SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for use of the Commission
|X| Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Movie Star, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
MOVIE STAR, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
The Annual Meeting of Stockholders of Movie Star, Inc. will be
held on Thursday, November 20, 1997, at 10:0O 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 22, 1997 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
October 24, 1997
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.
1
<PAGE>
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 Thursday, November 20, 1997, at 10:00 A.M. local
time. The Annual Report to Stockholders for the fiscal year ended June 30, 1997,
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 October 24, 1997, to stockholders
of record on October 22, 1997.
VOTING RIGHTS
As of October 22, 1997, 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 22, 1997) 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 five 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 five 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
Directors is not aware of any matter which is to be
2
<PAGE>
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.
3
<PAGE>
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 five nominees have
agreed to serve if elected; there will be one vacancy 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.
<TABLE>
<CAPTION>
Director Since Name Age Position
<S> <C> <C> <C>
1981 Mark M. David 50 Chairman of the Board and
Chief Executive Officer
1997 Melvyn Knigin 54 President, Chief Operating Officer
and Director
1983 Saul Pomerantz 48 Executive Vice President, Chief
Financial Officer, Secretary
and Director
1996 Gary W. Krat 49 Director
1996 Joel M. Simon 52 Director
</TABLE>
Mark M. David was re-elected Chairman of the Board and Chief Executive Officer
on November 20, 1996. 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 Officer of
Sanmark Industries Inc. In April 1996, Mr. David resumed his duties as Chief
Executive Officer.
4
<PAGE>
Melvyn Knigin was appointed to fill a vacancy on the Board of Directors and
promoted to Senior Vice President and Chief Operating Officer on February 5,
1997 and was promoted to President on September 4, 1997. Since joining the
Company in 1987, he was the President of Cinema Etoile, the Company's upscale
intimate apparel division. Prior to joining the Company, he had spent most of
his career in the intimate apparel industry.
Saul Pomerantz, CPA, was elected Senior Vice President on December 3, 1987 and
was re-elected on November 20, 1996 and was promoted to Executive Vice President
on September 4, 1997. 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 elected to the Board of Directors on November 20, 1996. Mr.
Krat was appointed to fill a vacancy on the Board in February 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., Advantage Capital Corp., Financial Services Corp. and
SunAmerica Securities, Inc., all of which are NASD broker dealer companies with
more than nine 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 is a Trustee for
the National Endowment of Financial Education. He has a law degree from Fordham
University and a Bachelor of Arts degree from the University of Pittsburgh.
Joel M. Simon was elected to the Board of Directors on November 20, 1996. Mr.
Simon was appointed to fill a vacancy on the Board in February 1996. Mr. Simon
is currently self-employed as a private investor. From 1990 until the end of
1996, Mr. Simon was 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 crises. Since then, O&Y-USA has been in the process of
restructuring its business and financial obligations. Many of the O&Y-USA
companies filed voluntary petitions for protection under Chapter 11 of the U.S.
Bankruptcy Code. Substantially all of these companies have had their plans of
reorganization confirmed and consummated. The balance of the companies are
expected to have their plans confirmed.
5
<PAGE>
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.
Five 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 resignation or removal; there will be one vacancy on
the Board of Directors. During the fiscal year ended June 30, 1997, the Board of
Directors met four 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 1997, 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. 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 Compensation Committee met once during
fiscal year 1997.
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.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AS OF AUGUST 30, 1997
The following table sets forth certain information as of
August 30, 1997 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.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP CLASS(1)
<S> <C> <C>
Mark M. David 3,032,440(2)(6) 21.1916%
136 Madison Avenue
New York, NY 10016
Republic National 1,287,664;Direct 9.2242%
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)(7) 11.6261%
3430 Galt Ocean Drive
Apt. 706
Ft. Lauderdale, FL 33308
Melvyn Knigin 64,844(4) 0.4624%
136 Madison Avenue
New York, NY 10016
Saul Pomerantz 170,026(5) 1.2055%
136 Madison Avenue
New York, NY 10016
Joel M. Simon 47,500 0.3403%
35 Midwood Cross
Roslyn, NY 11576
Gary W. Krat 20,000 0.1433%
733 Third Avenue
New York, NY 10017
Abraham David 25,000;Direct(9) 0.1791%
3430 Galt Ocean Drive
Apt. 706
Ft. Lauderdale, FL 33308
All directors and officers as 4,957,769(2)(4)(5)(8) 34.1461%
a group
(4 persons)
- -----------------
<FN>
(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.
7
<PAGE>
(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
350,000 shares, under the 1988 Non-Qualified Stock Option Plan,
exercisable within 60 days.
(3) Includes 506,695 shares owned by Annie David as a trustee for the
benefit of her daughters, Marcia Sussman and Elaine Greenberg.
(4) Represents options granted to Melvyn Knigin pursuant to the 1994 Plan,
exercisable within 60 days.
(5) 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.
(6) Does not include Mrs. Abraham David's shares for which he holds the
proxy.
(7) Mark M. David holds a proxy for these shares.
(8) Includes the shares held by Mrs. Abraham David.
(9) Abraham David is the husband of Annie David and the father of Mark M.
David.
</FN>
</TABLE>
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, 1997, 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, Melvyn Knigin, President and Chief Operating
Officer and Saul Pomerantz, Executive 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
Joel M. Simon, Gary W. Krat and Mark M. David were appointed by the
Board of Directors, and each of them agreed to serve as members of
the Compensation Committee (the "Committee").
8
<PAGE>
The salaries of certain officers, other than Mr. David, were increased for
fiscal years 1997 and 1998.
Compensation Policies
In determining the appropriate levels of executive compensation for fiscal year
1997, the Committee did not apply the policies previously established by the
Committee for determining compensation; rather, the Committee based its
decisions solely on the Company's financial condition.
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 shareholders 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.
In addition to base salary compensation, 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 business experience, base salaries are determined
from year to year. The Committee does not utilize outside consultants to obtain
comparative salary information, but believes that the salaries paid by the
Company are competitive, by industry standards, with those paid by companies
with similar sales volume to the Company. The Committee places 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 does 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
9
<PAGE>
from thirteen to more than twenty-five years. They have been primarily
responsible for the formulation and implementation of the Company's recent
financial and operational restructuring and provide the Company with a broad
range of management skills which are considered by the Committee to be an
essential source of stability and a base for the Company's future growth.
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 has not received
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 1983 ISOP has expired.
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 shareholders at the Company's annual
meeting on December 8, 1994. Subject to shareholder 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 Management Option Plan (the "1988
Non-qualified Plan") to provide an additional continuing form of long-term
incentive to selected officers of the Company. The 1988 Non-qualified Plan was
approved by the Company's shareholders at the Company's annual meeting on
December 13, 1988. Generally, options under the 1988 Non-qualified Plan 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
all of the Company's then executive officers. Mark David is the only current
executive officer of the Company who retains any options granted under the 1988
Non-qualified Plan.
10
<PAGE>
In January 1997, Messrs. Simon and Krat, the independent Directors serving on
the Committee, recommended that the Company grant new options to Mark David
under the 1988 Non-qualified Plan at a price equal to the market price for the
Company's shares on the date of the grant. As a condition to the grant of new
options to Mr. David under the 1988 Non-qualified Plan, the Committee required
Mr. David to surrender for cancellation any interest in options granted to him
prior to January 29, 1997.
Also in January 1997, the independent directors serving on the Committee
recommended that the Company grant new options under the 1994 ISOP to Saul
Pomerantz and Melvyn Knigin at a price equal to the market price for the
Company's shares on the date of the grant. The grant of new options to Messrs.
Pomerantz and Knigin was also subject to the condition that they surrender for
cancellation any interest in options granted to them prior to January 29, 1997.
Compensation of the Chief Executive Officer
For fiscal year 1997, the annual base salary paid to Mark M. David, the
Company's Chairman of the Board and Chief Executive Officer, was not increased.
The Committee believed that it would be more appropriate to recognize Mr.
David's contribution to the Company's improved performance in fiscal year 1997
through the grant of new options under the 1988 Non-qualified Plan rather than
by increasing Mr. David's base salary.
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 did not participate in
the Committee's determinations of compensation for fiscal year 1997 or fiscal
year 1998.
Mark M. David
Gary W. Krat
Joel M. Simon
11
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
RESTRICTED
NAME AND PRINCIPAL FISCAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY ($) AWARDS($) (# SHARES) COMPENSATION
- ------------------ ---- --------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Mark M. David 1997 275,000 _ 350,000(1) 8,145(3)
Chairman of the Board and 1996 275,000 _ 333,333(2) 8,145(3)
Chief Executive 1995 522,857 _ 333,333(2) 8,145(3)
Officer of the Company
Melvyn Knigin 1997 296,660 _ 350,000(4) _
President and Chief Operating 1996 291,076 _ 139,844(5) _
Officer of 1995 297,408 _ 139,844(5) _
the Company; Director
Saul Pomerantz 1997 164,480 _ 350,000(4) _
Executive Vice President 1996 145,000 _ 312,467(5) _
Chief Financial Officer and 1995 161,663 _ 312,467(5) _
Secretary of the
Company; Director
- --------------
<FN>
(1) Represents options to purchase 350,000 shares of Common Stock granted under
the Company's Non-Qualified Stock Option Plan ("1988 Plan").
(2) As a condition to the grant of new options, Mr. David was required to
surrender all outstanding options previously granted to him.
(3) Represents annual premiums paid by the Company for a split dollar form of
life insurance policy on the life of Mark M. David.
(4) Represents options to purchase 350,000 shares of Common Stock under the
1994 Incentive Stock Option Plan (the "1994 Plan").
(5) Asa condition to the grant of new options under the 1994 Plan, each
recipient was required to surrender all of outstanding options previously
granted to him or her. The exercise prices of the surrendered options were
higher than the exercise price of options granted under the 1994 Plan.
</FN>
</TABLE>
12
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Shares Dollar Number of Unexercised Options/SARs at Value of Unexercised,
Acquired on Value Fiscal In-the-Money Options/SARs at
Name Exercise Realized Year-End(#) Fiscal Year-End ($)(4)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
MARK M. DAVID - - 350,000(1) - - -
SAUL POMERANTZ - - 144,782(2) 205,218(3) - -
MELVYN KNIGIN - - 64,844(2) 285,156(3) - -
- -------------------------
<FN>
(1) Consists solely of options to purchase shares 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) Consists solely of the unvested portion of options granted pursuant to the
1994 ISOP.
(4) 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>
13
<PAGE>
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.
[Graph comparing cumulative total return of the Company with that of the S&P 500
Index and a peer group index slected by the Comapny]
*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: Hampton Industries, Nitches Inc. and Nantucket Industries.
14
<PAGE>
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. All participants in the ESOP at June 30, 1996 are fully vested.
Employees hired on and after July 1, 1996 vest in the ESOP as follows:
Service with Company after June 30, 1996
up to five years.... 0%
five years.......... 100%
For the fiscal year ended June 30, 1997, the Company did not make a
contribution.
As of August 30 1997, the ESOP owns 1,287,644 shares or 9.2242% 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.
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, 1997, there were options outstanding to purchase 1,565,000
shares, exercisable at prices ranging from $.625 to $1.125, over the period
June 30, 1997 to January 29, 2007, of which 238,000 are vested. An
aggregate of twenty-nine persons hold options under the 1994
15
<PAGE>
ISOP. For Fiscal 1997, 1,495,000 options were granted under the 1994
ISOP.
As of June 30, 1997, 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 3,300 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, 1997, 117,333 of these options are
exercisable.
16
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Number
of Price Per
Shares 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. As of June 30, 1997, one
person holds options to purchase 350,000 shares, exercisable at a price of
$.625 over the period June 30, 1997 to January 29, 2007, all of which are
vested.
17
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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, 1998.
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 30,1998
------------------------------------
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
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STOCKHOLDERS' PROPOSALS
Proposals of stockholders for consideration at the 1998 Annual Meeting of
Stockholders must be received by the Company no later than September 1,
1998, 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, 1997, 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 October 24, 1997.
A copy of the Company's Annual Report on Form 1O-K for the fiscal year
ended June 30, 1997, 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
October 24, 1997
19
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MOVIE STAR, INC., - PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 20, 1997
P The undersigned hereby appoints MARK M. DAVID, and SAUL POMERANTZ, and each
of them, with full power of substitution, to represent the undersigned and
R 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
O said Company to be held at Club 101 on the Main Floor, 101 Park Avenue, New
York, New York, on November 20, 1997 at 10:00 A.M., and at any adjournments
X thereof;
Y IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR
ALL PROPOSALS IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS.
1. Election of Directors
FOR all nominees listed below except WITHHOLD AUTHORITY to vote
as marked to the contrary below |_| for all nominees listed below |_|
Mark M. David Melvyn Knigin Saul Pomerantz Gary W. Krat Joel M. Simon
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through such nominee's name.)
------------------------------------------
2. Ratification of selection of Deloitte & Touch LLP as auditors
FOR |_| AGAINST |_| ABSTAIN |_|
3. To transact such other business as may properly come before the meeting or
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Date __________________, 1997
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SIGNATURE(S)
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SIGNATURE IF HELD JOINTLY
Note: Please sign exactly as your name appears hereon indicating your official
title when signing in a representative capacity.
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