (the "Senior Management Plan", and collectively with the
Brylane Subscription Plan, the "Stock Subscription Plans"), which in part acts
as a successor to the Subscription Plan with respect to the shares of VP Holding
purchased by the Named Executive Officers, Messrs. Johnson, Bennett and Brosius,
and Ms. Noriega-Wilson (collectively, the "Senior Management Investors"). The
Company has reserved 653,000 shares of Common Stock for issuance under the Stock
Subscription Plans collectively, of which 145,000 shares remain available for
issuance. Until May 27, 1998, the Company may be required to repurchase Mr.
Johnson's Common Stock at the greater of $10.00 per share or fair market value
in the event of Mr. Johnson's death or disability.
Pursuant to the Stock Subscription Plans, the following individuals
purchased the number of shares of Common Stock set forth after their names at a
purchase price of $10.00 per share: Mr. Canzone, 100,000; Ms. Garelik, 40,000;
Mr. Pulciani, 25,000; Mr. Doyle, 5,000; Mr. Johnson, 30,000; Mr. McGrain,
15,000; Mr. Silbert, 20,000; Ms. Silverman, 15,000; Mr. Bennett, 22,500; Mr.
Brosius, 22,500; and Mr. Clark, 25,000. For these individuals, $500,000,
$200,000, $125,000, $50,000, $0, $150,000, $100,000, $75,000, $112,500, $112,500
and $125,000 of their purchase price, respectively, was financed through the
delivery of promissory notes on the terms described below. Pursuant to the
Stock Subscription Plans, Ms. Noriega-Wilson purchased 15,000 shares of Common
Stock at a purchase price of $15.00 per share, for which $112,500 of the
purchase price was financed through the delivery of a promissory note on the
terms described below. Participants who chose not to pay the entire purchase
price of their subscription in cash could elect to pay up to 50% of such
purchase price through the delivery of a five-year, full recourse promissory
note, bearing interest at the rate of interest designated by Morgan Guaranty as
the prime rate at the time of purchase (which at the time of the Brylane
Acquisition was approximately 6%). In a few instances, the portion of the
purchase price paid by promissory note was greater than 50% of the total
purchase price. Accrued interest on the promissory notes is payable quarterly,
and the principal balance of, including all accrued and unpaid interest on, the
promissory notes is payable in full at maturity. The shares of Common Stock
purchased by such individuals who partially financed their purchases in this
manner have been pledged to the Company in order to secure repayment of the
notes. As of January 31, 1998, of the aggregate purchase price of approximately
$5.2 million paid for the shares of Common Stock purchased by such individuals
(net of repurchases), promissory notes in the aggregate amount of approximately
$1.0 million remained outstanding.
As contemplated by the Purchase Agreements, PPR has agreed to offer to
purchase from Messrs. Canzone, Pulciani and Silbert and Ms. Garelik of 78,900,
25,000, 20,000 and 40,000 shares, respectively, of their Common Stock at $51.00
per share, the same price to be paid pursuant to the Purchase Agreements.
12
<PAGE>
OPTION PLANS
Brylane 1996 Performance Option Plan
The Company has adopted the Brylane Inc. 1996 Performance Stock Option Plan
(the "Brylane 1996 Performance Option Plan"), which acts as the successor to the
Partnership's 1993 Performance Partnership Unit Option Plan (as amended, the
"1993 Option Plan") which was adopted in connection with the Brylane
Acquisition. An aggregate of 779,584 shares of Common Stock have been reserved
for issuance under the Brylane 1996 Performance Option Plan. As amended, all
options granted under the Brylane 1996 Performance Option Plan terminate 10
years from the date of grant of the options under the 1993 Option Plan, if not
sooner terminated due to termination of employment.
Messrs. Canzone, Pulciani, Doyle, Johnson, McGrain, Silbert, Bennett,
Brosius and Clark, and Mmes. Garelik, Silverman and Noriega-Wilson have been
granted the right to purchase 250,000, 36,459, 3,750, 20,000, 11,250, 20,000,
31,250, 31,250, 34,375, 43,750, 11,250 and 15,000 shares of Common Stock,
respectively, at a price of $15.00 per share.
As of January 31, 1998, options for the purchase of 619,584 shares of
Common Stock at a purchase price of $15.00 per share were outstanding and
exercisable under the Brylane 1996 Performance Option Plan, and options for the
purchase of 160,000 shares remained available for issuance.
As contemplated by the Purchase Agreements, PPR is offering to purchase all
of the outstanding and vested options under the Brylane 1996 Performance Option
Plan at $51.00 per share, the same price to be paid pursuant to the Purchase
Agreements. The Company has received commitments from Richard Bennett, William
Brosius, Peter Canzone, Daniel Carr, Lawrence Frank, Sheila Garelik, Kevin
McGrain, Robert Pulciani and Jules Silbert that such persons will exercise their
options and sell 15,625, 15,625, 250,000, 6,000, 7,500, 28,750, 5,250, 36,459
and 10,000, respectively, shares of Common Stock acquirable upon such exercises
to PPR at such price. Pursuant to the Purchase Agreements, PPR has stated its
intention to support the replacement of the 1996 Performance Option Plan with a
new plan with substantially similar economic value based on the Company's long-
term financial performance.
Brylane 1996 Option Plan
The Company has adopted the Brylane Inc. 1996 Stock Option Plan (the
"Brylane 1996 Option Plan"), which acts as the successor to the Partnership's
1995 Partnership Unit Option Plan (as amended, the "1995 Option Plan") which was
adopted in connection with the Brylane Acquisition. As amended, an aggregate of
1,700,000 shares of Common Stock have been reserved for issuance under the
Brylane 1996 Option Plan. Other than as described below, all options become
exercisable in three equal annual installments on the first, second and third
anniversaries of the date of original grant (including, if relevant, the date of
grant of the options under the 1995 Option Plan). As amended, all options
granted under the Brylane 1996 Option Plan terminate seven to ten years from the
date of original grant (including, if relevant, the date of grant of the options
under the 1995 Option Plan), if not sooner terminated due to termination of
employment.
Messrs. Canzone, Johnson, Pulciani, Silbert, Doyle, McGrain, Bennett,
Brosius and Clark, Mmes. Garelik, Noriega-Wilson and Silverman have been granted
the right to purchase 20,000, 25,000, 6,000, 6,000, 1,000, 3,000, 5,000, 5,000,
5,500, 10,000, 4,000 and 4,000 shares of Common Stock, respectively, at a price
of $15.00 per share and a term of seven years. Messrs. Canzone, Pulciani,
Silbert, Doyle, McGrain, Bennett, Brosius and Clark, and Mmes. Garelik, Noriega-
Wilson and Silverman have been granted the right to purchase 24,000, 12,000,
6,000, 2,000, 4,000, 6,000, 6,000, 5,000, 18,000, 6,000 and 6,000 shares of
Common Stock, respectively, at a price of $19.00 per share and a term of seven
years. Messrs. Canzone, Pulciani, Silbert, Doyle, McGrain, Bennett, Brosius,
Clark, Johnson and Rao, and Mmes. Garelik, Noriega-Wilson, Silverman and
Meyrowitz have been granted the right to purchase 25,000, 15,000, 3,000, 4,000,
3,000, 3,000, 5,000, 2,500, 10,000, 17,000, 17,000, 5,000, 6,000 and 15,000
shares of Common Stock, respectively, at a price of $36.00 per share and a term
of seven years. Mr. Silbert has been granted the right to purchase 5,000 shares
of Common Stock at a price of $41.00 per share and a term of seven years. In
addition, Mr. Rao and Ms. Meyrowitz have each been granted the right to
13
<PAGE>
purchase 25,000 shares of Common Stock at a price of $20.00 per share, which
options expire on December 9, 2006. In addition, in connection with the
Chadwick's Acquisition, Mr. Rao and Ms. Meyrowitz were granted options to
purchase 2,269 and 1,861 shares of Common Stock, respectively, at a price of
$9.92 per share, in exchange for certain of their options to purchase TJX common
stock. Such options vest in full on September 20, 1997 and expire on September
20, 2004. Finally, also in connection with the Chadwick's Acquisition, Mr. Rao
and Ms. Meyrowitz were granted options to purchase 6,033 and 4,536 shares of
Common Stock, respectively, at a price of $5.67 per unit, in exchange for
certain of their options to purchase TJX common stock. Such options vest in
equal 50% increments on September 6, 1997 and September 6, 1998, and expire on
September 6, 2005. On May 22, 1997, Mr. Starrett was granted an option to
purchase 2,000 shares of Common Stock, at a price of $29.875 per share and a
term of seven years, as well as an additional option to purchase 3,347 shares of
Common Stock, at a price of $25.40 per share, which option vests in full on May
22, 1998 and expires on May 22, 2004.
As of January 31, 1998, options for the purchase of 110,091 shares of
Common Stock at a purchase price of $15.00 per share, options for the purchase
of 130,240 shares of Common Stock at a purchase price of $19.00 per share,
options for the purchase of 90,486 shares of Common Stock at a purchase price of
$20.00 per share, options for the purchase of 2,000 shares of Common Stock at a
purchase price of $29.875 per share, options for the purchase of 3,347 shares of
Common Stock at a purchase price of $25.40 per share, options for the purchase
of 5,000 shares of Common Stock at a purchase price of $41.00 per share,
substitute options (issued in connection with the Chadwick's Acquisition) for
the purchase of 2,390 shares of Common Stock at a purchase price of $9.92 per
share, options for the purchase of 253,250 shares of Common Stock at a purchase
price of $36.00 per share, and substitute options (issued in connection with the
Chadwick's Acquisition) for the purchase of 24,045 shares of Common Stock at a
purchase price of $5.67 per share, were outstanding under the Brylane 1996
Option Plan, and options for the purchase of 999,485 shares remained available
for issuance.
As of January 31, 1998, options to purchase an aggregate of 79,666 shares
of Common Stock had been exercised under the Brylane 1996 Option Plan. Pursuant
to the Purchase Agreements, PPR has stated its intention to support the
continued granting of options under the Brylane 1996 Option Plan on an annual
basis which grants will have substantially similar terms and economic value as
grants previously made under the Brylane 1996 Option Plan.
CERTAIN INFORMATION REGARDING OPTION GRANTS AND EXERCISES DURING FISCAL 1997
The following table sets forth information concerning options granted to
the Named Executive Officers of the Company during fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------- AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR OPTION
SECURITIES GRANTED TO TERM (3)
UNDERLYING EMPLOYEES EXERCISE OR ---------------------------
OPTIONS IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED YEAR ($/SH)(1) DATE(2) 5%($) 10%($)
- --------------------- ---------- ----------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Canzone..... 25,000 9.31 36.00 7/24/04 366,300 854,100
Sheila R. Garelik.... 17,000 6.33 36.00 7/24/04 249,084 580,788
Robert A. Pulciani... 15,000 5.59 36.00 7/24/04 219,780 512,460
Dhananjaya K. Rao.... 17,000 6.33 36.00 7/24/04 249,084 580,788
Carol Meyrowitz...... 15,000 5.59 36.00 7/24/04 219,780 512,460
</TABLE>
_____________________
(1) The exercise price per share of these options was equal to the fair market
value of the Common Stock on the date of grant.
(2) These options were granted under the Brylane 1996 Option Plan and will
terminate seven years from the date of grant (if not sooner due to
termination of employment). These options become exercisable in three equal
installments on the first, second and third anniversaries of the date of
grant. See "--Option Plans".
14
<PAGE>
(3) The potential realizable value is calculated based on the term of the option
at its time of grant. It is calculated assuming that the stock price on the
date of grant appreciates at the indicated annual rate compounded annually
for the entire term of the option, and that the option is exercised and sold
on the last day of its term for the appreciated stock price. No gain to the
optionee is possible unless the stock price increases over the option term,
which will benefit all stockholders.
The following table sets forth information concerning the number and value
of securities underlying unexercised options held by each of the Named Executive
Officers as of January 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT JANUARY 31, JANUARY 31,
1998(#)(1) 1998($)(2)
SHARES VALUE ----------------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- --------------------- ------------ --------- ------------------------ --------------------
<S> <C> <C> <C> <C>
Peter J. Canzone..... -- -- 271,333/47,667 9,396,822/1,067,428
Sheila R. Garelik.... -- -- 56,416/32,334 1,936,456/718,607
Robert A. Pulciani... 8,000 246,125 36,459/25,000 1,266,950/521,750
Dhananjaya K. Rao.... 13,618 502,718 0/36,684 0/862,583
Carol Meyrowitz...... 12,462 450,822 0/33,935 0/802,067
</TABLE>
_____________________
(1) Represent options granted under the Brylane 1996 Performance Option Plan and
the Brylane 1996 Option Plan.
(2) These values are calculated using the last reported sale price of the Common
Stock on the New York Stock Exchange on January 30, 1998 of $49.75 per
share, less the exercise price of the options.
RETIREMENT PLANS
All of the Company's nonunion employees over 21 years of age are eligible
to participate in the Brylane, L.P. Savings and Retirement Plan (the "Retirement
Plan") after one year of employment. The Retirement Plan allows eligible
employees to make pre-tax contributions up to the lesser of $9,500 or 10% of
their compensation. All amounts contributed by employees are immediately fully
vested. The Company matches 100% of employee contributions to the Retirement
Plan up to a maximum employer contribution of 3% of the employee's compensation.
In addition, the Company makes additional contributions to the Retirement Plan
equal to 4% of each participant's compensation up to the Social Security taxable
wage base for the year (which was $65,400 for 1997) and equal to 7% of each
participant's total compensation which exceeds that amount. An additional 1% of
compensation is contributed by the Company on behalf of those participants who
have completed at least five years of service. The Company's contributions
begin to vest after three years of service, at which time such contributions are
20% vested. Thereafter, the contributions vest at a rate of 20% each year so
that the Company's contributions are fully vested after seven years of service.
Notwithstanding the foregoing, the Company's contributions fully vest when the
employee reaches age 65, dies or becomes disabled while employed by the Company.
Benefits under the Retirement Plan are paid in the form of a lump sum
distribution following termination of employment. In certain circumstances,
participants may be entitled to receive a distribution prior to termination of
employment. Participants may borrow from the Retirement Plan up to 50% of their
vested funds.
In addition to the Retirement Plan, the Company maintains the Brylane, L.P.
Supplemental Retirement Plan for certain highly compensated employees (the
"Supplemental Retirement Plan"). The Supplemental Retirement Plan allows an
eligible employee to receive the contributions which the employee would
otherwise receive under the Retirement Plan, except for certain limitations
imposed by the Internal Revenue Code of 1986, as amended. An
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individual will receive such a contribution only if he or she is employed by the
Company on the last day of the year. Gains and losses are credited to such
employee account at a rate of 7 3/4%, compounded annually.
Vesting of contributions to the Supplemental Retirement Plan occurs at the
same rate as the Company's contributions to the Retirement Plan. The nonvested
portion of any account is forfeited upon termination of employment. Benefits
under the Supplemental Retirement Plan are paid in the same manner as under the
Retirement Plan. The benefits under the Supplemental Retirement Plan are not
funded, consisting of unsecured liabilities payable by the Company out of its
general assets.
DEFERRED COMPENSATION PLAN
The Company has adopted the Brylane, L.P. Deferred Compensation Plan for
eligible employees (the "Deferred Compensation Plan"). The Deferred
Compensation Plan credits participants' accounts with amounts of compensation,
up to 90% of compensation, which they defer voluntarily pursuant to elections
made prior to the period with respect to which such compensation is earned
("Deferrals"). The Deferrals will not be subject to federal income tax at the
time of the Deferral. Each participant's Deferrals are fully vested at all
times. Further, the Company may cause matching contributions to be credited to
certain participants' accounts at its discretion. Matching contributions
credited to the participants' accounts vest in the same manner as under the
Retirement Plan. A participant's account is payable at such time and in the
same manner as under the Retirement Plan.
Participation in the Deferred Compensation Plan is at the discretion of the
Board. Participants' accounts in the Deferred Compensation Plan will be
credited with interest at a rate specified by a committee of members of the
Board (currently the greater of LIBOR plus 2.0% or 7 3/4%). The benefits under
the Deferred Compensation Plan are not funded, consisting of unsecured
liabilities payable by the Company out of its general assets. Participants may
elect to have benefits paid in the form of lump-sum distributions or over a
period of time. Since December 1993, the Company has made pay-outs in the
approximate aggregate amount of $383,675 to certain former employees and one
former executive officer under the Deferred Compensation Plan.
PERFORMANCE BONUS PROGRAM
The Company (and its subsidiaries) have a semi-annual performance bonus
program based upon goals relating to the Company's operating profit. Such goals
are established at the beginning of each six-month season based upon a review by
the Board of management's operating budget for that season. Each participant in
such program may receive a bonus based on a certain percentage of half of his or
her annual salary, with the actual bonus amount to be based upon the extent to
which the operating profit goals for that season are met or exceeded.
CHADWICK'S MANAGEMENT INCENTIVE PLAN
In connection with the Chadwick's Acquisition, Brylane adopted the
Chadwick's Management Incentive Plan (the "Chadwick's MIP"). The Chadwick's MIP
is intended to provide key officers and associates of the Company's Chadwick's
division with cash incentive opportunities based on annual performance goals.
The Chadwick's MIP is administered by the Company's Compensation Committee,
which has full authority to grant awards, including selecting the relevant
performance criteria thereunder, adjusting performance criteria or award amounts
in certain circumstances, and amending the terms of such plan. At the beginning
of each fiscal year, the Compensation Committee determines a range of
performance goals from minimum to target to maximum, and for each participant
determines the relative weights of these performance goals and the award amounts
payable upon attainment of the goals.
CHADWICK'S LONG RANGE MANAGEMENT INCENTIVE PLAN
In connection with the Chadwick's Acquisition, Brylane adopted the
Chadwick's Long Range Management Incentive Plan (the "Chadwick's LRMIP"). The
Chadwick's LRMIP is administered by the Compensation Committee, which has full
authority to grant awards, including selecting the relevant performance criteria
thereunder, adjusting the performance criteria or award amounts in certain
circumstances, and amending the terms of such plan. Awards under the Chadwick's
LRMIP are generally made annually for each successive rolling three-
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year cycle. At the time of award, the Compensation Committee determines a range
of performance goals for the three-year award cycle, from minimum to target to
maximum, and for each participant determines the relative weights of these
performance goals and the award amounts payable upon attainment of the goals.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has a Compensation Committee of its Board of Directors which
currently consists of Ronald P. Spogli, John M. Roth, Samuel P. Fried and Peter
M. Starrett (except that, when determining the compensation of "named executive
officers" (as defined in Section 162(m) of the Internal Revenue Code), the
Compensation Committee consists of Messrs. Fried and Starrett). Messrs. Spogli
and Roth are two of the three FS&Co. nominees to the Board, and Mr. Fried is one
of the two nominees of The Limited to the Board. In May 1994, in connection
with his election to the Board of Representatives of the Partnership, Mr.
Johnson purchased 30,000 shares of VP Holding common stock and was granted an
option to purchase 20,000 partnership units in the Partnership under the 1993
Option Plan. In September 1995, Mr. Johnson was granted an option to purchase
25,000 partnership units in the Partnership under the 1995 Option Plan. Also in
September 1995, the Company agreed to pay to Mr. Johnson an annual consulting
fee of $75,000. In connection with the Incorporation Plan, these securities
have been exchanged for 30,000 shares of Company Common Stock, an option to
purchase 20,000 shares of Company Common Stock, and an option to purchase 25,000
shares of Company Common Stock, respectively. In addition, on July 24, 1997,
Mr. Johnson was granted an option to purchase 10,000 shares of Common Stock, at
a price of $36.00 per share, pursuant to the Brylane 1996 Option Plan. On May
22, 1997, Mr. Starrett was granted an option to purchase 2,000 shares of Common
Stock, at a price of $29.875 per share, as well as an additional option to
purchase 3,347 shares of Common Stock, at a purchase price of $25.40 per share,
pursuant to the Brylane 1996 Option Plan. See "--Stock Subscription Plans" and
"--Option Plans".
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and certain of its officers, and persons who own more than 10% of a
registered class of the Company's equity securities (collectively, "Insiders"),
to file reports of ownership and changes in ownership with the Commission.
Insiders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that its Insiders complied with
all applicable Section 16(a) filing requirements for fiscal 1995, with the
exception of Messrs. Bennett, Clark, Doyle, McGrain and Silbert and Mmes.
Noriega-Wilson and Silverman, each of whom filed a late Form 4 to report
acquisitions of Common Stock in connection with the Merrill Lynch Reserved
Shares Program and Jessie Bourneuf, who reported on a Form 5 options granted to
her in connection with the Partnership's acquisition of the KingSize catalog
division of Wearguard, a wholly-owned subsidiary of ARAMARK Corporation in
October 1995.
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