<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
NAUTICA ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Charles M. Modlin
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
NAUTICA ENTERPRISES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
New York, New York
June 5, 1998
To the Stockholders of
NAUTICA ENTERPRISES, INC.
The Annual Meeting of Stockholders of Nautica Enterprises, Inc. will be
held on July 1, 1998 at the offices of the Company, 40 West 57th Street, New
York, New York, at 9:30 A.M. for the following purposes:
(1) To elect directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified;
and
(2) To transact such other business as may properly come before the meeting
and any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 22, 1998 are
entitled to notice of and to vote at the meeting and any adjournment or
adjournments thereof.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, BUT WISH
THEIR STOCK TO BE VOTED ON MATTERS TO BE PRESENTED TO THE MEETING, ARE URGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE TO WHICH
NO POSTAGE NEED BE AFFIXED IF MAILED WITHIN THE UNITED STATES.
By Order of the Board of Directors,
HARVEY SANDERS,
Chairman
<PAGE> 3
NAUTICA ENTERPRISES, INC.
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished with respect to the solicitation of
proxies by the Board of Directors of Nautica Enterprises, Inc. (the "Company")
for the Annual Meeting of Stockholders of the Company to be held at 9:30 A.M. on
July 1, 1998 and at any adjournment or adjournments thereof, at 40 West 57th
Street, 7th floor, New York, New York. The approximate date on which the proxy
statement and form of proxy was first sent or given to stockholders was June 5,
1998.
Proxies in the accompanying form which are properly executed and duly
returned to the Board of Directors will be voted at the meeting. Any proxy may
be revoked by the stockholder at any time prior to its being voted. Such
revocation shall be effective upon receipt of a written notice by the Secretary
of the Company at the address specified above.
The expense of the solicitation of proxies for the meeting, including the
cost of mailing, will be borne by the Company. In addition to mailing copies of
the enclosed proxy materials to stockholders, the Company may request persons,
and reimburse them for their expenses with respect thereto, who hold stock in
their names or custody or in the names of nominees for others to forward copies
of such materials to those persons for whom they hold stock of the Company and
to request authority for the execution of the proxies. In addition to the
solicitation of proxies by mail, it is expected that some of the officers,
directors, and regular employees of the Company, without additional
compensation, may solicit proxies on behalf of the Board of Directors by
telephone, telefax, and personal interview.
As of the close of business on May 22, 1998, the date for determining the
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournment or adjournments thereof, there were issued and outstanding
39,453,421 shares of the Company's Common Stock, the holders thereof being
entitled to one vote per share. The presence at the Annual Meeting of a majority
of such shares, in person or by proxy, are required for a quorum.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to, each matter to be acted upon at the Annual Meeting. Shares
represented by the proxy will be voted and, where the solicited stockholder
indicates a choice on the form of proxy with respect to any matter to be acted
upon, the shares will be voted as specified.
ELECTION OF DIRECTORS
The persons named in the accompanying proxy intend to vote for the election
as directors the seven nominees listed herein. All of the nominees have
consented to serve if elected. All directors will be elected to hold office
until the next annual meeting of stockholders, and, in each case, each director
will serve until his successor is elected and qualified or until his earlier
resignation or removal. If a nominee should be unable to
<PAGE> 4
act as a director, which is not anticipated, the persons named in the proxy will
vote for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. Each of the nominees presently serves as a director.
Set forth below is biographical information for each of the nominees.
Unless otherwise indicated, each has served in his stated capacity for the last
five years:
Robert B. Bank, age 51, has been a Director of the Company since 1989. He
is President of Robert B. Bank Advisory Services, a venture capital firm, a
Director of Jos. A. Bank Clothiers, Inc., a publicly held retailer of men's
tailored clothing, and a Director of several privately held companies.
David Chu, age 43, joined the Company in 1984 and became a Director in
1987. He has served as Executive Vice President of the Company since 1989 and
President of Nautica International, Inc. and Nautica Apparel, Inc., each wholly
owned subsidiaries of the Company, since 1984.
George Greenberg, age 76, has been a Director of the Company since 1988. He
is Vice Chairman and a Director of Guilford Mills, Inc., a textile manufacturer.
Mr. Greenberg is the father-in-law of Harvey Sanders, Chairman of the Board and
President of the Company.
Israel Rosenzweig, age 50, has been a Director of the Company since 1990.
He was a Director of Bankers Federal Savings FSB, a savings and loan association
from 1993 through April 1997, and its Executive Vice President and Chief Lending
Officer from November 1994 through April 30, 1997. From May 1, 1997 to March 31,
1998, Mr. Rosenzweig was associated on a full-time basis with Gould Investors
L.P., a limited partnership which owns a diverse real estate portfolio. Since
April 1, 1998, Mr. Rosenzweig has served as President of BRT Funding Corp., a
wholly-owned subsidiary of BRT Realty Trust engaged in mortgage lending
activities. He was a Trustee of BRT Realty Trust from 1984 to December 1996, its
President and Chief Executive Officer from 1984 to March 1995, and Vice Chairman
of its Board from March 1996 to December 1996.
Harvey Sanders, age 48, has been President, Chief Executive Officer and a
Director of the Company since 1977 and Chairman of the Board since October 1993.
Charles H. Scherer, age 54, has been a Director of the Company since May
1994. He is managing partner of Hughes Hubbard & Reed LLP, an international law
firm which provides legal services to the Company.
Ronald G. Weiner, 52, has been a Director of the Company since October
1995. He is President of Perelson Weiner, a certified public accounting firm
based in New York City.
Shares represented by proxies solicited by the Board of Directors will,
unless contrary instructions are given, be voted in favor of the election as
Directors of the nominees named above. If a stockholder wishes to withhold
authority to vote for any nominee, such stockholder can do so by following the
directions set forth on the form of proxy solicited by the Board of Directors or
on the ballot distributed at the Annual Meeting if such stockholder wishes to
vote in person. Directors shall be elected by a plurality vote of the shares of
Common Stock present in person or represented by proxy at the meeting.
Abstentions and broker non-votes will not have the effect of votes in opposition
to a person nominated as a Director.
During fiscal year 1998, the Board of Directors held six meetings. The
Compensation Committee of the Board of Directors is comprised of Messrs. Bank,
Rosenzweig and Weiner. The Compensation Committee
2
<PAGE> 5
reviews the Company's compensation policies and practices and develops
recommendations with respect to compensation for the Company's senior
executives. The Audit Committee of the Board of Directors is comprised of
Messrs. Bank, Scherer, Rosenzweig and Weiner. The Audit Committee reviews the
audit plan with the Company's independent accountants, the scope and results of
their audit and other related audit and accounting issues. During fiscal year
1998, the Compensation Committee held two meetings and the Audit Committee held
one meeting. The Board of Directors as a whole proposes nominees for election to
the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock as of May 14, 1998 (March 31, 1998 with respect to
The Equitable Companies Incorporated) by all stockholders known to the Company
to have been beneficial owners of more than five percent of its Common Stock, by
each nominee for Director, by each of the executive officers of the Company
included in the Summary Compensation Table below, and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT BENEFICIALLY PERCENT OF
BENEFICIAL OWNER(1) OWNED(2)(3) CLASS(%)
------------------- ------------------- ----------
<S> <C> <C>
Robert B. Bank......................................... 48,150 *
David Chu.............................................. 1,070,263 2.6
George Greenberg....................................... 27,150 *
Jeffrey Matthews....................................... 39,488 *
W. Donald Pennington................................... 9,700 *
Israel Rosenzweig...................................... 14,400 *
Harvey Sanders......................................... 4,041,040 10.0
Charles H. Scherer..................................... 16,500 *
Ronald G. Weiner....................................... 10,500 *
John Wetzler........................................... 67,200 *
All Directors and Executive Officers as a group........ 5,344,351 12.8
The Equitable Companies Incorporated(4)................ 4,398,392 11.1
</TABLE>
- ---------------
* Indicates holdings of less than 1%.
(1) The ages of the executive officers of the Company included above who are not
Directors of the Company are as follows: Jeffrey Matthews -- 50; W. Donald
Pennington -- 53; and John Wetzler -- 52. The address for each of the
executives named in the table above is c/o Nautica Enterprises,Inc., 40 West
57th Street, New York, New York 10019.
(2) Directly and indirectly. The inclusion of securities owned by others as
beneficially owned by the respective nominees and officers does not
constitute an admission that such securities are beneficially
3
<PAGE> 6
owned by them. All of the named individuals have, except as set forth in
Note 3 below, sole voting and investment powers with respect to the
aforesaid shares.
(3) Includes the following shares which may be acquired pursuant to existing
stock options which are exercisable on or before July 20, 1998: Robert B.
Bank -- 48,150; David Chu -- 1,031,564; George Greenberg -- 8,400; Jeffrey
Matthews -- 39,488; W. Donald Pennington -- 11,700; Israel
Rosenzweig -- 14,400; Harvey Sanders -- 904,600; Charles H.
Scherer -- 12,000; Ronald G. Weiner -- 6,000 and John Wetzler -- 67,200.
With respect to Mr. Sanders, includes 1,200,000 shares owned by the Harvey
Sanders Grantor Retained Income Trust. Such trust has sole voting and
investment power with respect to such shares.
(4) The address for The Equitable Companies Incorporated ("Equitable") and its
subsidiaries as set forth below is 1290 Avenue of the Americas, New York,
New York 10104. All of the shares of which Equitable is deemed to have
beneficial ownership of are held by subsidiaries of Equitable as follows:
The Equitable Life Assurance Society of the United States, which is deemed
to have sole voting and sole dispositive power to 447,300 shares; Alliance
Capital Management L.P., which is deemed to have sole voting power to
2,267,700 shares, shared voting power to 1,650,200 shares and sole
dispositive power to 3,950,900 shares; and, Donaldson, Lufkin & Jenrette
Securities Corporation, which is deemed to have sole voting power to 192
shares, sole dispositive power to 192 shares, and shared dispositive power
to 200 shares.
4
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended February 28, 1997 and
1998 and February 29, 1996, the cash compensation paid by the Company and its
subsidiaries, to the Company's Chief Executive Officer and each of the four most
highly compensated executive officers of the Company other than the Company's
Chief Executive Officer as of February 28, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ------------ ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
--------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Harvey Sanders............................... 1998 822,050 921,000 175,000 2,513
Chairman of the Board, 1997 770,370 891,000 200,000 2,479
Chief Executive Officer and President 1996 750,140 742,863 180,000 2,461
David Chu.................................... 1998 796,547 734,900 175,000 5,411
Executive Vice President and President -- 1997 697,463 741,000 200,000 5,536
Nautica International, Inc. and 1996 657,927 657,208 180,000 5,383
Nautica Apparel, Inc., wholly owned
subsidiaries of the Company
Jeffrey Matthews............................. 1998 225,750 41,000 3,000 2,250
President -- Nautica Furnishings, Inc., 1997 215,000 31,000 3,000 2,250
a wholly owned subsidiary of the Company 1996 209,000 1,000 -- 2,250
W. Donald Pennington......................... 1998 220,869 121,000 7,500 2,250
Chief Financial Officer 1997 210,961 66,000 12,000 2,250
1996 201,538 51,000 -- --
John Wetzler................................. 1998 285,000 261,000 40,000 2,250
President -- Nautica Retail USA, Inc., 1997 242,780 211,000 40,000 2,250
a wholly owned subsidiary of the Company 1996 231,218 161,000 45,000 2,262
</TABLE>
- ---------------
(1) "All Other Compensation" is comprised of contributions made by the Company
to the named executives pursuant to the Company's 401(k) Plan and, with
respect to Messrs. Sanders and Chu, an additional amount of $263 and $3,161,
respectively, representing the economic value attributable to each of them
for split-dollar life insurance.
5
<PAGE> 8
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during fiscal year 1998 under the Company's 1996 Stock Incentive Plan to
each of the Company's executives listed in the Summary Compensation Table above
receiving stock options during such period.
The table also illustrates the Grant Date Present Value of those stock
options based upon the Black-Scholes Model of Valuation, without giving effect
to the non-transferability or vesting requirements of the options.
No matter what theoretical value is placed on a stock option on the date of
grant, its ultimate value will be dependent on the market value of the Company's
Common Stock at a future date. If the price of the Company's Common Stock
increases, all stockholders will benefit commensurably with the optionees.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE VALUE($)(2)
---- --------------- --------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Harvey Sanders............. 175,000 21.35 24.50 3/5/07 2,509,500
David Chu.................. 175,000 21.35 24.50 3/5/07 2,509,500
Jeffrey Matthews........... 3,000 .37 24.50 3/5/07 43,020
John Wetzler............... 40,000 4.88 24.50 3/5/07 573,600
W. Donald Penington........ 7,500 .91 24.50 3/5/07 107,550
</TABLE>
- ---------------
(1) All options were granted at market value at the date of grant, March 5,
1997, for a term of ten years, subject to earlier termination in certain
instances related to termination of employment. All option grants are
exercisable cumulatively in five equal annual installments commencing one
year following the date of grant.
(2) The amounts shown assume a value based on the Black-Scholes Model of
Valuation. The assumptions used were as follows: volatility -- 50%;
risk-free rate of return -- 5.8%; and, assumed time of exercise -- 7 years.
No adjustments were made for non-transferability or risk-of-forfeiture.
There can be no assurance that the rate of appreciation assumed for purposes
of this table will be achieved. The stock options will have no value to the
executives named above or other optionees if the price of the Company's
Common Stock does not increase above the exercise price of the option.
6
<PAGE> 9
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Company's
executives listed in the Summary Compensation Table above, concerning the
exercise of options during the last fiscal year and unexercised options held as
of the end of the 1998 fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Harvey Sanders.......... -- -- 717,700/554,300 16,456,436/6,422,855
David Chu............... 375,000 9,118,001 858,164/540,800 22,049,039/6,093,887
Jeffrey Matthews........ 25,000 710,605 39,488/ 4,200 1,041,3361/ 23,605
W. Donald Pennington.... -- -- 4,800/ 20,700 63,026/ 171,065
John Wetzler............ -- -- 35,900/107,100 620,003/1,096,741
</TABLE>
DIRECTOR COMPENSATION
During fiscal year 1998, each nonemployee Director received compensation of
$2,000 for each Board and committee meeting attended, and an annual fee of
$20,000. No fees are payable to officers and employees of the Company who serve
as Directors. During fiscal year 1998, Messrs. Bank, Greenberg, Rosenzweig,
Scherer and Weiner each were granted 4,000 options at an exercise price of
$24.50 per share. The options are exercisable cumulatively in two equal annual
installments commencing one year from the date of grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Messrs. Sanders and Chu have entered into an agreement
which provides that upon the death of either of them, the Company will purchase
a portion of the shares of Common Stock of such stockholder. The Company has
obtained policies of life insurance on the lives of such stockholders for the
purpose of utilizing the proceeds from such insurance for the purchase of the
shares. The agreement provides for the Company to purchase the shares of the
deceased stockholder at a value which is equal to the average of the last sale
price as reported on the National Market List of the NASDAQ (or the closing
price if the shares are listed on a national securities exchange) for the thirty
trading days prior to the date of death of the deceased stockholder. The
Company's obligation to purchase the Common Stock of the deceased stockholder is
limited to the life insurance proceeds received by the Company on the death of
such stockholder. The agreement also provides, as soon after the death of the
stockholder as is practicable, for the filing of a registration statement with
the Securities and Exchange Commission for a secondary offering to provide for
the sale of the balance of the shares owned by the deceased stockholder.
Mr. David Chu, Executive Vice President of the Company and President of
Nautica Apparel, Inc. and Nautica International, Inc., both wholly owned
subsidiaries of the Company, is entitled to receive 50% of the net income
Nautica Apparel, Inc. receives from all royalty income earned with respect to
the Nautica name
7
<PAGE> 10
and trademarks. For the fiscal year ended February 28, 1998, Mr. Chu earned net
royalty income of $5,737,858. In addition, Mr. Chu is entitled to receive up to
1.5% of the net sales of certain new products.
During fiscal year 1998, the Company paid $523,243 to the law firm of
Hughes Hubbard & Reed LLP for professional services rendered to the Company.
Samuel Sultanik, Esq., the brother-in-law of Harvey Sanders, Chairman of the
Board, Chief Executive Officer and President of the Company, is a partner of
Hughes Hubbard & Reed LLP and Charles H. Scherer, Esq., a Director of the
Company, is managing partner of Hughes Hubbard & Reed LLP.
During fiscal year 1998, the Company paid $288,859 to the firm of Tuller
McNealus Feld and Chu for interior design and related services provided to the
Company. Mr. Peter Chu, the brother of David Chu, Executive Vice President of
the Company, is a stockholder and Vice President in such firm.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
its Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten percent stockholders are required by the Commission to furnish
the Company with copies of all Section 16(a) forms they file.
The Company believes that, based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no reports on Form 5 were required for those persons, during fiscal year
1998 all filing requirements applicable to its officers, directors and greater
than ten percent stockholders were complied with.
EMPLOYEE CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has entered into agreements with Messrs. Sanders, Chu and
Wetzler providing that in the event of a change in control of the Company, as
defined in the agreements, each has the right to receive a lump sum payment upon
termination of employment other than for cause or permanent disability or
resignation for good reason within three years after the change in control. At
February 28, 1998, the maximum amount payable to Mr. Sanders, Mr. Chu and Mr.
Wetzler under such agreements was $5,189,700, $4,574,900 and $1,718,400,
respectively.
The Company has entered into split-dollar agreements with trusts
established by each of Mr. Sanders and Mr. Chu. Pursuant to each of the
agreements, the Company pays the annual premium on specified life insurance
policies owned by each of the trusts, net of the amount of the "economic
benefit" attributable to each of the employees. The amount of the premiums paid
by the Company constitutes indebtedness from each of the trusts to the Company
and is secured by collateral assignments of each of the insurance policies to
the Company. The annual premium payable by the Company for the benefit of Mr.
Sanders' trust is $57,230 and for Mr. Chu's trust, $47,000. Upon termination of
each of the agreements, the Company is entitled to receive from each of the
trusts the amount equal to the aggregate premiums which it has paid. The face
value of the policy for Mr. Sanders' trust is $5,000,000 and for Mr. Chu's
trust, $4,850,000.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert B. Bank, Israel Rosenzweig and Ronald G. Weiner served as members of
the compensation committee (the "Compensation Committee") of the Board of
Directors during fiscal year 1998.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors consists of three
non-employee directors. The Committee reviews the Company's executive
compensation policies and practices and develops recommendations to the Board
with respect to compensation for the Company's senior executives. In fiscal year
1998, the Board adopted an executive compensation program to provide a framework
for administering the Company's executive compensation program. The Committee
also administers the Company's 1996 Stock Incentive Plan.
The goals of the Company's compensation policies are as follows:
- to attract, retain, reward and motivate executive officers and employees
by establishing compensation levels generally competitive with the
marketplace;
- to align executive compensation with the Company's business objectives;
- to position compensation to reflect the individual's performance as well
as the level of responsibility, skill and strategic value of the
executive; and
- to align the interests of the Company's employees with those of its
stockholders.
In setting compensation, the Compensation Committee reviews, with the
assistance of independent compensation consultants, available information for
similar positions or levels at comparable companies. Such companies include a
diverse range of apparel manufacturers with sales within, below and above the
range of sales of the Company. The Compensation Committee has adopted a policy
to seek to maintain executive compensation within the deduction cap of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Company's executive compensation program consists of three main
components: base salary, cash bonus or incentive awards, and long-term
stock-based incentives. Base salaries are determined with reference to a
competitive norm and job grades with consideration given to the executive's
strategic value, experience, proficiency and performance. Ranges of salary are
assigned to each grade with a minimum salary representing the lowest entry
level, a midpoint salary representing a market value of experienced good
performers and a maximum salary representing the highest value for the most
experienced and proficient employees. Cash bonuses to eligible employees are
based upon a formula to provide a direct "pay-for-performance" vehicle. The
annual bonus also serves to focus executives on those activities that most
directly affect shareholder value which are within their control and for which
they are held accountable. At the beginning of the fiscal year, specific
performance measures and goals are established based upon corporate and/or
business unit profitability and individual performance. Each participant is
assigned a target bonus award opportunity that relates to his or her level. That
target award level represents the level of bonus payment the participant can
expect to earn in the event all performance goals are achieved at 100% during
the ensuing fiscal year. When performance levels exceed or fall below
expectations, actual awards are proportionately increased or decreased
9
<PAGE> 12
from the target, with bonuses "at risk." In fiscal year 1998, the target levels
established at the corporate and business unit levels were based upon earnings
before income taxes.
With respect to certain senior executives, including Harvey Sanders, the
Chairman of the Board, President and Chief Executive Officer of the Company, and
David Chu, the Executive Vice President of the Company, annual incentive award
opportunities are set in accordance with the Company's Incentive Compensation
Plan (the "Plan"). At the start of each fiscal year, the Compensation Committee,
in consultation with management, establishes target levels of either earnings
before income taxes, net earnings and/or return on equity for the Company or a
business unit. In fiscal year 1998, threshold levels of earnings before income
taxes were established. If the designated minimum level of earnings before
income taxes was not achieved, the participants would have received no incentive
award for fiscal year 1998 performance under the Plan (although in its
discretion, the Compensation Committee could have authorized an award outside of
the Plan). During such year, the threshold level was exceeded and the
participants received an incremental proportionately greater payment than the
minimum. The Compensation Committee has established target levels for fiscal
year 1999 based on earnings before income taxes and has granted incentive award
opportunities for such year to each of Messrs. Sanders and Chu.
The Company's senior executives are eligible to receive stock options
and/or restricted stock in accordance with the Company's 1996 Stock Incentive
Plan. The objectives of such participation are to align executive and
stockholder long term interests and to enable executives to develop a stock
ownership position in the Company. The Compensation Committee has the
responsibility of granting stock options and restricted stock awards to
executive and management employees. In granting stock options, the Compensation
Committee takes into account Company performance, subsidiary performance and
individual performance, utilizing the same factors as those used in the
determination of cash compensation. The Compensation Committee also takes into
account the number of options held by an individual and the total number of
stock options outstanding. All of the stock options granted to senior executives
in fiscal year 1998 were exempt from the deduction cap of Section 162(m) of the
Code in accordance with the regulations promulgated thereunder.
The Chairman of the Board, President and Chief Executive Officer of the
Company is Harvey Sanders. The criteria by which the Compensation Committee
determines salary, bonus and the grant of stock options for senior executives,
as set forth above, is also utilized by the Compensation Committee in
determining cash compensation and stock option awards for Mr. Sanders.
Compensation Committee
Robert B. Bank
Israel Rosenzweig
Ronald G. Weiner
10
<PAGE> 13
PERFORMANCE GRAPH
The following performance graph assumes $100 invested in Nautica
Enterprises, Inc. Common Stock, the NASDAQ Stock Market (U.S.) and S&P Textiles
Index on March 1, 1993. Where applicable, it assumes reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
NAUTICA ENTERPRISES, INC., NASDAQ STOCK MARKET (U.S.) AND
S&P TEXTILES INDEX
FOR THE FIVE YEARS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
NASDAQ STOCK
MEASUREMENT PERIOD 'NAUTICA MARKET (U.S.) S&P TEXTILES
(FISCAL YEAR COVERED) ENTERPRISES, INC.' COMPOSITE INDEX
<S> <C> <C> <C>
1993 100 100 100
1994 238 118 87
1995 296 120 83
1996 585 167 96
1997 714 199 135
1998 823 273 151
</TABLE>
APPOINTMENT OF ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP as the independent
public accountants who will make an examination of the accounts of the Company
for the year ending February 28, 1999. A representative from Grant Thornton LLP
is expected to be present at the annual meeting to respond to appropriate
questions and to make a statement if that representative so desires.
PROPOSALS BY STOCKHOLDERS -- 1999 ANNUAL MEETING
All proposals by stockholders intended to be presented at the next annual
meeting of stockholders (to be held in July 1999) must be received by the
Company at its office at 40 West 57th Street, New York, New York 10019, no later
than February 28, 1999 in order to be included in the proxy statement and form
of proxy
11
<PAGE> 14
relating to such meeting. All such proposals must comply with applicable
Securities and Exchange Commission rules and regulations.
OTHER BUSINESS
Management is not aware of any matters to be presented at the meeting other
than those set forth in this Proxy Statement. However, should any other business
properly come before the meeting, or any adjournment or adjournments thereof,
the enclosed Proxy confers upon the persons entitled to vote the shares
represented by such Proxies, discretionary authority to vote the same in respect
to any such other business in accordance with their best judgment in the
interest of the Company.
MANAGEMENT UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST BY ANY SUCH STOCKHOLDER BY FIRST CLASS MAIL WITHIN ONE
BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULE FILED THEREWITH.
WRITTEN REQUEST FOR SUCH REPORT SHOULD BE ADDRESSED TO NEAL S. NACKMAN, VICE
PRESIDENT FINANCE, NAUTICA ENTERPRISES, INC., 40 WEST 57TH STREET, NEW YORK, NEW
YORK 10019. ORAL REQUESTS SHALL BE MADE BY TELEPHONE TO SUCH PERSON AT (212)
541-5990.
Stockholders are urged to sign and date the enclosed proxy, solicited on
behalf of the Board of Directors, and return it at once in the envelope enclosed
for that purpose. Unless a contrary direction is indicated, Proxies will be
voted for the election as directors of the nominees listed in this Proxy
Statement and for the other proposals contained in this Proxy Statement. The
Proxy does not affect the right to vote in person at the meeting and may be
revoked by the stockholder who executed it any time prior to its being voted.
By Order of the Board of
Directors
HARVEY SANDERS,
Chairman
June 5, 1998
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<PAGE> 15
PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
NAUTICA ENTERPRISES, INC.
PROXY -- Annual Meeting of Stockholders, July 1, 1998
The undersigned hereby appoints Harvey Sanders and David Chu, and each of them,
proxies and attorneys-in-fact of the undersigned, with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the shares of Common Stock of Nautica Enterprises, Inc. held of
record by the undersigned on May 22, 1998 at the Annual Meeting of Stockholders
to be held on July 1, 1998 or any adjournment thereof.
(Continued and to be dated and signed on the reverse side)
<PAGE> 16
Nautica Enterprises, Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
For all
Except as
For Withheld Listed Below
1. ELECTION OF DIRECTORS: / / / / / /
Nominees: Robert B. Bank, David Chu,
George Greenberg, Israel Rosenzweig,
Harvey Sanders, Charles H. Scherer
and Ronald G. Weiner.
INSTRUCTION: To withhold authority
to vote for any individual nominee
write that nominee's name in the
blank space below.
____________________________________________________________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL "1".
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated:__________________________________
________________________________________
Signature of Stockholder(s)
Please sign exactly as your name or names
appear to the left hereof. When shares are
held by joint tenants, both should sign.
When signing as attorney, as executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer. If
a partnership, please sign in partnership
name by authorized person.
