<PAGE> 1
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 [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
NAUTICA ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-12.
(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 1, 1999
To the Stockholders of
NAUTICA ENTERPRISES, INC.
The Annual Meeting of Stockholders of Nautica Enterprises, Inc. will be
held on July 1, 1999 at the offices of the Company, 40 West 57th Street, New
York, New York, at 10:00 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;
(2) To reapprove material terms of the Nautica Enterprises, Inc. Incentive
Compensation Plan as required by Section 162(m) of the Internal Revenue
Code; and
(3) 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 24, 1999 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 10:00 a.m.
on July 1, 1999 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 1,
1999.
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 24, 1999, 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
34,572,721 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 52, 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 44, 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 77, 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 51, 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, and as Senior Vice President of BRT
Realty Trust. 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 49, 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 55, 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 CPA, 53, 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 1999, the Board of Directors held seven 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
1999, 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 21, 1999 (May 1, 1999 with respect to FMR
Corp.) 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>
AMOUNT BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER(1) OWNED(2)(3) CLASS(%)
- --------------------------- ------------------- ----------
<S> <C> <C>
Robert B. Bank........................................... 64,550 *
David Chu................................................ 1,254,416 3.5
George Greenberg......................................... 48,984 *
Jeffrey Matthews......................................... 34,888 *
Paulette McCready........................................ 63,050 *
Israel Rosenzweig........................................ 20,800 *
Harvey Sanders........................................... 4,227,440 11.9
Charles H. Scherer....................................... 22,300 *
Ronald G. Weiner......................................... 17,500 *
John Wetzler............................................. 102,400 *
All Directors and Executive Officers as a group.......... 5,856,328 15.7
FMR Corp.(4)............................................. 4,156,200 12.0
</TABLE>
- ---------------
* Indicates holdings of less than 1%.
(1) 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, 1999: Robert B.
Bank -- 54,550; David Chu -- 1,217,964; George Greenberg -- 14,800; Jeffrey
Matthews -- 34,888; Paulette McCready -- 34,700; Israel Rosenzweig --
20,800; Harvey Sanders -- 1,091,000; Charles H. Scherer -- 17,800; Ronald G.
Weiner -- 10,000; and, John Wetzler -- 102,400. 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 FMR Corp. is 82 Devonshire Street, Boston, Massachusetts
02109. FMR Corp. is deemed to have sole voting power to 325,900 shares and
sole dispositive power to 4,156,200 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 27, 1999,
and February 28, 1998 and 1997, 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 27, 1999.
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............................... 1999 846,022 727,900 200,000 2,554
Chairman of the Board, 1998 822,050 921,000 175,000 2,513
Chief Executive Officer and President 1997 770,370 891,000 200,000 2,479
David Chu.................................... 1999 814,730 582,500 200,000 5,569
Executive Vice President and 1998 796,547 734,900 175,000 5,411
President/CEO -- Nautica International, 1997 697,463 741,000 200,000 5,536
Inc. and Nautica Apparel, Inc.,
wholly-owned subsidiaries of the Company
Jeffrey Matthews............................. 1999 232,950 111,000 6,000 2,250
President -- Nautica Furnishings, Inc., 1998 225,750 41,000 3,000 2,250
a wholly-owned subsidiary of the Company 1997 215,000 31,000 3,000 2,250
Paulette McCready............................ 1999 379,259 211,000 33,500 2,250
President -- Nautica Jeans Company, 1998 341,089 201,000 25,000 2,250
a wholly-owned subsidiary of the Company 1997 229,500 251,000 24,000 2,250
John Wetzler................................. 1999 293,550 161,000 42,000 2,250
President -- Nautica Retail USA, Inc., 1998 285,000 261,000 40,000 2,250
a wholly owned subsidiary of the Company 1997 242,780 211,000 40,000 2,250
</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, additional amount of $304 and $3,319,
respectively, representing the economic value attributable to each of them
for split-dollar life insurance.
5
<PAGE> 8
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during fiscal year 1999 under the Company's 1996 Stock Incentive Plan to
each of the Company's executives listed in the Summary Compensation Table above
receiving stock options during such period.
The table also illustrates the Grant Date Present Value of those stock
options based upon the Black-Scholes Model of Valuation, without giving effect
to the non-transferability or vesting requirements of the options.
No matter what theoretical value is placed on a stock option on the date of
grant, its ultimate value will be dependent on the market value of the Company's
Common Stock at a future date. If the price of the Company's Common Stock
increases, all stockholders will benefit commensurably with the optionees.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE VALUE($)(2)
---- --------------- --------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Harvey Sanders............. 200,000 21.15 25.31 4/28/08 2,226,000
David Chu.................. 200,000 21.15 25.31 4/28/08 2,226,000
Jeffrey Matthews........... 6,000 .63 25.31 4/28/08 66,780
Paulette McCready.......... 33,500 3.54 25.31 4/28/08 372,855
John Wetzler............... 42,000 4.44 25.31 4/28/08 467,460
</TABLE>
- ---------------
(1) All options were granted at market value at the date of grant, April 28,
1998, for a term of ten years, subject to earlier termination in certain
instances related to termination of employment. All option grants are
exercisable cumulatively in five equal annual installments commencing one
year following the date of grant.
(2) The amounts shown assume a value based on the Black-Scholes Model of
Valuation. The assumptions used were as follows: volatility -- 55%;
risk-free rate of return -- 6.0%; and, assumed time of exercise -- 7 years.
No adjustments were made for non-transferability or risk-of-forfeiture.
There can be no assurance that the rate of appreciation assumed for purposes
of this table will be achieved. The stock options will have no value to the
executives named above or other optionees if the price of the Company's
Common Stock does not increase above the exercise price of the option.
6
<PAGE> 9
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Company's
executives listed in the Summary Compensation Table above, concerning the
exercise of options during the last fiscal year and unexercised options held as
of the end of the 1999 fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Harvey Sanders.......... -- -- 904,600/567,400 7,661,739/599,916
David Chu............... -- -- 1,031,564/567,400 11,171,620/599,916
Jeffrey Matthews........ 7,000 143,570 32,488/ 10,200 414,748/ 0
Paulette McCready....... 28,350 297,021 9,800/ 82,300 0/ 73,596
John Wetzler............ -- -- 67,200/282,663 117,800/ 96,822
</TABLE>
DIRECTOR COMPENSATION
During fiscal year 1999, 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 1999, each of Messrs. Bank, Greenberg,
Rosenzweig, Scherer and Weiner were granted 4,000 options at an exercise price
of $25.31 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 that
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 27, 1999, Mr. Chu earned net
royalty income of $5,281,211. Through a separate arrangement, Mr. Chu is
entitled to receive, subject to certain conditions, up to 1.5% of the net sales
of certain new products. For the year ended February 27, 1999, Mr. Chu received
payments of $15,195 based upon the net sales of such products.
During fiscal year 1999, the Company paid $738,192 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 1999, the Company paid $297,657 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
1999 all filing requirements applicable to its officers, directors and greater
than ten percent stockholders were complied with, except that Mr. Weiner
inadvertently filed one late report for two purchases of Common Stock of the
Company.
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 27, 1999, the maximum amount payable to Mr. Sanders, Mr. Chu and Mr.
Wetzler under such agreements was $4,734,400, $4,186,300 and $1,454,500,
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, $48,113. Upon termination of
each of the agreements, the Company is entitled to receive
8
<PAGE> 11
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, $4,950,000.
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 1999.
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 Incentive Compensation Plan and the 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
9
<PAGE> 12
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 from the target, with bonuses "at risk." In fiscal year
1999, the target levels established at the corporate and business unit levels
were based upon earnings.
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,
net earnings and/or return on equity for the Company or a business unit. In
fiscal year 1999, threshold levels of earnings were established. If the
designated minimum level of earnings was not achieved, the participants would
have received no incentive award for fiscal year 1999 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 2000 based on earnings 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 1999 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, 1994. 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 27, 1999
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET
NAUTICA ENTERPRISES, INC. (U.S.) S&P TEXTILES INDEX
------------------------- ------------------- ------------------
<S> <C> <C> <C>
'1994' 100.00 100.00 100.00
'1995' 124.50 101.41 96.27
'1996' 246.02 141.30 111.35
'1997' 300.01 168.54 156.12
'1998' 345.76 230.61 174.69
'1999' 180.01 300.16 138.58
</TABLE>
11
<PAGE> 14
PROPOSAL TO REAPPROVE THE MATERIAL TERMS OF THE COMPANY'S
INCENTIVE COMPENSATION PLAN
In 1994, the Stockholders approved the Nautica Enterprises, Inc. Incentive
Compensation Plan (the "Plan") in order to comply with the provisions of Section
162(m) of the Internal Revenue Code, as amended (the "Code"). The provisions of
Section 162(m) require that the material terms of the Plan, as defined in such
provisions, be disclosed to and reapproved by stockholders no less often than
approximately every five years in order for the Company to continue to obtain a
deduction for awards paid under the Plan to any executive officer of the Company
whose compensation for the year is in excess of $1 million. Accordingly, the
Stockholders are being requested to again approve the material terms of the
Plan. If approved, and unless the material terms of the Plan are subsequently
changed, the Plan will meet the stockholder requirements of Section 162(m) until
2004.
Material terms of the Plan for eligible executives are outlined below.
Eligible Participants. The Committee of the Plan selects all participants
under the Plan from officers and other key employees of the Company and its
subsidiaries or other entities in which it has a significant equity interest.
Performance Goals. No later than the 90th day of each performance period,
the Committee of the Plan will establish for each participant the objective
performance goals based on earnings before income taxes, net earnings and return
on equity for the Company or business unit. The Committee must certify the
attainment of the applicable performance goal before an award is paid.
Maximum Payments. The maximum payment that can be made to a participant
for any annual award is 5% of the Company's operating profit for the applicable
Plan year. The maximum individual payment for any long-term award is 2% of the
Company's cumulative operating profit for the applicable three-year performance
period. The Committee may at any time reduce or eliminate awards otherwise
payable under the Plan.
Amendments. The Committee may amend the Plan, provided that no amendment
may be made that would increase the maximum individual payment limits for annual
and long-term awards or that would otherwise cause the Plan not to comply with
the performance-based requirements of Section 162(m) of the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" REAPPROVAL OF THE MATERIAL
TERMS OF THE INCENTIVE COMPENSATION PLAN.
A vote in favor of this proposal will be treated as a vote to approve each
of the material terms of the Incentive Compensation Plan described above for
purposes of the exemption from the limitations of Section 162(m) of the Code.
The affirmative vote of the majority of the shares present in person or
represented by proxy at the Annual Meeting is required for approval. Abstentions
will have the same effect as a vote against the proposal; broker non-votes will
have no effect on the outcome of the vote.
12
<PAGE> 15
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 March 4, 2000. 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 -- 2000 ANNUAL MEETING
All proposals by stockholders intended to be presented at the next annual
meeting of stockholders (to be held in July 2000) must be received by the
Company at its office at 40 West 57th Street, New York, New York 10019, no later
than March 1, 2000 in order to be included in the proxy statement and form of
proxy 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. VERBAL REQUESTS SHOULD 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 1, 1999
13
<PAGE> 16
EXHIBIT A
NAUTICA ENTERPRISES, INC.
INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to recognize and reward key employees of the
Company for the attainment of established performance goals reflecting both
annual and long-term result which further the success of the Company.
SECTION 2. DEFINITIONS
For Plan purposes, the following terms shall have the following respective
meanings:
(a) "Award" means a payment or payment opportunity granted to a Participant
pursuant to Section 5 of the Plan.
(b) "Board" means the Board of Directors of Nautica Enterprises, Inc.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Committee" means a committee designated by the Board and comprised of
two or more non-employee members of the Board, each of whom is an "outside
director" within the meaning of Section 162(m) of the Code.
(e) "Company" means Nautica Enterprises, Inc., including any subsidiary and
division, and any other entity in which the Company has a significant equity
interest, as determined by the Committee.
(f) "Earnings Before Income Taxes" means such amount as is reported in the
Company's annual report to stockholders, or comparable amount for a subsidiary
or division, for the applicable period.
(g) "Net Earnings" means such amount as is reported in the Company's annual
report to stockholders, but before extraordinary items and the cumulative effect
of accounting changes, for the applicable period, or comparable amount for a
subsidiary or division, for the applicable period.
(h) "Operating Profit" means such amount of income from operations as is
reported in the Company's annual report to stockholders, or comparable amount
for a subsidiary or division, for the applicable period.
(i) "Participant" means an employee of the Company designated by the
Committee to receive an Award.
(j) "Performance Period" means either, as designated by the Committee, a
single fiscal year of the Company, or three successive fiscal years of the
Company, or such other period designated by the Committee.
(k) "Plan" means the Incentive Compensation Plan as set forth herein and as
may be amended from time to time pursuant to Section 14.
<PAGE> 17
(l) "Return on Equity" means the quotient resulting from dividing Net
Earnings, by average stockholders' equity, as reported in the Company's annual
report to stockholders, for the applicable period.
SECTION 3. ADMINISTRATION
(a) The Committee shall have full power and authority to construe,
interpret and administer the Plan and to make rules and regulations subject to
the provisions of the Plan. All decisions, actions, determinations and
interpretations of the Committee shall be made in its sole discretion and shall
be final, conclusive and binding on all parties.
(b) No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by him, or on his behalf, in his capacity
as a member of the Committee or for any mistake of judgment made in good faith.
To the extent permitted by law, the Company shall indemnify and hold harmless
each member of the Committee and each other officer, employee or director of the
Company to whom any duty or power relating to the administration of the Plan has
been delegated, against any cost or expense (including counsel and related fees)
or liability (including any sum paid in settlement of a claim with approval of
the Committee) arising out of any act or omission in connection with the Plan
unless arising out of such person's own fraud, gross negligence, willful
misconduct or bad faith.
SECTION 4. ELIGIBILITY FOR PARTICIPATION
(a) The Committee shall select Participants from among officers and other
key employees of the Company. No member of the Committee or other non-employee
member of the Board shall participate in the Plan.
(b) The Committee may also grant an Award to a person (or his or her
beneficiary or estate) who has terminated employment with the Company prior to
the end of a Performance Period based on the terms of the Award or the
Committee's determination that the person is deserving of such an Award.
SECTION 5. DETERMINATION AND PAYMENTS OF AWARD
(a) For each Performance Period, the Committee shall, in its discretion,
establish target award levels and respective performance measures(s) which are
to be attained for the applicable Award(s). The performance measures used shall
be Earnings Before Income Taxes, Net Earnings and Return on Equity, either
solely or in combination, as established in the discretion of the Committee. The
Committee shall have the right to reduce or eliminate Awards otherwise payable
under the Plan.
(b) Following the conclusion of the applicable Performance Period, the
Committee shall authorize the payment of Awards to Participants. However, an
Award payment to any one Participant for a fiscal year Performance Period shall
not exceed five percent (5%) of Operating Profit for such year and an Award
payment to any one Participant for a three-year Performance Period shall not
exceed two percent (2%) of cumulative Operating Profit for such period.
(c) Awards may be paid in cash, shares of Common Stock or a combination and
payments may be deferred pursuant to Section 7, all as determined by the
Committee.
2
<PAGE> 18
SECTION 6. WITHHOLDING TAX
The Company shall deduct from any payments under the Plan, a sufficient
amount to cover withholding of any federal, state or local taxes required by
law.
SECTION 7. PAYMENT DEFERRALS
The Committee may require or permit Participants to elect to defer the
payment of Awards under such rules and procedures as it may establish under the
Plan, including providing for the payment or crediting of interest on the
deferred amounts or the payment or crediting of dividend equivalents if deferred
amounts are denominated in Common Stock equivalents.
SECTION 8. TRANSFERABILITY AND EXERCISABILITY
Awards and rights to deferred payments, granted under the Plan shall not be
transferable or assignable other than by will or the laws of descent and
distribution.
SECTION 9. OTHER BENEFIT AND COMPENSATION PROGRAMS
Unless otherwise specifically determined by the Committee, settlements of
Awards received by Participants under the Plan shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country, or benefits that may be provided pursuant to a
contractual obligation of the Company. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate or
necessary.
SECTION 10. UNFUNDED PLAN
Unless otherwise determined by the Committee, the Plan, and any deferred
amounts under Section 7 hereof, shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any participant or
other person. To the extent any person holds any rights by virtue of a grant
awarded under the Plan, such rights (unless otherwise determined by the
Committee) shall be no greater than the rights of an unsecured general creditor
of the Company.
SECTION 11. FUTURE RIGHTS
No person shall have any claim or rights to be granted an Award under the
Plan, and no participant shall have any rights under the Plan to be retained in
the employ of the Company. Likewise, participation in the Plan will not in any
way affect the Company's right to terminate the employment of the participant at
any time with or without cause. Participation in the Plan with respect to any
Performance Period shall not affect the Committee's right to include or exclude
any person for participation with respect to any other Performance Period.
3
<PAGE> 19
SECTION 12. GOVERNING LAW
The validity, construction and effect of the Plan and any actions taken or
relating to the Plan shall be determined in accordance with the laws of the
State of New York and applicable federal law.
SECTION 13. SUCCESSORS AND ASSIGNS
The Plan shall be binding on all successors and assigns of a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the participant's creditors.
SECTION 14. AMENDMENT OR TERMINATION
The Committee may from time to time amend or terminate the Plan, provided
that no amendment shall increase the maximum amount payable to a Participant for
a Performance Period as specified in Section 5; and further provided that no
amendment will cause an Award to become subject to the tax deduction limitation
contained in section 162(m) of the Code.
SECTION 15. EFFECTIVE DATE
The Plan shall become effective upon its approval by the stockholders of
the Company. Such approval shall constitute the effectiveness of Awards granted
by the Committee prior to such approval for purposes of qualifying such Awards
for the performance-based exemption provided under section 162(m) of the Code.
Approved by stockholders of the Company on July 12, 1994.
4
<PAGE> 20
PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
NAUTICA ENTERPRISES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS, JULY 1, 1999
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 24, 1999 AT THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 1, 1999 OR ANY ADJOURNMENT THEREOF.
(CONTINUED AND TO BE DATED AND SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
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,
P Harvey Sanders, Charles H. Scherer
and Ronald G. Weiner.
R
INSTRUCTION: To withhold authority
O to vote for any individual nominee
write that nominee's name in the
X blank space below.
Y
For Against Abstain
2. Approval of a proposal to reapprove / / / / / /
the material terms of the Incentive
Compensation Plan as required by
Section 162(m) of the Internal
Revenue Code.
In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
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 PROPOSALS "1" AND "2".
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.
________________________________________________________________________________
* FOLD AND DETACH HERE *
