<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
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 Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
OAKLEY, 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 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 (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
OAKLEY, INC.
ONE ICON
FOOTHILL RANCH, CALIFORNIA 92610
-----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 2000
-----------
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders (the "Meeting") of OAKLEY, INC. (the "Company" or "Oakley") to be
held on Friday, June 9, 2000, at 10:00 a.m. at the Company's headquarters in
Foothill Ranch, California, for the following purposes:
1. To elect five directors to serve as such until the next Annual Meeting
of Shareholders and until their successors are elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 2000;
and
3. To transact such other business as may properly come before the Meeting
or any adjournment(s) or postponement(s) thereof.
Only shareholders of record at the close of business on March 31, 2000,
will be entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
WHETHER OR NOT YOU EXPECT TO BE AT THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO
THE EXERCISE THEREOF BY WRITTEN NOTICE TO THE COMPANY, AND SHAREHOLDERS WHO
ATTEND THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE THEIR SHARES PERSONALLY
IF THEY SO DESIRE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Donna Gordon
Donna Gordon
Secretary
Foothill Ranch, California
Dated: April 19, 2000
<PAGE> 3
OAKLEY, INC.
ONE ICON
FOOTHILL RANCH, CALIFORNIA 92610
-----------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 2000
This Proxy Statement is furnished to shareholders of Oakley, Inc. (the
"Company" or "Oakley"), in connection with the solicitation of proxies in the
form enclosed herewith for use at the Annual Meeting of Shareholders of the
Company to be held on Friday, June 9, 2000, at 10:00 a.m. at the Company's
headquarters in Foothill Ranch, California, and at any and all adjournments or
postponements thereof (the "Meeting"), for the purposes set forth in the Notice
of Meeting. This Proxy Statement and the enclosed form of proxy are being first
mailed to shareholders on April 20, 2000.
This solicitation is made by mail on behalf of the Board of Directors of
the Company (the "Board of Directors"). Costs of the solicitation will be borne
by the Company. Further solicitation of proxies may be made by telephone,
telegraph, fax or personal interview by the directors, officers and employees of
the Company and its affiliates, who will not receive additional compensation for
the solicitation. The Company will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to shareholders.
Holders of record of the Common Stock, $.01 par value per share, of the
Company (the "Common Stock") as of the close of business on the record date,
March 31, 2000, are entitled to receive notice of, and to vote at, the Meeting.
Each share of Common Stock entitles the holder to one vote. At the close of
business on March 31, 2000, there were 69,533,457 shares of Common Stock issued
and outstanding.
Shares represented by proxies in the form enclosed, if the proxies are
properly executed and returned and not revoked, will be voted as specified.
Where no specification is made on a properly executed and returned proxy, the
shares will be voted FOR the election of all nominees for director and FOR the
ratification of the selection of Deloitte & Touche LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 2000. To be
voted, proxies must be filed with the Secretary of the Company prior to voting.
Proxies may be revoked at any time before voting by filing a notice of
revocation with the Secretary of the Company, by filing a later dated proxy with
the Secretary of the Company or by voting in person at the Meeting. Shares
represented by proxies that reflect abstentions or "broker non-votes" (i.e.,
shares held by a broker or nominee which are represented at the Meeting, but
with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum.
The Board of Directors knows of no matters to come before the Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the Meeting, it is the intention of each of the
persons named in the accompanying proxy to vote such proxies in accordance with
such person's discretionary authority to act in such person's best judgment.
The principal executive offices of the Company are located at One Icon,
Foothill Ranch, California 92610.
1
<PAGE> 4
PROPOSAL 1: ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Pursuant to the Company's Amended and Restated Articles of Incorporation
(the "Articles"), directors are elected at each Annual Meeting of Shareholders
and hold office until the next Annual Meeting of Shareholders and until their
successors shall have been elected and qualified. If, for any reason, the
directors are not elected at the Meeting, they may be elected at a special
meeting of shareholders called for that purpose in the manner provided by the
Company's Amended and Restated Bylaws, as amended (the "Bylaws"). The Bylaws
currently authorize a Board of Directors consisting of not less than one nor
more than nine persons, and Oakley's Board of Directors currently consists of
five directors.
The nominees for election to the five positions on the Board of
Directors to be voted upon at the Meeting are Jim Jannard, Link Newcomb, Irene
Miller, Orin Smith and Michael Jordan. Irene Miller, Orin Smith and Michael
Jordan (the "Independent Directors") are not employed by, or affiliated with,
the Company. Unless authority to vote for the election of directors has been
specifically withheld, the persons named in the accompanying proxy intend to
vote for the election of Jim Jannard, Link Newcomb, Irene Miller, Orin Smith and
Michael Jordan to hold office as directors for a term of one year and until
their successors are elected and qualified at the next Annual Meeting of
Shareholders. All nominees have consented to being named in this Proxy Statement
and have advised the Board of Directors that they are able and willing to serve
as directors, if elected.
Mike Parnell notified the Company in April 2000 that he did not wish to
stand for reelection. Mr. Parnell has decided to dedicate more of his time to
the foundation which he started, the Neophrogenic Diabetes Insipidus Foundation.
The Board has elected not to fill his position at this time and to reduce the
number of Board members to five.
If any nominee becomes unavailable for any reason (which is not
anticipated), the shares represented by the proxies may be voted for such other
person or persons as may be determined by the holders of the proxies (unless a
proxy contains instructions to the contrary). In no event will the proxy be
voted for more than five nominees.
VOTE
Each director will be elected by a favorable vote of a majority of the
votes cast at the Meeting. Accordingly, abstentions or broker non-votes as to
the election of directors will not affect the outcome. Unless instructed to the
contrary in the proxy, the shares represented by the proxies will be voted FOR
the election of the five nominees named above as directors.
2
<PAGE> 5
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information (as of March 31,
2000) concerning the directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jim Jannard 50 Chairman of the Board and Chief Executive Officer
Link Newcomb 38 Chief Operating Officer and Director
Colin Baden 38 President
Tom George 44 Chief Financial Officer
Donna Gordon 40 Vice President of Finance and Secretary
Kent Lane 46 Vice President of Manufacturing
Carlos Reyes 33 Vice President of Development
Jon Krause 36 Vice President of Operations
Scott Bowers 38 Vice President of Sports Marketing
Tommy Rios 30 Vice President of Oakley Worldwide
Mike Parnell 47 Director
Irene Miller 47 Director
Orin Smith 57 Director
Michael Jordan 37 Director
</TABLE>
Executive Officers
Mr. Jim Jannard, the founder of the Company, has been Chairman of the
Board and an Oakley director since its inception in 1975. From Oakley's
inception in 1975 to February 1999, Mr. Jannard also served as President of
Oakley. Effective October 1999, Mr. Jannard was named Chief Executive Officer.
Mr. Link Newcomb joined Oakley in June 1994 as its Vice President of
International Sales. Mr. Newcomb served as Executive Vice President from April
1995 until January 1997, as Chief Financial Officer from July 1995 until January
1997, as Chief Operating Officer from January 1997 to September 1997, and as
Chief Executive Officer from September 1997 to April 1999. Effective May 1,
1999, Mr. Newcomb was named Chief Operating Officer. Mr. Newcomb was appointed
to the Board of Directors in January 1997. Prior to joining Oakley, Mr. Newcomb
was an attorney for five years at Skadden, Arps, Slate, Meagher & Flom LLP, Los
Angeles, California. Mr. Newcomb has also been a certified public accountant
since 1984.
Mr. Colin Baden joined Oakley in February 1996 as Director of Design and
served as Vice President of Design from February 1997 to February 1999. In
February 1999, Mr. Baden was named President. Prior to joining Oakley, Mr. Baden
was a partner at Lewis Architects of Seattle, Washington for six years and began
advising Oakley on company image issues in 1993.
Mr. Tom George joined Oakley in October 1997 as Chief Financial Officer.
Prior to joining Oakley, Mr. George last served as Senior Vice President of
Finance and Chief Financial Officer at REMEC, a designer and manufacturer of
microwave wireless electronics, a position he had held since 1990. Mr. George
has more than 20 years experience in finance and is also a certified public
accountant.
Ms. Donna Gordon joined Oakley in February 1986. Ms. Gordon has held a
number of positions with Oakley, assuming her current position as Vice President
of Finance in October 1995. Ms. Gordon has also been Corporate Secretary since
1993 and Controller since 1990.
3
<PAGE> 6
Mr. Kent Lane joined Oakley in October 1994 and served as Director of
Manufacturing from January 1995 until October 1995. In October 1995, Mr. Lane
was named Vice President of Manufacturing. Mr. Lane has 21 years experience in
the manufacturing industry at various companies, including Kaiser Steel for six
years and Water Factory Systems, a manufacturer of water purification equipment,
for eight years.
Mr. Carlos Reyes joined Oakley in July 1989 and has held various
positions with Oakley, beginning as a lens coating assistant in the
manufacturing department. Mr. Reyes was promoted to Lens Coating Manager in 1991
and to a leadership position in Oakley's design department in 1993. In December
1995, Mr. Reyes was named Vice President of Development.
Mr. Jon Krause joined Oakley in November 1996 as Director of Information
Technology and was named Vice President of Operations in January 1998. Prior to
joining Oakley, Mr. Krause was a senior manager with Andersen Consulting where
he spent ten years specializing in information technology and manufacturing
operations.
Mr. Scott Bowers joined Oakley in May 1988 as a regional sales manager
and held the position of Director of Sports Marketing from January 1995 to
December 1999. In January 2000, Mr. Bowers was named Vice President of Sports
Marketing. Prior to joining Oakley, Mr. Bowers had 11 years of experience in the
snow/ski industry holding positions both in retail management and as a
independent sales representative.
Mr. Tommy Rios joined Oakley in 1996 and held the position of General
Director of Oakley Mexico from January 1996 to March 1998, Director of
International Sales from March 1998 to July 1999 and Director of Oakley
Worldwide from July 1999 to January 2000. In January 2000, Mr. Rios was named
Vice President of Oakley Worldwide. Prior to joining Oakley, Mr. Rios had 5
years of experience as the General Director of Fox Racing, an independent
distributor of Oakley products in Mexico.
Board of Directors
Mr. Mike Parnell has been an Oakley director since 1986. From 1986 to
September 1997, Mr. Parnell served as Chief Executive Officer of Oakley, and
from September 1997 to February 2000 he served as Vice Chairman. Prior to
joining Oakley, from 1974 to 1985, Mr. Parnell was employed in various positions
with OP Sunwear, including Vice President of Marketing from 1981 to 1985. Mr.
Parnell currently is dedicating his time to the foundation which he started, the
Nephrogenic Diabetes Insipidus Foundation, and has decided not to stand for
reelection in order to have more time to devote to this worthy cause.
Ms. Miller has been an Oakley director since shortly after the Company's
initial public offering in August 1995. Ms. Miller is Chief Executive Officer of
Akim, Inc., an investment management and consulting firm, and until June 1997
was Vice Chairman and Chief Financial Officer of Barnes & Noble, Inc., the
world's largest bookseller. She joined Barnes & Noble in 1991, became Executive
Vice President and Chief Financial Officer in 1993 and Vice Chairman in 1995.
From 1986 to 1990 Ms. Miller was an investment banker at Morgan Stanley & Co.
Incorporated. Ms. Miller is also a director of Barnes & Noble, Inc. and an
advisory director of Intralinks, Inc.
Mr. Orin Smith has been an Oakley director since shortly after the
Company's initial public offering in August 1995. Mr. Smith is the President and
Chief Operating Officer of Starbucks Corporation. Mr. Smith joined Starbucks in
1990 as Chief Financial Officer and Vice President, became Executive Vice
President and Chief Financial Officer in 1993 and was named President and Chief
Operating Officer in 1994. Prior to joining Starbucks, Mr. Smith was Executive
Vice President and Chief Financial and Administrative Officer of Danzas USA, a
subsidiary of Europe's largest transportation company. Mr. Smith is also a
director of Starbucks Corporation and Starbucks Coffee International.
4
<PAGE> 7
Mr. Michael Jordan has been an Oakley director since shortly after the
Company's initial public offering in August 1995. Mr. Jordan is the President of
basketball operations for the Washington Wizards NBA team and partner and
investor in Lincoln Holdings, LLC, which is a minority owner of the Washington
Wizards. Mr. Jordan is also a director and business advisory board member for
the e-commerce site MVP.com and a director for divine Interventures, which
invests in Internet-related companies. Mr. Jordan has achieved one of the most
extraordinary records in professional sports during his career with the Chicago
Bulls. Among other achievements, Mr. Jordan was voted Most Valuable Player of
the National Basketball Association in 1988, 1991, 1992, 1996 and 1998. Mr.
Jordan also captured the NBA's scoring title in seven consecutive seasons, from
1987 through 1993 and again from 1996 through 1998. Prior to joining the Chicago
Bulls, Mr. Jordan was an All American player at the University of North
Carolina, from which he graduated in 1986.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held six meetings, including regularly scheduled
and special meetings, and acted once by unanimous written consent during 1999.
The Board of Directors has established standing audit and compensation and stock
option committees as set forth below. During 1999, each director attended at
least 75 percent of the aggregate of the meetings of the Board of Directors and
of the committees of which he or she was a member.
Audit Committee. The Audit Committee currently consists of two Independent
Directors: Ms. Miller and Mr. Smith. The Audit Committee makes recommendations
to the Board of Directors concerning the engagement of independent auditors,
reviews with the independent auditors the plans and results of the audit
engagement, approves professional services provided by the independent auditors,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. The Audit Committee met four times in 1999.
Compensation Committee. In 1999, the Compensation Committee consisted solely of
Ms. Miller and Mr. Smith. Prior to being combined with the Stock Option
Committee, the Compensation Committee met one time in 1999. In April 1999, the
Compensation Committee was combined with the Stock Option Committee to form a
single Compensation and Stock Option Committee. See "Compensation and Stock
Option Committee."
Stock Option Committee. In 1999, the Stock Option Committee consisted of Mr.
Parnell and Ms. Miller. The Stock Option Committee administered the Company's
1995 Stock Incentive Plan and reported to the Board of Directors regarding such
administration, except that the entire Board of Directors administered the 1995
Stock Incentive Plan with respect to directors and officers subject to Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Prior to being combined with the Compensation Committee, the Stock Option
Committee met one time in 1999. In April 1999, the Stock Option Committee was
combined with the Compensation Committee to form a single Compensation and Stock
Option Committee. See "Compensation and Stock Option Committee."
Nominating Committee. In 1999, the Nominating Committee consisted of Messrs.
Parnell and Jordan. In April 1999, the Board of Directors voted to terminate the
Nominating Committee and transfer its responsibilities to the Board of
Directors. Prior to its termination, the Nominating Committee was responsible
for selecting a slate of potential directors to be nominated by the Board of
Directors at each Annual Meeting of Shareholders. Under the Company's bylaws,
nomination for election of directors at the Company's Annual Meeting of
Shareholders to be held in 2001, other than those made by the Board of
Directors, must be made in writing and must be received by the Company no later
than December 20, 2000. The Nominating Committee did not meet in 1999.
Compensation and Stock Option Committee. In April 1999, the Board of Directors
voted to combine the Compensation Committee and the Stock Option Committee to
form a single Compensation and Stock Option Committee. The Compensation and
Stock Option Committee, presently comprised of Ms. Miller and Mr. Smith, reports
to the Board of Directors and determines compensation for the Company's
executive officers and administers the Company's 1995 Stock Incentive Plan. The
Compensation and Stock Option Committee met one time in 1999.
5
<PAGE> 8
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Prior to April 1999, directors who were not
employees of the Company received a retainer fee of $25,000 per year for their
services. In addition, under the Oakley, Inc. 1995 Stock Incentive Plan, each
non-employee director was permitted to irrevocably elect annually to waive the
receipt of all or any part of his or her annual retainer and/or meeting fees (if
any) for the year commencing immediately following each annual shareholders
meeting and in lieu thereof receive a fixed number of non-qualified stock
options for such year, with the number of such options fixed by the Board of
Directors, based on the amount of fees so waived and an independent appraisal of
the intrinsic value of such options (the "Non-Employee Director Fee Election").
Such options were exercisable in full on March 1 of the year following the date
of grant. The option price per share of Common Stock purchasable under such
options was 100% of the fair market value of the Common Stock on the date of
grant. In April 1999, the Board of Directors revised the compensation structure
for non-employee directors of the Company to provide that such directors will
receive (i) a retainer fee of $25,000 per year for their services, (ii) $1,000
for each committee meeting attended, (iii) $5,000 per year for each committee a
non-employee director chairs, (iv) $2,000 per day for each special non-Board of
Directors meeting that a non-employee director is requested to attend, in person
or by telephone, by the Board of Directors, as determined by the Board of
Directors and (v) an annual grant of non-qualified options to purchase 10,000
shares, with an exercise price equal to fair market value on the date of grant,
and vesting in full on the anniversary of the date of grant. In addition, the
Board of Directors amended the 1995 Stock Incentive Plan to make the
Non-Employee Director Fee Election inapplicable unless the Board elects
otherwise. All directors are reimbursed for expenses incurred in connection with
attendance at Board meetings, committee meetings or special non-Board meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the members of the Compensation Committee and the
Compensation and Stock Option Committee during 1999 were Ms. Miller and Mr.
Smith. The members of the Stock Option Committee during 1999 were Ms. Miller,
Mr. Smith and Mr. Parnell. Neither Ms. Miller or Mr. Smith has ever been an
officer or employee of the Company or any of its subsidiaries and Mr. Parnell
served as Vice Chairman of the Company until his resignation in February 2000.
None of the executive officers of the Company served as a member of the
compensation committee (or other board committee performing equivalent functions
or, in the absence of such committee, the entire board of directors) of another
entity during 1999.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company for
the fiscal years ended December 31, 1999, 1998 and 1997, to (i) its Chief
Executive Officer, (ii) the four other most highly compensated executive
officers serving as of December 31, 1999, and (iii) a former executive officer
for whom disclosure would have been provided under clause (ii) above but for the
fact that the individual was not serving as an executive officer at December 31,
1999 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------- -------------
SECURITIES
ALL OTHER OTHER ANNUAL UNDERLYING
NAME AND SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(1)
- ------------------------ ---- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jim Jannard(2) 1999 -- -- -- -- --
Chief Executive Officer 1998 -- -- -- -- --
1997 -- -- -- -- --
Link Newcomb 1999 350,000 50,000 -- 110,000 4,638
Chief Operating Officer 1998 350,000 200,000 -- -- 3,030
1997 306,251 -- -- 513,000 2,000
Thomas George(3) 1999 195,000 32,000 18,000(4) 20,000 2,000
Chief Financial Officer 1998 195,000 80,000 18,000(4) -- --
1997 41,250 10,000 63,000(5) 93,000 --
Colin Baden 1999 173,268 30,000 -- 25,000 2,610
President 1998 124,231 75,000 -- -- 2,419
1997 100,000 -- -- -- 2,000
Jon Krause 1999 158,512 28,000 -- 25,000 3,262
Vice President of 1998 149,262 75,000 -- -- 2,797
Operations 1997 120,784 50,000 -- 65,938 1,823
William Schmidt(6) 1999 152,115 250,000 613,924(7) 500,000(8) --
Former Chief Executive 1998 -- -- -- -- --
Officer 1997 -- -- -- -- --
</TABLE>
- ---------------
(1) Represents the Company's matching 401(k) plan contribution and
above-market interest on deferred compensation accrued during the fiscal
year but deferred at the election of the Named Executive Officer.
(2) Mr. Jannard has chosen not to receive any base salary and was not
entitled to payment of any annual bonus for fiscal years 1997, 1998 and
1999. See "Compensation Committee Report -- Compensation of the Chairman
and Chief Executive Officer."
(3) Mr. George was hired as Chief Financial Officer on October 6, 1997.
(4) Represents payment to Mr. George for a monthly housing allowance related
to his relocation.
(5) Represents payments to Mr. George in connection with his original hire
and relocation.
7
<PAGE> 10
(6) Mr. Schmidt served as Chief Executive Officer from May 1, 1999 until his
resignation on October 6, 1999.
(7) Represents payments to Mr. Schmidt in connection with his hire and
relocation and a severance payment in connection with his resignation.
(8) Represents options granted to Mr. Schmidt when he became Chief Executive
Officer on May 1, 1999. All of these stock options expired unexercised
90 days after the date of his resignation.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS/SARS STOCK PRICE APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES IN OR BASE PRICE EXPIRATION ------------------------------
(#)(1) FISCAL YEAR ($/SH) DATE 5%($)(2) 10%($)(2)
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jim Jannard -- -- -- -- -- --
Link Newcomb 110,000 11.1% 7.6250 4/22/09 527,486 1,336,753
Colin Baden 25,000 2.5% 7.6250 4/22/09 119,883 303,808
Tom George 20,000 2.0% 7.6250 4/22/09 95,906 243,046
Jon Krause 25,000 2.5% 7.6250 4/22/09 119,883 303,808
William Schmidt(3) 500,000 50.4% 7.6250 3/12/09 0 0
</TABLE>
- -----------
(1) The options identified in this table were granted under the Company's 1995
Stock Incentive Plan and are exercisable in equal 25% installments on each
of the first four anniversaries of the date of grant. In the event of the
termination of a Named Executive Officer's employment within 12 months
following a change in control (as defined in the stock option agreements
evidencing such grants), the options will become immediately vested and
exercisable in full upon such termination of employment. To the extent
permitted under applicable law, the options granted are "incentive stock
options" for purpose of Section 422 of the Internal Revenue Code of 1986,
as amended, and otherwise are nonqualified stock options.
(2) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts
shown are for the assumed rates of appreciation only, do no constitute
projections of future stock performance and may not necessarily be
realized. Actual gains, if any, on stock option exercises depend on the
future performance of the Common Stock, continued employment of the
optionee through the term of the option and other factors.
(3) All of these options expired unexercised 90 days after Mr. Schmidt's
resignation on October 6, 1999.
8
<PAGE> 11
The following table sets forth information concerning the fiscal
year-end value of unexercised stock options held by the Named Executive Officers
as of December 31, 1999. No options were exercised by the Named Executive
Officers in fiscal year 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FY-END(#) AT FY-END($)(1)
SHARES VALUE --------------------- -----------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXCERCISABLE UNEXCERCISABLE
- ----------------------- ------------- ---------- --------------------- -----------------
<S> <C> <C> <C> <C>
Jim Jannard............ 0 0 0/0 0/0
Link Newcomb........... 0 0 443,539/370,875 0/0
Thomas George.......... 0 0 46,500/66,500 0/0
Colin Baden............ 0 0 36,496/53,498 0/0
Jon Krause............. 0 0 47,970/62,968 0/0
William Schmidt(2)..... 0 0 9,151/500,000 0/0
</TABLE>
- -----------
(1) Based upon the reported closing price of $5.56 per share of Common Stock
on the New York Stock Exchange on December 31, 1999.
(2) All of Mr. Schmidt's options expired unexercised 90 days after his
resignation on October 6, 1999.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
Mr. Jannard does not have a written employment agreement with the
Company. Since the expiration of his former employment agreement with the
Company in 1997, his employment has continued on an at-will basis. On May 12,
1998, Mr. Jannard entered into an Amended and Restated Consultant Agreement with
the Company providing that within 30 days following termination of his
employment, the Company will have the option to retain him as a consultant at
the rate of $100,000 per year for a period expiring on August 1, 2002 (or, if
later, the date that is two years from the date the Company exercises such
option). The Amended and Restated Consultant Agreement contains non-competition
and non-solicitation provisions effective through the end of the consultant
period. In addition, Mr. Jannard is entitled to Company-paid medical insurance
for himself and his immediate family during his lifetime.
On May 1, 1999, Mr. Newcomb entered into an Amended and Restated
Employment Agreement with the Company which replaced his prior employment
agreement, which agreement was subsequently amended as of December 31, 1999. The
term of Mr. Newcomb's agreement runs through January 31, 2002 and will
automatically be extended by one year on each January 31, unless either party
provides written notice that it does not wish to extend the term. The agreement
provides for a base salary of not less than $350,000 per year and an annual
target bonus under the Company's Executive Officer Performance Bonus Plan of not
less than $200,000. In April 1999, in lieu of any bonus target Mr. Newcomb may
otherwise have been entitled to for the Company's fiscal year 1999, Mr. Newcomb
was granted a stock option to purchase 110,000 shares of Common Stock with an
exercise price of $7 5/8 which vest in four equal annual installments on each of
the first four anniversaries of the date of the grant. If Mr. Newcomb's
employment with the Company is terminated by the Company for any reason other
than by reason of his death, disability or for cause or by Mr. Newcomb for good
reason, Mr. Newcomb will be entitled to his base salary for the remainder of the
term of his agreement and a bonus equal to the amount of Mr. Newcomb's annual
target bonus under the Company's Performance Bonus Plan as in effect at the time
of such termination at the end of each remaining fiscal year ending during the
remaining term of his agreement. In the event Mr. Newcomb's employment is
terminated by the Company for any reason other than by reason of his death,
disability, or for cause, Mr. Newcomb will also be entitled to one year's stock
option acceleration. If Mr. Newcomb's employment with the Company is terminated
by Mr. Newcomb or by the Company for any reason during the term of the
agreement, Mr. Newcomb will be entitled to exercise his stock options to the
extent vested on the date of his termination (including any stock options
accelerated pursuant to the previous sentence) for a period of two years from
the date of termination. If Mr. Newcomb's employment with the Company is
terminated by reason of his disability, Mr. Newcomb will be entitled to a
payment equal to one year's base salary, provided that if Mr. Newcomb's
termination as a result of his disability occurs on or before January 31, 2002,
he shall be entitled to a payment equal to $500,000. If Mr. Newcomb's employment
with the Company is terminated on or before January 31, 2002 by reason of his
death, Mr. Newcomb's estate will be entitled to a payment equal to $500,000
payable from any life insurance policy maintained by the Company on Mr.
Newcomb's life. If Mr. Newcomb's employment with the Company is voluntarily
terminated on or before January 31, 2002 by Mr. Newcomb other than due to a
material breach by the Company of any provision of his employment agreement, Mr.
Newcomb will be entitled to a payment equal to $500,000 payable in full on the
date of termination. Upon termination of Mr. Newcomb's employment with the
Company for any reason other than by reason of his death or disability, the
Company may require that Mr. Newcomb provide consulting services for a period of
two years. Mr. Newcomb would be compensated at the rate of $50,000 per year for
such services. Mr. Newcomb's agreement also contains non-competition and
non-solicitation provisions effective through the term of the agreement, and,
unless his employment is terminated by the Company without cause, by Mr. Newcomb
for good reason or by reason of expiration of the agreement, for a period of two
years thereafter.
On January 1, 2000, Mr. George entered into a Second Amended and
Restated Employment Agreement with the Company, which replaced his prior
employment agreement. Mr. George's agreement expires December 31, 2001, and will
automatically be extended by one year on each January 1st occurring during the
term of the agreement unless either party provides written notice that it does
not wish to extend the term. The agreement provides for a base salary of not
less than $230,000 per year and an annual target bonus under the Executive
Officer Performance Bonus Plan of not less than $80,000. The agreement also
provides for a housing allowance of $1,500 per month. If Mr. George's employment
with the Company is terminated by reason of his death, Mr. George's estate will
be entitled to his prorated performance bonus under the Company's Performance
Bonus Plan. If Mr. George's employment with the Company is terminated by reason
of his disability, Mr. George would be entitled to a payment equal to one years
base salary and his
10
<PAGE> 13
prorated performance bonus under the Company's Performance Bonus Plan. If Mr.
George's employment with the Company is terminated by the Company for any reason
other than by reason of his death, disability or for cause or by Mr. George for
good reason, Mr. George will be entitled to a payment equal to (i) the greater
of his base salary for eighteen months or the remainder of the term of his
agreement (the "Severance Period"), and (ii) an amount equal to the product of
(A) Mr. George's annual target bonus under the Company's Performance Bonus Plan
as in effect at the time of his termination and (B) a fraction, the numerator of
which is the number of full months in the Severance Period, and the denominator
of which is 12. Mr. George's agreement also contains non-competition and
non-solicitation provisions effective through the term of the agreement and, in
the event his employment is terminated by the Company for cause or by Mr. George
without good reason, for a period of two years thereafter.
On October 6, 1999, Mr. Schmidt entered into a Severance Agreement and
General and Special Release with the Company, pursuant to which Mr. Schmidt
voluntarily terminated his employment with the Company effective October 6,
1999. Under the terms of the agreement and in exchange for Mr. Schmidt's full
release of claims against the Company, the Company agreed to pay Mr. Schmidt (i)
his annual base salary of $350,000 through May 1, 2001, (ii) a bonus equal to
approximately $65,000 and (iii) approximately $8,500 for automobile and other
expenses.
COMPENSATION COMMITTEE REPORT
The report of the Compensation Committee of the Board of Directors with
respect to compensation in fiscal 1999 is as follows:
COMPENSATION PHILOSOPHY
The overall policy of the Compensation Committee is to provide the
Company's executive officers and other key employees with competitive
compensation opportunities based upon their contribution to the financial
success of the Company and their personal performance. It is the Compensation
Committee's objective to have a substantial portion of each executive officer's
compensation contingent upon the Company's performance as well as upon the
officer's own level of performance. Accordingly, the compensation package for
each executive officer is comprised of three primary elements: (i) base salary
which reflects individual performance and is designed primarily to be
competitive with salary levels in effect at companies within and outside the
industry with which the Company competes for executive talent, (ii) annual
variable performance awards payable in cash and tied to the Company's
achievement of financial performance targets and (iii) long-term stock-based
incentive awards, which strengthen the mutuality of interests between the
executive officers and the Company's shareholders. As an executive officer's
level of responsibility increases, it is the Company's general intent that a
greater portion of the executive officer's total compensation be dependent upon
Company performance and stock price appreciation than upon base salary.
COMPONENTS OF COMPENSATION
The principal components of executive officer compensation are generally
as follows:
- BASE SALARY. With respect to Messrs. Newcomb and George, their
base salary is fixed in accordance with the terms of their
respective employment agreements. See "Employment Agreements."
Mr. Jannard has chosen not to receive any base salary from the
Company. With respect to executive officers who do not have
employment agreements with the Company, base salary is
determined on the basis of individual performance and
competitive market practices as reflected in informal
information available to the Company.
- ANNUAL PERFORMANCE BONUS. Annual bonuses are payable to the
Company's executive officers under the Company's Executive
Officer Performance Bonus Plan based on the Company's
achievement of certain pre-set corporate financial performance
targets established for the fiscal year. The minimum target
bonuses for Messrs. Newcomb and George are set forth in their
respective employment agreements. With respect to officers who
do not have employment agreements with the Company, their target
bonuses are
11
<PAGE> 14
determined on the basis of individual performance and
competitive market practices as reflected in informal
information available to the Company. The actual financial
performance (measured by operating income) for fiscal year 1999
was below the target established by the Compensation and Stock
Option Committee. However, the Compensation and Stock Option
Committee has determined to pay bonuses pursuant to the
Executive Officer Performance Bonus Plan in the amount of 40% of
the target bonuses for each executive officer other than Mr.
Jannard and Mr. Parnell.
- LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are
provided through stock option grants and other stock-based
awards under the Company's 1995 Stock Incentive Plan. Awards
under the 1995 Stock Incentive Plan are designed to further
align the interests of each executive officer with those of the
shareholders and to provide each officer with a significant
incentive to manage the Company from the perspective of an owner
with an equity stake in the Company's business. Due to certain
requirements of Rule 16b-3 under the Exchange Act, grants of
awards under the 1995 Stock Incentive Plan to the Named
Executive Officers have been made through 1999 by the entire
Board of Directors.
COMPENSATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. Jannard has chosen not to receive any base salary from the Company.
As explained in "Components of Compensation -- Annual Performance Bonus," Mr.
Jannard was not entitled to any bonus under the Company's Executive Officer
Performance Bonus Plan for fiscal 1999 because the Company's performance did not
satisfy the pre-established performance target required for the payment of Mr.
Jannard's bonus. Mr. Jannard also did not receive a grant of stock options in
fiscal 1999 under the 1995 Stock Incentive Plan. Mr. Jannard is a major
shareholder of the Company.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
generally provides that publicly held companies may not deduct compensation paid
to certain of its top executive officers to the extent such compensation exceeds
$1 million per officer in any year. However, pursuant to regulations issued by
the Treasury Department, certain limited exemptions to Section 162(m) apply with
respect to "qualified performance-based compensation." The Company is currently
monitoring the applicability of Section 162(m) to its ongoing compensation
arrangements. The Company does not expect that amounts of compensation paid to
its executive officers will fail to be deductible by reason of Section 162(m).
IRENE MILLER
ORIN SMITH
MICHAEL JORDAN*
JIM JANNARD*
LINK NEWCOMB*
*With respect to that portion of the report entitled "Long-Term Incentive
Compensation" only.
The Compensation Committee Report will not be deemed to be incorporated
by reference into any filing by the Company under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that the Company specifically
incorporates the same by reference.
12
<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
Oakley, Inc., the Standard & Poor's 500 Composite Index and the Russell 2000
Index, during the period commencing on August 10, 1995, the date of the
Company's initial public offering, and ending on December 31, 1999. The
comparison assumes $100 was invested on August 10, 1995 in each of the Common
Stock, the Standard & Poor's 500 Composite Index and the Russell 2000 Index and
assumes the reinvestment of all dividends, if any. At this time, the Company
does not believe it can reasonably identify an industry peer group, and
therefore the Company has instead selected the Russell 2000 Index, which
includes companies with similar market capitalizations to that of the Company,
as a comparative index for purposes of complying with certain requirements of
the Securities and Exchange Commission.
<TABLE>
<CAPTION>
8/10/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Oakley, Inc. 100 125 81 67 70 41
Russell 2000 Index 100 106 124 151 147 176
S&P 500 Composite Index 100 111 136 182 234 283
</TABLE>
The Stock Price Performance Graph will not be deemed to be incorporated
by reference into any filing by the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates the same by reference.
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1997, the Company entered into a lease agreement for the lease
of an office facility owned by the M. and M. Parnell Revocable Trust, of which
Mr. Parnell and his wife are the trustees. The lease has a term of four years
with monthly lease payments of $2,092. During 1999, the Company made aggregate
payments under such lease of $26,930.
The Company leases certain aircraft from companies controlled by Mr.
Jannard and a trust for the benefit of Mr. Parnell and his immediate family.
Such leases have terms of five years with aggregate annual lease payments of
$100,000, and are renewable at the option of the Company and the applicable
lessor. The Company bears all costs and expenses of operating and maintaining
the aircraft while under lease. During 1999, the Company made aggregate payments
to the lessors under such leases of $100,000.
In July 1995, the Company entered into a ten-year agreement with Mr.
Jordan for the endorsement of Oakley eyewear. Pursuant to such agreement, Mr.
Jordan is paid an annual retainer of $500,000 and received options to purchase
217,392 shares of Common Stock at an exercise price of $11.50 per share (the
fair market value on the date of grant). The Company paid Mr. Jordan $500,000
during 1999 pursuant to this agreement.
Since the beginning of 1998, Mr. Jannard has borrowed from the Company
various amounts for use by Mr. Jannard in connection with various matters
unrelated to the business of Oakley. All of such indebtedness was repaid by Mr.
Jannard within one month of the date incurred. The largest amount of such
indebtedness outstanding at any time since the beginning of 1999 was
approximately $106,806. As of February 29, 2000, the total amount of such
indebtedness outstanding was $88,581.
In March 2000, the Company entered into a trademark license agreement
with a Delaware limited liability company wholly-owned by Jim Jannard (the
"LLC"). Pursuant to this agreement, the LLC has assigned to the Company its
right to purchase a truck and trailer to travel the National Hot Rod Association
("NHRA") circuit and to sell certain products at NHRA sanctioned events and has
agreed to place Oakley's logo in prominent places on the automobile and crew
members' uniforms. The agreement shall continue for so long as the LLC's
sponsorship of race car driver Scotty Cannon continues, unless sooner terminated
by either party upon 30 days written notice to the other party. Under the
agreement, the Company has agreed to pay to the LLC an annual fee of $100,000
for the placement of the logos as described above and to pay the LLC a royalty
rate, ranging between 10% and 25%, on net revenues (after sales tax and returns)
from sales by the Company of certain merchandise. Additionally, Oakley will pay
the NHRA a royalty of 20% on net revenues of all merchandise sold. The Company
will perform accounting services for the LLC as agreed upon by the Company and
the LLC and will be compensated in cash for such services by the LLC at a fair
market rate to be determined in good faith by the Company's Board of Directors.
On February 14, 2000, Mr. Parnell entered into a two-year Consultant
Agreement (the "Consultant Agreement") with the Company. The Consultant
Agreement provides for compensation in an aggregate amount of $100,000 for the
entire two-year term. The Consultant Agreement also entitles Mr. Parnell to
unlimited use of the aircraft currently being leased by the Company for Mr.
Parnell's use (such use to continue until the end of the year 2000 unless the
aircraft is sold prior to year-end). Under the Consultant Agreement, any stock
options granted by the Company to Mr. Parnell during his previous employment
with the Company will continue to vest during the term of the Consultant
Agreement, and Mr. Parnell will have the right to exercise any such vested stock
options until three months following the termination of the Consultant
Agreement. The Consultant Agreement contains a non-competition provision
effective through the end of the consultant period. In addition, Mr. Parnell is
entitled to Company-paid medical and health insurance for himself and his
immediate family during his lifetime.
14
<PAGE> 17
LEGAL PROCEEDINGS
The Company has been named as a nominal defendant in a putative
derivative lawsuit against certain of its directors and officers filed in March
1997 in the California Superior Court for the County of Orange (the "Superior
Court"). The case is captioned Blackman v. James Jannard, Mike Parnell and Does
1 through 100, Case No. 777098 (filed March 27, 1997) (the "California
Derivative Action").
In the California Derivative Action, the plaintiff, purporting to sue on
behalf of the Company, alleges claims for breach of fiduciary duty, constructive
fraud, unjust enrichment and violations of the insider trading provisions of the
California Corporations Code. The plaintiff's claims in the California
Derivative Action are, among other things, based upon alleged material
misstatements and omissions in certain of the Company's public statements and
Securities and Exchange Commission filings regarding the Company, its operations
and future prospects. After sustaining the defendants demurrer to the
plaintiff's second amended complaint on February 4, 1998, the Superior Court
entered a final order of dismissal of the California Derivative Action. On April
8, 1998, the plaintiff in the California Derivative Action filed a notice of
appeal with the Superior Court. In March 1999, the parties to the California
Derivative Action entered into a stipulation of settlement regarding derivative
claims that is subject to approval by the California Court of Appeal, Fourth
Appellate District (the "Court of Appeal"). Pursuant to the proposed settlement,
a committee of independent members of Oakley's board of directors (the
"Independent Committee"), comprised of non-employee directors Irene Miller and
Orin Smith, investigated the allegations of insider trading asserted in the
California Derivative Action against defendants James Jannard and Mike Parnell.
The Independent Committee was assisted by counsel Norman Blears, Esq. of the law
firm Heller, Ehrman, White & McAuliffe. The Independent Committee determined
that the insider trading claims lacked merit and recommended to Oakley's board
of directors that the action be dismissed and the claims against Messrs. Jannard
and Parnell released in accordance with the terms of the proposed settlement.
The Independent Committee also reported its findings and recommendations
respecting the allegations of insider trading to plaintiff's counsel and a copy
of its report was filed with the Court of Appeal.
On June 24, 1999, the Court of Appeal approved the settlement and
entered a final judgement dismissing with prejudice the California Derivative
Action and approving the Company's release of claims against Messrs. Jannard and
Parnell. The settlement is not expected to have a material adverse effect on the
Company.
15
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information available to the
Company, as of February 29, 2000, with respect to shares of its Common Stock (i)
held by those persons known to the Company to be the beneficial owners (as
determined under the rules of the Securities and Exchange Commission) of more
than 5% of such shares, (ii) held by each of the directors and nominees, (iii)
held by each of the Named Executive Officers and (iv) held as a group by the
directors and executive officers of the Company. Unless otherwise indicated, the
address of each beneficial owner named below is c/o Oakley, Inc., One Icon,
Foothill Ranch, California 92610.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS SHARES OF COMMON STOCK
OF BENEFICIAL OWNER COMMON STOCK OUTSTANDING
------------------- ------------ -------------
<S> <C> <C>
Directors and Executive Officers
Jim Jannard................................................. 42,394,600 60.7%
Link Newcomb................................................ 554,347(1) *
Colin Baden................................................. 46,244(2) *
Thomas George............................................... 54,724(3) *
Jon Krause.................................................. 57,220(4) *
Mike Parnell................................................ 3,946,583(5) 5.6%
Irene Miller................................................ 23,607(6) *
Orin Smith.................................................. 12,761(7) *
Michael Jordan.............................................. 273,835(8) *
William Schmidt............................................. 0(9) *
Directors and executive officers as a group (15 persons). 47,547,665(10) 67.2%
5% or Greater Holders:
M. and M. Parnell Revocable Trust........................... 3,840,000(5) 5.5%
</TABLE>
- -----------
(1) Includes 546,039 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(2) Includes 44,244 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(3) Includes 51,500 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(4) Includes 54,220 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(5) All of the shares beneficially owned by Mr. Parnell are held through the
M. and M. Parnell Revocable Trust, other than 106,583 shares issuable
pursuant to stock options exercisable within 60 days of February 29,
2000 which are held by Mr. Parnell in his individual capacity.
(6) Includes 19,261 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(7) Includes 9,561 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(8) Includes 126,013 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
(9) Mr. Schmidt resigned as Chief Executive Officer of the Company effective
October 6, 1999. All of Mr. Schmidt's stock options expired 90 days
after the date of his resignation.
(10) Includes 1,134,204 shares issuable pursuant to stock options exercisable
within 60 days of February 29, 2000.
* Less than one percent.
16
<PAGE> 19
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
The firm of Deloitte & Touche LLP, the Company's independent auditors
for the year ended December 31, 1999, was selected by the Board of Directors,
upon the recommendation of the Audit Committee, to act in such capacity for the
fiscal year ending December 31, 2000, subject to ratification by the
shareholders. There are no affiliations between the Company and Deloitte &
Touche LLP, its partners, associates or employees, other than as pertain to the
engagement of Deloitte & Touche LLP as independent auditors for the Company in
the previous year. Representatives of Deloitte & Touche LLP are expected to be
present at the Meeting and will be given the opportunity to make a statement if
they so desire and to respond to appropriate questions.
VOTE
The favorable vote of a majority of the votes cast regarding the
proposal is required to ratify the selection of Deloitte & Touche LLP.
Accordingly, abstentions or broker non-votes will not affect the outcome of the
vote on the proposal. Unless instructed to the contrary in the proxy, the shares
represented by the proxies will be voted FOR the proposal to ratify the
selection of Deloitte & Touche LLP to serve as independent auditors for the
Company for the fiscal year ending December 31, 2000.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a)
of the Exchange Act requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports (Forms 3, 4 and 5) of stock ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and beneficial owners of more than ten
percent of the Company's Common Stock are required by Securities and Exchange
Commission regulation to furnish the Company with copies of all such forms that
they file.
Based solely on the Company's review of the copies of such forms
received by it, and on written representations from certain reporting persons,
the Company believes that during fiscal 1999, all reports required by Section
16(a) applicable to its directors, officers and ten percent shareholders were
filed with the Securities and Exchange Commission on a timely basis, subject to
the following exception: a Form 4 was not timely filed on behalf of Mr. Jannard
for the month of December 1999.
SHAREHOLDERS' PROPOSALS. In accordance with the Company's Bylaws, proposals of
shareholders intended to be presented at the Company's Annual Meeting of
Shareholders to be held in 2001 must be received by the Company, marked to the
attention of the Secretary, no later than December 20, 2000. Proposals must
comply with the requirements as to form and substance established by the
Securities and Exchange Commission for proposals in order to be included in the
proxy statement.
Shareholder proposals submitted to he Company for consideration at the
Company's Annual Meeting of Shareholders to be held in 2001 outside the
processes of Rule 14a-8 (i.e., the procedures for placing a shareholder's
proposal in the Company's proxy materials) will be considered untimely if
received by the Company after March 16, 2001. Accordingly, the proxy with
respect to the Company's 2001 Annual Meeting of Shareholders will confer
discretionary authority to vote on any shareholder proposals received by the
Company after March 16, 2001.
THE BOARD OF DIRECTORS
Foothill Ranch, California
17
<PAGE> 20
- --------------------------------------------------------------------------------
PROXY OAKLEY, INC. PROXY
COMMON STOCK
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINT(S) JIM JANNARD AND LINK NEWCOMB AS PROXIES
WITH FULL POWER OF SUBSTITUTION, HEREBY AUTHORIZE(S) EACH OF THEM TO REPRESENT
AND TO VOTE, AS DESIGNATED ON THE REVERSE SIDE HEREOF, ALL SHARES OF COMMON
STOCK OF OAKLEY INC. (THE "COMPANY") HELD OF RECORD BY THE UNDERSIGNED ON MARCH
31, 2000 AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 9, 2000, AT
10:00 A.M., LOCAL TIME, OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF, AT THE
OAKLEY, INC. HEADQUARTERS AT ONE ICON, FOOTHILL RANCH, CALIFORNIA 92610 AND
HEREBY REVOKE(S) ANY PROXIES HERETOFORE GIVEN.
BY SIGNING AND DATING THE REVERSE SIDE OF THIS CARD, THE UNDERSIGNED
AUTHORIZE(S) THE PROXIES TO VOTE EACH PROPOSAL, AS MARKED, OR IF NOT MARKED TO
VOTE "FOR" EACH PROPOSAL, PLEASE COMPLETE AND MAIL THIS CARD AT ONCE IN THE
ENVELOPE PROVIDED.
THIS PROXY IS REVOCABLE AND THE UNDERSIGNED MAY REVOKE IT AT ANY TIME PRIOR TO
ITS EXERCISE. ATTENDANCE OF THE UNDERSIGNED AT THE ABOVE MEETING OR ANY
ADJOURNED OR POSTPONED SESSION THEREOF WILL NOT BE DEEMED TO REVOKE THIS PROXY
UNLESS THE UNDERSIGNED WILL INDICATE AFFIRMATIVELY THERE AT THE INTENTION OF THE
UNDERSIGNED TO VOTE SAID SHARES IN PERSON.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE> 21
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
OAKLEY, INC.
JUNE 9, 2000
[Arrow Down] Please Detach and Mail in the Envelope Provided [Arrow Down]
- --------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
WITHHOLD AUTHORITY
FOR ALL NOMINEES TO VOTE FOR ALL NOMINEES
LISTED TO THE RIGHT LISTED TO THE RIGHT
Election of [ ] [ ]
Directors
For, except vote withheld from the following nominee(s)
THE BOARD OF DIRECTORS OF OAKLEY, INC. RECOMMENDS
A VOTE FOR THE NOMINEES SET FORTH IN PROPOSAL 1 AND FOR PROPOSAL 2
FOR AGAINST ABSTAIN
NOMINEES: Jim Jannard 2. Ratification of the selection [ ] [ ] [ ]
Link Newcomb of Deloitte & Touche LLP as
Irene Miller independent auditors for the
Orin Smith year ending December 31, 2000.
Michael Jordan
3. In their discretion, the proxyholders are authorized
to vote on such other matters that may properly come
before the Annual Meeting or any adjournment or
postponement thereof.
IMPORTANT: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON
THIS PROXY. WHEN SHARES ARE HELD BY JOINT TENANTS,
BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. WHEN SIGNING IN A REPRESENTATIVE
CAPACITY, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP PLEASE SIGN IN THE PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES FOR DIRECTOR AND FOR THE RATIFICATION
OF THE SELECTION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS AND, IN THE DISCRETION OF THE
PROXY HOLDERS, ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE
NOTICE OF THE ANNUAL MEETING OF THE STOCKHOLDERS AND
A PROXY STATEMENT FOR THE ANNUAL MEETING PRIOR TO THE
SIGNING OF THIS PROXY.
SIGNATURE________________________________________ DATE___________________, 2000
(Be sure to date proxy)
SIGNATURE IF HELD JOINTLY________________________ DATE___________________, 2000
PLEASE VOTE, SIGN AND RETURN THIS PROXY CARD AS (Be sure to date proxy)
PROMPTLY AS POSSIBLE USING THE ENCLOSED ENVELOPE
