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
Friday, December 11, 1998, 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 30, 1998 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 3, 1998
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.
<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 Friday, December 11, 1998, at 10:00 A.M. local
time. The Annual Report to Stockholders for the fiscal year ended June 30, 1998,
including financial statements and the report of the independent accountants,
also accompanies this statement.
This Proxy Statement, the accompanying Notice and the accompanying proxy
card are first being mailed on or about November 3, 1998, to stockholders of
record on October 30, 1998.
VOTING RIGHTS
As of October 30, 1998, the record date for determination of stockholders
entitled to notice of and to vote at the Annual Meeting, 14,116,982 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 (7,058,492 shares at October 30, 1998) 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 an matter which is to be presented at the Annual
2
<PAGE>
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.
Director
Since Name Age Position
- - -------- ------------- ------ ---------------
1981 Mark M. David 51 Chairman of the
Board, Chief
Executive Officer
and Director
1997 Melvyn Knigin 55 President, Chief
Operating Officer
and Director
1983 Saul Pomerantz 49 Executive Vice
President, Chief
Financial Officer,
Secretary and
Director
1996 Gary W. Krat 50 Director
1996 Joel M. Simon 53 Director
4
<PAGE>
Mark M. David was re-elected Chairman of the Board and Chief Executive Officer
on November 20, 1997. 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.
Melvyn Knigin was elected to the Board of Directors on November 20, 1997. Mr.
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 re-elected to the Board of Directors on November 20,
1997. Mr. Pomerantz was elected Senior Vice President on December 3, 1987 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 re-elected to the Board of Directors on November 20, 1997. Mr.
Krat has been Senior Vice President of SunAmerica Inc. since 1990. He is also
Chairman and Chief Executive Officer of SunAmerica Financial Network, Inc. and
its six NASD broker dealer companies with nearly ten 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 re-elected to the Board of Directors on November 20, 1997. Mr.
Simon is the President and Chief Executive Officer of Starret Corporation, a
real estate construction, development and management company. From 1996 to 1998,
Mr. Simon was 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, most of the O&Y-USA companies filed voluntary
5
<PAGE>
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.
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, 1998, 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 the
non-employee directors, Messrs. Krat and Simon. 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 Audit Committee, met once relating to fiscal year 1997 and once
relating to fiscal year 1998. 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 twice during fiscal year 1998.
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 31, 1998
The following table sets forth certain information as of August 31, 1998
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 3,559,102(2)(6) 24.6016%
136 Madison Avenue
New York, NY 10016
Republic National 1,110,230;Direct 7.8645%
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) 11.4965%
3430 Galt Ocean Drive
Apt. 706
Ft. Lauderdale, FL 33308
Melvyn Knigin 242,375(4) 1.6880%
136 Madison Avenue
New York, NY 10016
Saul Pomerantz 277,738(5) 1.9328%
136 Madison Avenue
New York, NY 10016
Joel M. Simon 74,166(10) 0.5244%
237 Park Avenue
New York, NY 10017
Gary W. Krat 233,333(11) 1.6282%
733 Third Avenue
New York, NY 10017
Abraham David 25,000;Direct(9) 0.1771%
3430 Galt Ocean Drive
Apt. 706
Ft. Lauderdale, FL 33308
7
<PAGE>
All directors and 6,009,673(2)(4)(5)(8) 39.5338%
officers as a group (10)(11)
(5 persons)
- - -----------------
(1) Based upon 14,116,982 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 350,000 shares, under
the 1988 Non-Qualified Stock Option Plan, exercisable within 60 days.
(3) Includes 606,695 shares owned by Annie David as a trustee for the benefit
of her daughters, Marcia Sussman and Elaine Greenberg and her
grandchildren, Adam David, Evan David, Michael Sussman and David Greenberg.
(4) Represents options granted to Melvyn Knigin for 121,875 shares pursuant to
the 1994 Plan, exercisable within 60 days and 120,000 shares underlying
$45,000 in 8% Senior Convertible Notes.
(5) Includes options granted to Saul Pomerantz for 185,828 shares pursuant to
the 1994 Plan, exercisable within 60 days, 66,666 shares underlying $25,000
in 8% Senior Convertible Notes; 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.
(10) Includes 26,666 shares underlying $10,000 in 8% Senior Convertible Notes.
(11) Includes 213,333 shares underlying $80,000 in 8% Senior Convertible Notes.
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
8
<PAGE>
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, 1998, 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").
The salaries of Mark M. David, the Chairman and Chief Executive Officer; Melvyn
Knigin, the President and Chief Operating Officer; and, Saul Pomerantz, the
Executive Vice President and Chief Financial Officer, were increased for fiscal
year 1998. The salaries of Messrs. Knigin and Pomerantz were also increased for
fiscal year 1999. Mr. David's salary was not increased for fiscal year 1999.
Compensation Policies
In determining the appropriate levels of executive compensation for fiscal year
1998 and 1999, the Committee based its decisions on (1) the Company's improved
financial condition, (2) the Company's ability to retain experienced individuals
with proven leadership and managerial skills, (3) the executives' motivation to
enhance the Company's performance for the benefit of its shareholders and
customers and (4) the executives' contributions to the accomplishment of the
Company's annual and long-term business objectives.
Salaries generally are 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, to a lesser extent, prevailing levels at companies
considered to be comparable to and competitors of the Company.
9
<PAGE>
In addition to base salary compensation, the Committee has 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. Mr. David does not make recommendations with respect to his own
salary and does not participate in the Committee's determination of the salary
and other compensation to be paid to the Company's senior executives.
The current senior executives of the Company have been associated with the
Company in senior management positions for periods ranging from fourteen 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.
10
<PAGE>
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.
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. The 1994 ISOP was approved by the Company's shareholders at the Company's
annual meeting on December 8, 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.
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 1998, the annual base salary paid to Mark M. David, the
Company's Chairman of the Board and Chief Executive Officer, was increased from
$275,000 to $335,000. The Committee believed it was appropriate to recognize Mr.
David's contribution to the Company's improved performance in fiscal year 1997
and the anticipated continuation of that improvement in fiscal 1998 by
increasing Mr. David's base salary by approximately the same percentage as the
increases granted to other senior executives.
11
<PAGE>
Compensation Committee Interlocks and Insider Participation
Other than the Company's Chairman of the Board, there are no Compensation
Committee interlocks or insider participation. Mr. David did not participate in
the Committee's determinations of compensation for fiscal year 1998 or fiscal
year 1999.
Mark M. David
Gary W. Krat
Joel M. Simon
12
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
------------- -----------------------------
RESTRICTED
NAME AND PRINCIPAL FISCAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY ($) AWARDS($) (# SHARES) COMPENSATION
- - ------------------ ---- ----------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Mark M. David 1998 335,000 - 350,000(1) 8,145(3)
Chairman of the Board 1997 275,000 - 350,000(1) 8,145(3)
and Chief Executive 1996 275,000 - 333,333(2) 8,145(3)
Officer of the
Company; Director
Melvyn Knigin 1998 350,000 - 350,000(4) -
President and Chief 1997 296,660 - 350,000(4) -
Operating Officer of 1996 291,076 - 139,844(5) -
the Company; Director
Saul Pomerantz 1998 200,000 - 350,000(4) -
Executive Vice 1997 164,480 - 350,000(4) -
President and Chief 1996 145,000 - 312,467(5) -
Financial
Officer of the
Company; Director
</TABLE>
(1) Represents options to purchase 350,000 shares of Common Stock granted on
January 29, 1997 under the Company's Non-Qualified Stock Option Plan ("1988
Plan").
(2) As a condition to the grant of new options, Mr. David was required to
surrender all outstanding options previously granted to him on October 17,
1988. The exercise prices of the surrendered options were higher than the
exercise price of options granted under the 1988 Plan.
(3) Represents annual premiums paid by the Company for a split dollar form life
insurance policy on the life of Mark M. David.
(4) Represents options to purchase 350,000 shares of Common Stock granted on
January 29, 1997 under the 1994 Incentive Stock Option Plan (the "1994
Plan").
(5) As a condition to the grant of new options under the 1994 Plan, each
recipient was required to surrender all outstanding options previously
granted to him on July 15, 1994. The exercise prices of the surrendered
options were higher than the exercise price of options granted under the
1994 Plan.
13
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number
of Shares Value of Unexercised,
Acquired Dollar Number of Unexercised In-the-Money
on Value Value Options/SARs at Options/SARs at
Name Exercise Realized Fiscal Year-end (#) Fiscal Year-end ($)(4)
- - ---------------- ---------- -------- -------------------- -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
MARK M. DAVID - - 350,000(1) - 21,875 -
SAUL POMERANTZ - - 185,828(2) 164,172(3) 11,614 10,261
MELVYN KNIGIN - - 121,875(2) 228,125(3) 7,617 14,258
</TABLE>
-------------------------
(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) The value attributed to unexercised options/SARs at fiscal year-end is
based on the market value at June 30, 1998 less the cost to exercise the
Options/SARs.
14
<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 S&P 500
Index and a peer group index selected by the Company)
- - --------
*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.
15
<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, 1998, the Company did not make a
contribution.
As of August 31, 1998, the ESOP owns 1,110,230 shares or 7.8645% 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.
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As of June 30, 1998, there were options outstanding to purchase 1,765,000
shares, exercisable at prices ranging from $.625 to $1.125, over the period June
30, 1998 to February 25, 2008, of which 509,000 are vested. An aggregate of
thirty-one persons hold options under the 1994 ISOP. For Fiscal 1998, 200,000
options were granted under the 1994 ISOP.
As of June 30, 1998, 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 3,850 shares are vested.
Non-Qualified Stock Options
The Company has retained Harold Shatz and Jeffrey Hymowitz, and their
organization, Domino Industries, Inc. ("Domino") as a manufacturer's
representative since 1976. In fiscal 1998, Mr. Shatz effectively discontinued
providing his services as a sales executive to the Domino organization. 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. These options expire on December 12, 1998.
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 12, 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. Effective as of January 1, 1999, the
organization of Messrs. Shatz and Hymowitz will no longer 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, 1998, 133,333 of
these options are exercisable.
Price
Number of Per
Name Granted 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, 1998 to January 29, 2007, all of which are vested.
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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, 1999. 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, 1999
------------------------------------
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.
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STOCKHOLDERS' PROPOSALS
Proposals of stockholders for consideration at the 1999 Annual Meeting of
Stockholders must be received by the Company no later than September 1, 1999, 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, 1998, 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 3, 1998.
A copy of the Company's Annual Report on Form 1O-K for the fiscal year ended
June 30, 1998, 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 3, 1998
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MOVIE STAR, INC., - PROXY
SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 11, 1998
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 December 11, 1998 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 __________________, 1998
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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.
<PAGE>
