MOVIE STAR, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
The Annual Meeting of Stockholders of Movie Star, Inc. will be
held on Wednesday, November 20, 1996, at 9:3O A.M. at Club 101 on
the Main Floor at 101 Park Avenue, New York, New York, for the
following purposes:
1) To elect directors.
2) To ratify the selection of Deloitte & Touche LLP as
auditors.
3) To transact such other business as may properly come before
the meeting or any adjournments thereof.
The Company's Board of Directors has fixed October 21, 1996 as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Annual Meeting, and only stockholders of record at the close
of business on that date will be entitled to vote at the Annual Meeting.
By Authority of the Board of Directors,
Saul Pomerantz, Secretary
New York, New York
November 4, 1996
All stockholders are cordially invited to attend the Annual Meeting in
person. YOU ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING. Your proxy will not be used if you are present at the Annual
Meeting and desire to vote
your shares personally.
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MOVIE STAR, INC.
136 Madison Avenue
New York, New York 10016
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by the Board of Directors of
Movie Star, Inc., a New York corporation (the "Company"), for use at the Annual
Meeting of its Stockholders to be held at Club 101 on the Main Floor at 101 Park
Avenue, New York, New York, on Wednesday, November 20, 1996, at 9:30 A.M. local
time. The Annual Report to Stockholders for the fiscal year ended June 30, 1996,
including financial statements and the report of the independent accountants,
also accompanies this statement.
This Proxy Statement, the accompanying Notice and the accompa nying
proxy card are first being mailed on or about November 4, 1996, to stockholders
of record on October 21, 1996.
VOTING RIGHTS
As of October 21, 1996, the record date for determination of
stockholders entitled to notice of and to vote at the Annual Meeting, 13,959,650
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), were outstanding. The presence at the Annual Meeting, in person or by
proxy, of the holders of a majority of the total number of shares of Common
Stock outstanding on the record date (6,979,826 shares at October 21, 1996) will
constitute a quorum for the transaction of business by such holders at the
meeting. Each share of Common Stock entitles the holder to one vote on each
matter to come before the Annual Meeting.
The four nominees for director receiving the highest number of votes at
the Annual Meeting will be elected. Ratification of the appointment of Deloitte
& Touche LLP will require the affirmative vote of the holders of a majority of
the shares of Common Stock represented at the Annual Meeting.
Properly executed proxies which are received in time for the Annual
Meeting, unless revoked, will be voted as directed by the stockholder or in the
absence of such directions, by the persons named therein "FOR" the election of
the four nominees for director listed below under "Election of Directors", "FOR"
the ratification of the appointment of Deloitte & Touche LLP and, as to any
other business which may properly come before the Annual Meeting, in ac cordance
with the best judgment of the persons named in the proxies. The Board of
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Directors is not aware of any matter which is to be presented at the Annual
Meeting other than those noted herein. A proxy may be revoked at any time before
it is voted by delivery of written notice of revocation to the Secretary of the
Company, or by delivery of a subsequently dated proxy, or by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not
in and of itself constitute the revocation of a proxy.
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ELECTION OF DIRECTORS
The Board of Directors, pursuant to the Bylaws, has set the number of
directors constituting the full Board at six directors. All four nominees have
agreed to serve if elected; there will be two vacancies on the Board of
Directors. All directors hold office until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Assuming the presence of a quorum, the directors shall be elected by a plurality
of the votes cast at the meeting with respect to the election of directors.
"Plurality" means that the individuals who receive the largest number of votes
cast "For" are elected as directors up to the maximum number of directors to be
elected. Consequently, any shares not voted "For" a particular director (whether
as a result of a direction to withhold authority or a broker non-vote) will not
be counted for purposes of determining a plurality.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
YOU MARK YOUR PROXY "FOR" THE ELECTION OF ALL
NOMINEES TO THE BOARD.
Information concerning nominees for Directors
a) All nominees are the current directors.
Director
Since Name Age Position
- - -------- ---- --- --------
1981 Mark M. David 49 Chairman of the Board; Chief
Executive Officer; Director
1983 Saul Pomerantz 47 Senior Vice President; Chief
Financial Officer; Secretary; Director
1996 Gary W. Krat 48 Director
1996 Joel M. Simon 51 Director
- - --------------
Mark M. David was re-elected Chairman of the Board and Chief Executive
Officer on December 8, 1994. On August 14, 1995, Mr. David relinquished the
position of Chief Executive Officer, but remained as Chairman of the Board. He
had been Chairman of the Board and Chief Executive Officer since December, 1985,
President from April 1983 to December 1987 and Chief Operating Officer of the
Company since the merger with Stardust Inc. in 1981 until December 1987. Prior
to the merger, he was founder, Executive Vice President and Chief Operating
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Officer of Sanmark Industries Inc. In April 1996, Mr. David resumed his duties
as Chief Executive Officer.
Saul Pomerantz, Certified Public Accountant, was elected as Senior Vice
President on December 3, 1987 and was re-elected on December 8, 1994.
Previously, he was Vice President-Finance since 1981. He has been Chief
Financial Officer since 1982 and Secretary of the Company since 1983.
Gary W. Krat was appointed to fill a vacancy on the Board of Directors
on February 19, 1996. Mr. Krat has been Senior Vice President of SunAmerica Inc.
since 1990. He is also Chairman and Chief Executive Officer of SunAmerica's
subsidiaries, Royal Alliance Associates, Inc., SunAmerica Securities, Inc. and
Advantage Capital Corporation, all three of which are NASD broker-dealer
companies with more than six thousand registered representatives. From 1977
until 1990, Mr. Krat was a senior executive with Integrated Resources, Inc.
Prior to joining Integrated Resources, Mr. Krat was a practicing attorney. He
has a law degree from Fordham University and a Bachelor of Arts degree from the
University of Pittsburgh.
Joel M. Simon was appointed to fill a vacancy on the Board of Directors
on February 19, 1996. Since 1990, Mr. Simon has been the Executive Vice
President and Chief Operating Officer and, (until July 1993), was a director of
a group of affiliated companies known as Olympia & York Companies
(USA)("O&Y-USA"), subsidiaries of a Canadian multinational real estate concern.
Prior to becoming Chief Operating Officer of O&Y-USA, from 1985 until the end of
1989, Mr. Simon was the Executive Vice-President-Administration and a director
of O&Y-USA. Mr. Simon is a Certified Public Accountant and was a senior partner
in an accounting firm prior to joining O&Y-USA. In 1992, O&Y-USA experienced a
liquidity crisis. The O&Y-USA crisis was caused and exacerbated by its inability
to obtain financial support from its Canadian parent, as it had in the past,
because of the parent company's own financial crisis. Since then, O&Y-USA has
been in the process of restructuring its business and financial obligations.
Several companies of O&Y-USA have since filed voluntary petitions for protection
under Chapter 11 of the U.S. Bankruptcy Code. Some of the companies have had
their plans of reorganization confirmed and consummated. Several more of these
companies have had their plans of reorganization recently confirmed by the
Bankruptcy Court and the balance of the companies are expected to have their
plans confirmed in the near future.
There are no family relationships between the various executive
officers and directors.
BOARD AND COMMITTEE INFORMATION
The Board of Directors, pursuant to the Bylaws, has set the number of
directors constituting the full Board of Directors at six directors. Four
directors will be elected at the Annual Meeting, each to hold office for a term
of one year or until his or her successor is duly elected and qualified or until
his or her earlier
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resignation or removal; there will be two vacancies on the Board of Directors.
During the fiscal year ended June 30, 1996, the Board of Directors met three
times.
The members of the Nominating Committee are Mark M. David, Saul
Pomerantz and Gary W. Krat. This committee was formed in order to nominate
officers and/or directors. The Nominating Committee met once during the fiscal
year. Mark M. David, Saul Pomerantz and Gary W. Krat will serve on the
Nominating Committee again, subject to their election as directors.
Two Board members make up the Audit Committee which consists of two
non-employee directors. It recommends to the Board the engagement and discharge
of the independent auditors for the Company (subject to stockholder
ratification), analyzes the reports of such auditors, and makes such
recommendations to the Board with respect thereto as such committee may deem
advisable. The members of the Audit Committee, which met once relating to the
fiscal year 1996, are currently Gary W. Krat and Joel M. Simon. They will serve
on the Audit Committee again, subject to their election as directors.
The members of the Compensation Committee are Mark M. David, Gary W.
Krat and Joel M. Simon. This committee was formed in order to set compensation
and benefit levels for the Company's officers and other highly paid employees
and to decide which employees would be granted options. The Compensation
Committee did not meet during the last fiscal year. Prior to the appointment of
Messrs. Krat and Simon as Directors, decisions on executive compensation were
made by the entire Board of Directors. Mark M. David, Gary W. Krat and Joel M.
Simon will serve on the Compensation Committee again, subject to their election
as directors.
The Company currently pays its outside directors an annual fee of
$15,000 and a fee of $1,500 per meeting for attendance at meetings of the Board
and its Committees. Directors are also reimbursed for out-of-pocket expenses.
There are no family relationships between the various executive
officers and directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AS OF AUGUST 30, 1996
The following table sets forth certain information as of August 30,
1996 with respect to the stock ownership of (i) those persons or groups (as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who
beneficially own more than 5% of the Company's Common Stock, (ii) each director
of the Company and (iii) all directors and officers of the Company as a group.
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- - ------------------------ -------------------- ----------
Mark M. David 3,015,773 (2)(5) 21.0997%
136 Madison Ave
New York, NY 10016
Republic National 1,336,228;Direct 9.5721%
Bank as Trustee for
the Movie Star, Inc.
Employee Stock
Ownership Plan
452 Fifth Avenue
New York, NY 10018
Mrs. Abraham David 1,622,959 (3)(6) 11.6261%
8710 Banyan Court
Tamarac, FL 33321
Saul Pomerantz 170,026 (4) 1.2055%
136 Madison Ave
New York, NY 10016
Joel M. Simon 47,500 0.3403%
237 Park Avenue
New York, NY 10017
Gary W. Krat 10,000 0.0716%
733 Third Avenue
New York, NY 10017
Abraham David 66,000;Direct(8) 0.4728%
8710 Banyan Court
Tamarac, FL 33321
All directors and 4,866,258 (2)(4)(7) 33.7051%
officers as a group
(4 persons)
- - ----------
(1) Based upon 13,959,650 shares (excluding 2,016,802 treasury
shares)outstanding and options, where applicable, to purchase shares of
Common Stock, exercisable within 60 days.
(2) Includes 58,674 shares owned as custodian for his children, 30,000
shares owned as custodian for his sisters' children and 26,560 shares
owned by his spouse. Also includes the options granted to him for
333,333 shares, under the 1988 Non-Qualified Stock Option Plan,
exercisable within 60 days.
(3) Includes 506,695 shares owned by Mrs. Abraham David as a trustee for
the benefit of her daughters, Marcia Sussman and Elaine Greenberg.
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(4) Includes options granted to Saul Pomerantz for 144,782 shares pursuant
to the 1994 Plan, exercisable within 60 days; and 244 shares owned by
his spouse and 8,000 shares held jointly with his spouse.
(5) Does not include Mrs. Abraham David's shares for which he holds the
proxy. Mrs. Abraham David is the mother of Mark M. David.
(6) Mark M. David holds a proxy for these shares.
(7) Includes the shares held by Mrs. Abraham David.
(8) Abraham David is the father of Mark M. David.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers and persons who beneficially own
more than ten percent of the Company's common stock to file with the Securities
and Exchange Commission ("SEC") and the American Stock Exchange initial reports
of ownership and reports of changes in ownership of common stock of the Company.
Officers, directors and greater-than-ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) reports
they filed. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended June 30, 1996, all
Section 16(a) filing requirements were complied with.
EXECUTIVE OFFICERS
The Company's executive officers are Mark M. David, Chairman of the
Board and Chief Executive Officer, and Saul Pomerantz, Senior Vice President,
Secretary and Chief Financial Officer. Information concerning each executive
officer's age and length of service with the Company can be found herein under
the section entitled "ELECTION OF DIRECTORS."
Report of the Compensation Committee on Executive Compensation
In February 1996, the two new outside directors, Joel M. Simon and Gary W. Krat,
were appointed to fill vacancies on the Company's Board of Directors, and each
of them agreed to serve as a member of the Compensation Committee (the
"Committee"). However, prior to these new appointments, decisions on executive
compensation for fiscal 1996 were made by the Board of Directors, as a whole.
For fiscal year 1996, there were no increases in the compensation of the
executive officers of the Company and no such increases are planned for fiscal
year 1997.
Compensation Policies
In determining the appropriate levels of executive compensation for fiscal year
1996, the Board of Directors did not apply the policies for determining
compensation established by the prior Committee; rather, the Board based its
decisions solely on the Company's financial condition.
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Prior to fiscal year 1995, the Committee had based its recommendations to the
Board of Directors on (1) the Company's ability to attract and retain
experienced individuals with proven leadership and managerial skills, (2) the
executives' motivation to enhance the Company's performance for the benefit of
its Stockholders and customers and (3) the executives' contributions to the
accomplishment of the Company's annual and long-term business objectives.
Salaries generally had been determined based on the Committee's evaluation of
the value of each executive's contribution to the Company, results of the past
fiscal year in light of prevailing business conditions, the Company's goals for
the ensuing fiscal year and prevailing levels at companies considered to be
comparable to and competitors of the Company.
The Committee had also, from time to time, recommended that stock options be
granted to the executive officers of the Company in order to reward the
officers' commitment to maximizing shareholder return and long-term results.
Base Salary Compensation
Based on recommendations from the Company's Chairman of the Board and the other
Committee members' collective experience in the Company's industry, base
salaries had been determined from year to year. The Committee did not utilize
outside consultants to obtain comparative salary information, but believed that
the salaries paid by the Company were competitive, by industry standards, with
those paid by companies with similar sales volume to the Company. The Committee
placed considerably more weight on each executive's contribution to the
Company's development and maintenance of its sources of supply, manufacturing
capabilities, marketing strategies and customer relationships than on the
compensation policies of the Company's competitors; however, the Committee did
not establish or rely on target levels of performance in any of these areas to
arrive at its recommendations.
The current senior executives of the Company have been associated with the
Company in senior management positions for periods ranging from seventeen to
more than twenty-five years. They and other members of management have formed a
cohesive team with a broad range of management skills which was considered by
the Committee to be an essential source of stability and a base for the
Company's future growth.
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Stock Option Grants
In 1983, the Company adopted an Incentive Stock Option Plan (the "ISOP") to
provide a vehicle to supplement the base salary compensation paid to key
employees. All of the Company's senior executives were eligible to receive
grants under the ISOP. Options under the ISOP were granted at fair market value
at the date of grant. In the past, the Committee has recommended and the Board
of Directors has granted options under the ISOP to each of the senior
executives, except the Chairman of the Board. Mark M. David was not eligible to
receive options under the ISOP because his ownership of shares of the Company
exceeds 10% of the outstanding shares of the Company. The options granted under
the ISOP were exercisable at a rate of 11% per year for the first eight years of
service after grant and 12% for the ninth year after grant. No options have been
granted to the Company's senior executives under the ISOP since 1986 and no
further options may be granted under the ISOP. The ISOP expired by its terms in
1994.
On July 15, 1994, the Committee adopted a new Incentive Stock Option Plan (the
"1994 ISOP") to replace the expired 1983 ISOP. All of the Company's management
and administrative employees are eligible to receive grants under the 1994 ISOP.
The 1994 ISOP was approved by the Company's Stockholders at the Company's Annual
Meeting on December 8, 1994. Subject to Stockholder approval, options under the
1994 ISOP were granted to each of the Company's senior executives (except Mark
M. David) on July 15, 1994 at fair market value at that date. As a condition to
the grant of options to the Company's senior executives, the Committee required
each of the recipients to surrender for cancellation any interest in options
granted prior to July 15, 1994.
In addition to the ISOP, in 1988, the Committee recommended and the Board of
Directors adopted a non-qualified stock option plan to provide an additional
continuing form of long-term incentive to selected officers of the Company.
Generally these options are issued with a 10-year exercise period in order to
encourage the executive officers to take a long-term approach to the formulation
and accomplishment of the Company's goals. In 1988, the Committee recommended
and the Board of Directors approved the grant of options under the non-qualified
option plan to each of the executive officers. No options have been granted
under the non-qualified option plan since 1988. Each of the executive officers
receiving options under the 1994 ISOP surrendered their outstanding options
under the 1988 non-qualified plan.
Compensation of the Chief Executive Officer
Prior to fiscal year 1996, the annual base salary paid to Mark M. David, the
Company's Chairman of the Board and Chief Executive Officer, was reduced by
approximately fifty percent from his salary in fiscal year 1995. The Board
believed that in view of the Company's results of operations for the fiscal year
ended June 30, 1995, no further adjustments to Mr. David's compensation were
warranted.
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Compensation Committee Interlocks and Insider Participation
Other than the Company's Chairman of the Board, there are no Compensation
Committee interlocks or insider participation. Mr. David's compensation for
fiscal year 1997 was continued at the same level as 1996 until further action by
the Compensation Committee.
Mark M. David
Gary W. Krat
Joel M. Simon
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Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL LONG TERM COMPENSATION
COMPENSATION -------------------------
------------------------- RESTRICTED
FISCAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) AWARDS($) (# SHARES) COMPENSATION
- - --------------------------- ------ ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Mark M. David 1996 275,000 - 333,333 (1) 8,145(2)
Chairman of the Board and 1995 522,857 - 333,333 (1) 8,145(2)
Chief Executive Officer of 1994 550,000 - 333,333 (1) 8,145(2)
the Company
Clayton E. Medley 1996 277,000 (3) - 477,467 (4) -
Former President and Chief 1995 270,846 - 477,467 (6) -
Operating Officer of the 1994 275,000 - 423,889 (6) -
Company; Former Director
Saul Pomerantz 1996 145,000 - 312,467 (5) -
Senior Vice President and 1995 161,663 - 312,467 (6) -
Chief Financial Officer of 1994 165,000 - 312,778 (6) -
the Company; Director
Helen Samuels 1996 201,000( 7) - 219,648 (4) -
Former Vice President and 1995 127,476 - 219,668 (6) -
Treasurer of the Company; 1994 130,000 - 218,667 (6) -
Former Director
Barbara Khouri 1996 291,000 (8) - - -
Former Chief Executive
Officer
<FN>
(1) Represents options to purchase 333,333 shares of Common
Stock granted under the Company's Non-Qualified Stock
Option Plan ("1988 Plan").
(2) Represents annual premiums paid by the Company for a split
dollar form of life insurance policy on the life of Mark
M. David.
(3) Includes termination payment of $90,000.
(4) All outstanding options previously granted expired ninety
days after termination of employment.
(5) Represents options to purchase 312,467 shares of Common
Stock under the 1994 Incentive Stock Option Plan (the
"1994 Plan").
(6) As a condition to the grant of options under the 1994
Plan, each recipient was required to surrender all of
outstanding options previously granted to him or her. The
exercise prices of the surrendered options granted were
higher than the exercise price of options granted under
the 1994 Plan.
(7) Includes termination payment of $100,000.
(8) Includes termination payment of $95,000.
</FN>
</TABLE>
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Number of Unexercised Value of Unexercised,
Shares Options/SARs at Fiscal In-the-Money Options/SARs
Acquired Dollar Year-End(#) at Fiscal Year-End ($) (6)
on Value ------------------------------- ---------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- - ---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
MARK M. DAVID - - 333,333 (1) - - -
CLAYTON E. MEDLEY - - 177,776 (2)(3) 299,691 (5) - -
SAUL POMERANTZ - - 88,888 (2) 223,579 (5) - -
HELEN SAMUELS - - 88,888 (2)(4) 130,760 (5) - -
<FN>
- - -------------------------
(1) Consists solely of options granted pursuant to the Company's 1988 Non-qualified
Stock Option Plan.
(2) Consists solely of options to purchase shares pursuant to the Company's
1994 Incentive Stock Option Plan ("1994 ISOP").
(3) All outstanding options expired on August 1, 1996 which was the ninetieth day
after termination of employment.
(4) All outstanding options expired on July 16, 1996 which was the ninetieth day
after termination of employment.
(5) Consists solely of the unvested portion of options granted pursuant to the 1994
ISOP.
(6) No value is attributed to unexercised options/SARs at fiscal year-end. None of
the unexercised options/SARs were in-the-money at fiscal year-end.
</FN>
</TABLE>
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STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below compares cumulative total
return of the Company, the S&P 500 Index and a selected peer group index
selected by the Company.* The graph plots the growth in value of an initial $100
investment over the indicated time periods, with dividends reinvested. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance
[COMPARISON OF CUMULATIVE TOTAL RETURN]
[GRAPH NOT FILED HEREWITH]
- - ---------------
*The peer group index is selected by the Company and is comprised
of the Company and the following apparel companies, as adjusted for
relative market capitalization: Body Drama Inc., Hampton Industries,
Danskin, Inc. and Nantucket Industries.
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Employee Stock Ownership Plan
The Company adopted an Employee Stock Ownership and Capital
Accumulation Plan ("ESOP") as of July 1, 1983. The ESOP is intended to comply
with the provisions of the Employee Retirement Income Security Act of 1974, as
amended, the Tax Equity and Fiscal Responsibility Act of 1982, the Deficit
Reduction Act of 1984 and the Retirement Equity Act of 1984. A favorable
determination letter was initially issued by the Internal Revenue Service with
regard to the ESOP in February 1985. From time to time, the ESOP is amended as
required to comply with amendments to the applicable statutes. Contributions to
the ESOP by the Company are discretionary. The allocation of the contribution
made in any year to eligible employees is based on their earnings. All employees
over the age of 18 years who have been employed by the Company for one year are
eligible to participate in the ESOP. Effective July 1, 1989, employee benefits
vest as follows:
Service with Company after June 30, 1983
up to five years.... 0%
five years.......... 100%
For the fiscal year ended June 30, 1996, the Company contributed $91,000.
As of August 30 1996, the ESOP owns 1,336,228 shares or 9.5721% of the
outstanding shares of the Company's Common Stock. Withdrawal of vested balances
by participants can take place upon death, disability or early or normal
retirement. Vested benefits will be paid to participants who have terminated
their employment for reasons other than death, disability or early or normal
retirement as quickly as possible after the third June 30 following departure.
In connection with the discontinuance of manufacturing operations at
several plant locations, the Company offered its employees, terminated as a
result of the plant closings, the option to receive distributions of their
vested interests in the ESOP, in cash or stock of the Company. In September 1995
and February and March 1996, the ESOP purchased a total of 92,258 shares of the
Company's Common Stock from participants in the ESOP who had elected to receive
their distributions in cash.
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Incentive Stock Option Plan
In 1994, the Company adopted an Incentive Stock Option Plan (the "1994
ISOP"). The 1994 ISOP was approved by the stockholders of the Company on
December 8, 1994. The purpose of the 1994 ISOP is to enable the Company to
attract and retain key employees by providing them with an opportunity to
participate in the Company's ownership. Awards under the 1994 ISOP are made by
the Compensation Committee. The 1994 ISOP is intended to comply with Section
422A of the Internal Revenue Code of 1986, as amended. All options are granted
at market value as determined by reference to the price of shares of the Common
Stock on the American Stock Exchange.
As of June 30, 1996, there were options outstanding to purchase
1,229,000 shares, exercisable at a price of $1.125, over the period June 30,
1996 to July 15, 2004, of which 323,000 are vested. An aggregate of eleven
persons hold options under the 1994 ISOP. No options were granted under the 1994
ISOP in fiscal 1996.
As of June 30, 1996, one person holds options which were granted under
the Company's prior Incentive Stock option Plan to purchase 5,000 shares at a
price of $1.375, of which 3,000 shares are vested.
Non-Qualified Stock Options
The Company has retained Harold Shatz and Jeffrey Hymowitz, and their
organization, as a manufacturer's representative since 1976. On December 13,
1988, Harold Shatz and Jeffrey Hymowitz were granted options to purchase an
aggregate of 133,333 shares at $2.363 per share, after adjustment for stock
dividends and stock splits.
The options granted to Messrs. Shatz and Hymowitz on December 13, 1988
provide that they may be exercised at a rate of 11% per year for the first eight
years of service after grant and 12% for the ninth year of service. The options,
granted on December 13, 1988, are exercisable from December 14, 1989 through
December 13, 1998. All the options granted to these individuals are (i) not
transferrable, (ii) may only be exercised while the grantee is an employee of
their organization or the Company, and for three months thereafter, and (iii)
may only be exercised while their organization continues to be a manufacturer's
representative for the Company. Stockholders of the Company approved the grant
of these non-qualified options on December 7, 1989. At June 30, 1996, 117,333 of
these options are exercisable.
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<PAGE>
Number of
Name Granted Shares Price Per Share
- - ---- ------- --------- ---------------
Jeffrey Hymowitz 1988 44,444 $2.36
Harold Shatz 1988 88,889 $2.36
1988 Non-Qualified Stock Option Plan
On December 13, 1988, the Company's stockholders approved a
non-qualified stock option plan of up to 1,666,666 shares. All outstanding
options granted are presently exercisable.
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<PAGE>
RATIFICATION OF SELECTION OF
DELOITTE & TOUCHE LLP AS AUDITORS
The Board of Directors has selected Deloitte & Touche LLP to audit the
books and records of the Company for its fiscal year ending June 30, 1997. The
Company has been advised by Deloitte & Touche LLP, that the firm has no
relationship with the Company or its subsidiaries other than that arising from
the firm's engagement as auditors, tax advisors and consultants.
In the event the stockholders fail to ratify the appointment, the Board
of Directors will consider it as direction to select other auditors for the
subsequent year. Even if the selection is ratified, the Board in its discretion
may direct the appointment of a different independent accounting firm at any
time during the year if the Board feels that such a change would be in the best
interest of the Company and its stockholders. The ratification requires a
majority vote of those shares of Common Stock represented at the meeting.
Consequently, any shares not voted "For" ratification (whether as a result of a
direction to withhold authority or a broker non-vote) will not be counted for
purposes of determining a majority.
The appointment of Deloitte & Touche LLP continues a relationship that
began prior to 1980. Representatives of Deloitte & Touche LLP will be present at
the Annual Meeting, during which they will be afforded the opportunity to make a
statement if they so desire, and stockholders will be afforded the opportunity
to ask appropriate questions.
------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU MARK YOUR
PROXY "FOR" RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP
TO AUDIT THE BOOKS AND RECORDS OF THE COMPANY FOR THE
FISCAL YEAR ENDING JUNE 30,1997
------------------------------------
OTHER BUSINESS
The Board of Directors does not intend to present any other business
for action at the Annual Meeting and does not know of any other business
intended to be presented by others.
18
<PAGE>
STOCKHOLDERS' PROPOSALS
Proposals of stockholders for consideration at the 1997 Annual Meeting
of Stockholders must be received by the Company no later than September 1, 1997,
in order to be included in the Company's Proxy Statement and proxy relating to
the meeting.
ANNUAL REPORT AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Stockholders for the year
ended June 3O, 1996, has been or will be mailed concurrently with or prior to
the mailing of this Proxy Statement by first class mail, to each stockholder of
record on or about November 4, 1996.
A copy of the Company's Annual Report on Form 1O-K for the fiscal year
ended June 30, 1996, filed by the Company with the Securities and Exchange
Commission, will be furnished without charge to any person requesting a copy
thereof in writing and stating that he is a beneficial holder of shares of the
Company's Common Stock. The Company will also furnish copies of exhibits, if
any, to the Form 1O-K to eligible persons requesting exhibits, at a charge of
$0.50 per page, paid in advance. The Company will indicate the number of pages
to be charged for upon written inquiry. Requests and inquiries should be
addressed to:
Saul Pomerantz, Secretary
Movie Star, Inc.
136 Madison Avenue
New York, New York 10016
Nothing contained in the Annual Report to Stockholders or in the Form
10-K is to be regarded as proxy soliciting material or as a communication by
means of which a solicitation of proxies is to be made.
By Order of the Board of Directors
Saul Pomerantz, Secretary
November 4, 1996
19
<PAGE>
MOVIE STAR, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints MARK M. DAVID, and SAUL POMERANTZ, and each of
them, with full power of substitution, to represent the undersigned and to vote
all of the shares of stock in Movie Star, Inc. which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of said Company to be held at Club
101 on the Main Floor, 101 Park Avenue, New York, New York, on November 20, 1996
at 9:30 A.M., and at any adjournments thereof;
IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL
VOTE FOR ALL PROPOSALS IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDA
TIONS.
1. Election of Directors.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through such nominee's name.) Mark M. David,
Saul Pomerantz, Gary W. Krat and Joel M. Simon.
FOR AGAINST ABSTAIN
2. Ratification of selection of ---- ---- ----
Deloitte & Touche LLP as auditors. ---- ---- ----
4. To transact such other business as
may properly come before the meeting
or any adjournment thereof.
Dated: ________________________, 1996
(L.S.)
(L.S.)
(Please sign exactly as your name appears hereon
indicating your official title when signing in a
representative capacity)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
<PAGE>
