<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>
Tiffany & Co.
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
April 8, 1999
TIFFANY & CO.
727 Fifth Avenue
New York, N.Y. 10022
William R. Chaney
Chairman of the Board
Michael J. Kowalski
President and Chief Executive Officer
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Tiffany & Co. on Thursday, May 20, 1999, at 10:00 a.m. in the
Roof/Penthouse of the St. Regis Hotel, 2 East 55th Street at Fifth Avenue,
New York, New York.
We hope that you can join us at this meeting. As a stockholder, your
participation in the affairs of Tiffany & Co. is important, regardless of the
number of shares that you hold. Therefore, whether or not you are able to
personally attend, please vote your shares by completing and returning the
enclosed proxy card or by calling the telephone number listed on the card as
soon as possible.
Enclosed are Tiffany & Co.'s 1998 Annual Report and Proxy Statement.
We hope you find it informative reading.
Thank you for your interest in Tiffany & Co.
Sincerely,
/s/ William R. Chaney
William R. Chaney
/s/ Michael J. Kowalski
Michael J. Kowalski
<PAGE> 3
1999 Annual Meeting of Stockholders
Proxy Statement
[graphic]
Tiffany & Co.
<PAGE> 4
PROXY STATEMENT FOR THE
1999 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Attendance and Voting Matters............................................... 1
Introduction.......................................................... 1
Matters To Be Voted On at the 1999 Annual Meeting..................... 1
How To Vote Your Shares............................................... 1
The Number of Votes That You Have ................................... 2
What a Quorum Is...................................................... 2
What a Broker Non-Vote Is............................................. 3
What Vote Is Required To Approve Each Proposal ....................... 3
Proxy Voting on Proposals in the Absence of Instructions.............. 4
How Proxies Are Solicited............................................. 4
Ownership of Tiffany & Co................................................... 5
Stockholders Who Own At Least Five Percent of Tiffany & Co............ 5
Ownership by Executive Officers and Directors......................... 5
Compliance of Directors, Executive Officers and Greater-Than-Ten-
Percent Stockholders with Section 16(a) Beneficial Ownership
Reporting Requirements.......................................... 7
Tiffany & Co.'s Board of Directors and Executive Officers................... 7
The Board of Directors, In General ................................... 7
Committees of the Board of Directors.................................. 8
Compensation of Directors............................................. 9
Compensation of the CEO and Other Executive Officers................. 10
Compensation Committee Report on Executive Compensation.............. 17
Performance of Tiffany & Co. Stock......................................... 21
Discussion of Proposals Presented by the Board............................. 22
Item I - Election of the Board of Directors.......................... 22
Item II - Increase in the Number of Authorized Shares of Common Stock 24
Item III - Appointment of Independent Accountants.................... 26
Other Matters.............................................................. 27
Stockholder Proposals, In General.................................... 27
Stockholder Proposals for Inclusion in the Proxy Statement
for the 2000 Annual Meeting.................................... 27
Reminder to Vote..................................................... 27
</TABLE>
<PAGE> 5
ATTENDANCE AND VOTING MATTERS
INTRODUCTION
The Annual Meeting of the stockholders of Tiffany & Co. will be held on
Thursday, May 20, 1999, at 10:00 a.m. in the Roof/Penthouse of the St. Regis
Hotel, 2 East 55th Street at Fifth Avenue, New York, New York.
You are entitled to vote at our 1999 Annual Meeting because you were a
stockholder, or held Tiffany & Co. stock through a broker, bank or other
nominee, at the close of business on March 25, 1999, the record date for this
year's Annual Meeting. That is why you were sent this Proxy Statement and
accompanying material.
We have also enclosed for your review a copy of our 1998 Annual Report to
Stockholders. This Report contains financial and other information about our
business during the last fiscal year (February 1, 1998, to January 31, 1999).
MATTERS TO BE VOTED ON AT THE 1999 ANNUAL MEETING
There are three matters scheduled to be voted on at this year's Annual
Meeting:
- - the election of the Board of Directors,
- - the amendment of our Restated Certificate of Incorporation to increase
the number of authorized shares of common stock from 60,000,000 to
120,000,000, and
- - the approval of independent accountants to examine our fiscal 1999
financial statements.
HOW TO VOTE YOUR SHARES
You can vote your shares at the Annual Meeting in one of two ways.
The first way is by having one or more individuals who will be at the
Annual Meeting vote your shares for you. These individuals are called "proxies"
and using them to cast your ballot at the Annual Meeting is called voting "by
proxy."
If you wish to vote by proxy, you must do one of the following:
- - complete the enclosed form, called a "proxy card," and mail it in the
envelope provided, or
- - call the telephone number listed on the proxy card and follow the
pre-recorded instructions.
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<PAGE> 6
If you do one of the above, you will have designated three officers of
Tiffany & Co. to act as your proxies at the 1999 Annual Meeting. One of them
will then vote your shares at the Annual Meeting in accordance with the
instructions you have given them on the proxy card or over the telephone with
respect to each of the proposals presented in this Proxy Statement.
While we know of no other matters to be acted upon at this year's Annual
Meeting, it is possible that other matters may be presented at the meeting. If
that happens and you have voted by proxy, your proxy will vote on such other
matters in accordance with his or her best judgment.
If you decide to vote by proxy, you can revoke - that is, change or cancel
- - your vote at any time before your proxy casts his or her vote at the Annual
Meeting. Revoking your vote by proxy may be accomplished in one of three ways:
- - you can send in another proxy card or call in different instructions,
- - you can notify the Secretary of Tiffany & Co. in writing that you wish
to revoke your proxy, or
- - you can attend the Annual Meeting and vote in person.
The other way you can vote your shares is by attending the Annual Meeting
and voting in person. If you decide to vote this way, you do not have to bring
the enclosed proxy card with you to the Annual Meeting; you will be given a
ballot at the meeting to complete and return. This ballot must be submitted
before the polls close at the Annual Meeting in order for your vote to be
counted.
A special note for those who plan to attend the Annual Meeting and vote in
person: if your shares are held in the name of a broker, bank or other nominee,
you must bring a statement or letter from the person or entity in whose name the
shares are registered indicating that you are the beneficial owner of those
shares as of the record date. If you do not bring such a statement or letter,
your vote at the meeting will not be counted.
THE NUMBER OF VOTES THAT YOU HAVE
Each share of Tiffany & Co. common stock has one vote. The number of
shares, or votes, that you have at this year's Annual Meeting is indicated on
the enclosed proxy card.
WHAT A QUORUM IS
A "quorum" is the minimum number of shares that must be present at an
Annual Meeting for a valid vote. For our stockholder meetings, a majority of
shares outstanding on the record date must be present.
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<PAGE> 7
The number of shares outstanding at the close of business on March 25,
1999, the record date, was 35,115,421. Therefore, 17,557,711 shares must be
present at our 1999 Annual Meeting for a quorum to be established.
To determine if there is a quorum, we consider a share "present" if:
- - the stockholder who owns the share is present at the Annual Meeting,
whether or not he or she chooses to cast a ballot on any proposal, or
- - the stockholder is represented by proxy at the Annual Meeting.
If a stockholder is represented by proxy at the Annual Meeting, his or her
shares are deemed present for purposes of a quorum, even if:
- - the stockholder withholds his or her vote or marks "abstains" for one
or more proposals; or
- - there is a "broker non-vote" on one or more proposals.
WHAT A "BROKER NON-VOTE" IS
Shares held in a broker's name may be voted by the broker, but only in
accordance with the rules of the New York Stock Exchange. Under those rules,
your broker must follow your instructions. If you do not provide instructions to
your broker, your broker may vote your shares based on its own judgment or it
may withhold a vote. Whether your broker votes or withholds its vote is
determined by the New York Stock Exchange rules and depends on the proposal
being voted upon.
If your broker withholds its vote, that is called a "broker non-vote." As
stated above, broker non-votes are counted as present for a quorum.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL
Directors are elected by a plurality of the votes cast for directors at
the Annual Meeting. This means that, of all nominees, the top eight in terms of
"for" votes received will be elected directors.
You may withhold your vote "for" any nominee, but there is no means for
you to vote "against" any nominee. To withhold your vote "for" any or all of the
nominees named in this Proxy Statement, you can so mark your proxy card or
ballot or, if you call in your vote, so indicate by telephone. A broker non-vote
is the same as a withheld vote; neither will have any effect on the outcome of
the election of directors.
The proposal to approve the amendment to our Restated Certificate of
Incorporation requires the affirmative vote of a majority of the issued and
outstanding shares of Tiffany & Co. common stock. That means that holders of
17,557,711 shares of common stock must vote "for" the proposal in order to
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<PAGE> 8
increase the number of authorized shares from 60,000,000 to 120,000,000. For
this proposal, broker non-votes and abstentions will have the same effect as a
vote "against" the proposal.
The proposal to ratify the approval of PricewaterhouseCoopers LLP as
independent accountants for fiscal 1999 will be decided by a plurality of the
votes cast "for" or "against" the proposal. Therefore, if you "abstain" from
voting on this matter - in other words, you do not vote on the matter or you
indicate "abstain" on the proxy card or by telephone, it will not affect the
outcome of votes on this proposal. That is because only votes cast "for" or
"against" this proposal will be counted in determining whether or not it has
been approved. Broker non-votes on this proposal will be treated the same as
abstentions; neither will have any effect on the vote on the proposal.
PROXY VOTING ON PROPOSALS IN THE ABSENCE OF INSTRUCTIONS
If you complete a proxy card or you call the telephone number on the card
and enter your control number, but do not give any instructions as to how your
shares are to be voted, your proxies will vote your shares in accordance with
the following recommendations of the Board of Directors:
- FOR the election of all eight nominees for director named in
this Proxy Statement,
- FOR approval of an amendment to our Restated Certificate of
Incorporation increasing the number of authorized shares of
common stock from 60,000,000 shares to 120,000,000 shares, and
- FOR approval of the appointment of PricewaterhouseCoopers LLP
as independent accountants to examine our fiscal 1999
financial statements.
HOW PROXIES ARE SOLICITED
We have hired the firm of Kissel-Blake Inc. to assist in the
solicitation of proxies on behalf of the Board of Directors. Kissel-Blake
Inc. has agreed to perform this service for a fee of not more than $5,500
plus out-of-pocket expenses.
Employees of Tiffany and Company, a subsidiary of Tiffany & Co., may also
solicit proxies on behalf of the Board of Directors. These employees will not
receive any additional compensation for their work soliciting proxies and any
costs incurred by them in doing so will be paid for by Tiffany and Company.
This particular solicitation is being made by mail, but proxies may also
be solicited in person, by facsimile, by telephone or by electronic mail
(e-mail).
In addition, we will pay for any costs incurred by brokerage houses and
others for forwarding proxy materials to beneficial owners.
4
<PAGE> 9
OWNERSHIP OF TIFFANY & CO.
STOCKHOLDERS WHO OWN AT LEAST FIVE PERCENT OF TIFFANY & CO.
The following table shows all persons who were known to us to be
"beneficial owners" of at least five percent of Tiffany & Co. stock as of March
25, 1999. Footnote 1 below provides a brief explanation of what is meant by the
term "beneficial ownership."
This table is based upon reports filed with the Securities and Exchange
Commission, commonly referred to as the SEC. These reports are publicly
available. You may therefore obtain copies of them from the SEC, if you so
desire.
<TABLE>
<CAPTION>
Name and Address Amount and Percent
of Nature of Beneficial of
Beneficial Owner Ownership (1) Class
- ---------------- ------------- -----
<S> <C> <C>
The Equitable Companies Incorporated
1290 Avenue of the Americas
New York, New York 10104 4,465,867 (2) 12.7
Oak Value Capital Management, Inc.
3100 Tower Boulevard, Suite 700
Durham, North Carolina 27707 2,347,078 6.7
</TABLE>
- -------------------------
(1) "Beneficial ownership" is a term broadly defined by the SEC and includes
more than the typical form of stock ownership, that is, stock held in the
person's name. The term also includes what is referred to as "indirect
ownership" such as where, for example, the person has or shares the power to
vote the stock, sell it or acquire it within 60 days. Accordingly, some of the
shares reported as beneficially owned in this table may actually be held by
other persons or organizations. Those other persons and organizations are
described in the reports filed with the SEC.
(2) The number of shares of Tiffany & Co. common stock reported in this table as
beneficially owned by The Equitable Companies Incorporated includes 3,992,122
shares beneficially owned by its subsidiary, Alliance Capital Management L.P.
OWNERSHIP BY EXECUTIVE OFFICERS AND DIRECTORS
The following table shows the number of shares of Tiffany & Co. common
stock beneficially owned as of March 25, 1999, by executive officers, including
the Chief Executive Officer (the "CEO") and the four next most highly
compensated executive officers, and directors of Tiffany & Co. as of the end of
the last fiscal year (January 31, 1999).
5
<PAGE> 10
<TABLE>
<CAPTION>
Amount and Percent
Nature of Beneficial of
Name Ownership Class (1)
- ---- --------- ---------
<S> <C> <C>
DIRECTORS:
William R. Chaney (CEO)(2) 460,200 (3) 1.3
Rose Marie Bravo 2,804 (4) *
Samuel L. Hayes III 75,550 (5)(6) *
Michael J. Kowalski (Executive Officer) 196,750 (7) *
Charles K. Marquis 47,703 (5) *
James E. Quinn (Executive Officer) 92,282 (8) *
Yoshiaki Sakakura 1,748 (9) *
William A. Shutzer 56,003 (10) *
Geraldine Stutz 48,203 (5) *
EXECUTIVE OFFICERS:
James N. Fernandez 25,432 (11) *
Patrick B. Dorsey 41,100 (12) *
ALL EXECUTIVE OFFICERS AND
DIRECTORS AS A GROUP (16 PERSONS): 1,129,084 (13) 3.2
</TABLE>
- -------------------------
(1) An asterisk (*) is used to indicate less than 1% of the class outstanding.
(2) On February 1, 1999, Mr. Kowalski assumed the title and duties of Chief
Executive Officer.
(3) Includes 65,000 shares issuable upon the exercise of "Vested Stock Options"
which are stock options that either are exercisable as of March 25, 1999, or
will become exercisable within 60 days of that date, and 64,200 shares held by
Mr. Chaney's wife.
(4) Includes 1,804 shares issuable upon the exercise of Vested Stock Options.
(5) Includes 29,703 shares issuable upon the exercise of Vested Stock Options.
(6) Includes 44,500 shares held in trust for the benefit of children of Prof.
Hayes, Barbara L. Hayes, his wife, as trustee; 506 shares held in trust for the
benefit of a brother of Prof. Hayes, Prof. Hayes as trustee; and 800 shares held
by Prof. Hayes's wife.
(7) Includes 158,750 shares issuable upon the exercise of Vested Stock Options.
(8) Includes 87,250 shares issuable upon the exercise of Vested Stock Options;
32 shares credited to Mr. Quinn's account under the Tiffany & Co. Employee
Profit Sharing and Retirement Savings Plan; and 4,000 shares held by Mr. Quinn's
wife.
(9) Represents shares issuable upon the exercise of Vested Stock Options.
(10) Includes 5,719 shares issuable upon the exercise of Vested Stock Options
and 25,300 shares held by Mr. Shutzer's minor children.
(11) Includes 23,000 shares issuable upon the exercise of Vested Stock Options
and 32 shares credited to Mr. Fernandez's account under the Tiffany & Co.
Employee Profit Sharing and Retirement Savings Plan.
(12) Includes 33,500 shares issuable upon the exercise of Vested Stock Options.
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<PAGE> 11
(13) Includes 448,500 shares issuable upon the exercise of Vested Stock Options
and 373 shares held in the Tiffany & Co. Employee Profit Sharing and Retirement
Savings Plan.
COMPLIANCE OF DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-TEN-PERCENT
STOCKHOLDERS WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires Tiffany &
Co.'s directors, executive officers and greater-than-ten-percent stockholders to
file reports of ownership and changes in ownership with the SEC and the New York
Stock Exchange. These persons are also required to provide us with copies of
those reports.
Based on our review of those reports and of certain other documents we
have received, we believe that, during and with respect to our last fiscal year
(February 1, 1998, to January 31, 1999), all filing requirements under Section
16(a) applicable to our directors, executive officers and
greater-than-ten-percent stockholders were satisfied.
TIFFANY & CO.'S BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS, IN GENERAL
Tiffany & Co. is a Delaware corporation. Our principal subsidiary is
Tiffany and Company, a New York corporation. For the sake of clarity, from
here on Tiffany & Co. will be referred to as "Tiffany & Co." or "the Company"
in this Proxy Statement and Tiffany and Company will be referred to as simply
"Tiffany."
Our Board of Directors is currently comprised of nine members. However, as
explained below, after this year's Annual Meeting, the size of the Board will be
reduced to eight members.
Directors are required by our By-laws to be less than age 72 when elected
or appointed unless the Board of Directors waives that provision with respect to
an individual director whose continued service is deemed uniquely important to
Tiffany & Co. The Board of Directors can also fill vacancies and newly created
directorships as well as amend the By-laws to provide for a greater or lesser
number of directors.
Yoshiaki Sakakura, a member of the Board of Directors since November 1989,
has decided not to stand for re-election at this year's Annual Meeting. We would
like to take this opportunity to thank him for his many years of dedicated
service to the Board. Rather than nominate a successor, however, we have decided
to follow the recommendation of the Nominating Committee and reduce the size of
the Board from nine to eight members.
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<PAGE> 12
The Board of Directors met seven times during fiscal 1998. With respect
to the eight nominees for director, their attendance rate at Board and
committee meetings averaged over 98% in fiscal 1998. Mr. Sakakura's attendance
rate in fiscal 1998 was less than 75%.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation Committee, a
Stock Option Subcommittee and a Nominating Committee.
Under its charter, the Audit Committee's responsibilities include
- reviewing the adequacy of our system of internal financial
controls,
- recommending to the Board of Directors the appointment of
independent accountants and evaluating their proposed audit
scope, performance and fee arrangement,
- conducting a post-audit review of our financial statements and
audit findings in advance of publication, and
- reviewing in advance proposed changes in our accounting
methods.
Prof. Hayes, Mr. Marquis and Mr. Shutzer currently serve as members of
the Audit Committee. During fiscal 1998, there were three meetings of this
committee.
The functions performed by the Compensation Committee include
- approval of remuneration arrangements for executive officers,
and
- approval of compensation plans in which officers and employees
of Tiffany are eligible to participate.
Ms. Bravo, Prof. Hayes, Mr. Marquis, Mr. Sakakura, Mr. Shutzer and Ms.
Stutz currently serve as members of the Compensation Committee. In fiscal
1998, there were three meetings of this committee.
The Stock Option Subcommittee, a subcommittee of the Compensation
Committee, determines the grant of options and other matters under our 1998
Employee Incentive Plan.
Prof. Hayes, Mr. Shutzer and Ms. Stutz currently serve as members of
the Stock Option Subcommittee. The Stock Option Subcommittee met six times
in fiscal 1998.
The role of the Nominating Committee is to recommend to the Board of
Directors
- policies on the composition of the Board of Directors,
- criteria for the selection of nominees for election to the
Board of Directors,
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<PAGE> 13
- nominees to fill vacancies on the Board of Directors, and
- nominees for election to the Board of Directors.
Prof. Hayes, Mr. Shutzer and Ms. Stutz currently serve as members of
the Nominating Committee. This committee had one meeting in fiscal 1998.
COMPENSATION OF DIRECTORS
Directors who are not employees of Tiffany & Co. or its subsidiaries
are paid or provided with the following for their service on the Board:
- an annual retainer of $38,000,
- an additional annual retainer of $2,500 if the director is
also a chairperson of the Compensation, Audit or Nominating
Committee,
- a per-meeting-attended fee of $2,000 for meetings attended in
person, except that no fee is paid for attendance at any
committee or subcommittee meetings which occur on the same day
as a meeting of the full Board of Directors,
- a fee of $500 for each telephonic meeting in which the
director participates,
- stock options, as discussed below, and
- a retirement benefit, also discussed below.
Under Tiffany's Amended and Restated Executive Deferral Plan, directors
may defer up to one hundred percent (100%) of their cash compensation and invest
the amounts they defer in various accounts and funds established under the plan.
Tiffany & Co. also reimburses directors for expenses they incur in
attending Board and committee meetings, including expenses for travel, food
and lodging.
As indicated above, non-employee directors may receive options to purchase
shares of Tiffany & Co. common stock. These options vest in two equal
installments - 1/2 after one year of service on the Board following the grant of
the option, and the balance, after two years of service. However, as explained
below, all installments become immediately exercisable in the event there is a
"change in control" of Tiffany & Co.
These options typically expire after 10 years, but they expire sooner if,
before the end of that 10-year period, the director leaves the Board. The
option's exercise price is the fair market value of Tiffany & Co. common stock
on the date of grant, which is calculated as the average of the highest and
lowest sales prices of the stock on the New York Stock Exchange on the date of
grant.
Current policy provides that new non-employee directors will be granted
options to purchase 5,000 shares of Tiffany & Co. common stock upon their
election or appointment to the Board.
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<PAGE> 14
Non-employee directors with five or more years of Board service when they
retire are also entitled to receive an annual retirement benefit equal to the
lesser of the annual retainer in effect during the year in which they retire or
$38,000. Subject to adjustment for partial years served, this benefit is payable
quarterly and continues for a period of time equal to the director's length of
service on the Board. However, this particular benefit will not apply to any new
director appointed or elected after January 1, 1999.
Messrs. Chaney, Kowalski and Quinn are employees of Tiffany. They
therefore receive no separate compensation for their service as directors.
COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS
This section includes a summary of salaries, bonuses and other
compensation paid to our CEO and each of the four (4) next highest paid
executive officers during the last three fiscal years. Also presented in this
section are options granted to and exercised by each of them in fiscal 1998,
retirement benefits currently available to them and any special employment,
termination or change-in-control arrangements that have been made with any of
them.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Name and Securities Underlying All Other
Principal Position (1) Year Salary Bonus Options/SARs Compensation
- ---------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
William R. Chaney 1998 $636,172 $780,000 15,000 shares $183,113 (2)
Chairman of the 1997 $556,962 $484,000 50,000 shares $180,018 (3)
Board and CEO 1996 $522,248 $540,000 30,000 shares $138,650 (4)
Michael J. Kowalski 1998 $466,628 $337,500 100,000 shares $67,905 (5)
President and Chief 1997 $387,572 $209,000 35,000 shares $50,647 (6)
Operating Officer 1996 $352,896 $222,750 25,000 shares $28,950 (7)
James E. Quinn 1998 $382,048 $254,000 75,000 shares $53,765 (8)
Vice Chairman 1997 $328,347 $161,000 25,000 shares $43,049 (9)
1996 $315,209 $182,250 15,000 shares $26,231 (10)
James N. Fernandez 1998 $316,418 $186,000 50,000 shares $38,697 (11)
Executive Vice President 1997 $264,845 $106,000 20,000 shares $30,940 (12)
and Chief Financial Officer 1996 $231,761 $106,500 10,000 shares $23,087 (13)
Patrick B. Dorsey 1998 $237,189 $85,000 12,000 shares $27,460 (14)
Senior Vice President, 1997 $216,110 $71,000 10,000 shares $27,365 (15)
General Counsel and 1996 $209,321 $81,000 6,000 shares $19,672 (16)
Secretary
</TABLE>
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<PAGE> 15
(1) Titles are as of the end of fiscal year 1998 (January 31, 1999). On February
1, 1999, Mr. Kowalski assumed the title and duties of Chief Executive Officer.
(2) Represents $100,000 contributed to Mr. Chaney's deferred compensation
account, $80,521 attributable to split-dollar life insurance premiums and $2,592
attributable to premiums for executive long-term disability insurance. Mr.
Chaney's deferred compensation arrangement and the split-dollar life insurance
provided to him and other executive officers are discussed below under "Other
Compensation Arrangements."
(3) Represents $100,000 contributed to Mr. Chaney's deferred compensation
account, $77,858 attributable to split-dollar life insurance premiums and $2,160
attributable to premiums for executive long-term disability insurance.
(4) Represents $100,000 contributed to Mr. Chaney's deferred compensation
account, $36,490 attributable to split-dollar life insurance premiums and $2,160
attributable to premiums for executive long-term disability insurance.
(5) Represents $65,313 attributable to split-dollar life insurance premiums and
$2,592 attributable to premiums for executive long-term disability insurance.
(6) Represents $48,487 attributable to split-dollar life insurance premiums and
$2,160 attributable to premiums for executive long-term disability insurance.
(7) Represents $26,935 attributable to split-dollar life insurance premiums and
$2,015 attributable to premiums for executive long-term disability insurance.
(8) Represents $51,173 attributable to split-dollar life insurance premiums and
$2,592 attributable to premiums for executive long-term disability insurance.
(9) Represents $40,889 attributable to split-dollar life insurance premiums and
$2,160 attributable to premiums for executive long-term disability insurance.
(10) Represents $24,216 attributable to split-dollar life insurance premiums and
$2,015 attributable to premiums for executive long-term disability insurance.
(11) Represents $36,105 attributable to split-dollar life insurance premiums and
$2,592 attributable to premiums for executive long-term disability insurance.
(12) Represents $28,840 attributable to split-dollar life insurance premiums and
$2,100 attributable to premiums for executive long-term disability insurance.
(13) Represents $21,550 attributable to split-dollar life insurance premiums and
$1,537 attributable to premiums for executive long-term disability insurance.
(14) Represents $25,271 attributable to split-dollar life insurance premiums and
$2,189 attributable to premiums for executive long-term disability insurance.
(15) Represents $25,662 attributable to split-dollar life insurance premiums and
$1,703 attributable to premiums for executive long-term disability insurance.
(16) Represents $18,275 attributable to split-dollar life insurance premiums and
$1,397 attributable to premiums for executive long-term disability insurance.
11
<PAGE> 16
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
Percent of
Total Options
Granted to all
Employees in Per
Fiscal Share
Options Year Exercise Expiration Grant Date
Name Granted (1) 1998 Price (2) Date (3) Present Value (4)
- ---- ----------- ---- --------- -------- -----------------
<S> <C> <C> <C> <C> <C>
William R. Chaney 15,000 shares 2.0 $59.9063 1/21/2009 $294,450
Michael J. Kowalski 100,000 shares 13.1 $59.9063 1/21/2009 $1,963,000
James E. Quinn 75,000 shares 9.8 $59.9063 1/21/2009 $1,472,250
James N. Fernandez 50,000 shares 6.5 $59.9063 1/21/2009 $981,500
Patrick B. Dorsey 12,000 shares 1.6 $59.9063 1/21/2009 $235,560
</TABLE>
- -------------------------
(1) These options are exercisable in four equal installments, with the first
installment (1/4 of the total grant) becoming exercisable on the first
anniversary of the grant date and the three remaining installments becoming
exercisable on subsequent consecutive anniversaries of the grant date. However,
all installments become immediately exercisable in the event there is a "change
in control" of Tiffany & Co. The term "change in control" is discussed below.
(2) The exercise price for each share is its fair market value on the date of
grant. This is determined by averaging the highest and lowest sales prices of
Tiffany & Co. common stock on the New York Stock Exchange on the date of grant.
(3) Normally, these options expire on the 10th anniversary of their grant date.
However, their expiration date will be accelerated if, before that 10th
anniversary, the officer dies, becomes disabled, retires or leaves Tiffany.
(4) The amounts stated are hypothetical values calculated under the
Black-Scholes model, a mathematical formula used to value options covering
securities traded on stock exchanges. This formula considers a number of factors
in estimating an option's present value, including the stock's volatility rate
(21.5%), expected term (5 years), interest rate (5.5%) and dividend yield
(0.8%). The actual value, if any, that the executive officer will realize from
these options will depend solely on the increase of the stock price over the
$59.9063 per share exercise price when the options are exercised.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Shares Unexercised Options In-The-Money Options
Acquired Value at Fiscal Year-End (1) at Fiscal Year-End (1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William R. Chaney 80,000 $2,052,404 235,000/ 80,000 $8,333,589/$1,359,219
Michael J. Kowalski 12,000 $635,010 158,750/151,250 $5,450,363/$1,099,375
James E. Quinn 10,000 $329,688 87,250/108,750 $2,838,479/ $716,250
James N. Fernandez 10,000 $263,057 23,000/ 75,000 $ 595,000/ $524,688
Patrick B. Dorsey 10,000 $259,980 52,500/ 13,500 $1,877,124/ $286,500
</TABLE>
12
<PAGE> 17
1) Options are deemed "exercisable" in this table if they are exercisable
as of January 31, 1999, or will become exercisable within 60 days of that
date.
PENSION PLAN AND SUPPLEMENTAL RETIREMENT INCOME PLAN
Tiffany has established two separate retirement plans for eligible
employees: a Pension Plan and a Supplemental Retirement Income Plan.
The Pension Plan is a "qualified plan," that is, it is designed to comply
with those provisions of the Internal Revenue Code applicable to retirement
plans. The Pension Plan provides participants with a retirement benefit based on
the participant's "average final compensation" multiplied by his or her years of
service with Tiffany. The amount of the benefit payable under the Pension Plan
is subject to Internal Revenue Code limitations.
The Supplemental Retirement Income Plan is not a qualified plan and is not
subject to Internal Revenue Code limitations on the amount of benefits it may
pay. It was established to supplement the Pension Plan and Social Security by
providing additional payments upon a participant's retirement.
Payments under the Supplemental Retirement Income Plan, together with
payments under the Pension Plan and from Social Security, would equal a variable
percentage of the participant's "average final compensation." This assumes that
the vesting requirements under the Supplemental Retirement Income Plan are met.
Depending upon the participant's years of service with Tiffany, the
combined benefit under the Pension Plan and the Supplemental Retirement Income
Plan and from Social Security would be as follows:
<TABLE>
<CAPTION>
Combined Benefit as a
Percentage of
Years of Service Average Final Compensation
---------------- --------------------------
<S> <C>
less than 10 0%
10-14 20%
15-19 30%
20-24 40%
25-29 50%
30 or more 60%
</TABLE>
A participant's "average final compensation" is the average annual
compensation he or she received over the five highest paid plan years (January 1
to December 31) during his or her last 10 years of service. In general,
compensation reported in the Summary Compensation Table above as "Salary" and
"Bonus" is compensation for purposes of the Pension Plan and the Supplemental
Retirement Income Plan; amounts attributable to the exercise of stock options
are not included.
13
<PAGE> 18
The following table sets forth the estimated combined annual benefit
payable on retirement to participants under the Supplemental Retirement Income
Plan, Pension Plan and Social Security.
<TABLE>
<CAPTION>
Annual Total Benefit for Years of Service
Average Final --------------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $37,500 $50,000 $62,500 $75,000 $75,000
$150,000 $45,000 $60,000 $75,000 $90,000 $90,000
$175,000 $52,500 $70,000 $87,500 $105,000 $105,000
$200,000 $60,000 $80,000 $100,000 $120,000 $120,000
$225,000 $67,500 $90,000 $112,500 $135,000 $135,000
$250,000 $75,000 $100,000 $125,000 $150,000 $150,000
$300,000 $90,000 $120,000 $150,000 $180,000 $180,000
$400,000 $120,000 $160,000 $200,000 $240,000 $240,000
$450,000 $135,000 $180,000 $225,000 $270,000 $270,000
$500,000 $150,000 $200,000 $250,000 $300,000 $300,000
$600,000 $180,000 $240,000 $300,000 $360,000 $360,000
$700,000 $210,000 $280,000 $350,000 $420,000 $420,000
$800,000 $240,000 $320,000 $400,000 $480,000 $480,000
$900,000 $270,000 $360,000 $450,000 $540,000 $540,000
$1,000,000 $300,000 $400,000 $500,000 $600,000 $600,000
</TABLE>
All executive officers except Mr. Chaney are eligible to participate in
the Pension Plan and the Supplemental Retirement Income Plan. At the end of the
last fiscal year (January 31, 1999), the current years of creditable service and
average final compensation under both plans for each of the executive officers
named in the Summary Compensation Table were as follows:
<TABLE>
<CAPTION>
Name Years of Service Average Final Compensation
- ---- ---------------- --------------------------
<S> <C> <C>
Michael J. Kowalski 20 $488,016
James E. Quinn 12 $423,425
James N. Fernandez 20 $304,583
Patrick B. Dorsey 13 $262,985
</TABLE>
OTHER COMPENSATION ARRANGEMENTS
As indicated above, Mr. Chaney is not eligible for benefits under either
the Pension Plan or the Supplemental Retirement Income Plan. Instead, Tiffany
has credited $25,000 per calendar quarter, plus accrued interest at a prime
rate, to an account in his favor. This was done under the terms of a deferred
compensation agreement entered into with Mr. Chaney in December 1989. The
account is maintained on the books of Tiffany as a liability to Mr. Chaney.
On Mr. Chaney's resignation as Chief Executive Officer on January 31,
1999, the deferred compensation agreement was amended to provide for the
discontinuance of accruals to his account after December 31, 1998. As of
February
14
<PAGE> 19
1, 1999, the balance in that account was $2,644,701.78. Commencing in March of
1999, Tiffany became obligated under the Agreement to pay Mr. Chaney a monthly
annuity of $22,449.35 from the account. This obligation terminates on Mr.
Chaney's death. On his death, the excess, if any, of the balance in his account
as of February 1,1999, over the sum of all annuity payments actually made will
be paid to Mr. Chaney's estate.
The Company and Tiffany have entered into retention agreements with four
executive officers. These agreements would provide a covered executive with
compensation if he should incur an "involuntary termination" after a "change in
control." The purpose of these agreements is to keep our management team in
place and focused on their job duties should discussions of a "change in
control" ever occur. An "involuntary termination" does not include a termination
for cause, but does include a resignation for good cause.
When, if ever, a "change in control" occurs, the covered executives
would have fixed, or guaranteed, terms of employment under their retention
agreement as follows: two years in the case of Mr. Fernandez and Mr. Dorsey
and three years in the case of Mr. Kowalski and Mr. Quinn. If the executive
incurs an involuntary termination during his term, compensation, keyed to the
length of his term, would be payable to the executive as follows:
- two or three times salary and bonus as severance,
- a payment equal to the present value of two or three years of
additional years of service credit under the Supplemental
Retirement Income Plan, and
- two or three years of benefits continuation under Tiffany's
health and welfare plans.
The covered executives may receive other benefits in connection with a
"change in control," such as accelerated vesting of stock options or pension
benefits under the Supplemental Retirement Income Plan. Because a covered
executive's receipt of payments and benefits in connection with a "change in
control" may trigger a 20% excise tax under Section 280G of the Internal Revenue
Code, the retention agreements contain "gross-up" provisions. Under these
provisions, the Company or Tiffany must pay the covered executive's excise tax
and any additional income tax resulting from the gross-up provisions. If the
gross-up provisions are triggered, the Company or Tiffany, as the case may be,
will be unable to deduct most of the "change in control" payments and benefits.
Tiffany maintains split-dollar life insurance agreements with some of
its executive officers, including Mr. Chaney, Mr. Kowalski, Mr. Quinn, Mr.
Fernandez and Mr. Dorsey. Under those agreements, Tiffany pays the premiums
for executive life insurance and will be repaid for those premium payments
from the death benefit.
15
<PAGE> 20
Until there is a "change in control," Tiffany has the right to terminate
those split-dollar agreements. If there is a "change in control," Tiffany loses
that right, and will then be bound to continue to pay premiums until the
maturity date of each executive's agreement, which is when the executive reaches
age 65, or age 75 in the case of Mr. Chaney. At the maturity date, the cash
value of each policy will be sufficient for the following purposes:
- to repay Tiffany for its premium investment, and
- to continue the policy in force, without payment of further
premiums, with a death benefit equivalent to twice the
executive's average annual salary and bonus compensation for
the last three calendar years prior to termination of
employment.
In the event of a "change in control" of Tiffany & Co., all options
granted under its various stock option plans become exercisable in full. In
addition, all benefits under the Supplemental Retirement Income Plan become
vested and payable at retirement age, but only if, at the time of the "change in
control," benefits are also vested under the Pension Plan.
For purposes of the split-dollar agreements, the Supplemental Retirement
Income Plan and the stock options, the term "change in control" means that one
of the following events has occurred:
- any person or group of persons acting in concert, and by
person we mean an individual or organization, acquires
thirty-five percent or more in voting power or stock of
Tiffany & Co., including the acquisition of any right, option,
warrant or other right to obtain such voting power or stock,
whether or not presently exercisable, unless the acquisition
is authorized or approved by the Board of Directors;
- a majority of the Board of Directors is, for any reason, not
made up of individuals who were either on the Board on January
21, 1988, or, if they became members of the Board after that
date, were approved by the directors; or
- any other circumstance which the Board deems to be a "change
in control."
For purposes of the retention agreements, a "change in control" includes
the above events, as well as additional events amounting to a change in control
of the Company or Tiffany, even if the Board has approved of such events. Such
events could include a so-called "friendly" acquisition of the Company or
Tiffany.
16
<PAGE> 21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the Compensation Committee's report on executive
compensation:
The Committee's overall compensation policy is to provide a reward
structure that will motivate the officers to assist the Company's
achievement of its strategic and financial goals, retain and attract
competent personnel and link the interests of management with those of the
stockholders through stock-based compensation.
(i) Cash Bonuses
The Committee believes that the portion of an officer's compensation
that is "at risk" (subject to adjustment for corporate and/or individual
performance factors) should vary proportionally to the amount of
responsibility the officer bears for the Company's success. The Committee
adheres to that philosophy in establishing target bonuses.
Each January, the Committee establishes target bonuses for executive
officers for the fiscal year that will begin on the first day of February.
For most officers, a bonus equal to or in excess of the target is
paid if the Company achieves its business plan and if the individual's
personal and/or business unit performance meets or exceeds expectations.
If the Company fails to achieve its business plan, or if the individual's
personal and/or business unit performance fails to meet expectations, the
bonus is reduced or eliminated.
In January of 1999, the Stock Option Subcommittee (the
"Subcommittee") made a different arrangement for Messrs. Kowalski, Quinn
and Fernandez. Their fiscal 1999 bonuses will be calculated solely on the
basis of the increase or decrease in the Company's consolidated net
earnings in accordance with a formula. This arrangement is an "Incentive
Award" under the provisions of the 1998 Employee Incentive Plan. For this
reason, the entire bonus payable to Messrs. Kowalski, Quinn and Fernandez
will be deductible under the provisions of Section 162(m) of the Internal
Revenue Code (see below).
No bonus for fiscal year 1999 will be paid to Mr. Chaney because he
will cease to serve as Chief Executive Officer effective February 1, 1999.
Mr. Kowalski will assume that position from Mr. Chaney.
17
<PAGE> 22
For fiscal 1999, Mr. Kowalski's target bonus under the Incentive
Award arrangement is 75% of his salary. Target bonuses for the other
executive officers in fiscal 1999 range from 35% to 50% of salary and
average approximately 38%.
For fiscal 1998, Mr. Chaney's target bonus under an Incentive Award
arrangement was 80% of his base salary. The actual bonus paid to Mr.
Chaney was $780,000, 150% of his target. This award was calculated by the
Subcommittee solely on the basis of the increase of the Company's
consolidated net earnings in accordance with a formula established by the
Subcommittee in March of 1998.
Target bonuses for the other executive officers for fiscal year 1998
ranged from 30% to 50% of salary and averaged approximately 34% of salary.
The actual bonus paid for fiscal 1998 to each executive officer (other
than Mr. Chaney) was determined by the Committee in January of 1999. At
that time, the Committee compared the Company's projected fiscal 1998
performance to its business and strategic plans, and the performance of
each executive officer (other than of Mr. Chaney himself) was reviewed for
the Committee by Mr. Chaney. Mr. Kowalski also contributed to these
evaluations (other than with respect to himself and Mr. Chaney). Bonuses
actually awarded averaged 127% of the target amounts.
In awarding bonuses for fiscal 1998 to the executive officers (other
than Mr. Chaney) the Committee applied the following measures of corporate
financial performance: the success that the Company had in meeting its
1998 objectives for profitability, expense control, sales results and
staffing. The Committee also considered, where applicable, the financial
results of any business unit for which the officer was responsible.
Finally, the Committee considered the following subjective factors: the
judgments of Mr. Chaney and Mr. Kowalski and the members of the Committee
concerning the officer's leadership, development of creative business
opportunities and motivation and development of staff.
(ii) Salaries and Benefits
The Committee believes that the Company's compensation and benefits
program for its executives is competitive with the program generally
offered by comparable retailers and direct marketing organizations. This
program enables the Company to retain and attract competent management
personnel.
To assess the competitiveness of the compensation offered to the
Company's executive officers, the Committee reviewed an analysis prepared
by a nationally recognized compensation consulting firm. That analysis
included data concerning compensation provided by companies in the Peer
Company Group included in the performance graph set forth below. It also
included
18
<PAGE> 23
compensation data available from other publicly traded retail companies
and survey data for companies of comparable size and, where available, in
comparable businesses. Data from companies other than those included in
the Peer Company Group were reviewed, including data from firms much
larger than the Company. The Committee believes that a competitive market
for the services of retail executives exists, even among firms that are
not peers of the Company or that operate in a different line of business.
Executive salaries are reviewed by the Committee in January of each
year and typically are adjusted on the basis of merit and relevant
competitive factors.
(iii) Stock Options
Options to purchase the common stock of the Company are granted to
executive officers in January of each year, and may be exercised, when
vested, to purchase common stock at its fair market value as of the date
of the option grant. Options vest and become exercisable in four equal
annual installments beginning with the first anniversary of the grant
date; non-vested installments are forfeited if the option holder leaves
the Company.
Option grants are authorized by the Subcommittee. The Subcommittee
believes that the greater the officer's position and level of
responsibility within the Company, the greater the desirability for
compensation that is linked to the long-term interests of the
stockholders. For that reason, the size of option grants is generally tied
to the individual's level of responsibility within the Company. For that
same reason, the Subcommittee also reviews the extent of each executive
officer's beneficial holdings of the Company's Common Stock, including
prior option grants. In determining the size of each option grant the
Subcommittee also considers, in certain cases, subjective factors, such as
the individual's potential for further growth within the Company and his
or her past performance. In January of 1999, the number of shares subject
to options awarded to Messrs. Kowalski, Quinn and Fernandez by the
Subcommittee was reflective of the increased responsibilities that each of
these executives has undertaken effective with the resignation of William
R. Chaney as Chief Executive Officer; however, the Subcommittee has not
made any determination regarding future stock option awards for these
executives.
(iv) Limitation Under Section 162(m) of the Internal Revenue
Code
Section 162(m) of the Internal Revenue Code generally denies a
federal income-tax deduction to a publicly-held corporation for
compensation in excess of $1 million per year paid to certain persons.
These include persons who were, as of the last day of the corporation's
taxable year, (i) the chief executive officer or (ii) among the four
highest-compensated officers. This denial of deduction is
19
<PAGE> 24
subject to an exception for certain "performance-based compensation,"
including the stock options and Incentive Awards discussed above. Under
current arrangements, the Company will be entitled to deduct all
compensation paid to its executive officers. However, the Board of
Directors does not believe that it would be in the best interests of the
Company to adopt a policy that would preclude compensation arrangements
that might in the future be subject to deduction limitations.
Rose Marie Bravo
Samuel L. Hayes III
Charles K. Marquis
Yoshiaki Sakakura
William A. Shutzer
Geraldine Stutz
Members of the
Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, the following directors served as members of the
Compensation Committee during the 1998 fiscal year: Ms. Bravo, Professor
Hayes, Messrs. Marquis, Sakakura and Shutzer and Ms. Stutz. None of the
members of the Compensation Committee was, at any time either during or
before such fiscal year, an employee of Tiffany & Co. or any of its
subsidiaries.
During fiscal 1998, Mr. Marquis was a partner in the law firm of
Gibson, Dunn & Crutcher L.L.P. Mr. Marquis is now a Senior Advisor to
Investcorp International, Inc. Gibson, Dunn & Crutcher L.L.P. has performed
services for the Company and Tiffany.
During fiscal 1998, Tiffany & Co. obtained $100,000,000 in additional long
term financing through a private placement of debt securities. ING Baring Furman
Selz LLC earned a fee of $300,000 for services provided as one of the two
underwriters of that transaction. Mr. Shutzer is an Executive Vice President of
ING Baring Furman Selz LLC and Chairman of its Investment Banking Group.
20
<PAGE> 25
PERFORMANCE OF TIFFANY & CO. STOCK
The following graph compares changes in the cumulative total shareholder
return on Tiffany & Co.'s stock for the previous five fiscal years to returns on
the Standard & Poor's 500 Stock Index and a peer group index for the same
period. Cumulative shareholder return is defined as changes in the closing price
of our stock on the New York Stock Exchange, adjusted to reflect our July 1996
two-for-one stock split, plus the reinvestment of any dividends paid on our
stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
TIFFANY & CO., S&P 500 INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
Tiffany & Co. Standard & Poors 500 Peer Group
------------- -------------------- ----------
<S> <C> <C> <C>
1/31/1994 $100.00 $100.00 $100.00
1/31/1995 $100.37 $100.58 $106.07
1/31/1996 $192.25 $139.42 $115.96
1/31/1997 $260.90 $176.48 $146.33
1/31/1998 $272.15 $224.10 $153.19
1/31/1999 $408.02 $296.19 $223.40
</TABLE>
ASSUMES AN INVESTMENT OF $100 ON JANUARY 31, 1994 IN TIFFANY & CO. STOCK AND
EACH OF THE THREE INDICES AND THE REINVESTMENT OF ANY SUBSEQUENT DIVIDENDS.
TOTAL RETURNS ARE BASED ON MARKET CAPITALIZATION; INDICES ARE WEIGHTED AT THE
BEGINNING OF EACH PERIOD FOR WHICH A RETURN IS INDICATED.
PEER COMPANY GROUP: A.T. Cross Co.; Gucci Group; Jostens, Inc.; Lazare Kaplan
International Inc.; The Neiman-Marcus Group, Inc.; Nordstrom, Inc.; Reeds
Jewelers, Inc.; Sotheby's Holdings; Williams-Sonoma Inc.; and Zale Corporation.
(Saks Holdings Inc., which in past Proxy Statements has been included in this
group, has been deleted as a result of its acquisition in 1998 by another
company.)
21
<PAGE> 26
DISCUSSION OF PROPOSALS PRESENTED BY THE BOARD
ITEM I - ELECTION OF THE BOARD OF DIRECTORS
Each year, we elect directors at an Annual Meeting of Stockholders. At the
1999 Annual Meeting, eight directors will be elected. Each of them will serve
until he or she is succeeded by another qualified director or until his or her
earlier resignation or removal from office.
It is not anticipated that any of this year's nominees will be unable to
serve as a director, but if that should occur before the Annual Meeting, the
Board may either propose another nominee or reduce the number of directors to be
elected. If another nominee is proposed, you or your proxy will have the right
to vote for that person at the Annual Meeting.
Information concerning each of the nominees is set forth below:
<TABLE>
<CAPTION>
<S> <C>
William R. Chaney Mr. Chaney, 66, is the Chairman of the
Board of Directors. Mr. Chaney joined
Tiffany in January 1980 as a member of
its Board of Directors and was named
Chairman and Chief Executive Officer of
Tiffany & Co. in August 1984. Prior to
this, he served as an executive officer
of Avon Products, Inc. Mr. Chaney also
serves on the Boards of Directors of The
Bank of New York and the Atlantic Mutual
Companies.
Rose Marie Bravo Ms. Bravo, 48, is Worldwide Chief
Executive of Burberry Limited and is a
member of its Board of Directors. Ms.
Bravo previously served as President of
Saks Fifth Avenue from 1992 to 1997. Ms.
Bravo became a director of Tiffany & Co.
in October 1997 when she was selected by
the Board of Directors to fill a newly
created directorship.
</TABLE>
22
<PAGE> 27
<TABLE>
<CAPTION>
<S> <C>
Samuel L. Hayes III Prof. Hayes, 64, has been the Jacob
H. Schiff Professor of Investment Banking
at the Harvard Business School since
1975. In 1998, he accepted emeritus
status. He was elected a director of
Tiffany & Co. in 1984. He also serves on
the boards of the Eaton Vance Group of
Funds and the Kobrick Funds.
Michael J. Kowalski Mr. Kowalski, 47, is President and Chief
Executive Officer of Tiffany & Co. Prior
to his appointment as President in
January 1996, he was an Executive Vice
President of Tiffany & Co., a position he
had held since March 1992. Mr. Kowalski
also served as Tiffany & Co.'s Chief
Operating Officer from January 1997 until
his appointment as Chief Executive
Officer became effective in February
1999. He became a director of Tiffany &
Co. in January 1995.
Charles K. Marquis Mr. Marquis, 56, is a Senior
Advisor to Investcorp International,
Inc. From 1974 through 1998, he was a
partner in the law firm of Gibson, Dunn &
Crutcher L.L.P. He was elected a
director of Tiffany & Co. in 1984. Mr.
Marquis also serves on the Board of
Directors of Falcon Building Products,
Inc.
James E. Quinn Mr. Quinn, 47, is Vice Chairman of
Tiffany & Co., responsible for sales
throughout the world. Prior to his
appointment as Vice Chairman in January
1998, Mr. Quinn was an Executive Vice
President of Tiffany & Co., a position he
had held since March 1992. He became a
director of Tiffany & Co. in January
1995. He is also a member of the Boards
of Directors of BNY Hamilton Funds, Inc.
and Mutual of America Capital Management.
</TABLE>
23
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C>
William A. Shutzer Mr. Shutzer, 52, is Executive Vice
President of ING Baring Furman Selz LLC
and is Chairman of its Investment Banking
Group. He previously served as a Managing
Director of Lehman Brothers and its
predecessors from 1978 to 1994. He was
elected a director of Tiffany & Co. in
1984. Mr. Shutzer is also a member of
the Board of Directors of The Fortress
Group.
Geraldine Stutz Ms. Stutz, 70, has been the principal
partner of GSG Group since 1993. She was
previously the Publisher of Panache Press
at Random House Inc. and the President of
Henri Bendel, the New York specialty
store. She became a director of Tiffany
& Co. in July 1987. Ms. Stutz is also a
member of the Board of Directors of Jones
New York.
</TABLE>
- -------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL EIGHT
NOMINEES FOR DIRECTOR.
ITEM II - INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors asks that the stockholders approve an amendment to
the Company's Restated Certificate of Incorporation to increase the number of
authorized shares of common stock from 60,000,000 shares to 120,000,000 shares.
Of the 60,000,000 currently authorized for issuance, there are only
21,097,717 shares available for issuance as of March 25, 1999, after taking
into account 3,786,862 shares reserved for the Company's various stock option
plans.
The Board of Directors and management believe that the Company should have
additional authorized shares available for issuance. Such additional shares
could be used for any one or more of the following purposes:
- common stock splits,
- dividends payable in common stock,
- financing and acquisition transactions,
- dividend reinvestment plans,
- employee benefit plans, and
- other general corporate purposes.
24
<PAGE> 29
Having such shares available for issuance in the future would give the Company
greater flexibility and allow shares of common stock to be issued without the
expense and delay of a special stockholders meeting.
If the proposed amendment is approved by the stockholders, the Board will
consider a split of the Company's common stock. The Board believes that, in view
of the recent market value of the Company's common stock, such a split is
desirable as it would result in a price per share that is more attractive to a
broader range of investors.
Except as described above, as of the date of this Proxy Statement, the
Board of Directors has neither approved nor is contemplating any transaction
which would require the issuance of shares of common stock in excess of the
amount currently authorized.
If the proposed amendment is adopted, the additional authorized shares,
when and if properly issued, would have the same voting and other rights as the
presently issued and outstanding shares of common stock.
Existing stockholders do not have and will not have preemptive rights to
subscribe for any additional stock of the Company which in the future may be
approved for issuance. For that reason, the rights of existing stockholders may
be diluted by the issuance of additional common stock. Whether or not such
dilution occurs will depend upon the particular circumstances in which
additional common stock is issued. No dilution would occur in the case of a
stock split, as described above.
When and if the amendment to the Restated Certificate of Incorporation
becomes effective, the additional shares of common stock will be available for
issuance without further action by the stockholders except in circumstances
where stockholder action is required by law or the rules of any stock exchange
on which the common stock may then be listed.
When and if the additional shares are issued, the Company will seek to
register those shares as may be required by federal securities laws. The Company
will also make an application to list the additional shares that are issued as
may be required by the New York Stock Exchange and/or other exchanges on which
the common stock is then listed.
The proposed amendment might discourage a person or entity seeking to gain
control of the Company from acquiring shares of common stock for that purpose.
The proposed amendment could have that effect because the Board of Directors
could use the additional authorized shares to oppose a takeover bid if deemed by
the Board to be in the best interests of the stockholders. For example, such
additional shares could be used:
25
<PAGE> 30
- to create voting impediments,
- to dilute the stock ownership of the person seeking to gain
control,
- for sale to those who might side with the Board of Directors
in opposition to such a takeover, or
- in connection with the Company's Amended and Restated
Stockholder Rights Plan, which is described in Note L to the
Consolidated Financial Statements included in the Company's
1998 Annual Report to Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 60,000,000 TO 120,000,000.
ITEM III - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
appointed PricewaterhouseCoopers LLP as independent accountants to examine the
Company's consolidated financial statements for fiscal year 1999. We are asking
you to ratify our selection.
PricewaterhouseCoopers LLP is the successor to the firm formerly known as
Coopers & Lybrand L.L.P. Before becoming a part of PricewaterhouseCoopers LLP,
Coopers & Lybrand L.L.P. and its predecessor Coopers & Lybrand served as the
Company's independent accountants since 1984.
A representative of PricewaterhouseCoopers LLP will be in attendance at
the Annual Meeting to respond to appropriate questions raised by stockholders
and will be afforded the opportunity to make a statement at the meeting, if he
or she desires to do so.
The Board of Directors may review its selection if its appointment is not
approved by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS TIFFANY & CO.'S INDEPENDENT
ACCOUNTANTS FOR FISCAL YEAR 1999.
26
<PAGE> 31
OTHER MATTERS
STOCKHOLDER PROPOSALS, IN GENERAL
If you would like to submit the name of a candidate for the Nominating
Committee to consider as a nominee for director, you may send your proposal at
any time to the Nominating Committee, c/o Mr. Patrick B. Dorsey, Secretary,
Tiffany & Co., 727 Fifth Avenue, New York, New York 10022.
If you would like to nominate a candidate for director or bring other
business before the stockholders at the 2000 Annual Meeting, which is currently
expected to take place on May 18, 2000, you must comply with the following
requirements:
- you must notify the Secretary of Tiffany & Co. in writing no
earlier than January 21, 2000, and no later than February 20,
2000,
- if the matter you wish to present is other than the nomination
of a candidate for director, your proposal must be a proper
matter for stockholder action under the General Corporation
Law of the State of Delaware, and
- your proposal must contain all of the information required
under our By-laws, a copy of which is available, at no charge,
from the Secretary.
STOCKHOLDER PROPOSALS FOR INCLUSION IN THE PROXY STATEMENT FOR THE 2000
ANNUAL MEETING
If you wish to submit a proposal to be included in the Proxy Statement for
our 2000 Annual Meeting, we must receive it no later than December 10, 1999.
Proposals should be sent to Tiffany & Co. at 727 Fifth Avenue, New York, New
York, 10022, addressed to the attention of Patrick B. Dorsey, Secretary.
REMINDER TO VOTE
Please be sure to either complete, sign and mail the enclosed proxy card
in the return envelope provided or call in your instructions as soon as you can
so that your vote may be recorded and counted.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Patrick B. Dorsey
Patrick B. Dorsey
Secretary
New York, New York
April 8, 1999
27
<PAGE> 32
- --------------------------------------------------------------------------------
Please mark
your votes as |_|
indicated in
this example
The Board of Directors recommends: a vote FOR all nominee for director in Item
1, FOR approval of an increase in the number of authorized shares of common
stock in Item 2, and FOR approval of the appointment of Pricewaterhousecoopers
LLP as independent accountants in Item 3. Shares represented by this proxy will
be so voted unless otherwise indicated, in which case they will be voted as
marked.
FOR ALL WITHHELD FOR NOMINEES
Item I: Election of the following NOMINEES NAMED BELOW
nominees as directors:
01 William R. Chaney, |_| |_|
02 Rose Marie Bravo,
03 Samuel L. Hayes III,
04 Michael J. Kowalski,
05 Charles K. Marquis,
06 James E. Quinn,
07 William A. Shutzer and
08 Geraldine Stutz.
WITHHELD FOR (write in each nominee's name in the space provided below):
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Item 2: Approval of an amendment to FOR AGAINST ABSTAIN
the Company's Restated
Certificate of Incorporation |_| |_| |_|
to increase the number of
authorized shares of common
stock, $.01 par value, from
60,000,000 to 120,000,000.
Item 3: Approval of the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as
independent accountants of the |_| |_| |_|
Company's fiscal 1999
financial statements.
YES NO
I plan to attend the
Annual Meeting. |_| |_|
NOTE: Please date and sign exactly as your name appears
printed on this card. When shares are held by joint owners,
all should sign. When signing as fiduciary (e.g., attorney,
executor, administrator, conservator, trustee or guardian),
please give title. If a corporation or partnership, please
sign in corporate or partnership name by an authorized person.
THIS PROXY CONTINUED ON THE REVERSE SIDE.
Signature_______________________Signature_______________________Date____________
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
----------------------------
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
----------------------------
YOUR VOTE IS IMPORTANT! YOU CAN VOTE IN ONE OF TWO WAYS:
TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7 days a week.
There is NO CHARGE to you for this call. Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form
- --------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
- --------------------------------------------------------------------------------
When asked, please confirm by pressing 1.
- --------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions.
- --------------------------------------------------------------------------------
Item 1 - FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9; To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to
the Instructions.
Item 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Item 3 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked please confirm by pressing 1.
or
TO VOTE BY MAIL: Mark, sign and date your proxy card and return promptly in the
enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
<PAGE> 33
- --------------------------------------------------------------------------------
TIFFANY & CO.
PROXY FOR ANNUAL MEETING
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS OF TIFFANY & CO. ("THE COMPANY") TO BE HELD MAY 20, 1999, AT 10:00
A.M. NEW YORK TIME IN THE ROOF/PENTHOUSE OF THE ST. REGIS HOTEL, 2 EAST 55TH
STREET AT FIFTH AVENUE, NEW YORK, NEW YORK. THE BOARD OF DIRECTORS RECOMMENDS: A
VOTE "FOR" ALL NOMINEES FOR DIRECTOR IN ITEM 1, "FOR" APPROVAL OF AN INCREASE IN
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK IN ITEM 2, AND "FOR" APPROVAL OF
THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS IN ITEM
3.
SHARES REPRESENTED BY THIS PROXY WILL BE SO VOTED UNLESS OTHERWISE INDICATED, IN
WHICH CASE THEY WILL BE VOTED AS MARKED. IF NO DIRECTION IS GIVEN, SUCH SHARES
WILL BE VOTED "FOR" ITEMS 1, 2 AND 3. IF ANY NOMINEE NAMED ON THE REVERSE SIDE
OF THIS CARD IS UNABLE TO SERVE AS A DIRECTOR, THE BOARD OF DIRECTORS MAY
NOMINATE ANOTHER PERSON OR PERSONS IN SUBSTITUTION FOR SUCH NOMINEE AND THE
PROXIES NAMED BELOW WILL VOTE FOR THE PERSON OR PERSONS SO NOMINATED OR FOR SUCH
LESSER NUMBER OF DIRECTORS AS MAY BE PRESCRIBED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints W.R. CHANEY, J.N. FERNANDEZ, and P.B. DORSEY,
and each of them, proxies, with full power of substitution, to act for the
undersigned, and to vote all shares of common stock represented by this proxy
which the undersigned may be entitled to vote, at the 1999 Annual Meeting of
Stockholders (and any adjournment thereof) as directed and permitted on the
reverse side of this card and, in their judgment, on such matters as may be
incident to the conduct of or may properly come before the meeting.
IMPORTANT
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Tiffany & Co.
727 Fifth Avenue
New York, N.Y. 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS to be held
THURSDAY, MAY 20, 1999
The Annual Meeting of Stockholders of Tiffany & Co. (the "Company") will be held
in the Roof/Penthouse of The St. Regis Hotel, 2 East 55th Street at Fifth
Avenue, New York, New York on May 20, 1999, at 10:00 a.m. New York time to
consider and take action on the following:
1. Election of eight (8) directors to hold office until the next annual meeting
of stockholders and until their respective successors have been elected and
qualified;
2. Approval of an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common stock, $.01
par value, from 60,000,000 to 120,000,000; and
3. Approval of the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company's fiscal 1999 financial statements.
All stockholders are cordially invited to attend, although only those
stockholders of record as of the close of business on March 25, 1999, will be
entitled to notice of and to vote at the meeting or any adjournments thereof.
The transfer books will not be closed.
A list of stockholders entitled to vote will be available for inspection by
interested stockholders at the offices of the Company, 727 Fifth Avenue, New
York, New York commencing on April 30, 1999, during ordinary business hours.
BY ORDER OF THE BOARD OF DIRECTORS
Patrick B. Dorsey
Secretary
New York, New York
April 8, 1999
YOUR VOTE IS IMPORTANT. EVEN IF IT IS YOUR DESIRE TO ATTEND THE ANNUAL MEETING,
PLEASE CALL IN YOUR VOTE OR SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING POSTAGE PAID ENVELOPE.
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