SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
PHILLIPS-VAN HEUSEN CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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:
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[ ] 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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PHILLIPS-VAN HEUSEN CORPORATION
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------
The Annual Meeting of Stockholders of PHILLIPS-VAN HEUSEN CORPORATION (the
"Company"), a Delaware corporation, will be held at The Graduate Center - City
University of New York, 365 Fifth Avenue, Elebash Recital Hall, First Floor, New
York, New York, on Tuesday, June 11, 2002, at 10:00 a.m., for the following
purposes:
(1) to elect 11 directors of the Company to serve for a term of one year;
(2) to ratify the appointment of auditors for the Company to serve for
the current fiscal year; and
(3) to consider and act upon such other matters as may properly come
before the meeting.
Only stockholders of record at the close of business on April 12, 2002 are
entitled to vote at the meeting.
Attendance at the meeting will be limited to holders of record of the
Company's Common Stock or their proxies, beneficial owners having evidence of
ownership and guests of the Company. If you hold stock through a bank or broker,
a copy of an account statement from your bank or broker as of the record date
will suffice as evidence of ownership.
You are requested to fill in, date and sign the enclosed proxy, which is
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed envelope.
By order of the Board of Directors,
MARK D. FISCHER
Secretary
New York, New York
April 29, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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PHILLIPS-VAN HEUSEN CORPORATION
---------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 2002
---------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PHILLIPS-VAN HEUSEN CORPORATION (the
"Company") to be used at the Annual Meeting of Stockholders of the Company which
will be held at The Graduate Center - City University of New York, 365 Fifth
Avenue, First Floor, New York, New York, on Thursday, June 11, 2002, at 10:00
a.m., and at any adjournments thereof.
The principal executive offices of the Company are located at 200 Madison
Avenue, New York, New York 10016-3903. The approximate date on which this Proxy
Statement and the enclosed proxy card were first sent or given to stockholders
was April 29, 2002.
Stockholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the meeting or by presenting a later dated proxy. Unless so revoked,
the shares represented by proxies will be voted at the meeting. The shares
represented by the proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Stockholders vote
at the meeting by casting ballots (in person or by proxy) which are tabulated by
a person who is appointed by the Board of Directors before the meeting to serve
as inspector of elections at the meeting and who has executed and verified an
oath of office. Abstentions and broker "non-votes" are included in the
determination of the number of shares present at the meeting for quorum
purposes. Abstentions will have the same effect as negative votes, except that
abstentions will have no effect on the election of directors because directors
are elected by a plurality of the votes cast. Broker "non-votes" are not counted
in the tabulations of the votes cast on proposals presented to stockholders
because shares held by a broker are not considered to be entitled to vote on
matters as to which broker authority is withheld. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
Stockholders of record at the close of business on April 12, 2002 will be
entitled to one vote for each share of the Company's Common Stock (the "Common
Stock") then held. There were outstanding on such date 27,682,432 shares of
Common Stock. The Common Stock is the only outstanding class of voting stock of
the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information with respect to the
persons who are known to the Company to be the beneficial owners of more than
five percent of the Common Stock as of April 19, 2002. Except as otherwise
indicated, the persons listed below have advised the Company that they have sole
voting and investment power with respect to the shares listed as owned by them.
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
------------------- ------------ ----------
Vaneton International, Inc.(1)............................................ 4,679,001 16.9
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
Dimensional Fund Advisors Inc.(2)......................................... 2,252,600 8.1
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
State Street Bank and Trust Company(3).................................... 1,481,028 5.3
225 Franklin Street
Boston, Massachusetts 02110
(Footnotes appear on next page)
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
------------------- ------------ ----------
Lord, Abbett & Co.(4)..................................................... 1,430,959 5.2
90 Hudson Street
Jersey City, New Jersey 07302
-----------------------------
(1) Dr. Richard Lee, 6/F TAL Building, 49 Austin Road, Kowloon, Hong Kong, may
be deemed to beneficially own the 4,679,001 shares of Common Stock owned
of record by Vaneton International, Inc. Dr. Richard Lee and Vaneton
International, Inc. have shared voting and dispositive power over such
shares. Information as to the shares of Common Stock beneficially owned by
Vaneton International, Inc. and Dr. Richard Lee is as of December 31,
2001, as set forth in a Schedule 13G dated February 13, 2002 and filed
with the Securities and Exchange Commission.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
adviser, furnishes investment advice to four registered investment
companies and serves as investment manager to certain other commingled
group trusts and separate accounts (such investment companies, trusts and
accounts are referred to as the "Funds"). In its role as investment
advisor or manager, Dimensional possesses voting and/or investment power
over the Common Stock owned by the Funds. Dimensional disclaims beneficial
ownership of such securities. Information as to the shares of Common Stock
that may be deemed to be owned beneficially by Dimensional is as of
December 31, 2001, as set forth in a Schedule 13G dated January 30, 2002
and filed with the Securities and Exchange Commission.
(3) State Street Bank and Trust Company ("State Street") acting in various
fiduciary capacities, may be deemed to be the beneficial owner of
1,481,028 shares of Common Stock, including 217,238 with respect to which
it has sole voting power, 237,738 with respect to which it has sole
dispositive power and 1,243,290 with respect to which it shares voting and
dispositive power. State Street disclaims ownership of all such shares.
Information as to the shares that may be deemed to be owned beneficially
by State Street is as of December 31, 2001, as set forth in a Schedule 13G
dated February 7, 2002 and filed with the Securities and Exchange
Commission.
(4) Lord, Abbett & Co. is a registered investment adviser. Information as to
the shares of Common Stock that may be deemed to be owned beneficially by
Lord, Abbett & Co. is as of December 31, 2001, as set forth in a Schedule
13G dated January 16, 2002 and filed with the Securities and Exchange
Commission.
The following table presents certain information with respect to the
number of shares of Common Stock beneficially owned by each of the directors and
nominees for director of the Company, the Chief Executive Officer, the four most
highly compensated executive officers of the Company other than the Chief
Executive Officer and all of the directors, nominees for director and executive
officers of the Company as a group as of April 19, 2002. Except as otherwise
indicated below, each of the directors, nominees for director and executive
officers has sole voting and investment power with respect to the shares listed
as owned by him or her.
2
AMOUNT
BENEFICIALLY PERCENT OF
NAME OWNED(1) CLASS
----- ------------ ----------
Emanuel Chirico(2)........................................................ 120,271 *
Edward H. Cohen........................................................... 28,384 *
Francis K. Duane.......................................................... 34,166 *
Joseph B. Fuller.......................................................... 23,384 *
Joel H. Goldberg.......................................................... 31,999 *
Marc Grosman............................................................. 12,999 *
Dennis F. Hightower....................................................... 13,499 *
Bruce J. Klatsky.......................................................... 392,481 1.4
Maria Elena Lagomasino.................................................... 21,198 *
Harry N.S. Lee(3)......................................................... 20,197 *
Bruce Maggin.............................................................. 49,884 *
Allen E. Sirkin........................................................... 127,814 *
Peter J. Solomon.......................................................... 38,250 *
Mark Weber................................................................ 222,403 *
All directors, nominees for director and executive officers as a group
(15 persons).............................................................. 1,136,929 4.1
--------------------
* Less than 1% of class.
(1) The figures in the table are based upon information furnished to the
Company by the directors, nominees for director and executive officers.
The figures do not include the shares held for the executive officers in
the Master Trust for the PVH Stock Fund. The PVH Stock Fund is one of the
investment options under the Company's Associates Investment Plans (the
"AIPs"), which are employee benefit plans under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended. Participants
in the AIPs who make investments in the PVH Stock Fund may direct the vote
of shares of Common Stock held in the Master Trust for the PVH Stock Fund
only with respect to tender or exchange offers subject to Section 13(e) or
Section 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and matters which, if approved or disapproved, would
result in a change in control of the Company (as defined in the AIPs). The
committee that administers the AIP (the "AIP Committee") has the right to
vote such shares for all other matters. These participants also have the
right, subject to certain limitations, to receive a distribution of shares
of Common Stock held for their benefit in the Master Trust, but the AIP
Committee makes all other decisions regarding the disposition of Common
Stock held in the Master Trust.
(2) Mr. Chirico's figure does not include the 1,243,290 shares of Common Stock
(4.5%) held in the Master Trust for the PVH Stock Fund as of December 31,
2001 for all participants in the AIPs who invest in the PVH Stock Fund.
Mr. Chirico is a member of the AIP Committee, which has the power, under
most circumstances, to vote and dispose of the shares held in the Master
Trust.
(3) Harry N.S. Lee is an indirect minority shareholder of Vaneton
International, Inc., which beneficially owns 4,679,001 shares of Common
Stock (16.9%). See Note 1 to the prior table for certain information
regarding Vaneton International, Inc.
The figures in the foregoing table include 1,500 shares owned by a family
trust of which Mr. Hightower is trustee, 190 shares held by Mr. Klatsky's child,
as to which Mr. Klatsky has disclaimed beneficial ownership, 12,000 shares held
by Mr. Maggin as custodian for his children, as to which Mr. Maggin has
disclaimed beneficial ownership, and 100 shares held by Mr. Sirkin's wife as
custodian for one of Mr. Sirkin's children, as to which Mr. Sirkin has
disclaimed beneficial ownership.
The foregoing table also includes shares which the following directors and
executive officers have the right to acquire within 60 days of April 19, 2002
upon the exercise of options granted under the Company's stock option plans:
Emanuel Chirico, 116,771 shares; Edward H. Cohen, 22,384 shares; Francis K.
Duane, 34,166 shares; Joseph B. Fuller, 22,384 shares; Joel Goldberg, 11,999
shares; Marc Grosman, 11,999 shares; Dennis Hightower, 11,999 shares; Bruce J.
Klatsky, 335,956 shares; Maria Elena Lagomasino, 20,998 shares; Harry N.S. Lee,
19,197 shares; Bruce Maggin, 22,384 shares; Allen E. Sirkin, 127,714 shares;
Peter J. Solomon, 20,998 shares; Mark Weber, 189,673 shares; and all directors,
nominees for director and executive officers as a group, including the
foregoing, 968,622 shares.
3
ELECTION OF DIRECTORS
The Board of Directors currently consists of 11 members, all of one class.
All members of the Board of Directors are elected by the stockholders at the
Annual Meeting of Stockholders of the Company for a term of one year or until
their successors are elected and qualified. All of the nominees for director
have previously been elected directors of the Company by the stockholders.
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock present in person or by proxy at the meeting. At this
time, the Board of Directors knows of no reason why any nominee might be unable
to serve. There is no arrangement or understanding between any director or
nominee and any other person pursuant to which such person was selected as a
director or nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE 11
NOMINEES NAMED BELOW. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES UNLESS OTHERWISE SPECIFIED IN A PROXY.
YEAR
BECAME A
NAME PRINCIPAL OCCUPATION AGE DIRECTOR
---- -------------------- --- --------
Edward H. Cohen.................................... Counsel of Katten Muchin Zavis 63 1987
Rosenman, a law firm
Joseph B. Fuller................................... President and Chief Executive 45 1991
Officer of Monitor Company, a
management consulting firm
Joel H. Goldberg................................... President of Career Consultants, 58 1997
Inc., a management consulting firm
Marc Grosman....................................... Founder and Chief Executive Officer 47 1997
of Marc Laurent SA, the owner of a
chain of European apparel stores
which trade under the name CELIO
Dennis F. Hightower................................ Retired business executive 60 1997
Bruce J. Klatsky................................... Chairman and Chief Executive 53 1985
Officer of the Company
Maria Elena Lagomasino............................. Chairman and Chief Executive 53 1993
Officer, J.P. Morgan Private Bank
Harry N.S. Lee..................................... Managing Director of TAL Apparel 59 1995
Limited, an apparel manufacturer
and exporter based in Hong Kong
Bruce Maggin....................................... Principal of The H.A.M. Media 59 1987
Group, LLC, a media investment
company, and Chief Executive
Officer of TDN, Inc. (d/b/a atTV
Media, Inc.), a marketer of
interactive television advertising
Peter J. Solomon................................... Chairman of Peter J. Solomon 63 1987
Company Limited, an investment
banking firm
Mark Weber......................................... President and Chief Operating 53 1998
Officer of the Company
4
Mr. Cohen is also a director of Franklin Electronic Publishers, Inc.,
Levcor International, Inc., Merrimac Industries, Inc. and Voice Powered
Technology International, Inc. Mr. Fuller is also a director of Merrimac
Industries, Inc. Mr. Goldberg is also a director of Hampshire Group, Limited and
Merrimac Industries, Inc. Mr. Grosman is also a director of Aigle SA. Mr.
Hightower is also a director of BriteSmile, Inc., The Gillette Company,
Northwest Airlines Corporation, PanAmSat Corporation and The TJX Companies, Inc.
Ms. Lagomasino is also a director of Avon Products, Inc. Mr. Maggin is also a
director of MindArrow Systems, Inc. Mr. Solomon is also a director of BKF
Capital Group, Inc., Monro Muffler Brake, Inc. and Office Depot, Inc.
Each of the directors has been engaged in the principal occupation
indicated in the foregoing table for more than the past five years, except Mr.
Cohen, who was a partner in the law firm of Rosenman & Colin LLP until its
February 1, 2002 merger with Katten Muchin Zavis, at which time he became
counsel to the merged firm, Katten Muchin Zavis Rosenman; Mr. Hightower, who was
a Professor of Management at Harvard University School of Business
Administration from July 1996 until May 2000 and Chief Executive Officer, Europe
Online Networks S.A. from June 2000 until February 2001; Ms. Lagomasino, who was
the Head of Global Private Bank of The Chase Manhattan Bank until its January
2002 merger with J.P. Morgan Bank at which time she became Chairman and Chief
Executive Officer of J.P. Morgan Private Bank; and Mr. Weber, who was elected
President and Chief Operating Officer of the Company in March 1998, having
served as Vice Chairman of the Company for the prior three years.
No family relationship exists between any director or executive officer of
the Company.
The Nominating Committee of the Company's Board of Directors will consider
for election to the Board of Directors a nominee recommended by a stockholder if
the recommendation is made in writing and includes (i) the qualifications of the
proposed nominee to serve on the Board of Directors, (ii) the principal
occupations and employment of the proposed nominee during the past five years,
(iii) each directorship currently held by the proposed nominee and (iv) a
statement that the proposed nominee has consented to the nomination. The
recommendation should be addressed to the Secretary of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended February 3, 2002, there were six meetings of
the Board of Directors. All of the directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and the Committees of the
Board of Directors on which they served held during the fiscal year, except for
Mr. Fuller, who attended four of the six Board meetings and the one Compensation
Committee meeting held while he was a member.
The Board of Directors of the Company has a standing Audit Committee, a
standing Compensation Committee and a standing Nominating Committee.
AUDIT COMMITTEE
The Audit Committee is composed of Messrs. Cohen, Hightower and Maggin.
The Board of Directors has determined that all of the members of the Committee
are "independent," as defined in the rules of the New York Stock Exchange. The
Company's Common Stock is listed for trading on the New York Stock Exchange.
The Board of Directors has adopted a written charter for the Audit
Committee. Pursuant to its charter, the Audit Committee is charged with
providing assistance to the Board of Directors in fulfilling the Board's
statutory responsibilities relating to the quality and integrity of the
Company's financial reports, monitoring the Company's financial reporting
process and internal control system and performing such other activities
consistent with its charter and the Company's By-laws as the Audit Committee or
the Board deems appropriate.
The Audit Committee held three meetings and four teleconferences during
the fiscal year ended February 3, 2002.
COMPENSATION COMMITTEE
The Compensation Committee, composed of Ms. Lagomasino and Messrs. Grosman
and Hightower, is charged with setting the compensation of all executive
officers, administering the Company's existing stock option plans and its
cash-based incentive compensation plans for the executive officers, adopting new
cash-based incentive compensation plans and implementing changes and
improvements to existing cash-based incentive compensation plans for the
executive officers and, subject to approval by the Board of Directors,
recommending new stock option plans and other equity-based
5
compensation plans and implementing changes and improvements to the existing
stock option plans. The Compensation Committee also provides guidance to the
executive officers regarding the compensation of the Company's corporate and
divisional officers. The Compensation Committee held three meetings during the
fiscal year ended February 3, 2002.
NOMINATING COMMITTEE
The Nominating Committee determines, and recommends to the Board of
Directors, a slate of nominees for election as directors. In connection
therewith, the Nominating Committee considers the nomination for reelection of
incumbent directors and will consider the qualifications of candidates suggested
by Board members, management, stockholders and consultants that may be retained
for the purpose of identifying candidates. The members of the Nominating
Committee are Ms. Lagomasino and Messrs. Grosman and Hightower. The Nominating
Committee was first created during the fiscal year ended February 3, 2002 and
held its first meeting in the current fiscal year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of the filings furnished to the Company pursuant to
Rule 16a-3(e) promulgated under the Exchange Act and on representations from its
executive officers and directors, all filing requirements of Section 16(a) of
said Act were complied with during the fiscal year ended February 3, 2002. Mr.
Sirkin filed late one report covering one option exercise during the fiscal year
ended February 4, 2001.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by or paid to the Company's Chief Executive Officer and its four most
highly compensated executive officers, other than the Chief Executive Officer
(together, the "Named Executive Officers"), for services rendered in all
capacities to the Company and its subsidiaries for each of the Company's last
three fiscal years, ended February 3, 2002, February 4, 2001 and January 30,
2000 (fiscal years 2001, 2000 and 1999, respectively).
LONG-TERM COMPENSATION
-------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------- -------------
--------------------- LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS PAYOUTS COMPENSATION(1)
PRINCIPAL POSITION YEAR ($) ($) (#) ($) ($)
------------------------------------ -------- ---------- ---------- ------------ ---------- -------------
Emanuel Chirico...................... 2001 500,000 - 40,000 419,375 61,242
Executive Vice President and CFO, 2000 500,000 485,000 40,000 700,000 36,750
Phillips-Van Heusen Corporation 1999 475,000 400,000 30,000 - 24,417
Francis K. Duane(2).................. 2001 600,000 449,640 30,000 - 50,001
Vice Chairman, Sportswear, 2000 475,000 375,000 30,000 - 15,283
Phillips-Van Heusen Corporation
Bruce J. Klatsky..................... 2001 1,000,000 - 150,000 1,357,550 203,406
Chairman and CEO, 2000 1,000,000 1,370,000 150,000 2,313,000 122,523
Phillips-Van Heusen Corporation 1999 850,000 1,207,600 100,000 - 91,762
Allen E. Sirkin...................... 2001 750,000 - 30,000 - 62,540
Vice Chairman, Dress Shirts, 2000 716,667 541,500 30,000 - 31,245
Phillips-Van Heusen Corporation 1999 650,000 415,000 30,000 - 37,405
Mark Weber........................... 2001 800,000 - 75,000 671,000 123,874
President and COO, 2000 750,000 728,000 75,000 1,050,000 79,889
(Phillips-Van Heusen Corporation 1999 700,000 612,725 50,000 - 61,946
(Footnotes appear on next page)
6
(Footnotes to table on previous page)
-----------------------------
(1) All Other Compensation includes payments or contributions required by the
AIPs and Supplemental Savings Plan, Executive Medical Reimbursement
Insurance Plan and Educational Benefits Plan.
Under the AIPs, each employee, including the Named Executive Officers,
eligible to participate may authorize his or her employer to withhold
a specified percentage of his or her compensation, up to 6% in the
case of certain management and highly compensated employees, including
the Named Executive Officers, and otherwise up to 15% (subject to
certain limitations). Under the Supplemental Savings Plan applicable
to certain management and highly compensated employees, each employee,
including the Named Executive Officers, eligible to participate may
currently authorize his or her employer to withhold a specified
percentage of his or her compensation, up to 15% after deductions for
contributions to the AIPs. The Company or its subsidiaries currently
contribute an amount equal to 100% of the first 2% of total
compensation contributed by an employee and an amount equal to 25% of
the next 4% of total compensation contributed by such employee. A
participant's interest in the amounts arising out of employer
contributions currently vest ratably over the first five years of
employment (regardless of when participation commences), or, if
earlier, at age 65 or upon disability or death. In the fiscal years
2001, 2000 and 1999, respectively, the Company made contributions
which are reflected under this column in the amounts of $50,558,
$27,005 and $17,992 for Mr. Chirico; $140,622, $66,228 and $50,794 for
Mr. Klatsky; $51,856, $21,500 and $32,579 for Mr. Sirkin; and $77,336,
$40,444 and $29,313 for Mr. Weber. The Company's contributions
reflected in the column for Mr. Duane for fiscal 2001 and 2000 are
$39,317 and $5,537, respectively.
The Company's Executive Medical Reimbursement Insurance Plan covers
eligible employees for most medical charges not covered by the basic
medical plan up to a specified annual maximum. The Company incurred
$10,684, $9,745 and $7,167 during fiscal years 2001, 2000 and 1999,
respectively, as annual premiums for coverage for each of the Named
Executive Officers, which amounts are reflected under this column.
Under the Company's Educational Benefits Plan, children of eligible
employees received reimbursement of tuition and room and board charges
while attending an accredited college or vocational school. The plan was
terminated in 1986, except with respect to children who were then covered
by the plan. For fiscal years 2001, 2000 and 1999, respectively, the
benefits received by the Named Executive Officers, which are reflected
under this column, were in the amounts of $52,100, $46,550 and $38,095 for
Mr. Klatsky; and $35,854, $29,699 and $27,342 for Mr. Weber.
(2) Mr. Duane became an executive officer of the Company during fiscal 2000
upon his promotion to Vice Chairman, Sportswear.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's 2000 Stock Option
Plan (the "2000 Option Plan") granted to the Named Executive Officers during the
fiscal year ended February 3, 2002.
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE ------------------------------
GRANTED(1) IN FISCAL PRICE EXPIRATION 5% 10%
NAME (#) YEAR ($SH) DATE ($) ($)
---- ------------ ------------- -------------- ------------ ----------- -------------
Emanuel Chirico............ 40,000 4.7 13.40 3/25/11 337,200 854,400
Francis K. Duane........... 30,000 3.5 13.40 3/25/11 252,900 640,800
Bruce J. Klatsky........... 150,000 17.7 13.40 3/25/11 1,264,500 3,204,000
Allen E. Sirkin............ 30,000 3.5 13.40 3/25/11 252,900 640,800
Mark Weber................. 75,000 8.8 13.40 3/25/11 632,250 1,602,000
(Footnote appears on next page)
7
(Footnote to table on previous page)
-----------------------------
(1) One-quarter of the options granted to each of the Named Executive
Officers in fiscal 2001 become exercisable on each of the first through
fourth anniversaries of the grant date.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to the value at
February 3, 2002 of unexercised stock options held by the Named Executive
Officers. None of the Named Executive Officers exercised any stock options in
the 2001 fiscal year.
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
-------------------------- ------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($)
---- -------------------------- ------------------------
Emanuel Chirico.................... 70,105 / 143,334 59,394 / 188,668
Francis K. Duane................... 15,833 / 79,167 5,188 / 31,938
Bruce J. Klatsky................... 179,772 / 449,167 77,813 / 397,188
Allen E. Sirkin.................... 85,759 / 112,500 15,563 / 95,813
Mark Weber......................... 102,639 / 241,252 38,906 / 198,594
-----------------------------
(1) Fair market value at fiscal year end of securities underlying the options
minus the exercise price of the options.
LONG-TERM INCENTIVE PLANS -
AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(1)
------------------------------------------------
PERFORMANCE OR OTHER PERIOD THRESHOLD PLAN MAXIMUM
NAME UNTIL MATURATION OF PAYOUT ($) ($) ($)
---- ------------------------------- -------------- ------------ -----------
Bruce J. Klatsky........... 27 months ending 2/1/04 710,000 1,314,000 2,500,000
Mark Weber................. 27 months ending 2/1/04 408,000 673,000 1,200,000
Emanuel Chirico............ 27 months ending 2/1/04 306,000 505,000 900,000
------------------------
(1) Based on current base salaries. Actual awards are based on the base
salary in effect on the last day of the performance cycle.
The Company has a Long-Term Incentive Plan in which the Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer are
participants. The payment of cash awards under the Plan requires the Company to
achieve both earnings growth and improvement in return on equity over the
applicable performance cycle. Threshold, plan and maximum targets are
established within the first 90 days of the relevant performance cycle by the
Compensation Committee. Awards are based on a percentage of a participant's base
salary in effect on the last day of the performance cycle. The percentage is
lowest for the achievement of the threshold targets and is highest if the
maximum targets are achieved or exceeded. If the level of achievement falls
between two of the targets, the award will be based on a percentage of the
participant's base salary that is on a straight-line interpolation between the
percentages for the two targets. The percentage of base salary that a
participant can earn as an award differs among the participants: the range for
the Chief Executive Officer is 70%-250% of base salary and the range for the
Chief Operating Officer and the Chief Financial Officer is 50%-150% of base
salary. No awards are earned if the threshold targets are not satisfied. In the
event of the death or disability of a participant during a performance cycle,
the participant or his estate will receive the award, if any, which would
otherwise have been payable to the participant for such performance cycle, pro
rated to reflect the portion of the performance cycle worked by the participant.
In all other events, a participant must be employed by the Company on the
payment date for an award or must have died, become disabled, retired under the
Company's retirement
8
plan or have been discharged without cause subsequent to the end of the
performance cycle but prior to the date the award is paid in order to remain
eligible to receive an award.
PENSION PLAN TABLE
The following table sets forth the aggregate estimated annual benefits
payable, upon retirement at age 65, to employees under the combination of the
pension plan for salaried employees and a supplemental defined benefit plan
applicable to certain management and highly compensated employees (including the
Named Executive Officers), in various compensation and years-of-service
classifications, assuming that the Social Security maximum limit does not change
from its present level of $84,900.
CAREER ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
AVERAGE SALARY PAYABLE AS A LIFE ANNUITY AT AGE 65
-------------- ------------------------------------------------------------------------------
15 20 25 30 35
-- -- -- -- --
$200,000 38,736 50,994 63,024 74,922 86,754
$400,000 83,736 110,994 138,024 164,922 191,754
$600,000 128,736 170,994 213,024 254,922 296,754
$800,000 173,736 230,994 288,024 344,922 401,754
$1,000,000 218,736 290,994 363,024 434,922 506,754
$1,200,000 263,736 350,994 438,024 524,922 611,754
$1,400,000 308,736 410,994 513,024 614,922 716,754
$1,600,000 353,736 470,994 588,024 704,922 821,754
$1,800,000 398,736 530,994 663,024 794,922 926,754
$2,000,000 443,736 590,994 738,024 884,922 1,031,754
$2,200,000 488,736 650,994 813,024 974,922 1,136,754
$2,400,000 533,736 710,994 888,024 1,064,922 1,241,754
$2,600,000 578,736 770,994 963,024 1,154,922 1,346,754
$2,800,000 523,736 830,994 1,038,024 1,244,922 1,451,754
$3,000,000 668,736 890,994 1,113,024 1,334,922 1,556,754
The benefits under the Company's pension plans are generally based on a
participant's career average compensation (except that pre-2000 benefits for
current salaried employees are based on pre-2000 last five-years average
compensation, unless the participant's career average compensation is greater
than the last five-years average). Absent any election by a participant of an
optional form of benefit, benefits under the pension plans become payable at the
time of retirement, normally at age 65; such benefits under the pension plans
for salaried employees are payable monthly for the life of the participant and,
in most cases, for the life of such participant's surviving spouse, and benefits
under the supplemental defined benefit plan are payable in a lump sum.
Notwithstanding the method of payment of benefits under the pension plans, the
amounts shown in the above table are shown in the actuarial equivalent amount of
a life annuity. The benefits listed above are not subject to any deduction for
Social Security or other offset amounts.
The credited years of service under the pension plans, as of February 3,
2002, for each of the Named Executive Officers is set forth in the following
table.
CREDITED YEARS
NAME OF SERVICE
---- --------------
Emanuel Chirico.................................... 7
Francis K. Duane................................... 3
Bruce J. Klatsky................................... 29
Allen E. Sirkin.................................... 15
Mark Weber......................................... 29
9
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries receives a fee of $25,000 for his or her services as a
director of the Company and $2,000 for each Board of Directors' meeting
attended. Each director who is a member of the Audit Committee or the
Compensation Committee receives an additional fee of $2,000 for each committee
meeting attended. Pursuant to the Company's stock option plans, each outside
director is entitled to receive, on an annual basis, in the aggregate,
non-qualified options to purchase 8,000 shares of Common Stock at the fair
market value on the date of grant for his or her services as a director.
The law firm of Rosenman & Colin LLP, of which Mr. Cohen was a partner,
was engaged as the Company's general outside counsel for the fiscal year ended
February 3, 2002. The Company expects to continue to engage such firm's
successor, Katten Muchin Zavis Rosenman, for the fiscal year ending February 2,
2003.
Mr. Goldberg, Career Consultants Inc. and S&K Associates, Inc. were paid
an aggregate of $755,172 for management consulting and recruiting services they
provided to the Company in fiscal 2001. Mr. Goldberg owns more than 50% of the
stock of each of the two companies. The Company is continuing to utilize such
services during the current fiscal year.
The Company purchased approximately $2,681,030 of products and services
from TAL Apparel Limited and certain related companies during the 2001 fiscal
year. Mr. Lee is a director of TAL Apparel Limited. The Company expects to
continue to purchase goods from such companies during the current fiscal year.
Peter J. Solomon Company Limited, of which Mr. Solomon is Chairman,
provided services to the Company during the 2001 fiscal year in connection with
certain strategic issues. The Company may utilize such services during the
current fiscal year.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has had in effect since 1987 a Special Severance Benefit Plan.
Upon the termination of the employment of any participant in the plan within two
years after a change in control of the Company (as defined in the Special
Severance Plan), the participant receives a lump sum payment in an amount
generally equal to three times the average annual total cash compensation paid
to or accrued for him or her during the two-year period preceding the date of
termination. The Company has agreed to indemnify each participant in the Special
Severance Benefit Plan against any and all liabilities he or she may incur under
Section 4999(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
which relates to excise taxes on excess parachute payments, including any income
taxes and/or additional excise taxes applicable to such indemnification payment.
In addition, the participant receives comparable medical, dental and life
insurance coverage for himself or herself and his or her family for a three-year
period after termination. Mr. Klatsky is the only current participant in the
Special Severance Benefit Plan. Participation in the Special Severance Benefit
Plan by Mr. Weber, Mr. Chirico and Mr. Sirkin has been terminated, but they
continue to have rights thereunder through June 11, 2002.
The Company's Capital Accumulation Plan, under which participants
remaining in the employ of the Company until established target dates earn
specified dollar amounts, provides that if a participant's employment with the
Company is terminated following a change in control of the Company (as defined
in such plan), the full undiscounted value of the future payments to be made to
the participant under the Capital Accumulation Plan becomes immediately payable
in a lump sum. Further, each participant's rights are subject to non-competition
and non-disclosure restrictions that automatically terminate upon a change in
control of the Company. Messrs. Klatsky, Weber, Chirico and Sirkin are
participants in the Capital Accumulation Plan.
All options that were previously granted under one of the Company's option
plans and which have not expired or been otherwise cancelled become immediately
exercisable in full upon a change in control of the Company, regardless of
whether such options have previously vested.
Mr. Klatsky is also entitled to the payments provided for under the
Special Severance Benefit Plan and the Capital Accumulation Plan (i) if he is
not continued as the Company's Chief Executive Officer and Chairman of the Board
of Directors prior to his retirement as an employee of the Company, (ii) in the
event of the appointment by the Board of Directors of an officer or the hiring
by the Board of Directors of an employee with authority equal or superior to the
authority of Mr. Klatsky at any time prior to his retirement as an employee of
the Company or (iii) if the Company fails to
10
maintain the terms and conditions of Mr. Klatsky's employment, including,
without limitation, a minimum level of compensation, as such existed on April
28, 1993, or a termination of the Special Severance Benefit Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended February 3, 2002, the members of the
Compensation Committee included Joseph B. Fuller, Marc Grosman, Dennis F.
Hightower and Maria Elena Lagomasino. Mr. Fuller was a member of the
Compensation Committee from the beginning of fiscal 2001 until June 14, 2001,
and Mr. Grosman first became a member of the Committee on that date. There were
no interlocks or insider participations as defined in the proxy regulations of
the Securities and Exchange Commission.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting the compensation of
all executive officers, administering the Company's existing stock option plans
and cash-based incentive compensation plans for the executive officers, adopting
new cash-based incentive compensation plans and implementing changes and
improvements to existing incentive compensation plans for the executive
officers, and, subject to approval by the Board of Directors, recommending new
stock option plans and other equity-based compensation plans and implement
changes and improvements to the existing stock option plans. The Compensation
Committee also provides guidance to the executive officers regarding the
compensation of the Company's corporate and divisional officers.
OVERALL POLICY
The Compensation Committee believes that the Company's executive officers
constitute a highly qualified management team that has been largely responsible
for the Company's success. The Compensation Committee has structured the
Company's executive officer compensation program primarily (i) to compensate its
executive officers on an annual basis with a stable, secure cash salary at a
sufficiently high level to retain and motivate these officers, (ii) to provide
short-term incentives to executive officers to attain certain financial targets
and to reward certain accomplishments or activities, (iii) to link a portion of
its executive officers' compensation to long-term increases in value created for
the Company's stockholders by the efforts of these officers and (iv) to be
consistent with the Company's high ethical standards. The Compensation Committee
targets the compensation levels of its top three executives to approximate the
competitive median if the Company achieves its budget plan, to exceed the median
and approach the 75th percentile of competitive compensation levels if the plan
is exceeded and to be below the competitive median if the budget plan is not
attained. Information regarding competitive compensation is compiled by the
Committee and/or compensation consultants retained from time to time by the
Committee. Although the Company's compensation program does not rely to any
significant extent on fringe benefits or perquisites, its fringe benefit plans
are generally competitive. The Company believes that it has a reputation for
providing a reasonably high level of job security in an industry known for high
levels of executive turnover.
The Compensation Committee reviews annually the Company's executive
officer compensation package, taking into account corporate performance, stock
price performance and total return to stockholders, as well as industry
conditions, recommendations of the Company's Chief Executive Officer and
compensation awarded to executives in other companies, especially those involved
in the apparel, footwear and specialty retail industries. In establishing future
executive officer compensation packages, the Compensation Committee may adopt
additional long-term incentive and/or annual bonus plans to meet the needs of
changing employment markets and economic, accounting and tax conditions. In
determining the compensation of each individual executive officer, the
Compensation Committee intends to take into account the performance of the
executive and the full compensation package afforded by the Company to him or
her, including pension benefits, insurance and other benefits. The views of the
Company's Chief Executive Officer are considered by the Compensation Committee
in their review of the performance and compensation of each individual executive
officer.
BASE SALARIES
Annual salaries are determined by evaluating the performance of the
Company and of each individual executive officer. In the case of executive
officers with responsibility for particular operations of the Company, the
financial results of those operations are also considered. In evaluating overall
performance and results of particular operations of the Company, the
Compensation Committee reviews the extent to which the Company or the particular
operations achieved budgeted estimates for sales, gross and after-tax margins
and earnings per share and may also consider the Company's
11
sales and earnings results compared to those of many public peer companies
(including companies that are part of the Line of Business Index) and private
peer companies known to the members of the Committee or the results of which can
be disclosed by compensation consultants retained by the Committee. Where
appropriate, the Compensation Committee considers non-financial performance
measures, including market share increases, manufacturing and distribution
efficiency gains, improvements in product quality, improvements in relations
with customers and suppliers and a demonstrated commitment to the welfare and
dignity of the Company's associates. Also considered are years of service to the
Company. Finally, the Compensation Committee takes into account the relative
salaries of the executive officers and determines what it believes are
appropriate compensation level distinctions between and among the executive
officers, including between the Company's Chief Executive Officer and the other
executive officers. There is no specific relationship between achieving or
failing to achieve the budgeted estimates or the Company's relative results and
the annual salaries determined by the Compensation Committee for any of the
executive officers. No specific weight is attributed to any of the factors
considered by the Compensation Committee; the Compensation Committee considers
all factors and makes a subjective determination, based upon the experience of
its members and the recommendations of the Company's Chief Executive Officer, of
appropriate compensation levels.
In determining the base salary of the Company's Chief Executive Officer
for the fiscal year ended February 3, 2002, the Compensation Committee took into
account the salaries of chief executive officers of many public peer companies
(including companies that are part of the Line of Business Index) and private
peer companies known to the members of the Committee, compensation information
provided by an outside consultant, the performance of the Common Stock over the
prior several years and the assessment by the Compensation Committee of Mr.
Klatsky's individual performance. The Committee also took into account the
incentive components of Mr. Klatsky's compensation package and the potential
payouts and other value under those plans.
SHORT-TERM INCENTIVES
PERFORMANCE INCENTIVE BONUS PLAN. Stockholders approved the Company's
Performance Incentive Bonus Plan (the "Bonus Plan") at the 2000 Annual Meeting
of Stockholders. The Compensation Committee had adopted a similar bonus program
for fiscal 1999. Under the Bonus Plan (and the earlier bonus program) the
Company's senior executives, including the Named Executive Officers, can receive
a bonus based on earnings targets for the Company as a whole or, in the case of
the Vice Chairmen, earnings targets for their respective divisions. Threshold,
plan and maximum earnings targets are set during the first 90 days of each
fiscal year. If an executive dies during a fiscal year for which he or she was
selected as a participant in the Plan, his or her estate would receive the
bonus, if any, payable to the participant for that fiscal year, pro rated to
reflect the portion of the year worked by the participant. The amount of a
participant's bonus payment, if any, for a fiscal year is determined by the end
of the first quarter of the succeeding fiscal year. Mr. Duane earned a bonus
under the Bonus Plan for the fiscal year ended February 3, 2002 and received his
bonus payment in the first quarter of the current fiscal year.
DISCRETIONARY BONUSES. The Compensation Committee has the authority to
award annual bonuses to executive officers on a discretionary basis. In
determining whether to award discretionary bonuses, the Compensation Committee
reviews each executive's overall compensation package and takes into account
factors including, but not limited to, the assessment by the Compensation
Committee of each executive's individual performance, the compensation awarded
to executives in other companies, especially companies involved in the apparel,
footwear and specialty retail industries and additional duties or special
projects assumed by the executive. The Compensation Committee has the authority
to place restrictions on any discretionary bonus it awards to an executive
officer. No executive officer was awarded a discretionary bonus for fiscal 2001.
LONG-TERM INCENTIVES
STOCK OPTIONS. The Company currently has in effect two stock option plans,
the 1997 Stock Option Plan (the "1997 Option Plan") and the 2000 Option Plan,
under which options to purchase Common Stock are granted. In addition, options
to purchase Common Stock under the Company's 1987 Stock Option Plan (the "1987
Option Plan") are still outstanding. Stock options may be granted to employees
of the Company, including the Named Executive Officers, under the 1997 and 2000
Option Plans, subject to certain limitations. The 1997 and 2000 Option Plans
also provide for an annual grant of options to the Company's non-employee
directors and permit additional grants to be made to non-employee directors who
provide services to the Company or its subsidiaries outside of their duties as
directors. The 2000 Option Plan also permits option grants to be made to
consultants and advisors of the Company. Stock options are designed to align the
interests of grantees with those of the stockholders. Stock options granted
under the Company's stock option plans are granted at an exercise price equal to
the closing price of the Common Stock on the New York Stock Exchange on the date
prior to grant. Generally, stock options granted under the 1987 and 1997 Option
Plans may not be
12
exercised until the third anniversary of the date on which they are granted, and
grants of stock options do not become fully exercisable until the fifth
anniversary of the date on which they are granted. Stock options granted under
the 2000 Option Plan generally may not be exercised until the first anniversary
of the date of grant and do not become fully exercisable until the fourth
anniversary of the date of the grant. The stock options granted to executive
officers (and other grantees) under each of the Company's option plans generally
remain exercisable during employment until the tenth anniversary of the date of
grant. This approach provides an incentive to the executive to increase
stockholder value over the long term, since the full benefit of the options
granted cannot be realized unless stock price appreciation occurs over a number
of years.
Grants under the 2000 Option Plan were awarded in March 2001 to
approximately 249 of the key employees of the Company, including the Named
Executive Officers. Each such individual received a fixed number of shares
relative to his or her salary range and position within the Company. Options
were granted to the executive officers in an amount such that the value of the
award, when combined with base compensation, potential bonuses under the Bonus
Plan and, in the case of the top three executive officers, potential payouts
under the Company's Long-Term Incentive Plan, would provide competitive total
compensation relative to comparable positions at other companies.
LONG-TERM INCENTIVE PLAN. The Compensation Committee adopted in June 1999
long-term incentive plans for the 21-month period ending February 4, 2001 and
the 33-month period ending February 3, 2002. Stockholders approved the Company's
Long-Term Incentive Plan at the 2000 Annual Meeting of Stockholders. The
participants in each of the three plans are the Company's Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer. The payment of
cash awards under each of the plans requires the Company to achieve both
earnings growth and improvement in return on equity over the applicable
performance cycle. Under the Long-Term Incentive Plan, the Compensation
Committee can also establish other performance criteria. With respect to the
plans adopted in June 1999, threshold, plan and maximum targets were established
for each performance cycle, and awards were established for achievement of each
of the targets at the time of adoption. Under the Long-Term Incentive Plan,
these targets are established within the first 90 days of the relevant
performance cycle by the Compensation Committee. Awards are based on a
percentage of a participant's base salary. The percentage is lowest for
achievement of the threshold targets and is highest if the maximum targets are
achieved or exceeded. If the level of achievement falls between two of the
targets, the award will be based on a percentage of the participant's base
salary that is on a straight-line interpolation between the percentages for the
two targets. The percentage of base salary that a participant can earn as an
award differs among the participants. No awards are earned if the threshold
targets are not satisfied. The amount of a participant's award, if any, will be
determined by the Compensation Committee, by the end of the first quarter of the
fiscal year immediately following the end of the applicable performance cycle.
Payment of such awards will be made as soon as practicable thereafter. In the
event of the death or disability of a participant during a performance cycle,
the participant or his or her estate will receive the award, if any, which would
otherwise have been payable to the participant for such program period, pro
rated to reflect the portion of the performance cycle worked by the participant.
In all other events, a participant must be employed by the Company on the
payment date therefor or must have died, become disabled, retired under the
Company's retirement plan or have been discharged without cause subsequent to
the end of the performance cycle but prior to the date the award is paid in
order to remain eligible to receive an award. Messrs. Klatsky, Weber and Chirico
received payouts in the current fiscal year as a result of achieving the targets
under the 33-month plan.
In view of changing tax laws and economic and employment conditions, the
Compensation Committee regularly examines other methods of long-term and
short-term incentive-based compensation for executive officers and intends to
implement, when appropriate, such methods in lieu of or in addition to the
existing plans. In addition, the Compensation Committee may create special bonus
pools or modify existing arrangements when special conditions or events warrant.
STOCK OWNERSHIP
To ensure that management's interests remain aligned with stockholders'
interests, the Company encourages key executives to retain shares acquired
pursuant to the exercise of stock options. In addition, employees of the
Company, including the executive officers, acquire Common Stock of the Company
through the AIPs, subject to certain limitations on the amount an employee can
contribute to or hold in the PVH Stock Fund. Most of the Company's executive
officers have a significant portion of their AIP accounts invested in the PVH
Stock Fund.
FEDERAL INCOME TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Code, limits the amount of compensation a publicly
held corporation may deduct as a business expense for Federal income tax
purposes. The limit, which applies to a company's chief executive officer and
the four other most highly compensated executive officers, is $1 million (the
"Deductibility Limit"), subject to certain exceptions.
13
The exceptions include the general exclusion of performance-based compensation
from the calculation of an executive officer's compensation for purposes of
determining whether his or her compensation exceeds the Deductibility Limit. The
Company generally does not expect to pay its executive officers compensation in
excess of the Deductibility Limit. However, the Compensation Committee also
recognizes that in certain instances it may be in the best interest of the
Company to provide compensation that is not fully deductible and amounts in
excess of the Deductibility Limit have been paid.
Compensation Committee
Maria Elena Lagomasino, Chairperson
Joseph B. Fuller
Marc Grosman
Dennis F. Hightower
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly
change in the cumulative total stockholder return on the Common Stock against
the cumulative return of the Russell 2000 Index and a line of business index
comprised of the S&P Retail Composite Index, the S&P Textile (Apparel) Index and
the S&P Footwear Index for the five fiscal years ended February 3, 2002.
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN
[GRAPHIC OMITTED]
Phillips-Van Heusen Corporation Russell 2000 Index Line of Business Index
01/31/97 100.00 100.00 100.00
01/30/98 90.49 116.40 95.57
01/29/99 49.12 115.64 128.54
01/28/00 55.31 136.59 130.95
02/02/01 108.49 135.74 156.61
02/03/02 90.40 132.91 167.76
------------------
Note: Line of Business Index is composed of a blended weighting of the S&P
Retail Composite Index (50%), the S&P Textile (Apparel) Index (33%) and
the S&P Footwear Index (17%) to correspond generally to the Company's
relative sales over the five-year period attributable to its retail,
wholesale apparel and wholesale footwear operations.
VALUE OF $100.00 INVESTED AFTER FIVE YEARS:
Phillips-Van Heusen Corporation Common Stock... $ 90.40
Russell 2000 Index............................. $132.91
Line of Business Index......................... $167.76
14
AUDIT COMMITTEE REPORT
The Company's management has the primary responsibility for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors audit the Company's financial statements and express an
opinion on the financial statements based on the audit. The Audit Committee
reviews the Company's financial reporting process on behalf of the Board of
Directors.
In this context, the Audit Committee has met and held discussions with
Company management and Ernst & Young LLP, the Company's independent auditors.
Management represented to the Committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles in the United States, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The Committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
In addition, the Audit Committee has discussed with the independent
auditors the auditors' independence from the Company and its management,
including the matters in the written disclosures required by the Independence
Standards Board Standard No. 1 (Independence Discussions With Audit Committees).
The Committee has also considered whether the independent auditors' provision of
other non-audit services to the Company is compatible with the auditors'
independence.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, the evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended February 3, 2002, for filing with
the Securities and Exchange Commission. The Committee and the Board also have
recommended, subject to stockholder approval, the selection of the Company's
independent auditors.
Audit Committee
Bruce Maggin, Chairperson
Edward H. Cohen
Dennis F. Hightower
SELECTION OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has selected Ernst & Young LLP, independent auditors, as auditors for the fiscal
year ending February 2, 2003. Although stockholder ratification of the Board of
Directors' action in this respect is not required, the Board of Directors
considers it desirable for stockholders to pass upon the selection of auditors
and, if the stockholders disapprove of the selection, intends to reconsider the
selection of auditors for the fiscal year ending February 1, 2004, since it
would be impracticable to replace the Company's auditors so late into the
Company's current fiscal year.
It is expected that representatives of Ernst & Young LLP will be present
at the meeting, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THE AUDITORS. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION
WILL BE VOTED FOR THE APPOINTMENT OF THE AUDITORS UNLESS OTHERWISE SPECIFIED IN
A PROXY.
15
FEES PAID TO AUDITORS
AUDIT FEES
The aggregate fees billed for professional services rendered for the audit
of the Company's annual financial statements for the fiscal year ended February
3, 2002, and for the reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-Q for that fiscal year, were $608,250,
all of which were attributable to services performed by Ernst & Young LLP.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not render professional services relating to
financial information systems design and implementation for the fiscal year
ended February 3, 2002.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young LLP for services rendered to
the Company, other than the services described above under "Audit Fees" for the
fiscal year ended February 3, 2002 were $394,000. These fees relate to tax
services, audits of benefit plans and other activities in support of the
Company.
MISCELLANEOUS
Any proposal of an eligible stockholder intended to be presented at the
next Annual Meeting of Stockholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting on
or before December 31, 2002. The proxy or proxies designated by the Board of
Directors will have discretionary authority to vote on any matter properly
presented by a stockholder for consideration at the next Annual Meeting of
Stockholders but not submitted for inclusion in the proxy materials for such
Meeting unless notice of the matter is received by the Company on or before
March 16, 2003 and certain other conditions of the applicable rules of the
Securities and Exchange Commission are satisfied. Stockholder proposals should
be directed to the Secretary of the Company at the address set forth below.
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than that set forth in the accompanying Notice of
Annual Meeting of Stockholders. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material that may be sent
to stockholders in connection with this solicitation. Solicitation may be made
by mail, telephone, telegraph and/or personal interview. The Company may
reimburse persons holding shares in their names or in the names of nominees for
their expense in sending proxies and proxy material to their principals. In
addition, Georgeson Shareholder, which is retained by the Company on an annual
basis, will aid in the solicitation of proxies for the meeting for a fee of
$6,500 plus expenses.
Copies of the 2001 Annual Report to Stockholders are being mailed to the
stockholders simultaneously with this Proxy Statement. If you want to save the
Company the cost of mailing more than one Annual Report to the same address,
please send your written request to the Secretary of the Company at the address
indicated below to discontinue mailing a duplicate copy to the account or
accounts selected by you.
THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED FEBRUARY 3, 2002 UPON RECEIPT OF A WRITTEN REQUEST ADDRESSED TO:
Treasurer
Phillips-Van Heusen Corporation
200 Madison Avenue
New York, New York 10016-3903
By order of the Board of Directors,
MARK D. FISCHER
Secretary
New York, New York
April 29, 2002
16
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PHILLIPS-VAN HEUSEN CORPORATION
200 Madison Avenue
New York, New York 10016-3903
BRUCE J. KLATSKY and MARK WEBER, or either of them, with the power of
substitution, are hereby authorized to represent the undersigned and to vote all
shares of the Common Stock of PHILLIPS-VAN HEUSEN CORPORATION held by the
undersigned at the Annual Meeting of Stockholders to be held in New York, New
York, on June 11, 2002, and any adjournments thereof, on the matters printed on
the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS EXECUTED BUT NO
DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED:
o FOR THE ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR; AND
o FOR THE APPOINTMENT OF AUDITORS.
(Continued, and to be dated and signed on the other side.)
PHILLIPS-VAN HEUSEN CORPORATION
P.O. BOX 11287
NEW YORK, NEW YORK 10203-0287
THE BOARD RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 BELOW:
Election of the nominees for director FOR all nominees [ ] WITHHOLD AUTHORITY to [ ] EXCEPTIONS* [ ]
listed below: listed below vote for all nominees listed below
NOMINEES: EDWARD H. COHEN, JOSEPH B. FULLER, JOEL H. GOLDBERG, MARC GROSMAN, DENNIS F. HIGHTOWER, BRUCE J. KLATSKY, MARIA
ELENA LAGOMASINO, HARRY N.S. LEE, BRUCE MAGGIN, PETER J. SOLOMON AND MARK WEBER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW.)
* Exceptions
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Appointment of auditors. FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
Address change
and/or comments [ ]
Note: The signature should agree with the name on your stock
certificate. If acting as executor, administrator, trustee,
guardian, etc., you should so indicate when signing. If the
signer is a corporation, please sign the full corporate name,
by duly authorized officer. If shares are held jointly, each
stockholder named should sign.
Dated: , 2002
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Signature
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Signature, if held jointly
To vote, fill in (x) with black or blue ink only. [X]
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