Continuing — Class I Directors — Terms Expire in 2008
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Name | | Age | | | Director Since | | | Positions Held |
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J. Reese Lanier, Sr.* | | | 62 | | | | 1974 | | | Mr. Lanier is self-employed in farming and related businesses and has had this occupation for more than five years. |
Cecil D. Conlee | | | 69 | | | | 1985 | | | Mr. Conlee is Chairman of CGR Advisors, a real estate advisory company, and has held this position since 1990. He is also a director of Central Parking Corporation. Mr. Conlee serves on the Audit Committees of Central Parking Corporation and Vanderbilt University. He is Chairman of the Compensation Committee of Central Parking Corporation. |
Robert E. Shaw | | | 74 | | | | 1991 | | | Mr. Shaw is Chairman of the Board and Chief Executive Officer of Shaw Industries, Inc., a manufacturer and seller of carpeting to retailers and distributors, and has held those positions since 1995 and 1990, respectively. |
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Name | | Age | | | Director Since | | | Positions Held |
|
Cecil D. Conlee | | | 71 | | | | 1985 | | | Mr. Conlee is Chairman of CGR Advisors, a real estate advisory company, and has held this position since 1990. Mr. Conlee serves on the Audit Committee of Vanderbilt University. |
J. Reese Lanier, Sr.* | | | 64 | | | | 1974 | | | Mr. Lanier is self-employed in farming and related businesses and has had this occupation for more than five years. |
Robert E. Shaw | | | 75 | | | | 1991 | | | Mr. Shaw retired in September 2006 from his position of Chief Executive Officer of Shaw Industries, Inc., a manufacturer and seller of carpeting to retailers and distributors. Mr. Shaw had held that position since 1971. |
Continuing Class — Class��II Directors — Terms Expire in 20062009
| | | | | | | | | | |
Name | | Age | | | Director Since | | | Positions Held |
| | | | | | | | |
J. Hicks Lanier* | | | 65 | | | | 1969 | | | Mr. Lanier has been Chairman and Chief Executive Officer of the Company since 1981. Mr. Lanier also served as President of the Company from 1977 until 2003. He serves as a director of SunTrust Banks, Inc., Crawford & Company and Genuine Parts Company. He serves on the Audit Committee of SunTrust Bank and Crawford & Company. He also serves on the Compensation Committee of Genuine Parts Company and Crawford & Company. |
Thomas C. Gallagher | | | 57 | | | | 1991 | | | Mr. Gallagher is Chairman, Chief Executive Officer and President of Genuine Parts Company, a distributor of automotive replacement parts, industrial products, office supplies and electrical and electronic parts. He was appointed Chief Executive Officer in 2004 and President in 1990. He is also a director of STI Classic Funds and STI Classic Variable Trust. He is a member of the Audit Committee of STI Classic Funds. |
Clarence H. Smith | | | 54 | | | | 2003 | | | Mr. Smith is President and Chief Executive Officer of Haverty Furniture Companies, Inc., a home furnishings retailer, and has held this position since January 2003. He served as President and Chief Operating Officer of Haverty Furniture Companies, Inc. from 2002 to 2003, Chief Operating Officer from 2000 to 2002, and Senior Vice President, General Manager — Stores from 1996 to 2000. He is also a director of Haverty Furniture Companies, Inc. |
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Continuing Class III Directors — Terms Expire in 2007
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Name | | Age | | | Director Since | | | Positions Held |
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E. Jenner Wood III | | | 54 | | | | 1995 | | | Mr. Wood became Chairman, President and Chief Executive Officer of Sun Trust Bank, Central Group, in March 2001. Mr. Wood served as Executive Vice President of SunTrust Banks, Inc. from 1994 until 2001. SunTrust Banks, Inc. is a financial holding company that through its flagship subsidiary, SunTrust Bank, offers deposit, credit and trust and investment services. Mr. Wood is a director of Crawford & Company and serves on its Compensation Committee. He is also a director of Georgia Power Company and serves on its Audit Committee. |
Helen B. Weeks | | | 51 | | | | 1998 | | | Ms. Weeks founded Ballard Designs, Inc., a home furnishing catalog business, in 1983 and served as Chief Executive Officer until she retired in 2002. |
S. Anthony Margolis | | | 63 | | | | 2003 | | | Mr. Margolis has been a Group Vice President of the Company and Chief Executive Officer of Tommy Bahama Group, Inc. (formerly known as Viewpoint International, Inc.) since 2003. Prior to joining the Company, Mr. Margolis had been the Chief Executive Officer and President of Viewpoint International, Inc. since 1992. |
James A. Rubright | | | 58 | | | | 2004 | | | Mr. Rubright has served as Chief Executive Officer of Rock-Tenn Company, a manufacturer of paperboard, paperboard packaging and merchandising displays for sale primarily to non-durable goods producers, since October 1999 and Chairman of its Board of Directors since January 2000. Mr. Rubright is a director of AGL Resources Inc., an energy company, and serves on its Compensation Committee. He is also a director of Avondale Incorporated, a textile manufacturing company, and serves on its Audit Committee. |
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Name | | Age | | | Director Since | | | Positions Held |
|
J. Hicks Lanier* | | | 67 | | | | 1969 | | | Mr. Lanier has been Chairman and Chief Executive Officer of the Company since 1981. Mr. Lanier also served as President of the Company from 1977 until 2003. He serves as a director of SunTrust Banks, Inc., Crawford & Company and Genuine Parts Company. He serves on the Audit Committees of SunTrust Banks, Inc. and Crawford & Company. He also serves on the Compensation Committees of Genuine Parts Company and Crawford & Company. |
Clarence H. Smith | | | 56 | | | | 2003 | | | Mr. Smith is President and Chief Executive Officer of Haverty Furniture Companies, Inc., a home furnishings retailer, and has held this position since January 2003. He served as President and Chief Operating Officer of Haverty Furniture Companies, Inc. from 2002 to 2003, Chief Operating Officer of Haverty Furniture Companies, Inc. from 2000 to 2002, and Senior Vice President, General Manager — Stores of Haverty Furniture Companies, Inc. from 1996 to 2000. He is also a director of Haverty Furniture Companies, Inc. |
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* | | J. Hicks Lanier and J. Reese Lanier, Sr. are first cousins. J. Reese Lanier, Jr., an executive officer of the Company,our Senior Vice President and Treasurer, is the son of J. Reese Lanier, Sr. |
Corporate Governance
Conduct Policies for Directors, Officers, including Senior Financial Officers, and Employees Director Independence.
The Board of Directors has determinedadopted a Conflict of Interest and Business Ethics Policy for all of our directors, officers and employees. It is our policy that all such covered persons must avoid any activity that is or has the appearance of being hostile, adverse or competitive with the Company’s business, or that interferes with the proper performance of their duties, responsibilities or loyalty to the Company. The Executive Committee of the Board of Directors has the authority, in its sole discretion, to approve any waiver of a provision of our Conflict of Interest and Business Ethics Policy granted to any of our employees (other than our officers). The Board of Directors has the exclusive authority, in its sole discretion, to approve any waiver of a provision of our Conflict of Interest and
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Business Ethics Policy granted to any of our directors or officers. We will disclose on our Internet website at www.oxfordinc.com, to the extent and in the manner permitted by applicable law, any waiver of a provision of our Conflict of Interest and Business Ethics Policy granted to any of our directors or officers.
In addition, the Board of Directors has adopted an ethical conduct policy for our senior financial officers, including, among others, our principal executive officer (our CEO), our principal financial officer (our Executive Vice President) and our principal accounting officer (our Controller). These individuals are expected to adhere at all times to this ethical conduct policy. Failure to comply with this ethical conduct policy is a serious offense and will result in appropriate disciplinary action. The Board of Directors has the exclusive authority, in its sole discretion, to approve any material departure from a provision of this ethical conduct policy. We will disclose on our Internet website at www.oxfordinc.com, to the extent and in the manner permitted by Item 5.05 ofForm 8-K under Section 13 or 15(d) of the Exchange Act, (i) the nature of any amendment to this ethical conduct policy (other than technical, administrative or other non-substantive amendments), (ii) our approval of any material departure from a provision of this ethical conduct policy, or (iii) our failure to take action within a reasonable period of time regarding any material departure from a provision of this ethical conduct policy that has been made known to any of our executive officers.
We have posted our Conflict of Interest and Business Ethics Policy and our ethical conduct policy for our senior financial officers on our Internet website at www.oxfordinc.com. A copy of each of these policies is available in print to any shareholder who so requests it. Requests for a copy of either of these policies should be mailed to: Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, GA 30308, Attention: Investor Relations.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that our officers and directors, and persons who beneficially own more than 10% of our common stock, file with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”) certain reports, and to furnish copies thereof to us, with respect to each such person’s beneficial ownership and changes in ownership of our equity securities. To the Company’s knowledge, based solely upon a review of the copies of such reports furnished to us and certain representations made by such persons, all such persons complied with the applicable reporting requirements during fiscal 2007.
Submission of Director Candidates by Shareholders On April 2, 2007, our Board of Directors amended the Company’s Bylaws to, among other things, specify the date and process by which shareholders may submit a director nomination in order for such nomination to be timely and acceptable for consideration at any annual meeting of shareholders.
Pursuant to our Bylaws, as now in effect, to be timely, a director nomination by a shareholder must be delivered to our Secretary not less than 90 days nor more than 120 days prior to the first anniversary of the date on which we first mailed proxy materials for the preceding year’s annual meeting; however, if the annual meeting of shareholders is advanced more than 30 days prior to or delayed more than 30 days after the first anniversary of the preceding year’s annual meeting, a director nomination submitted by a shareholder to be timely must be delivered not later than the close of business on the later of (i) the 90th day prior to the annual meeting and (ii) the 10th day following the date on which public announcement of the date of such annual meeting is first made. Any recommendation received by our Secretary will be promptly forwarded to the Chairman of the Nominating, Compensation and Governance Committee for consideration.
Notice of a director nomination by a shareholder should include the following:
(1) the name and address of record of the shareholder making the nomination;
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(2) a representation that the followingshareholder is a holder of record of shares of our capital stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
(3) the class and number of shares of capital stock held of record, owned beneficially and represented by proxy by the shareholder and each proposed nominee, as of the date of the notice;
(4) the name, age, business and residence addresses and principal occupation or employment of each proposed nominee;
(5) a description of all arrangements or understandings between the shareholder and each proposed nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder;
(6) such other information regarding each proposed nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; and
(7) the written consent of each proposed nominee to serve as a director if so elected.
In addition to candidates submitted by shareholders, the Nominating, Compensation and Governance Committee will also consider candidates recommended by directors, are independent:management, third party search firms and other valid and reliable sources. Candidates recommended by any of these sources will be equally evaluated and considered. The Nominating, Compensation and Governance Committee will compile a complete list of candidates recommended from any valid source and evaluate each candidate. Each candidate will be evaluated in the context of the current composition of the Board of Directors, the current needs of the Board of Directors and the long-term interests of our shareholders. After evaluating each candidate, the Nominating, Compensation and Governance Committee will vote on which candidates will be recommended to the full Board of Directors.
As further described below under“Corporate Governance — Committees of the Board of Directors — Audit Committee,”our Board of Directors has organized an Audit Committee that, among other things, assists the Board of Directors in fulfilling its responsibilities with respect to the oversight of the integrity of our financial statements, reporting processes and systems of internal controls; our compliance with applicable laws and regulations; the qualifications and independence of our independent auditors; and the performance of our internal audit department and our independent auditors. Cecil D. Conlee, James A. Rubright Robert E. Shaw,and Clarence H. Smith are the members of the Audit Committee. The Board of Directors has determined that all members of the Audit Committee are independent and are financially literate in accordance with the NYSE’s governance listing standards and the regulations of the SEC and that Mr. Conlee is an “audit committee financial expert” as that term is defined in Item 407(d) ofRegulation S-K under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”).
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COMMON STOCK OWNERSHIP BY MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS The table below sets forth certain information, as of August 15, 2007 (except as noted), regarding the beneficial ownership of shares of our common stock by:
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| • | owners of 5% or more of our common stock; |
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| • | our directors; |
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| • | our named executive officers (as defined in“Executive Compensation — Compensation Discussion and Analysis — Compensation Philosophy and Objectives”); and |
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| • | our directors and executive officers as a group. |
Except as set forth below, the shareholders named below have sole voting and investment power with respect to all shares of our common stock shown as being beneficially owned by them. Unless otherwise indicated, the address for each shareholder on this table isc/o Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, Georgia 30308.
| | | | | | | | |
| | Beneficial Ownership of
| |
| | Common Stock | |
| | Number of
| | | Percent of
| |
Name | | Shares(1) | | | Class(1) | |
|
Columbia Wanger Asset Management, L.P. | | | 2,302,400(a | ) | | | 12.89 | |
Kornitzer Capital Management, Inc. | | | 935,041(b | ) | | | 5.23 | |
John A. Baumgartner | | | 12,766(c | ) | | | * | |
Thomas C. Chubb III | | | 38,712(d | ) | | | * | |
Christine B. Cole | | | 1,867 | | | | * | |
Cecil D. Conlee | | | 8,927 | | | | * | |
George C. Guynn | | | 191 | | | | * | |
J. Hicks Lanier | | | 1,612,109(e | ) | | | 8.98 | |
J. Reese Lanier, Sr. | | | 551,805(f | ) | | | 3.09 | |
S. Anthony Margolis | | | 26,973 | | | | * | |
James A. Rubright | | | 1,315 | | | | * | |
Michael J. Setola | | | 6,501(g | ) | | | * | |
Robert E. Shaw | | | 4,068 | | | | * | |
Clarence H. Smith | | | 1,570 | | | | * | |
Helen B. Weeks | | | 1,718 | | | | * | |
E. Jenner Wood III | | | 2,170 | | | | * | |
All directors and executive officers as a group (19 persons)(h) | | | 2,384,595(i | ) | | | 13.35(i | ) |
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* | | Less than 1% |
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(1) | | Calculations based on an aggregate of 17,867,780 shares of our common stock outstanding at the close of business on August 15, 2007. In addition, the number of shares and percentage of the class beneficially owned for each shareholder assume the issuance of all shares attributable to outstanding options held by such shareholder that may be exercised within 60 days of August 15, 2007 but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The number of shares and percentage of the class beneficially owned by all directors and executive officers as a group assume the issuance of all shares |
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| | |
| | attributable to outstanding options held by such directors and executive officers that may be exercised within 60 days of August 15, 2007. |
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(a) | | The shares reported are held by Columbia Wanger Asset Management, L.P. in its capacity as an investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E) of the Exchange Act. Columbia Wanger Asset Management, L.P., has sole voting power over 2,082,400 of the reported shares and sole dispositive power over all of the reported shares. As reported by Columbia Wanger Asset Management, L.P., the shares reported include shares representing 8.76% of the Company’s outstanding common stock held by Columbia Acorn Trust, a Massachusetts business trust that is advised by Columbia Wanger Asset Management, L.P. The address for Columbia Wanger Asset Management, L.P. is 227 West Monroe Street, Suite 3000, Chicago, IL 60606. This information was as of December 31, 2006 and was obtained from a Schedule 13G/A filed on January 10, 2007. |
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(b) | | The shares reported are held by Kornitzer Capital Management, Inc. in its capacity as an investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E) of the Exchange Act. As reported by Kornitzer Capital Management, Inc., Kornitzer Capital Management, Inc. is an investment adviser with respect to the reported shares for the accounts of other persons who have the right to receive, and the power to direct the receipt of, dividends from, or the proceeds from the sale of, the reported shares. Kornitzer Capital Management, Inc. has shared voting and dispositive power with respect to all shares reported. Its address is 5420 West 61st Place, Shawnee Mission, KS 66205. This information was as of December 31, 2006 and was obtained from a Schedule 13G filed on March 2, 2007. |
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(c) | | Includes 8,800 shares issuable pursuant to outstanding stock options that may be exercised within 60 days of August 15, 2007. |
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(d) | | Includes 29,870 shares issuable pursuant to outstanding stock options that may be exercised within 60 days of August 15, 2007. |
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(e) | | Consists of 447,212 shares held individually by Mr. Lanier, 582,020 shares held in trust, 492,477 shares held by a charitable foundation of which Mr. Lanier is a trustee and 90,400 shares issuable pursuant to outstanding stock options that may be exercised within 60 days of August 15, 2007. Mr. Lanier disclaims beneficial ownership of the reported shares held in trust and held by the charitable foundation of which Mr. Lanier is a trustee. |
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(f) | | Consists of 474,306 shares held individually by Mr. Lanier, 76,899 shares held in trust and 600 shares held by Mr. Lanier’s wife. Mr. Lanier disclaims beneficial ownership of the reported shares held in trust and held by his wife. |
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(g) | | Mr. Setola served as President of the Company until January 31, 2007. Section 16(a) of the Exchange Act requires that our officers, among others, file with the SEC certain reports with respect to such person’s beneficial ownership of our equity securities. Accordingly, Mr. Setola’s obligation to file such reports pursuant to Section 16(a) of the Exchange Act terminated in connection with the termination of his employment with the Company on January 31, 2007. Information regarding Mr. Setola’s beneficial ownership of shares of our common stock is based on a Form 4 filed by Mr. Setola with the SEC on August 7, 2006, the last report filed by Mr. Setola with respect to his beneficial ownership of our equity securities. |
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(h) | | The number of shares and percentage of the class beneficially owned by all directors and executive officers as a group include shares beneficially owned by Messrs. Gray and Tuman but do not include shares beneficially owned by Mr. Setola. Each of Messrs. Gray and Tuman was designated by the Company’s Board of Directors as an executive officer of the Company for purposes of Section 16 of the Exchange Act on July 27, 2007 and, accordingly, each was an executive officer of the Company on August 15, 2007. Mr. Setola resigned as President of the Company effective January 31, 2007. Mr. Setola’s beneficial ownership was excluded for purposes of this calculation because he was not an executive officer of the Company on August 15, 2007. |
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(i) | | Of this amount, the executive officers not listed by name hold individually an aggregate of 68,045 shares, hold an aggregate of 19,606 shares in trust and have the right to acquire 31,300 shares pursuant to outstanding stock options that may be exercised within 60 days of August 15, 2007. |
Under the rules of the SEC, a person may be deemed to beneficially own securities in which he or she has no financial interest. The information set forth above under this heading“Common Stock Ownership by Management and Certain Beneficial Owners”shall not be construed as an admission that any such person is, for purposes of Section 13(d) or 13(g) of the Exchange Act or otherwise, the beneficial owner of any securities disclosed above.
The Board of Directors oversees the Company’s business in accordance with the Georgia Business Corporation Code, as implemented by our Articles of Incorporation and Bylaws. The directors are elected by our shareholders to oversee their interest in the long-term health and overall success of the Company. The Board of Directors serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the shareholders. The Board of Directors selects and oversees the members of senior management, who are charged by the Board of Directors with conducting the day-to-day business of the Company.
The Board of Directors annually reviews the independence of our directors. As a result of its annual review, the Board of Directors has affirmatively determined that none of the following director nominees has a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and, as a result, such directors are independent: George C. Guynn, James A. Rubright, Helen B. Weeks and E. Jenner Wood III. In addition, the Board of Directors has affirmatively determined that the following continuing directors are independent: Cecil D. Conlee, Robert E. Shaw and Clarence H. Smith.
In determining director independence, the Board of Directors broadly considers all relevant facts and circumstances, when making a determination of independence, including the corporate governance listing standards of the NYSE. The Board of Directors considers the issue not merely from the standpoint of a director, but also from that of persons or organizations with which the director has an affiliation. An independent director is free of any relationship with ourthe Company or ourits management that impairsmight impair the director’s ability to make independent judgments. The Board has determined that each of these directors has no material relationship with our Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with our Company). Mr. E. Jenner Wood III has certain relationships with ourthe Company that are described elsewhere in this proxy statement under the heading“Certain Relationships and Related Transactions.”” The Board of Directors has
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determined that this relationship is not material for purposes of determining Mr. Wood’s independence in accordance with the NYSE corporate governance listing standards.
Corporate Governance Guidelines The Board of Directors has adopted Corporate Governance Guidelines that set forth certain guidelines for the operation of the Board of Directors and its committees. In accordance with its charter, the Nominating, Compensation and Governance Committee of the Board of Directors periodically reviews and assesses the adequacy of our Corporate Governance Guidelines. We have posted our Corporate Governance Guidelines on our Internet website atwww.oxfordinc.com.
Director Self-Evaluation. Our A copy of our Corporate Governance Guidelines provide thatis available in print to any shareholder who so requests it. Requests for a copy of our Corporate Governance Guidelines should be mailed to: Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, GA 30308, Attention: Investor Relations.
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In accordance with our Corporate Governance Guidelines, the Board will conduct an annualof Directors annually conducts a self-evaluation of the Board and its Committees.of Directors. The Corporate Governance Guidelines provide that the Nominating, Compensation and Governance Committee is responsible for overseeingoversees the Board of Directors’ self-evaluation process.
Meetings of Non-Employee Directors.Directors Pursuant to our Corporate Governance Guidelines, our non-employee directors periodically meet separately from the other directors.directors in executive sessions. Our non-employee directors include directors who are independent, as defined indetermined by the NYSE corporate governance listing standards,Board of Directors, and any other directors who are not officers or employees of ourthe Company even though they may have another relationship to ourwith the Company or ourits management that prevents them from being considered independent under the NYSE corporate governance listing standards.
Presiding Independent Director. Robert E. ShawDirector Cecil D. Conlee is the presiding independent director, in accordance with our Corporate Governance Guidelines. The presiding independent director serves in a lead capacity to chair executive sessions of the non-employee directors and coordinate the activities of the other non-employee directors.
Submission
The Board of Candidates by Shareholders. Shareholders may recommend candidatesDirectors plans for consideration by the Nominating, Compensation and Governance Committee by submitting a written recommendationsuccession to the Secretaryposition of Chief Executive Officer, as well as certain other senior management positions. To assist the Company. The recommendation must be sent by certified or registered mail and received by the time specified in the Company’s Proxy Statement as the deadline for submitting shareholder proposals for consideration at the Company’s Annual Meeting. In addition to the information required below, the shareholder must provide his or her own name, numberBoard of shares owned and the date the shares were purchased. Any recommendation received by the Secretary will be promptly forwarded toDirectors, the Chairman ofand Chief Executive Officer periodically provides the Nominating, Compensation and Governance Committee.
Regardless of the source of the recommendation, the Nominating, Compensation and Governance Committee must be provided the following information for new candidates being recommended:
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| (1) the name, age, business address and residence address of the candidate; |
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| (2) the candidate’s resume, which must describe, among other things, the candidate’s principal occupation or employment history, other directorships held, material outside commitments and the names of all other business entities of which the candidate owns a 10% beneficial interest; |
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| (3) a statement from the candidate describing the reasons for seeking election to the Board of Directors; |
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| (4) the number of shares of the Company’s stock that are beneficially owned by the candidate; |
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| (5) the candidate’s consent to stand for election if nominated by the Board and to serve if elected by the shareowners; and |
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| (6) any other information that may assist the Committee in evaluating the candidate or that the Committee may request. |
In addition to candidates submitted by shareholders, the Committee will also consider candidates recommended bynon-employee directors management, third party search firms, or any other valid or reliable source.
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The Committee strives to identify and recruit the best-qualified candidates that are available. The Committee will compile a complete list of candidates recommended from any valid source and evaluate each candidate. Each candidate will be evaluated in the context of the current composition of the Board of Directors with an assessment of senior executive officers and of their potential to succeed him. He also provides the current needsnon-employee directors with an assessment of persons considered potential successors to certain senior management positions.
Meetings of the Board andof Directors; Attendance at the long-term interestsAnnual Meeting of the shareholders. After evaluating each candidate, the Committee will vote on which candidates will be recommended to the full Board.Shareholders | |
| Meetings of the Board of Directors |
The Board of Directors met sevenfour times during our fiscal year that ended on June 3, 2005 (“fiscal 2005”).2007. Each of theour incumbent directors other than Robert E. Shaw attended at least 75%75 percent of allthe aggregate number of meetings of the Board of Directors and Committeesof all committees of which the director was a member during the period he or she was a director or served on which they served in fiscal 2005. such committees.
While the Company has not adopted a formal policy regarding attendance by members of the Board of Directors at the Annual Meeting of Shareholders, eachthe Company encourages directors to attend the Annual Meeting of Shareholders in person. Each of the directors attended the Company’s 20042006 Annual Meeting of Shareholders.Shareholders in person.
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| Committees of the Board of Directors |
Committees of the Board of Directors
The Board of Directors has ana standing Executive Committee, an Audit Committee and a Nominating, Compensation and Governance Committee.
Executive Committee.Committee Messrs.
J. Hicks Lanier, Knowlton J. O’Reilly and Robert E. Shaw and E. Jenner Wood III are the members of the Executive Committee. Mr. J. Hicks Lanier is chairman of the Executive Committee.
The Executive Committee is authorized to exercise the authority of the full boardBoard of Directors in managing the business and affairs of ourthe Company. However, the Executive Committee does not have certain powers, including the following:
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| (1) to fill vacancies on the Board; |
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| (2) to adopt, amend or repeal our Bylaws; or |
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| (3) to approve or propose to shareholders action that Georgia law requires to be approved by shareholders. |
(1) to fill vacancies on the Board of Directors;
(2) to adopt, amend or repeal our Bylaws; or
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(3) to approve or propose to shareholders any action that Georgia law requires to be approved by shareholders.
The Executive Committee met oncedid not meet in person during fiscal 2005.2007 but acted by written consent on six occasions during fiscal 2007.
Audit Committee.Committee
Cecil D. Conlee, James A. Rubright and Clarence H. Smith are the members of the Audit Committee. Mr. Conlee is chairman of the Audit Committee. We have posted the Audit Committee’s charter on our Internet website atwww.oxfordinc.com. A copy of our Audit Committee’s charter is available in print to any shareholder who so requests it. Requests for a copy of our Audit Committee’s charter should be mailed to: Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, GA 30308, Attention: Investor Relations.
The Board hasof Directors annually evaluates the financial expertise and independence of the members of the Audit Committee. Following its review, the Board of Directors determined that Mr. Conlee is an “Audit Committee“audit committee financial expert” as that term is defined in Item 401(h)(1)407(d) ofRegulation S-K under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”), and the Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”).Act. The Board has also determined that all members of the Audit Committee are independent and are financially literate. See“literate in accordance with the NYSE’s governance listing standards and the regulations of the SEC.
The Board of Directors — Corporate Governance — Director Independence” above.
The Board established the Audit Committee (in accordance withRule 10A-3 of the Exchange Act) to assist the Board of Directors in fulfilling its responsibilities with respect to the oversight of the following:
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| (1) the integrity of our financial statements, reporting processes and systems of internal controls; |
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| (2) our compliance with applicable laws and regulations; |
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(1) the integrity of our financial statements, reporting processes and systems of internal controls;
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| (3) the qualifications and independence of our independent auditors; and |
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| (4) the performance of our internal audit department and our independent auditors. |
(2) our compliance with applicable laws and regulations;
(3) the qualifications and independence of our independent auditors; and
(4) the performance of our internal audit department and our independent auditors.
The principal duties and responsibilities of the Audit Committee are set forth in its charter. The Audit Committee may exercise additional authority prescribed from time to time by the Board.Board of Directors.
The Audit Committee met fivein person four times inand acted by written consent on one occasion during fiscal 2005, including meetings to review each of the quarterly earnings releases.2007.
Nominating, Compensation and Governance Committee.Committee
Cecil D. Conlee, Robert E. Shaw and Helen B. Weeks are the members of the Nominating, Compensation and Governance Committee. Mr. Shaw is chairman of the Nominating, Compensation and Governance Committee. We have posted the Nominating, Compensation and Governance Committee’s charter on our Internet website atwww.oxfordinc.com. A copy of the Nominating, Compensation and Governance Committee’s charter is available in print to any shareholder who so requests it. Requests for a copy of the Nominating, Compensation and Governance Committee’s charter should be mailed to: Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, GA 30308, Attention: Investor Relations.
The Board of Directors has determined that all members of the Nominating, Compensation and Governance Committee are independent. See“Board of Directors — Corporate Governance — Director Independence” above.
independent in accordance with the NYSE corporate governance listing standards. The purpose of the Nominating, Compensation and Governance Committee is to:
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| (1) assist our Board in fulfilling its responsibilities with respect to compensation of our executive officers; |
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| (2) establish criteria for the selection of new directors to serve on the Board; |
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| (3) recommend candidates for all directorships to be filled; |
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| (4) identify individuals qualified to serve as members of our Board; |
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| (5) review and recommend Committee appointments; |
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| (6) consider questions of independence and possible conflicts of interest of members of the Board and our executive officers; |
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| (7) take a leadership role in shaping our corporate governance; |
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| (8) develop and recommend to the Board for adoption our Corporate Governance Guidelines; |
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| (9) lead the Board in the Board’s annual review of its own performance; and |
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| (10) perform other functions that it deems necessary or appropriate. |
(1) assist the Board of Directors in fulfilling its responsibilities with respect to compensation of our executive officers;
(2) recommend candidates for all directorships to be filled;
(3) identify individuals qualified to serve as members of the Board of Directors;
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(4) review and recommend committee appointments;
(5) take a leadership role in shaping our corporate governance;
(6) develop and recommend to the Board of Directors for adoption our Corporate Governance Guidelines;
(7) lead the Board of Directors in an annual review of its own performance; and
(8) perform other functions that it deems necessary or appropriate.
The Nominating, Compensation and Governance Committee also has the following responsibilities, among others, related to compensation of our directors, officers and other key employees:
(1) administering our stock option and restricted stock plans;
(2) administering our Executive Performance Incentive Plan;
(3) reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer (“CEO”);
(4) evaluating the CEO’s performance in light of those goals and objectives;
(5) determining the compensation of the CEO based upon this evaluation;
(6) reviewing and approving the compensation of our executive officers:officers; and
| |
| (1) administer our stock option and restricted stock plans; |
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| (2) administer our Executive Performance Incentive Plan; |
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| (3) review and approve corporate goals and objectives relevant(7) making recommendations to the Board of Directors regarding non-chief executive officer compensation, incentive-compensation plans and equity-based plans. To facilitate the Nominating, Compensation and Governance Committee’s fulfillment of its responsibilities relating to the compensation of our Chief Executive Officer (“CEO”); |
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| (4) evaluate the CEO’s performance in light of those goals and objectives; |
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| (5) determine the compensation of the CEO based upon this evaluation; |
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| (6) review and approve the compensation of our executive officers; |
9
| |
| (7) make recommendations to the Board regarding non-chief executive officer compensation, incentive-compensation plans and equity-based plans; and |
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| (8) annually prepare a report on Executive Compensation for inclusion in our proxy statement. |
In determining the long-term incentive component of the CEO’sCEO, as well as certain of our other executive officers, our Corporate Human Resources Department and other internal resources provide information to the committee, as requested by the committee. In addition, in reviewing and approving the compensation of our executive officers (other than the CEO), the Nominating, Compensation and Governance Committee considers our performancethe recommendation and relative shareholder return, the valueevaluation of similar incentive awards to CEOs at comparable companies, the awards given to the CEO in past years andevaluating such other factors as the Committee deems relevant.
compensation. The Nominating, Compensation and Governance Committee met twicein person on two occasions and acted by written consent on eight occasions during fiscal 2005.2007.
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Compensation Discussion and Analysis Compensation Philosophy and Objectives
Our compensation programs are intended to motivate our officers and other key employees to achieve short- and long-term corporate goals that enhance shareholder value and to enable us to attract and retain exceptionally talented individuals. To meet these objectives, we aim to provide pay for performance by setting challenging Company-related and individual performance goals for our executives and conditioning a significant proportion of their compensation on the achievement of those goals. As a result, a significant proportion of our executive officers’ compensation, including the named executive officers described below, is variable, based on corporate, divisionaland/or individual performance.
Named Executive Officers for Fiscal 2007
Under the rules of the SEC, we are required to disclose compensation and related information relating to our principal executive officer, our principal financial officer, our three most highly compensated executive officers other than the principal executive officer and principal financial officer who were serving as executive officers at the end of the last completed fiscal year and up to two additional individuals for whom disclosure would have been provided pursuant to the preceding but for the fact that the individual was not serving as an executive officer at the end of the last completed fiscal year. We have determined that under these rules, our “named executive officers” for fiscal 2007 are Mr. J. Hicks Lanier, our Chairman and Chief Executive Officer, Mr. Thomas C. Chubb III, our Executive Vice President, Mr. S. Anthony Margolis, our Group Vice President, Mr. John A. Baumgartner, our Senior Vice President and Chief Information Officer, Ms. Christine B. Cole, our Vice President-Corporate Human Resources, and Mr. Michael J. Setola, our former President.
Elements of Executive Officer Compensation
Total compensation for our named executive officers consists of the following components:
| | |
| • | base salary; |
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| • | short-term incentive compensation; |
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| • | long-term equity incentive compensation; |
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| • | participation opportunities in other benefit plans, including our Employee Stock Purchase Plan, our Retirement Savings Plan, our Non-Qualified Deferred Compensation Plan and our Executive Medical Plan; and |
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| • | perquisites. |
In approving the total compensation paid to our named executive officers, our Nominating, Compensation and Governance Committee (which we refer to in this section of the proxy statement as our “compensation committee”) does not expressly allocate a specified percentage of total compensation to base salary, short-term incentive compensationand/or long-term equity incentive compensation. However, in determining base salary and the short-term incentive compensation that a named executive officer may receive at target (as further described below under“— Base Salary” and“— Short-Term Incentive Compensation”), our compensation committee considers the total cash compensation that would become payable to that officer in comparison to the total cash compensation ranges recommended by our Corporate Human Resources Department based on market surveys (as further described below under“— Benchmarking”).
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Base Salary
Salaries are used to provide a fixed amount of compensation to our named executive officers for the performance of their duties.
Overview and Objectives. The base salaries of our named executive officers are reviewed on an annual basis. The effective date of increases in the base salaries for our named executive officers has historically been August 1st of each year (with exceptions relating to our recently acquired businesses). Salary increases also occur periodically upon promotion or a significant increase in responsibilities. All salary increases for our executive officers are approved by our compensation committee.
All of the employment positions within our corporate headquarters function, including those for our named executive officers other than Mr. Margolis, are assigned a job level based on the requirements and responsibilities of the position. For each of these job levels (other than for our Chief Executive Officer), a salary range is determined by our Corporate Human Resources Department based on published market surveys of compensation of similarly positioned employees within our industry. These published surveys include industry specific reports from Mercer HR Consulting, ICR Limited, Towers Perrin and Watson Wyatt (as further described below under“— Benchmarking”). Our Corporate Human Resources Department periodically reviews and revises the salary ranges recommended for each of these job levels, including the salary ranges for each of our executive officers (other than Messrs. Margolis and Gray). Likewise, most employment positions within our Oxford Apparel and Lanier Clothes divisions are assigned a job level with salary ranges determined by our Corporate Human Resources Department based on market surveys. Within our Tommy Bahama and Ben Sherman divisions, employee salary ranges are established by divisional Human Resources departments based on market surveys of compensation of similarly positioned employees within the industry.
Each executive officer’s base salary is determined based on the person’s job level and individual responsibilities and performance. Our Chief Executive Officer recommends the salaries of all of our executive officers (other than our Chief Executive Officer) to our compensation committee. Our compensation committee determines the salary of our Chief Executive Officer and reviews and approves (with or without modification) the recommended salaries of all our other executive officers. In evaluating and determining the salary of our Chief Executive Officer, our compensation committee considers the Company’s performance and our Chief Executive Officer’s performance during the preceding fiscal year and the salaries of chief executive officers at a comparison group of “peer companies” (as further described below under“— Benchmarking”).
Chief Executive Officer Base Salary for Fiscal 2008. In determining our Chief Executive Officer’s base salary for fiscal 2008, our compensation committee took into account our financial performance relative to other publicly-traded apparel companies and the compensation paid to chief executives at peer companies. Our compensation committee considered Mr. Lanier’s service to Oxford and recognized that during fiscal 2007 Mr. Lanier’s performance was noteworthy given the challenging retail environment and adverse economic conditions that prevailed. Our compensation committee reviewed the strategic actions taken by Mr. Lanier to improve our future profitability and growth prospects. In particular, our compensation committee noted the progress with our strategy of focusing on “lifestyle” brand businesses, as exemplified by the continuing success of the Tommy Bahama Group during fiscal 2007 and the improvements in certain of our other operating groups. Based upon this review, our compensation committee increased Mr. Lanier’s annual base salary from $800,000 to $832,000 for fiscal 2008. In determining Mr. Lanier’s base salary for fiscal 2008, our compensation committee observed that Mr. Lanier’s base salary is below the 40th percentile compared to the base salary paid to chief executives at peer companies.
Other Named Executive Officer Base Salaries for Fiscal 2008. In recommending the base salaries of each of our other named executive officers (other than Mr. Margolis) for fiscal 2008, Mr. Lanier, in collaboration with our
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Corporate Human Resources Department, evaluated the compensation paid to such officer in the context of the individual’s job level, the salary range recommended by our Corporate Human Resources Department for the applicable job level based on the survey data, the individual’s responsibility within the organization as a whole and the individual’s personal performance during fiscal 2007. In light of the efforts put forth by each of these other named executive officers during fiscal 2007, our compensation committee approved a 5.88%, 4.85% and 4.99% increase in base salary for each of Mr. Chubb, Mr. Baumgartner and Ms. Cole, respectively, effective August 1, 2007.
Mr. Margolis’ Base Salary for Fiscal 2008. In the case of Mr. Margolis, Mr. Lanier took into consideration the Tommy Bahama Group’s performance during fiscal 2007, as well as the employment arrangement that we entered into with Mr. Margolis in connection with our acquisition of Tommy Bahama Group in June 2003. This employment arrangement provided for an annual increase of 5% of Mr. Margolis’ base salary (through fiscal 2007) if the Tommy Bahama Group’s profit before taxes (net of certain capital charges and other agreed upon adjustments) for the preceding fiscal year exceeded a specified target. Although Mr. Margolis’ prior employment arrangement did not specifically address the issue of his base salary for fiscal 2008, in light of the Tommy Bahama Group’s noteworthy performance for fiscal 2007 (including its achievement of its profit before taxes goal), Mr. Lanier recommended, and our compensation committee approved, a 5% increase in Mr. Margolis’ base salary for fiscal 2008, from $1,187,530 to $1,246,907.
Short-Term Incentive Compensation (Bonuses)
Overview and Objectives of our Executive Performance Incentive Plan. Our executive officers are eligible to receive annual cash bonuses based on performance awards granted under our Executive Performance Incentive Plan (which we refer to as the “EPIP”). The EPIP was approved by our shareholders in 2003 and is administered by our compensation committee. A performance award under the EPIP generally entitles the participant to cash compensation based upon the achievement by Oxford or one or more of its business units of certain pre-established performance measures. For each EPIP participant, the bonus may be calculated as a percentage of base salary or as a percentage of a target bonus amount. Our compensation committee also has the authority under the EPIP to award bonuses to participants based on their individual personal performance.
The EPIP is used, among other things, to:
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| • | attract and retain qualified executives; |
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| • | align the compensation paid to our executive officers with Oxford’s performance; |
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| • | motivate our executive officers to work to achieve and exceed specific Company performance goals; and |
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| • | facilitate the treatment of elements of compensation as “performance-based compensation” under the Internal Revenue Code (which is described in more detail below under“— Tax Deductibility Considerations”). |
In administering the EPIP, our compensation committee establishes target bonus levels for our executive officers that are intended to reflect the individual’s responsibility within the organization and his or her ability to impact Company performance as a whole. Target bonus levels for our executive officers, which are approved annually by our compensation committee, typically are expressed as a percentage of base salary and, generally, such bonus percentages increase as an officer’s responsibilities within our organization increase. Our compensation committee believes that by having a relatively greater percentage of total compensation of our most senior executives tied to company performance, our shareholders’ interests are better served.
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Fiscal 2007 Bonus. For the fiscal 2007 bonus program under the EPIP, our compensation committee established target bonus levels for our named executive officers (other than Mr. Margolis) that included two elements:
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| • | a formula-based bonus element tied to the achievement of a company performance measures under the EPIP (which bonus element we refer to as the “formula bonus”); and |
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| • | an individual performance based bonus element (which bonus element we refer to as the “individual performance bonus”). |
The formula bonus element represented 67% of the target bonus level for each participant, while the individual performance bonus element represented 33% of the target bonus level. As has been the case for each year since the EPIP was implemented, in fiscal 2007 our compensation committee used return on net assets (“RONA”), as adjusted for non-recurring or unusual items, in setting performance measures for the formula bonus element of such bonus awards and in determining achievement of such performance measures. Specifically, our compensation committee established a threshold RONA, a target RONA and a maximum RONA for the fiscal year for each of our operating groups based on our business plan for the year. For fiscal 2007 (as was the case for each year since the EPIP was implemented), RONA (for purposes of determining achievement of the RONA performance measures) gave effect to a 10% capital charge on the assets employed in the applicable operating group(s). For fiscal 2007, each named executive officer’s (other than Mr. Margolis’) formula bonus was allocated as follows:
| | |
| • | 30% of the formula bonus was based on the satisfaction by the combined operations for our Oxford Apparel and Lanier Clothes divisions of a specified target RONA for those divisions; |
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| • | 55% of the formula bonus was based on the satisfaction by our Tommy Bahama division of a specified target RONA for that division; and |
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| • | 15% of the formula bonus was based on the satisfaction by our Ben Sherman division of a specified target RONA for that division. |
Under the terms of the EPIP for fiscal 2007, if the applicable threshold RONA for a particular operating division(s) was not met or exceeded for fiscal 2007, no formula bonus would be awarded to a named executive officer in respect of the portion of the officer’s formula basis allocated to the RONA for the applicable operating division(s). For actual RONA performance between threshold RONA and target RONA or between target RONA and maximum RONA for the applicable operating division(s), the formula bonus allocated to the operating division(s) would be adjusted on a pro rata basis as a percentage of actual RONA compared to target RONA. If the maximum RONA was met or exceeded for an operating division(s), a named executive officer would be eligible to receive 150% of his or her target formula bonus allocated to the applicable operating division(s). For fiscal 2007, our compensation committee approved the following RONA performance goals for the applicable operating division(s):
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| • | A threshold RONA, target RONA and maximum RONA of 14.0%, 18.0% and 22.0%, respectively, for the combined operations for our Oxford Apparel and Lanier Clothes divisions; |
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| • | A threshold RONA, target RONA and maximum RONA of 14.0%, 18.0% and 22.0%, respectively, for our Tommy Bahama division; and |
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| • | A threshold RONA, target RONA and maximum RONA of 3.0%, 6.0% and 9.0%, respectively, for our Ben Sherman division. |
By way of example, at the beginning of fiscal 2007, our compensation committee approved a target bonus level for Mr. J. Hicks Lanier of 105% of Mr. Lanier’s base salary. Mr. Lanier’s approved base salary for fiscal 2007 was $800,000 so his target bonus level (expressed in dollars) was $840,000. The formula bonus element represented 67% of the target bonus level, while the individual performance bonus element represented 33% of the target bonus level. Accordingly, for fiscal 2007, Mr. Lanier’s target formula bonus (expressed in dollars) was $562,800 and his
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target individual performance bonus (expressed in dollars) was $277,200. The target formula bonus (expressed in dollars) was allocated $168,840 to the satisfaction of the applicable target RONA by the operations of our Oxford Apparel and Lanier Clothes divisions; $309,540 to the satisfaction of the applicable target RONA by the operations of our Tommy Bahama division; and $84,420 to the satisfaction of the applicable target RONA by the operations of our Ben Sherman division.
Following the end of fiscal 2007, our compensation committee certified the results of the preceding fiscal year for purposes of determining satisfaction of the RONA performance measures. Specifically, for fiscal 2007:
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| • | the combined operations of our Oxford Apparel and Lanier Clothes divisions failed to achieve the threshold RONA; |
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| • | our Tommy Bahama division exceeded the maximum RONA; and |
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| • | our Ben Sherman division failed to achieve the threshold RONA. |
Accordingly, Mr. Lanier’s target formula bonus was determined to be 82.5% of his aggregate target formula bonus, calculated as follows:
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| • | the percentage of the target formula bonus awarded in respect of the combined operations of our Oxford Apparel and Lanier Clothes divisions (0%) multiplied by the portion of the total target formula bonus allocated to the combined operations of our Oxford Apparel and Lanier Clothes divisions (30%), which equals 0%;plus |
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| • | the percentage of the target formula bonus awarded in respect of the operations of our Tommy Bahama division (150%) multiplied by the portion of the total target formula bonus allocated to the operations of our Tommy Bahama division (55%), which equals 82.5%;plus |
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| • | the percentage of the target formula bonus awarded in respect of the operations of our Ben Sherman division (0%) multiplied by the portion of the total target formula bonus allocated to the operations of our Ben Sherman division (15%), which equals 0%. |
Accordingly, Mr. Lanier received a formula bonus of $464,310 (82.5% of his target formula bonus of $562,800).
Individual Performance Bonus. For fiscal 2007, the individual performance bonus for our named executive officers (other than Mr. Margolis) was determined as a function of the percentage of the target formula bonus payable in respect of our performance for the fiscal year and the individual’s personal performance during the fiscal year. Since each of our named executive officers (other than Mr. Margolis) received 82.5% of his or her respective formula bonus for fiscal 2007, the individual performance bonus opportunity at target individual performance for each of the participating named executive officers was reduced to 82.5% of what his or her individual performance bonus opportunity would have been if each of our operating divisions had achieved target RONA. For example, because of our actual performance during fiscal 2007, Mr. Lanier’s individual performance bonus opportunity at target individual performance was reduced to $228,690 (which is 82.5% of what his individual performance bonus opportunity would have been if each of our operating divisions had achieved target RONA (i.e., 82.5% of $277,200)).
Our compensation committee has the authority to vary the individual performance bonus for each of our executive officers from 0% to 200% of the target individual performance bonus (as adjusted to give effect to the satisfaction of the RONA targets, as described above) based upon an individual’s performance during the fiscal year. For example, our compensation committee had the discretion to award Mr. Lanier an individual performance bonus between $0 and $457,380 (i.e., between 0% and 200% of his target individual performance bonus after giving effect to the satisfaction of the RONA targets). After considering Mr. Lanier’s individual performance during fiscal 2007,
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including the challenges faced in the retail and apparel industries, our compensation committee approved an individual performance bonus of $228,690 for Mr. Lanier in respect of fiscal 2007. By way of further example, if each of the applicable operating divisions had met or exceeded the applicable maximum RONA for fiscal 2007, Mr. Lanier would have been eligible to receive an individual performance bonus at target of $415,800 (which is equal to 150% of $277,200 (i.e., what his target individual performance bonus would have been if each of our operating divisions had achieved target RONA)). Under the terms of the performance awards under the EPIP for fiscal 2007, if the applicable threshold RONA had not been met or exceeded for fiscal 2007 by any of our applicable operating divisions, a participant in the EPIP would not have been eligible for any formula bonus or any individual performance bonus.
The individual performance bonuses for each of our named executive officers (other than our Chief Executive Officer) were reviewed and recommended to our compensation committee by our Chief Executive Officer. In evaluating the individual performance bonus element for participating executive officers, our compensation committee considered various criteria relative to the officer’s individual performance during the fiscal year. Our compensation committee approved the actual individual performance bonuses for each of these other named executive officers. The actual individual performance bonus paid to each of our named executive officers for fiscal 2007 are listed under the heading “Bonus” in the table below under“— Summary Compensation Table for Fiscal 2007.”
Mr. Margolis’ Bonus for Fiscal 2007. With respect to Mr. Margolis’ bonus for fiscal 2007 under the EPIP, our compensation committee established a threshold, target and maximum bonus level for Mr. Margolis using the Tommy Bahama Group’s profit before taxes for fiscal 2007 as the applicable performance measure. Our compensation committee also established corresponding threshold, target and maximum profit before taxes performance goals of $67,561,000, $75,068,000 and $82,581,000, respectively for fiscal 2007. Specifically, the threshold profit before taxes performance measure equaled 90% of the Tommy Bahama Group’s target profit before taxes performance measure and the maximum profit before taxes measure equaled 110% of its target profit before taxes performance measure. If the threshold profit before taxes performance measure had not been met or exceeded for fiscal 2007, Mr. Margolis would not have been eligible to receive a bonus for fiscal 2007. If the maximum profit before taxes performance measure had been met or exceeded, Mr. Margolis would have been eligible to receive a bonus equal to 100% of his base salary for fiscal 2007. For performance between the threshold and target profit before taxes levels or between the target and maximum profit before taxes levels, Mr. Margolis’ actual bonus was to have been interpolated on a straight-line basis between 0% and 50% of his base salary or between 50% and 100% of his base salary, respectively, relative to the threshold, target and maximum performance measures. If the Tommy Bahama Group’s profit before taxes (net of certain capital charges and other agreed upon adjustments) for fiscal 2007 equaled the agreed upon target profit before taxes for the fiscal year, Mr. Margolis would have been entitled to receive a bonus equal to 50% of his base salary for fiscal 2007. For fiscal 2007, our compensation committee certified that the Tommy Bahama Group’s actual profit before taxes (which was $75,074,000) was essentially equal to its target profit before taxes goal and, therefore, the committee determined that the Mr. Margolis’ bonus for fiscal 2007 should be $593,765 (i.e., an amount equal to 50% of his base salary).
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Fiscal 2007 Target and Actual Bonuses Paid. The fiscal 2007 target and actual bonuses paid to each of the named executive officers and the fiscal 2008 target bonus level (expressed as a percentage of base salary) are shown in the table below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Target
| | | Payout
| | | Target
| | | Maximum
| | | Actual
| | | Actual
| | | Fiscal 2008
| |
| | Bonus
| | | Range
| | | Bonus
| | | Bonus
| | | Bonus
| | | Bonus
| | | Target Bonus
| |
| | Level (% of
| | | (% of
| | | Award
| | | Award
| | | Award
| | | Award (% of
| | | Level (% of
| |
Name | | Base Salary) | | | Base Salary) | | | ($) | | | ($) | | | ($) | | | Base Salary) | | | Base Salary) | |
|
J. Hicks Lanier | | | 105 | | | | 0-209 | | | | 840,000 | | | | 1,675,800 | | | | 693,000 | | | | 86.6 | | | | 105 | |
Chairman and Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Thomas C. Chubb III | | | 55 | | | | 0-110 | | | | 210,375 | | | | 419,698 | | | | 200,000 | | | | 52.3 | | | | 55 | |
Executive Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
S. Anthony Margolis | | | 50 | | | | 0-100 | | | | 593,765 | | | | 1,187,530 | | | | 593,765 | | | | 50 | | | | 50 | |
Group Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
John A. Baumgartner | | | 45 | | | | 0-90 | | | | 106,650 | | | | 212,767 | | | | 87,986 | | | | 37.1 | | | | 45 | |
Senior Vice President and Chief Information Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christine B. Cole | | | 45 | | | | 0-90 | | | | 108,113 | | | | 215,684 | | | | 89,193 | | | | 37.1 | | | | 45 | |
Vice President-Corporate Human Resources | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael J. Setola(1) | | | 55 | | | | 0-110 | | | | 437,250 | | | | 872,314 | | | | 161,348 | | | | 20.3 | | | | — | |
Former President | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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(1) | | Mr. Setola resigned as President of the Company effective January 31, 2007. A pro-rated formula bonus was paid to Mr. Setola in accordance with the terms of a release and non-solicitation agreement described under“— Termination, Severance andChange-in-Control Arrangements.” Pursuant to the terms of the release and non-solicitation agreement, Mr. Setola was not eligible for any individual performance bonus in respect of fiscal 2007. |
Fiscal 2008 Bonus. For fiscal 2008, our compensation committee has again approved the use of RONA as the performance measure for determining cash bonuses paid to each of our named executive officers (other than Mr. Margolis). For fiscal 2008, our compensation committee has approved RONA measures for these named executive officers based on the following allocation of the officer’s formula bonus:
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| • | 55% of the formula bonus will be based on the satisfaction by our Tommy Bahama division of its specified target RONA; |
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| • | 10% of the formula bonus will be based on the satisfaction by our Oxford Apparel division of its specified target RONA; |
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| • | 10% of the formula bonus will be based on the satisfaction by our Lanier Clothes division of its specified target RONA; |
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| • | 10% of the formula bonus will be based on the satisfaction by our Ben Sherman division of its specified target RONA; and |
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| • | 15% of the formula bonus will be based on the satisfaction by our company as a whole of a consolidated target RONA. |
In addition, Mr. Lanier recommended, and our compensation committee approved, profit before taxes performance measures and target bonus levels for Mr. Margolis similar to the methodology used in respect of
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fiscal 2007. The RONA and profit before taxes performance goals established by our compensation committee were based on the business plan and budgets for each of our divisions utilizing substantially the same methodology as used in establishing the fiscal 2007 performance goals. As noted above, in respect of fiscal 2007, our named executive officers (other than Mr. Margolis) received bonuses based on our achievement of 82.5% of the target RONA, and Mr. Margolis received a bonus based on the Tommy Bahama Group’s achievement of 100% of its target profit before taxes. We believe that if our performance as a whole, and that of our respective divisions, during fiscal 2008 resembles our performance during fiscal 2007 that we and our respective divisions would achieve similar proportions of the target performance measures.
Long-Term Equity Incentive Compensation
Overview and Objectives of our Long-Term Stock Incentive Plan. Our Long-Term Stock Incentive Plan (which we refer to as the “LTIP”) was initially approved by our shareholders in 2004. Under the LTIP, our compensation committee has the authority to award equity grants to our non-employee directors and key employees (including the named executive officers). LTIP awards can be made in the form of incentive and non-qualified stock options, stock appreciation rights, restricted shares and restricted share units. Since the LTIP went into effect, our compensation committee has granted awards under the LTIP exclusively in the form of restricted stock and restricted share units, and we have not granted stock options to any of our executive officers since November 2003.
The Board of Directors and our compensation committee believe that granting awards under the LTIP in the form of restricted stock and restricted share units is in the best interests of our shareholders and is consistent with recent trends in equity-based compensation. Specifically, the use of equity awards such as restricted stock and restricted share units that can both lose value and increase in value as our stock price may fall or rise better aligns the interests of our directors and executive officers and our shareholders and reduces the dilutive effect to our shareholders that certain other types of equity awards may have.
Our compensation committee utilizes the LTIP to, among other things:
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| • | align the interests of our directors and executive officers with our shareholders; |
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| • | provide a meaningful incentive to improve long-term growth and profitability; |
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| • | encourage participants to enhance the growth of our company rather than just specific segments of our company; and |
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| • | facilitate recruiting and retention of key executive talent. |
The participants in the LTIP are limited and are approved annually by our compensation committee based upon input from management.
Grants of Restricted Stock and Restricted Share Units. Under the LTIP, grants of restricted stock and restricted share units may be made or become vested based upon our achievement of “performance objectives,” which further facilitates alignment of the interests of shareholders and our directors and executive officers. All of the restricted stock and restricted share units granted to our key employees, including our named executive officers, since the LTIP went into effect have been made based on our achievement of an earnings per share threshold for an annual performance period (although during our fiscal year that ended on June 3, 2005 (which we refer to as “fiscal 2005”), the performance period was limited to the period beginning November 27, 2004 and ending June 3, 2005 because our compensation committee did not make awards under the LTIP until the LTIP was approved by our shareholders in October 2004).
Although any earned restricted stock awards and restricted share units are determined after the completion of our fiscal year, our compensation committee has further subjected the receipt of the stock, free and clear of any forfeiture restrictions, to a vesting period that ends on the third anniversary of the last day of the applicable
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performance period (i.e., restricted shares that were granted in respect of our earnings per share during fiscal 2007, if any, would vest and become free and clear of any forfeiture restrictions on the third anniversary of the end of fiscal 2007). The intent of delayed vesting is that the shares will increase in value over the vesting period based on sustained improvement of our performance over that period of time, and at the same time help retain our key employees. Our compensation committee does not currently have a policy or practice with respect to the timing of stock or option awards coinciding with the release of material non-public information. Since we have granted equity awards exclusively in the form of restricted stock with a delayed vesting period, our compensation committee does not believe that such a policy or practice is necessary or appropriate.
In the LTIP, each participant typically is assigned a threshold, target and maximum number of shares of restricted stock or restricted share units that may be received pursuant to the award. In determining the size of annual grants for our key employees, our compensation committee considers the employee’s position and level of responsibility, both of which reflect the individual’s ability to influence our long-term performance. The number of restricted shares of our common stock that a key employee, including each of the named executive officers, would receive at target performance pursuant to an award is considered by our senior management and our compensation committee when analyzing whether the total compensation opportunity for our executives is competitive in the relevant employment market.
LTIP Awards for Fiscal 2005 — Fiscal 2007. As noted above, the performance measure used by our compensation committee for awards under the LTIP has been earnings per share (subject to adjustments that may be made for non-recurring or unusual non-cash items recognized in accordance with accounting principles generally accepted in the United States, or GAAP, as approved by our compensation committee). The awards to our named executive officers for each of fiscal 2005, our fiscal year that ended June 2, 2006 (which we refer to as “fiscal 2006”), and fiscal 2007 at threshold, target and maximum earnings per share, along with the corresponding
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performance targets and the shares of restricted stock and restricted share units actually awarded based on our performance, are set forth in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Actual
| |
| | | | | | | | | | | | | | | | | | | | | | | Restricted
| |
| | | | | | | | | | | | | | | | | | | | | | | Shares
| |
| | Fiscal
| | | Number of Restricted Shares (#)(1) | | | Earnings per Share Performance Objective ($)(2) | | | Awarded
| |
Name | | Year | | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | (#)(3) | |
|
J. Hicks Lanier | | | 2007 | | | | 1 | | | | 3,500 | | | | 5,250 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | 0 | (5) |
| | | 2006 | | | | 1 | | | | 3,500 | | | | 5,250 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 2,335 | (6) |
| | | 2005 | | | | 1 | | | | 3,500 | | | | 5,250 | | | | 1.71 | | | | 1.835 | | | | 1.96 | | | | 5,250 | (7) |
Thomas C. Chubb III | | | 2007 | | | | 1 | | | | 2,000 | | | | 3,000 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | 0 | (5) |
| | | 2006 | | | | 1 | | | | 2,000 | | | | 3,000 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 1,334 | (6) |
| | | 2005 | | | | 1 | | | | 2,000 | | | | 3,000 | | | | 1.71 | | | | 1.835 | | | | 1.96 | | | | 3,000 | (7) |
S. Anthony Margolis | | | 2007 | | | | 1 | | | | 3,000 | | | | 4,500 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | 0 | (5) |
| | | 2006 | | | | 1 | | | | 3,000 | | | | 4,500 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 2,001 | (6) |
| | | 2005 | (4) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
John A. Baumgartner | | | 2007 | | | | 1 | | | | 1,000 | | | | 1,500 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | 0 | (5) |
| | | 2006 | | | | 1 | | | | 1,000 | | | | 1,500 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 667 | (6) |
| | | 2005 | | | | 1 | | | | 750 | | | | 1,125 | | | | 1.71 | | | | 1.835 | | | | 1.96 | | | | 1125 | (7) |
Christine B. Cole | | | 2007 | | | | 1 | | | | 1,000 | | | | 1,500 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | 0 | (5) |
| | | 2006 | | | | 1 | | | | 1,000 | | | | 1,500 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 667 | (6) |
| | | 2005 | | | | 1 | | | | 650 | | | | 975 | | | | 1.71 | | | | 1.835 | | | | 1.96 | | | | 975 | (7) |
Michael J. Setola | | | 2007 | | | | 1 | | | | 3,000 | | | | 4,500 | | | | 3.11 | | | | 3.43 | | | | 3.59 | | | | — | (8) |
| | | 2006 | | | | 1 | | | | 3,000 | | | | 4,500 | | | | 3.33 | | | | 3.45 | | | | 3.57 | | | | 2,001 | (6) |
| | | 2005 | | | | 1 | | | | 3,000 | | | | 4,500 | | | | 1.71 | | | | 1.835 | | | | 1.96 | | | | 4,500 | (7) |
| | |
(1) | | The number of restricted shares that are granted under these LTIP awards for earnings per share performance between the threshold and target performance objectives and between the target and maximum performance objectives are allocated on a straight-line basis between the number of shares that would be granted between threshold and target or between target and maximum, respectively. |
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(2) | | The performance targets for fiscal 2005 and fiscal 2006 approved by our compensation committee give effect to the operation of our Womenswear Group during the applicable performance periods. We sold substantially all of the operating assets of our Womenswear Group operations effective on June 2, 2006, the last day of fiscal 2006. In determining whether our performance satisfied the performance objectives, our compensation committee may take into account adjustments to our actual earnings per share during the relevant performance period for non-recurring or unusual non-cash items recognized in accordance with GAAP. |
|
(3) | | The restricted shares granted to the named executive officers under these LTIP awards vest on the third anniversary of the last day of the applicable performance period to which the grants relate. |
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(4) | | Our compensation committee did not award Mr. Margolis an award in respect of the performance period beginning November 27, 2004 and ending June 3, 2005. |
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(5) | | Our actual earnings per share for fiscal 2007 for LTIP performance measure purposes was $2.93, which was below the threshold earnings per share. Accordingly, no restricted shares were granted pursuant to the awards in respect of the fiscal 2007 performance period. |
|
(6) | | Our actual earnings per share for fiscal 2006 for LTIP performance measure purposes was $3.41. Accordingly, participants under these LTIP awards received restricted shares representing 66.7% of the number of shares that would have been received at target. |
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| | |
(7) | | Our actual earnings per share for the performance period beginning November 27, 2004 and ending June 3, 2005 for LTIP performance measure purposes was $1.98. Accordingly, participants under these LTIP awards received restricted shares representing the maximum number of shares under these awards. |
|
(8) | | Mr. Setola resigned from his position as our President effective January 31, 2007. Mr. Setola’s award in respect of the fiscal 2007 performance period was cancelled effective upon his resignation. |
LTIP Awards for Fiscal 2008. As was the case in each in each of the three preceding fiscal years, the performance measure for awards granted in respect of the fiscal 2008 performance period is earnings per share. Our compensation committee has approved the threshold ($3.19 per share), target ($3.35 per share) and maximum earnings per share ($3.53 per share) for this12-month performance period and has approved awards to (i) Mr. J. Hicks Lanier of 3,500 shares at target earnings per share and 5,250 shares at maximum earnings per share and (ii) Mr. S. Anthony Margolis of 3,000 shares at target earnings per share and 4,500 shares at maximum earnings per share in respect of this12-month performance period. Our compensation committee has generally discussed, but as of August 28, 2007 not finally approved, awards under the LTIP to certain of our other key employees, including the other named executive officers, but those awards would be subject to the same earnings per share performance objectives as those approved for Messrs. Lanier and Margolis.
Other Benefit Plans
Employee Stock Purchase Plan. We have a tax-qualified Employee Stock Purchase Plan, which we refer to as the “ESPP,” generally available to all eligible employees based in the United States, including our named executive officers (other than employees who own 5% or more of our outstanding common stock. The ESPP allows participants to acquire shares of our common stock at a discount price. Mr. J. Hicks Lanier owns more than 5% of our common stock and is not eligible to participate in the ESPP.
The ESPP consists of four purchase periods each calendar year. Pursuant to the ESPP, participants are allowed to make voluntary payroll deductions that accumulate in individual accounts beginning on the first day of each calendar quarter. An employee who has elected to participate in the ESPP for a purchase period may not cancel that election or reduce the amount of his or her payroll deduction until the start of the next purchase period. At the end of each calendar quarter, the amount credited to each individual employee’s account is applied to the purchase of our common stock at a price equal to 85% of the market price as of the close of business on the last day of the applicable calendar quarter. Under the ESPP, during any calendar year, no participant may purchase more than 2,000 shares of our common stock or shares of our common stock with a fair market value of more than $25,000.
Retirement Savings Plan. We provide retirement benefits to our eligible employees, including the named executive officers, who have achieved a minimum of one year of service under the terms of our tax-qualified retirement savings plan (which we also refer to as our “401(k) plan”). Our 401(k) plan is intended to promote retirement savings by providing employees with an opportunity to save in a tax-efficient manner. The named executive officers participate in our 401(k) plan on substantially the same terms as our other highly compensated employees.
During fiscal 2007, the Company made matching contributions of 100% of the first 3% of a participant’s compensation that was deferred, and matched 50% of the next 2% of a participant’s compensation that was deferred. Our company contributions are subject to limitations prescribed by the Internal Revenue Code. Our company contributions to the 401(k) plan vest immediately.
Although the terms of our 401(k) plan permit participants to make contributions to the plan from pre-tax compensation or after-tax compensation (or a combination of the two), after-tax contributions to our 401(k) plan are not permitted for individuals designated as “highly compensated employees” under applicable Internal Revenue
29
Service guidelines. All of our named executive officers are deemed highly compensated employees under applicable Internal Revenue Service guidelines.
Non-Qualified Deferred Compensation Plan. We offer a Non-Qualified Deferred Compensation Plan, which we refer to as the “Deferred Compensation Plan,” to employees with a minimum base salary of $130,000, including the named executive officers. Under the Deferred Compensation Plan, a participant may defer up to 50% of base salary and up to 100% of an annual performance-based bonus. The named executive officers participate in the Deferred Compensation Plan on the same terms as our other eligible, participating employees.
All deferral elections are irrevocable. Annually, we make a matching contribution to each participant’s account for deferrals in excess of the 401(k) compensation limit, which for calendar year 2006 was $220,000, and any match lost in the 401(k) due to participation in the Deferred Compensation Plan.
The Deferred Compensation Plan is intended to offer our highly-compensated employees, including our named executive officers, a tax-efficient method for accumulating retirement savings, as well as to provide an opportunity for our executives to accumulate savings for significant expenses while continuing in service in a tax-efficient manner. Because the named executive officers have not received above-market rates of return under the Deferred Compensation Plan, earnings under the plan are not included in the table below under“— Summary Compensation Table for Fiscal 2007.” However, earnings and related activity under the Deferred Compensation Plan by our named executive officers during fiscal 2007.
Executive Medical Plan. Certain key employees, including our named executive officers, are eligible to receive reimbursement of qualified medical expenses in an amount up to $100,000 per year with a limit of $10,000 per occurrence under an insurance contract we have entered into effective January 1, 2007. Our executive medical plan reimburses eligible executives for reasonable, medically necessary expenses that are not covered under a base medical plan. Our executive medical plan also provides for a $100,000 accidental death and dismemberment policy that will pay an executive officer’s beneficiary the lump sum amount in the event of death as the result of a covered accident. Company contributions to each named executive officer during fiscal 2007 under our executive medical plan are included in the table below under“— Summary Compensation Table for Fiscal 2007.” Prior to calendar year 2007, our executive medical plan was a taxable, self-insured plan pursuant to which we reimbursed certain of our key employees, including our named executive officers, for qualified medical expenses. The maximum benefits payable to any employee prior to calendar year 2007 under our executive medical plan varied among our eligible employees as a function of each employee’s applicable job level within our organization.
Other Benefits. In addition to some of the other compensation policies discussed above, our named executive officers are generally eligible to participate in and receive the same health, life insurance and disability benefits available to ourU.S.-based, eligible employees generally (subject to certain distinctions in our plans that are applicable to employees of our subsidiaries).
We do not offer a defined benefit pension or supplemental executive retirement plan.
Perquisites
From time to time, our named executive officers receive discounts on merchandise purchased directly from our distribution centers or in our retail stores, as well as complementary meals at our Tommy Bahama restaurants. Certain of these discounts and benefits are offered to other designated employees from time to time. We offer these discounts and benefits because they represent common practice in the apparel industry. The aggregate amount of these discounts and benefits to each of our named executive officers is not readily ascertainable and is therefore excluded from the compensation disclosed in the tables set forth in the proxy statement.
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Benchmarking
We review compensation paid by “peer companies” in determining the target cash compensation provided to our Chief Executive Officer. We use Equilar, Inc.’s database to access competitive market compensation, where available. The following publicly-traded companies, representing, among others, a mix of Georgia-based companies, apparel marketing companies and retailers (including certain department stores that are also our customers), were included in the peer company group we reviewed:
| | | | |
Aaron Rents, Inc. Acuity Brands, Inc. AGL Resources Inc. AnnTaylor Stores Corporation Caraustar Industries, Inc. Carter’s, Inc. Charming Shoppes, Inc. Chico’s FAS, Inc. ChoicePoint, Inc. Coldwater Creek Inc. Columbia Sportswear Company Crawford & Company Equifax Inc. Exide Technologies Flowers Foods, Inc. | | Genuine Parts Company Georgia Gulf Corporation Graphic Packaging Corporation Guess?, Inc. Hartmarx Corporation Haverty Furniture Companies, Inc. Interface, Inc. Jones Apparel, Inc. Kellwood Company Kenneth Cole Productions, Inc. Liz Claiborne, Inc. Mirant Corporation Nordstrom, Inc. Perry Ellis International, Inc. Phillips-Van Heusen Corporation | | Quiksilver, Inc. RARE Hospitality International, Inc. Rock-Tenn Company Rollins, Inc. Roper Industries, Inc. Saks Incorporated SunTrust Banks, Inc. Superior Essex Inc. Synovus Financial Corp. The Dress Barn, Inc. The Talbots, Inc. The Timberland Company The Warnaco Group, Inc. Total System Services, Inc. V. F. Corporation |
This list of peer companies is developed at the direction of our compensation committee by our Corporate Human Resources Department with input from our Executive Vice President. Our compensation committee utilized compensation data from the foregoing peer companies in setting Mr. Lanier’s base salary, which was below the 40th percentile compared to the base salary paid to chief executives at peer companies, and in reviewing total compensation paid to chief executives at peer companies when establishing Mr. Lanier’s target bonus percentage. In determining Mr. Lanier’s target bonus percentage, which was set at 105% of his base salary for fiscal 2008, our compensation committee targets total cash compensation that is at the median of total cash compensation paid to chief executives at our peer companies.
We also review market data to help us establish the range of reasonable compensation for our other executive officers, assuming achievement of corporate, divisional and individual performance objectives. During fiscal 2007, we reviewed the following published surveys and related resources in reviewing compensation levels for our other executive officers: Watson Wyatt — Executive Management Survey; ICR Apparel Industry Survey; Mercer Executive Survey; Mercer Apparel Industry Survey; and the Equilar, Inc. database of peer companies. Generally, our executive officers’ target bonus levels are established to provide total cash compensation between the median and 75th percentile of total cash compensation paid to similarly situated individuals in our industry with the specific responsibilities and experience of our executive officers. Total compensation ranges (including bonus levels) for our executive officers are reviewed and revised periodically based upon similar reviews of the published market surveys.
Role of Executive Officers in Compensation Decisions
The chairman of our compensation committee develops the agenda for each meeting of the Committee in consultation with our senior management, as appropriate. Our senior management, in particular our General Counsel and Vice President-Corporate Human Resources, is responsible for developing appropriate agenda materials for our compensation committee’s review and consideration and documenting the actions of the committee. Our Chief Executive Officer, Executive Vice President, General Counsel and Vice President-Corporate
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Human Resources regularly attend meetings of our compensation committee, excluding portions of meetings during which the committee requests to meet without one or more of such officers present.
Our Vice President-Corporate Human Resources and Executive Vice President are responsible for reviewing and summarizing executive compensation at peer companies, analyzing trends in executive compensation, reviewing with our compensation committee summary data relating to the range(s) of compensation for chief executive officers at peer companies, and making preliminary recommendations on executive officer compensation (other than the compensation of our Chief Executive Officer) to our Chief Executive Officer. Our Chief Executive Officer reviews the materials relating to compensation of other executive officers and makes recommendations to our compensation committee annually. Our compensation committee considers our Chief Executive Officer’s recommendations with respect to the compensation paid to other executive officers in approving the components of those officers’ compensation.
In making its determinations that relate to our or a division’s satisfaction of applicable performance criteria, our Controller provides our compensation committee with requested information relating to our financial performance, including offering a certification as to the actual performance relative to the established performance measure. Our compensation committee considers the Controller’s certifications in determining whether we have, or the applicable division has, met or exceeded the applicable performance measure.
Stock Ownership Guidelines
In part because our compensation committee believes in aligning the interests of management and our shareholders, on July 27, 2007, our Board of Directors established stock ownership guidelines for our executive officers, including the named executive officers. The ownership guidelines specify a target number of shares of our common stock that our executive officers are expected to accumulate and hold within five years of the later of the effective date of the guidelines or the date of appointment to the applicable position set forth in the guidelines (which we refer to as the “executive’s determination date”). The specific guidelines for each applicable individual are established based on the fair market value of our common stock (based on a365-day trailing average for our common stock price as reported on the NYSE as of the executive’s determination date) and the executive officer’s base salary as of the executive’s determination date. Pursuant to these guidelines, each of our executive officers is expected to own or acquire shares of our common stock having a fair market value of a multiple of his or her base salary as indicated below:
| | |
| • | Chief Executive Officer — 2.0x |
|
| • | President — 1.25x |
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| • | Group Vice Presidents and Executive Vice Presidents — 1.0x |
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| • | All Other Executive Officers — 0.5x |
Shares owned outright by an executive officer or by members of his or her immediate family sharing the same household, restricted stock, shares acquired pursuant to the exercise of stock options, shares held in trust for the benefit of the executive officer or his or her immediate family and shares acquired through our ESPP are counted towards satisfying the applicable guideline. Unexercised stock options do not count towards satisfying the guidelines.
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Tax Deductibility Considerations
It is the responsibility of our compensation committee to address the issues raised by Section 162(m) of the Internal Revenue Code of 1986. As it relates to us, Section 162(m) generally prohibits us from deducting the compensation of any executive officer that exceeds $1,000,000 during any year. The limitation does not apply to compensation based on achievement of pre-established performance goals if certain requirements are met. Our EPIP, and the formula-based incentive compensation paid under the EPIP, are structured to permit such awards to qualify as performance-based compensation to maximize the tax deductibility of such awards. Our compensation committee, as much as possible, uses and intends to use performance-based compensation to limit the amount of compensation paid by us that would not be eligible for deductibility. However, our compensation committee believes that we must be able to attract, retain and reward the executive leadership necessary to develop and execute our strategic plans and that the loss of a tax deduction may be necessary and appropriate in some circumstances. Accordingly, our compensation committee reserves the right to award compensation in excess of the Section 162(m) limits as it deems necessary or appropriate.
Termination, Severance andChange-in-Control Arrangements Subject to the effect of local labor laws, all of our employees, including our executive officers, are employed at will. From time to time, we have entered into written employment arrangements with certain of our employees, including our executive officers, in connection with an acquisition or hiring a new employee. In addition, we have from time to time implemented discretionary separation programs that have provided for separation payments to departing employees.
Separation Payments to Mr. Setola
In connection with Mr. Setola’s resignation which became effective as of January 31, 2007, on February 5, 2007, the Company and Mr. Setola entered into a release and non-solicitation agreement in exchange for Mr. Setola (1) providing a customary release of any claims he may have against the Company and its affiliates, and (2) agreeing to certain covenants relating to non-solicitation, non-disparagement and confidentiality. The release and non-solicitation agreement provides for, among other things,
| | |
| • | payment of $795,000, representing Mr. Setola’s annual base salary as then in effect, payable bi-weekly over the 52-week period following the effectiveness of his resignation; |
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| • | payment of a pro-rated portion (based on the duration of fiscal 2007 during which Mr. Setola was employed) of the formula bonus under the EPIP (which was $161,348); |
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| • | payment of premiums for up to one year of continuation medical / health insurance coverage under the Company’s medical plan up to a maximum of $9,000; |
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| • | payment of premiums for up to one year of continuation medical coverage under the Company’s executive medical plan; and |
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| • | vesting for 6,501 shares of the Company’s restricted stock previously granted to Mr. Setola under the LTIP. |
Margolis Severance Arrangements
As described above under“— Compensation Discussion and Analysis — Base Salary” and“— Compensation Discussion and Analysis — Short-Term Incentive Compensation (Bonuses),” in connection with the Company’s acquisition of Tommy Bahama Group, we entered into a written employment arrangement with Mr. Margolis. The term of the employment arrangement expired on June 1, 2007 (the last day of fiscal 2007). Per the terms of this employment arrangement, if Mr. Margolis’ employment had terminated prior to June 1, 2007, including as a result of Mr. Margolis’ death, Mr. Margolis would have been entitled to receive his base salary as then in effect pursuant to
33
the arrangement for the remainder of the term. In addition, pursuant to the terms of this employment arrangement, if Mr. Margolis’ employment had been terminated by our wholly owned subsidiary Tommy Bahama Group prior to June 1, 2007 (other than for “cause”), we would have continued to provide to Mr. Margolis participation in all of the benefit and welfare plans generally available to senior management executives of Tommy Bahama Group.
Other Named Executive Officer Severance andChange-in-Control Arrangements
None of our other named executive officers is party to any written employment, severanceand/or change in control agreement.
Other Potential Post-Employment Payments
Stock Options. All of the outstanding stock options held by our named executive officers as of May 31, 2007 (the date immediately preceding the last day of fiscal 2007) were granted under the Oxford Industries, Inc. 1992 Stock Option Plan or the Oxford Industries, Inc. 1997 Stock Option Plan. The outstanding options as of June 1, 2007 are set forth in the table under“— Outstanding Equity Awards at Fiscal Year-End” below. The outstanding stock options, in accordance with the terms of the Oxford Industries, Inc. 1992 Stock Option Plan or the Oxford Industries, Inc. 1997 Stock Option Plan, do not become immediately vested upon a change in control of the Company. Pursuant to the respective plans, the Nominating, Compensation and Governance Committee is charged with determining the treatment of any such options and may choose to accelerate vesting in its sole discretion.
The option agreements relating to those outstanding options provide that the options are not exercisable after employment ends (other than for death or disability). The option holder’s estate may exercise the option upon the holder’s death (including portions of the options that had not vested) for a period of one year. Similarly, the option holder may exercise the option upon termination due to disability (including portions of the options that had not vested) for a period of three months following termination of employment.
LTIP. The restricted stock grants under the LTIP (and the performance share awards pursuant to which restricted stock could have been granted based upon the Company’s financial performance during fiscal 2007) held by our named executive officers and outstanding as of May 31, 2007 (the date immediately preceding the last day of fiscal 2007) do not provide for an acceleration of vesting or payments in the event of a change of control. In addition, our named executive officers would forfeit their entire interest in the restricted stock (or the performance share award pursuant to which the restricted stock was granted) if their service with the Company terminates for any reason whatsoever before the restricted stock becomes vested and non-forfeitable, unless the Nominating, Compensation and Governance Committee waives this forfeiture condition at the time service terminates.
Retirement Savings Plan. The Company’s matching contributions under the 401(k) plan are immediately vested at the time they are made, and each participant is always fully vested in the value of his or her contributions under the plan.
Non-Qualified Deferred Compensation Plan. Each of the named executive officers is fully vested in account assets held in the Deferred Compensation Plan discussed above. Under the terms of the Deferred Compensation Plan, if a participant (other than one eligible for retirement) terminates employment with the Company, the participant’s account balance under the plan would continue to be adjusted for earnings and losses in the investment choices selected by the participant and would be paid six month following termination of employment. If a participant who is eligible for retirement (one who is 65 years of age or who is 55 years of age with five years of service to the Company) terminates employment with the Company for any reason, the participant’s account balance under the plan would continue to be adjusted for earnings and losses in the investment choices selected by the participant until paid in accordance with the distribution election made by the participant.
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Employee Stock Purchase Plan. Upon termination of employment, all amounts in the participant’s account are paid to the participant.
Executive Medical Plan. Upon termination of employment, our named executive officers are generally ineligible to continue participation under the Executive Medical Plan and our other benefit and welfare plans (subject to rights to participate in continuation coverage under COBRA).
General. We do not have any other written or unwritten arrangement, policy or plan which would provide payments, equity or acceleration of vesting on unvested stock or option awards to any of our named executive officers as a result of a termination of any kind, including following a change in control.
Summary Compensation Table for Fiscal 2007 The table below shows the compensation earned during fiscal 2007 by our named executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Non-Equity
| | | | | | | |
| | | | | | | | | | | Stock
| | | Option
| | | Incentive Plan
| | | All Other
| | | | |
Name and
| | Fiscal
| | | Salary
| | | Bonus
| | | Awards
| | | Awards
| | | Compensation ($)
| | | Compensation
| | | Total
| |
Principal Position | | Year | | | ($) | | | ($)(1) | | | ($)(2) | | | ($)(3) | | | (4) | | | ($)(5) | | | ($) | |
|
J. Hicks Lanier | | | 2007 | | | | 796,058 | | | | 228,690 | | | | 87,003 | | | | 37,642 | | | | 464,310 | | | | 95,742 | | | | 1,709,444 | |
Chairman and Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Thomas C. Chubb III | | | 2007 | | | | 378,952 | | | | 83,715 | | | | 49,716 | | | | 31,262 | | | | 116,285 | | | | 31,688 | | | | 691,618 | |
Executive Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
S. Anthony Margolis | | | 2007 | | | | 1,187,530 | | | | — | | | | 20,896 | | | | — | | | | 593,765 | | | | 12,637 | | | | 1,814,828 | |
Group Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
John A. Baumgartner | | | 2007 | | | | 235,581 | | | | 29,035 | | | | 20,385 | | | | 14,594 | | | | 58,951 | | | | 19,047 | | | | 377,593 | |
Senior Vice President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Chief Information Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Christine B. Cole | | | 2007 | | | | 238,791 | | | | 29,434 | | | | 18,595 | | | | — | | | | 59,759 | | | | 25,489 | | | | 372,068 | |
Vice President-Corporate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Human Resources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael J. Setola(6) | | | 2007 | | | | 535,573 | | | | — | | | | 211,025 | | | | 59,240 | | | | 161,348 | | | | 318,638 | | | | 1,285,825 | |
Former President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
(1) | | Amounts reported under “Bonus” reflect the individual performance bonus awarded to each of our named executive officers, as described above under“— Compensation Discussion and Analysis.” |
|
(2) | | Represents the FAS 123(R) compensation expense recognized for financial statement reporting purposes during fiscal 2007 by the Company in respect of restricted stock grants made to the named executive officers during fiscal 2007 and in prior periods. Pursuant to the rules of the SEC, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used in valuing the stock awards are described in note 7 to our consolidated financial statements included in our Annual Report onForm 10-K filed for the fiscal year ended June 1, 2007 and under the caption “Stock-Based Compensation” in note 1 to our consolidated financial statements included in our Annual Report onForm 10-K filed for the fiscal year ended June 1, 2007. |
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(3) | | Represents the FAS 123(R) compensation expense recognized for financial statement reporting purposes during fiscal 2007 by the Company in respect of stock option grants made to the named executive officers during periods prior to fiscal 2007. Pursuant to the rules of the SEC, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used in valuing the option awards are described in note 7 to our consolidated financial statements included in our Annual Report onForm 10-K filed for the fiscal year |
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| | |
| | ended June 1, 2007 and under the caption “Stock-Based Compensation” in note 1 to our consolidated financial statements included in our Annual Report onForm 10-K filed for the fiscal year ended June 1, 2007. |
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(4) | | Amounts reported under “Non-Equity Incentive Plan Compensation” reflect the formula bonus awarded to each of our named executive officers, as described above under“— Compensation of DirectorsDiscussion and Analysis.” |
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(5) | | Amounts reported under “All Other Compensation” reflect the following amounts paid by the Company during fiscal 2007: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Matching
| | | | | | | |
| | | | | | | | | | | Contributions to
| | | Discount
| | | | |
| | | | | | | | | | | Non-Qualified
| | | on Stock
| | | | |
| | | | | Executive
| | | Matching
| | | Deferred
| | | Purchased
| | | Dividends
| |
| | Excess
| | | Medical
| | | 401(k)
| | | Compensation
| | | Pursuant
| | | on Stock
| |
Name and
| | Group Life
| | | Plan
| | | Contributions
| | | Plan
| | | to the ESPP
| | | Awards
| |
Principal Position | | Insurance ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
|
J. Hicks Lanier | | | 8,382 | | | | 13,478 | | | | 10,489 | | | | 57,599 | | | | — | | | | 5,794 | |
Thomas C. Chubb III | | | 395 | | | | 2,723 | | | | 9,173 | | | | 14,577 | | | | 3,676 | | | | 3,310 | |
S. Anthony Margolis | | | 2,316 | | | | — | | | | 9,000 | | | | — | | | | — | | | | 1,321 | |
John A. Baumgartner | | | 3,336 | | | | 2,258 | | | | 8,951 | | | | 3,151 | | | | — | | | | 1,351 | |
Christine B. Cole | | | — | | | | 10,796 | | | | 9,502 | | | | 3,275 | | | | 686 | | | | 1,230 | |
Michael J. Setola | | | — | | | | 10,876 | | | | 3,873 | | | | 38,303 | | | | — | | | | 2,625 | |
| | |
(6) | | Mr. Setola resigned from his position as President of the Company effective January 31, 2007. “All Other Compensation” includes $262,962 paid to Mr. Setola as severance in accordance with the terms of his release and non-solicitation agreement described above under“— Compensation Discussion and Analysis.”In connection with his resignation, among other things, the Nominating, Compensation and Governance Committee approved the acceleration of vesting on 6,501 shares of restricted stock previously granted to Mr. Setola. |
Grants of Plan-Based Awards in Fiscal 2007 The following table presents information for fiscal 2007 regarding equity awards granted under the Oxford Industries, Inc. Long-Term Stock Incentive Plan and awards granted under the Oxford Industries, Inc. Executive Performance Incentive Plan to the named executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Grant
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | |
Name | | Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | |
|
J. Hicks Lanier | | | | | | | 1 | | | | 840,000 | | | | 1,675,800 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | 1 | | | | 840,000 | | | | 1,675,800 | | | | 1 | | | | 3,500 | | | | 5,250 | |
Thomas C. Chubb III | | | | | | | 1 | | | | 210,375 | | | | 419,698 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | | | | | | | | | | | | | 1 | | | | 2,000 | | | | 3,000 | |
S. Anthony Margolis | | | | | | | 1 | | | | 593,765 | | | | 1,187,530 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | | | | | | | | | | | | | 1 | | | | 3,000 | | | | 4,500 | |
John A. Baumgartner | | | | | | | 1 | | | | 106,650 | | | | 212,767 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | | | | | | | | | | | | | 1 | | | | 1,000 | | | | 1,500 | |
Christine B. Cole | | | | | | | 1 | | | | 108,113 | | | | 215,684 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | | | | | | | | | | | | | 1 | | | | 1,000 | | | | 1,500 | |
Michael J. Setola | | | | | | | 1 | | | | 437,250 | | | | 872,314 | | | | | | | | | | | | | |
| | | 8/3/06 | | | | | | | | | | | | | | | | 1 | | | | 3,000 | | | | 4,500 | |
36
| | |
(1) | | Amounts set forth under “Estimated possible payouts under non-equity incentive plan awards” reflect potential bonus payments in respect of Company and individual performance during fiscal 2007 under the EPIP, which is described above under“— Compensation Discussion and Analysis.”Actual bonus payments to the named executive officers are reflected above under“— Compensation Discussion and Analysis” and under the summary compensation table under“— Summary Compensation Table for Fiscal 2007.” |
|
(2) | | The number of shares set forth under “Estimated future payouts under equity incentive plan awards” reflect potential restricted stock grants in respect of Company performance during fiscal 2007 under the LTIP, which is described above under“— Compensation Discussion and Analysis.”Following fiscal 2007, the Nominating, Compensation and Governance Committee determined that the threshold earnings per share threshold was not met or exceeded and, accordingly, no restricted stock grants were awarded. |
37
Outstanding Equity Awards at Fiscal 2007 Year-End The following table provides information with respect to outstanding stock options and restricted stock of the Company held by the named executive officers as of June 1, 2007.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Option Awards | | | Stock Awards | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Equity
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | Incentive
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | Plan Awards:
| |
| | | | | | | | | | | | | | | | | | | | | | | Equity
| | | Market
| |
| | | | | | | | | | | | | | | | | | | | | | | Incentive
| | | or Payout
| |
| | | | | | | | | | | | | | | | | | | | | | | Plan Awards:
| | | Value or
| |
| | | | | | | | | | | | | | | | | | | | Market
| | | Number
| | | Unearned
| |
| | | | | | | | | | | | | | | | | Number of
| | | Value of
| | | of Unearned
| | | Shares,
| |
| | | | | Number of
| | | Number of
| | | | | | | | | Shares or
| | | Shares or
| | | Shares,
| | | Units
| |
| | | | | Securities
| | | Securities
| | | | | | | | | Units of
| | | Units of
| | | Units or Other
| | | or Other
| |
| | | | | Underlying
| | | Underlying
| | | Option
| | | | | | Stock That
| | | Stock That
| | | Rights
| | | Rights
| |
| | | | | Unexercised
| | | Unexercised
| | | Exercise
| | | Option
| | | Have Not
| | | Have Not
| | | That Have
| | | That Have
| |
| | Grant
| | | Options
| | | Options
| | | Price
| | | Expiration
| | | Vested
| | | Vested
| | | Not Vested
| | | Not Vested
| |
Name | | Date | | | (#) Exercisable | | | (#) Unexercisable | | | ($) | | | Date | | | (#) | | | ($)(1) | | | (#)(2) | | | ($)(1) | |
|
J. Hicks Lanier | | | 7/13/98 | | | | 20,000 | | | | — | | | | 17.8281 | | | | 7/13/08 | | | | — | | | | | | | | | | | | | |
| | | 7/12/99 | | | | 20,000 | | | | — | | | | 13.9375 | | | | 7/12/09 | | | | — | | | | | | | | | | | | | |
| | | 7/10/00 | | | | 20,000 | | | | — | | | | 8.6250 | | | | 7/10/10 | | | | — | | | | | | | | | | | | | |
| | | 7/16/01 | | | | 10,000 | | | | — | | | | 10.7250 | | | | 7/16/11 | | | | — | | | | | | | | | | | | | |
| | | 7/15/02 | | | | 8,000 | | | | 2,000 | (4) | | | 11.7250 | | | | 7/15/12 | | | | — | | | | | | | | | | | | | |
| | | 8/18/03 | | | | 7,800 | | | | 5,200 | (5) | | | 26.4375 | | | | 8/18/13 | | | | | | | | | | | | | | | | | |
| | | 8/15/05 | | | | — | | | | — | | | | — | | | | — | | | | 5,250 | (6) | | | 241,395 | | | | | | | | | |
| | | 8/3/06 | | | | — | | | | — | | | | — | | | | — | | | | 2,335 | (7) | | | 107,363 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,500 | | | | 160,930 | |
Thomas C. Chubb III | | | 7/13/98 | | | | 1,000 | | | | — | | | | 17.8281 | | | | 7/13/08 | | | | — | | | | — | | | | | | | | | |
| | | 7/12/99 | | | | 3,000 | | | | — | | | | 13.9375 | | | | 7/12/09 | | | | — | | | | — | | | | | | | | | |
| | | 7/10/00 | | | | 470 | | | | — | | | | 8.6250 | | | | 7/10/10 | | | | — | | | | — | | | | | | | | | |
| | | 7/16/01 | | | | 5,000 | | | | — | | | | 10.7250 | | | | 7/16/11 | | | | — | | | | — | | | | | | | | | |
| | | 7/15/02 | | | | 8,000 | | | | 2,000 | (4) | | | 11.7250 | | | | 7/15/12 | | | | — | | | | — | | | | | | | | | |
| | | 8/18/03 | | | | 7,800 | | | | 5,200 | (5) | | | 26.4375 | | | | 8/18/13 | | | | | | | | | | | | | | | | | |
| | | 8/15/05 | | | | — | | | | — | | | | — | | | | — | | | | 3,000 | (6) | | | 137,940 | | | | | | | | | |
| | | 8/3/06 | | | | — | | | | — | | | | — | | | | — | | | | 1,334 | (7) | | | 61,337 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,000 | | | | 91,960 | |
S. Anthony Margolis | | | 8/3/06 | | | | — | | | | — | | | | — | | | | — | | | | 2,001 | (7) | | | 92,006 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,000 | | | | 137,940 | |
John A. Baumgartner | | | 7/16/01 | | | | 800 | | | | — | | | | 10.7250 | | | | 7/16/11 | | | | — | | | | — | | | | | | | | | |
| | | 7/15/02 | | | | 3,200 | | | | 800 | (4) | | | 11.7250 | | | | 7/15/12 | | | | — | | | | — | | | | | | | | | |
| | | 8/18/03 | | | | 3,000 | | | | 2,000 | (5) | | | 26.4375 | | | | 8/18/13 | | | | — | | | | — | | | | | | | | | |
| | | 8/15/05 | | | | — | | | | — | | | | — | | | | — | | | | 1,125 | (6) | | | 51,728 | | | | | | | | | |
| | | 8/3/06 | | | | — | | | | — | | | | — | | | | — | | | | 667 | (7) | | | 30,669 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | 45,980 | |
Christine B. Cole | | | 8/15/05 | | | | — | | | | — | | | | — | | | | — | | | | 975 | (6) | | | 44,831 | | | | | | | | | |
| | | 8/3/06 | | | | — | | | | — | | | | — | | | | — | | | | 667 | (7) | | | 30,669 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | 45,980 | |
Michael J. Setola(3) | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
| | |
(1) | | The market value of stock awards reported is computed by multiplying the reported number of shares of stock that have not vested by $45.98, the per-share closing market price of our common stock on June 1, 2007, the last day of fiscal 2007. |
|
(2) | | Represents the target number of restricted shares that could have been granted pursuant to the LTIP based on the Company’s earnings per share during fiscal 2007. The Company’s actual earnings per share for fiscal 2007 for |
38
| | |
| | LTIP performance measure purposes was below the threshold earnings per share and, accordingly, no restricted shares were granted pursuant to the awards in respect of the fiscal 2007 performance period. |
|
(3) | | Mr. Setola resigned from his position as our President effective January 31, 2007. Pursuant to the terms of an option agreement between us and Mr. Setola, dated as of November 17, 2003, Mr. Setola was entitled to exercise the vested and exercisable portion of the option previously granted to him for a period of up to thirty days following the effectiveness of his resignation. After such time, no options were exercisable by Mr. Setola. In addition, pursuant to the terms of a Release and Non-Solicitation Agreement entered into between the Company and Mr. Setola in connection with his resignation, 6,501 shares of our restricted stock that were previously granted to Mr. Setola became vested and non-forfeitable effective as of February 23, 2007. |
|
(4) | | The options reported as unexercisable became vested and exercisable effective on July 15, 2007. |
|
(5) | | One-half of the securities underlying options reported as unexercisable became vested and exercisable effective on August 18, 2007. The other one-half of the securities underlying options reported as unexercisable become vested and exercisable on August 18, 2008. |
|
(6) | | The restricted shares reported become vested and non-forfeitable on June 3, 2008. |
|
(7) | | The restricted shares reported become vested and non-forfeitable on June 2, 2009. |
Option Exercises and Stock Vested During Fiscal 2007 The following table provides information on stock option exercises by the named executive officers and the vesting of restricted stock granted to the named executive officers during fiscal 2007.
| | | | | | | | | | | | | | | | |
| | Option Awards | | | Stock Awards | |
| | Number of
| | | | | | Number of
| | | | |
| | Shares
| | | Value
| | | Shares
| | | Value
| |
| | Acquired on
| | | Realized on
| | | Acquired
| | | Realized
| |
| | Exercise
| | | Exercise
| | | on Vesting
| | | on Vesting
| |
Name | | (#) | | | ($) | | | (#) | | | ($) | |
|
J. Hicks Lanier | | | — | | | | — | | | | — | | | | — | |
Thomas C. Chubb III | | | 1,000 | | | | 35,735(1 | ) | | | — | | | | — | |
S. Anthony Margolis | | | �� | | | | — | | | | — | | | | — | |
John A. Baumgartner | | | — | | | | — | | | | — | | | | — | |
Christine B. Cole | | | — | | | | — | | | | — | | | | — | |
Michael J. Setola(2) | | | — | | | | — | | | | 6,501 | | | | 328,626(3 | ) |
| | |
(1) | | The dollar amount is determined by multiplying (i) the number of shares of the Company’s common stock to which the exercise of the option related by (ii) the difference between the per-share closing price of the Company’s common stock on the date of exercise and the exercise price per share of the options. |
|
(2) | | Mr. Setola resigned from his position as President of the Company effective January 31, 2007. Pursuant to the terms of an option agreement between the Company and Mr. Setola, dated as of November 17, 2003, Mr. Setola was entitled to exercise the vested and exercisable portion of the option previously granted to him for a period of up to thirty days following the effectiveness of his resignation. The disclosure set forth in the foregoing table does not include any option exercises effected by Mr. Setola after the effectiveness of his resignation because he was not an executive officer of the Company after January 31, 2007. |
|
(3) | | The dollar amount is determined by multiplying the number of shares that vested by the per-share closing price of the Company’s common stock of $50.55 per share on February 23, 2007, the date of vesting for the restricted shares granted to Mr. Setola. |
39
Fiscal 2007 Non-Qualified Deferred Compensation The following table shows the activity under the Non-Qualified Deferred Compensation Plan for each of the named executive officers during fiscal 2007.
| | | | | | | | | | | | | | | | | | | | |
| | Executive
| | | Registrant
| | | Aggregate
| | | Aggregate
| | | Aggregate
| |
| | Contributions in
| | | Contributions in
| | | Earnings
| | | Withdrawals/
| | | Balance
| |
| | Last FY
| | | Last FY
| | | in Last FY
| | | Distributions
| | | at Last FYE
| |
Name | | ($) | | | ($) | | | ($) | | | ($) | | | ($)(1) | |
|
J. Hicks Lanier | | | 407,849 | | | | 57,599 | | | | 411,324 | | | | — | | | | 2,320,780 | |
Thomas C. Chubb III | | | 7,562 | | | | 14,577 | | | | 560 | | | | — | | | | 25,490 | |
S. Anthony Margolis | | | 74,221 | | | | — | | | | 236,427 | | | | — | | | | 1,362,532 | |
John A. Baumgartner | | | 3,022 | | | | 3,151 | | | | 3,260 | | | | — | | | | 17,102 | |
Christine B. Cole | | | 22,829 | | | | 3,275 | | | | 12,151 | | | | — | | | | 85,564 | |
Michael J. Setola | | | 105,684 | | | | 38,303 | | | | 92,001 | | | | — | | | | 576,646 | |
| | |
(1) | | The amounts reported in this “Aggregate balance at last FYE” column include amounts that are also reported as salary or non-equity incentive plan awards in the Summary Compensation Table above. Those amounts, as well as amounts in the “Aggregate balance at last FYE” column that represent salary and bonus that was reported in the Summary Compensation Tables in prior years, are quantified as follows: |
| | | | | | | | | | | | |
| | | | | | | | Total Amounts
| |
| | | | | Amount Included in
| | | Included in Both
| |
| | Amount Included in
| | | Both Non-Qualified
| | | Non-Qualified
| |
| | Both Non-Qualified
| | | Deferred
| | | Deferred
| |
| | Deferred
| | | Compensation Table
| | | Compensation Table
| |
| | Compensation Table
| | | and Previously
| | | and Fiscal 2007 or
| |
| | and Fiscal 2007
| | | Reported in Prior
| | | Prior Years’
| |
| | Summary
| | | Years’ Summary
| | | Summary
| |
| | Compensation Table
| | | Compensation Table
| | | Compensation Table
| |
Name | | ($) | | | ($) | | | ($) | |
|
J. Hicks Lanier | | | 57,599 | | | | 198,343 | | | | 255,942 | |
Thomas C. Chubb III | | | 14,577 | | | | — | | | | — | |
S. Anthony Margolis | | | — | | | | 6,000 | | | | 6,000 | |
John A. Baumgartner | | | 3,151 | | | | — | | | | 3,151 | |
Christine B. Cole | | | 3,275 | | | | — | | | | 3,275 | |
Michael J. Setola | | | 38,303 | | | | 41,392 | | | | 79,695 | |
See“— Compensation Discussion and Analysis” for additional discussion about our Non-Qualified Deferred Compensation Plan.
For fiscal 2005,2007, a non-employee director who served as Chairmanchair of the Audit Committee or the Nominating, Compensation and Governance Committee received an annual retainer of $30,000. All other non-employee directors received an annual retainer of $24,000. Each non-employee director is required to receive at least one-half of his or her annual retainer in the form of shares of our restricted stock of the Company and may elect to receive the remainder of the annual retainer in cash or in shares of our restricted stock of the Company.stock. Each non-employee director receives a $1,250 meeting fee for each committee or Board and Committeeof Directors meeting attended. Directors are reimbursed for their out-of-pocket expenses in attending meetings. Directors who are employees of the Company do not receive an annual retainer or meeting fees.
COMMON STOCK OWNERSHIP BY MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information, asfees for their service on the Board of August 22, 2005 (except as noted), regardingDirectors. With respect to the beneficial ownershipnon-employee directors’ annual retainer, Mr. Conlee and Ms. Weeks elected to receive 100% of their respective annual retainer in the form of shares
40
of our restricted stock. All of the other non-employee directors elected to receive 50% of their respective annual retainer in the form of shares of our Common Stock by:restricted stock.
The number of shares of our restricted stock to be issued in respect of each non-employee director’s annual retainer is based on the fair market value (based on the closing price of our common stock as reported on the NYSE) as of the grant date for the restricted stock. The grant date for the restricted stock is determined in advance by the Company’s management as of a reasonably practicable date early in the fiscal year with respect to the upcoming fiscal year. The grant date for shares of our restricted stock issued in respect of each non-employee director’s fiscal 2007 annual retainer was September 5, 2006 (other than with respect to Mr. Guynn, who was appointed to the Board of Directors on January 8, 2007). The grant date for shares of our restricted issued in respect of Mr. Guynn’s fiscal 2007 annual retainer (equitably adjusted for the portion of the fiscal year during which he served, based on the number of quarterly meetings of the Board of Directors in respect of fiscal 2007) was February 9, 2007.
For fiscal 2007, the Nominating, Compensation and Governance Committee also determined that it would provide our non-employee directors with the opportunity to receive additional restricted shares of our common stock under the LTIP pursuant to performance share awards. The number of restricted shares that were to be granted under those performance share awards was based upon the Company’s performance for fiscal 2007. Based upon the Nominating, Compensation and Governance Committee’s certification on July 27, 2007 of the Company’s earnings per share (calculated after giving effect to certain accounting adjustments) for fiscal 2007, no restricted shares were earned by our non-employee directors pursuant to these performance share awards.
The Nominating, Compensation and Governance Committee has generally discussed but not finally approved the grant of new performance share awards for the performance period comprising fiscal 2008, pursuant to which our non-employee directors may receive additional restricted shares.
Director Compensation for Fiscal 2007
The table below summarizes the compensation paid by the Company to non-employee directors for fiscal 2007. Directors who are employees of the Company do not receive an annual retainer or meeting fees for their service on the Board of Directors. Each of our employee directors is also an executive officer of the Company whose compensation paid by the Company is disclosed elsewhere in this proxy statement.
| | | | | | | | | | | | | | | | |
| | Fees Earned
| | | Stock
| | | All Other
| | | | |
| | or Paid in
| | | Awards
| | | Compensation
| | | Total
| |
Name | | Cash($) | | | ($)(1) | | | ($)(2) | | | ($) | |
|
Cecil D. Conlee | | | 12,516 | | | | 28,460 | | | | 1,650 | | | | 42,627 | |
Thomas C. Gallagher(3) | | | 15,765 | | | | 27,614 | | | | 340 | | | | 43,719 | |
George C. Guynn(4) | | | 11,525 | | | | 3,366 | | | | 69 | | | | 14,960 | |
J. Reese Lanier, Sr. | | | 17,015 | | | | 15,460 | | | | 996 | | | | 33,471 | |
James A. Rubright | | | 22,015 | | | | 19,448 | | | | 879 | | | | 42,342 | |
Robert E. Shaw | | | 22,508 | | | | 16,801 | | | | 1,467 | | | | 40,776 | |
Clarence H. Smith | | | 22,015 | | | | 10,134 | | | | 761 | | | | 32,910 | |
Helen B. Weeks | | | 7,530 | | | | 35,440 | | | | 1,119 | | | | 44,089 | |
E. Jenner Wood III | | | 17,015 | | | | 21,444 | | | | 761 | | | | 39,220 | |
| | |
(1) | • | ownersRepresents the FAS 123(R) compensation expense recognized during fiscal 2007 by the Company in respect of 5% or more of our Common Stock; |
|
| • | our directors; |
|
| • | ourrestricted stock grants made to the named executive officers as definedduring fiscal 2007 and in“Executive Compensation — Summary Compensation Table”; and |
|
| • | prior periods. Pursuant to the rules of the SEC, these values are not reduced by an estimate for the probability of forfeiture. The assumptions used in valuing the stock awards are described in note 7 to our directors and executive officers as a group.consolidated financial statements |
Except as set forth below, the shareholders named below have sole voting and investment power with respect to all shares of our Common Stock shown as being beneficially owned by them. Under the rules of the Securities and Exchange Commission (the “SEC”), a person “beneficially owns” securities which that person has the right to purchase within 60 days. Under these rules, more than one person may be deemed to beneficially own the same securities, and a person may be deemed to beneficially own securities in which he or
41
10
she has no financial interest. Unless otherwise indicated, the address for each shareholder on this table is c/o Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, Georgia 30308.
| | | | | | | | |
| | Beneficial Ownership of | |
| | Common Stock | |
| | | |
| | Number of | | | Percent of | |
Name | | Shares | | | Class(1) | |
| | | | | | |
Apex Capital, LLC | | | 1,264,000 | (a) | | | 7.35 | % |
Buckingham Capital Management Incorporated | | | 1,104,200 | (b) | | | 6.42 | % |
Columbia Wanger Asset Management, L.P. | | | 1,675,800 | (c) | | | 9.75 | % |
SunTrust Banks, Inc. | | | 947,728 | (d) | | | 5.51 | % |
Systematic Financial Management, L.P. | | | 910,227 | (e) | | | 5.29 | % |
Thomas C. Chubb III | | | 25,903 | (f) | | | * | |
Cecil D. Conlee | | | 7,224 | | | | * | |
Thomas C. Gallagher | | | 4,289 | | | | * | |
J. Hicks Lanier | | | 1,673,799 | (g) | | | 9.74 | % |
J. Reese Lanier, Sr. | | | 600,160 | (h) | | | 3.49 | % |
S. Anthony Margolis | | | 36,555 | (i) | | | * | |
Knowlton J. O’Reilly | | | 23,312 | (j) | | | * | |
James A. Rubright | | | 434 | | | | * | |
Michael J. Setola | | | 12,500 | (k) | | | * | |
Robert E. Shaw | | | 2,724 | | | | * | |
Clarence H. Smith | | | 689 | | | | * | |
Helen B. Weeks | | | 289 | | | | * | |
E. Jenner Wood III | | | 1,289 | | | | * | |
All directors and executive officers as a group (18 persons) | | | 2,450,300 | (l) | | | 14.26 | % |
| | |
* | | Less than 1% |
|
(1) | | Based on an aggregate of 17,187,132 shares of our Common Stock, which represents 17,043,862 shares of our Common Stock issued and outstanding as of August 22, 2005plus143,270 shares of our Common Stock (which represents the number of shares of Common Stock issuable upon exercise of outstanding stock options that are or will become exercisable on or prior to October 22, 2005 for the individuals in this table). |
|
(a) | | The shares shown as beneficially owned by Apex Capital, LLC (“Apex”) include (i) 1,250,000 shares with respect to which Apex and Sanford J. Colen have shared voting power and shared investment power and (ii) 14,000 shares held of record by Mr. Colen of which he has sole voting power and sole investment power. Their address is 25 Orinda Way, Suite 300, Orinda, CA 94563. This information was as of December 31, 2004 and was obtained from a Schedule 13G/ A filed as of February 14, 2005. |
|
(b) | | The shares reported are held by Buckingham Capital Management Incorporated, which has sole voting and investment power with respect to all shares reported. Its address is 750 Third Avenue, Sixth Floor, New York, NY 10017. This information was as of June 30, 2005 and was obtained from a Schedule 13G filed as of August 12, 2005. |
|
(c) | | The shares reported are held by Columbia Wanger Asset Management, L.P. and its general partner for their clients in various fiduciary and agency capacities. One client, Columbia Acorn Trust, an investment company, has shared voting and investment power over 1,030,200 of the reported shares. Columbia |
11
| | |
| | Wanger Asset Management, L.P. has shared votingincluded in our Annual Report onForm 10-K filed for the fiscal year ended June 1, 2007 and investment power over allunder the caption “Stock-Based Compensation” in note 1 to our consolidated financial statements included in our Annual Report onForm 10-K filed for the fiscal year ended June 1, 2007. |
As of June 1, 2007, our non-employee directors held the following number of restricted shares of our common stock previously granted by the Company: Mr. Conlee owned 2,427 restricted shares; Mr. Gallagher owned no restricted shares; Mr. Guynn owned 191 restricted shares; Mr. Lanier owned 1,460 restricted shares; Mr. Rubright owned 1,315 restricted shares; Mr. Shaw owned 2,068 restricted shares; Mr. Smith owned 1,170 restricted shares; Ms. Weeks owned 1,718 restricted shares; and Mr. Wood owned 1,170 restricted shares.
In addition, as of June 1, 2007, the following non-employee directors had outstanding performance share awards granted pursuant to the LTIP that would entitle such director to receive the following target number of restricted shares of our common stock based on the Company’s earnings per share during fiscal 2007: Mr. Conlee — 500; Mr. Guynn — 375; Mr. Lanier — 500; Mr. Rubright — 500; Mr. Shaw — 500; Mr. Smith — 500; Ms. Weeks — 500; and Mr. Wood — 500. The Company’s actual earnings per share for fiscal 2007 for LTIP performance measure purposes was below the threshold earnings per share and, accordingly, no restricted shares were granted pursuant to the awards in respect of the fiscal 2007 performance period.
The grant date fair value of stock awards to each of our non-employee directors during fiscal 2007, determined in accordance with FAS 123(R), was as follows: Mr. Conlee — $45,748; Mr. Gallagher — $27,750; Mr. Guynn — $9,191; Mr. Lanier — $27,750; Mr. Rubright — $27,750; Mr. Shaw — $30,757; Mr. Smith — $27,750; Ms. Weeks — $39,735; and Mr. Wood — $27,750.
| | |
(2) | | Represents the dollar value of dividends paid on unvested stock awards which was not factored into the reported shares.grant date fair value for the stock. From time to time, our non-employee directors receive discounts on our apparel merchandise, as well as complementary apparel merchandise. The addressaggregate incremental cost to the Company of these discounts and benefits do not exceed $10,000 for eachany of our non-employee directors. We offer these discounts and benefits because they represent common practice in the parties is 227 West Monroe Street, Suite 3000, Chicago, IL 60606. This information was as of December 31, 2004 and was obtained from a Schedule 13G/ A filed as of February 11, 2005.apparel industry. |
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(d)(3) | | The shares reported are held by SunTrust Banks, Inc. and its subsidiaries in various fiduciary and agency capacities and include (i) 686,556 sharesMr. Gallagher resigned from the Company’s Board of Directors on January 8, 2007. In connection with respect to which they have sole voting power, (ii) 51,000 shares with respect to which they have shared voting power, (iii) 592,113 shares with respect to which they have sole investment power and (iv) 355,614 shares with respect to which they have shared investment power. SunTrust disclaims beneficial interest in any of the shares reported. The address is 303 Peachtree Street, Suite 1500, Atlanta, GA 30308. This information was as of December 31, 2004 and was obtained from a Schedule 13G filed as of February 16, 2005. |
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(e) | | The shares reported are held Systematic Financial Management, L.P. and include (i) 590,227 shares with respect to which it has sole voting power and (ii) 910,227 shares with respect to which it has sole investment power. Its address is 300 Frank W. Burr Blvd., Glenpointe East, 7th Floor, Teaneck, NJ 07666. This information was as of December 31, 2004 and was obtained from a Schedule 13G filed as of February 14, 2005. |
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(f) | | Of this amount, Mr. Chubb has sole voting and investment power with respect to 5,233 shares, and 20,670 shares representing exercisable options. |
|
(g) | | Of this amount, Mr. Lanier has sole voting and investment power with respect to 452,066 shares, sole voting and investment power with respect to 554,677 shares held by a charitable foundation of which Mr. Lanier is a trustee, sole voting and investment power with respect to 587,856 shares held by various trusts, and 79,200 shares of exercisable options. |
|
(h) | | Of this amount, Mr. Lanier has sole voting and investment power with respect to 526,378 shares, and sole voting and investment power with respect to 73,182 shares held by trust. |
|
(i) | | Of this amount, Mr. Margolis has sole voting and investment power with respect to 27,463 shares, and sole voting and investment power with respect to 9,092 shares held by trust. |
|
(j) | | Of this amount, Mr. O’Reilly has sole voting and investment power with respect to 12,712 shares, and 10,600 shares representing exercisable options. |
|
(k) | | Of this amount, Mr. Setola has sole voting and investment power with respect to 4,500 shares, and 8,000 shares representing exercisable options. |
|
(l) | | Of this amount, the executive officers not listed by name have sole voting and investment power with respect to 61,133 shares, sole voting and investment power with respect to 18,666 shares held by trust, and 24,800 shares representing exercisable options. |
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EXECUTIVE OFFICERS
Identification of Executive Officers
The executive officers of our Company are as follows as of August 22, 2005:
| | | | | | |
Name | | Age | | | Position Held |
| | | | | |
J. Hicks Lanier | | | 65 | | | Chairman and Chief Executive Officer |
Michael J. Setola | | | 47 | | | President |
Thomas C. Chubb III | | | 41 | | | Executive Vice President |
S. Anthony Margolis | | | 63 | | | Group Vice President |
Knowlton J. O’Reilly | | | 65 | | | Group Vice President |
John A. Baumgartner | | | 62 | | | Senior Vice President |
K. Scott Grassmyer | | | 44 | | | Senior Vice President and Controller |
J. Reese Lanier, Jr. | | | 40 | | | Senior Vice President and Treasurer |
Christine B. Cole | | | 56 | | | Vice President |
Anne M. Shoemaker | | | 46 | | | Vice President |
All of our executive officers are elected by and serve at the discretion of either the Board or the Chairman of the Board.
Mr. J. Hicks Lanier has been Chairman and Chief Executive Officer of the Company since 1981. Mr. Lanier also served as President of the Company from 1977 until 2003. He is also a director of SunTrust Banks, Inc., Crawford & Company and Genuine Parts Company.
Mr. Michael J. Setola has served as President since 2003. Prior to joining the Company, Mr. Setola had been the Chairman and Chief Executive Officer of Salant Corporation since 1998. Salant Corporation filed a petition for relief under Chapter 11 of the Bankruptcy Code in 1998, and was reorganized in 1999.
Mr. Thomas C. Chubb III was appointed as Executive Vice President in 2004. From 1999 to 2004, he served as Vice President, General Counsel and Secretary.
Mr. S. Anthony Margolis has been a Group Vice President of the Company and Chief Executive Officer of Tommy Bahama Group, Inc. (formerly known as Viewpoint International, Inc.) since 2003. Prior to joining the Company, Mr. Margolis had been the Chief Executive Officer and President of Viewpoint International, Inc. since 1992.
Mr. Knowlton J. O’Reilly has served as Group Vice President since 1978.
Mr. John A. Baumgartner was appointed as Senior Vice President in 2004. From 1992 to 2004, he served as Vice President.
Mr. K. Scott Grassmyer was appointed as Senior Vice President in 2004 and remains Controller. From 2003 to 2004, he served as Vice President and Controller. From 2002 to 2003, he served as Controller. Prior to joining the Company, he served as Senior Vice President and Chief Financial Officer of Duck Head Apparel Company, Inc., an apparel manufacturer, since 1997.
Mr. J. Reese Lanier, Jr. was appointed as Senior Vice President in 2004 and remains Treasurer. From 2003 to 2004, he served as Vice President and Treasurer. From 2000 to 2003, he served as Treasurer.
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Ms. Christine B. Cole was appointed as Vice President in 2004. Prior to joining the Company, Ms. Cole had been the Vice President of Reed Business Information, Inc., a provider of information and communications for a diverse range of business sectors, since 1999.
Ms. Anne M. Shoemaker was appointed as Vice President in 2004. From 1995 to 2004, she served as Director of Credit and Internal Audit.
Ethical Conduct Policy for Senior Financial Officers
Our Board of Directors has adopted a code of ethical conduct for our senior financial officers, including, among others, our principal executive officer (our CEO), our principal financial officer (our Executive Vice President), and our principal accounting officer (our Controller). These individuals are expected to adhere at all times to this code of ethical conduct. We have posted this code of ethical conduct on our Internet website atwww.oxfordinc.com.
Failure to comply with this code of ethical conduct is a serious offense and will result in appropriate disciplinary action. Our Board and our Audit Committee each has the authority to independently approve, in their sole discretion, any such disciplinary action as well as any amendment to and any material departure from a provision of this code of ethical conduct. We will disclose on our Internet website atwww.oxfordinc.com,to the extent and in the manner permitted by Item 5.05 of Form 8-K under Section 13 of the Exchange Act, the nature of any amendment to this code of ethical conduct (other than technical, administrative, or other non-substantive amendments), our approval of any material departure from a provision of this code of ethical conduct, and our failure to take action within a reasonable period of time regarding any material departure from a provision of this code of ethical conduct that has been made known to any of the executive officers noted above.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The table below shows the compensation earned during fiscal 2005, 2004, and 2003 by our CEO and our four other most highly compensated executive officers who were serving at the end of fiscal 2005. These individuals are called the“named executive officers.”
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Long-Term | | | |
| | | | | | | | Compensation Awards | | | |
| | | | | | | | | |
| | | | Annual Compensation | | | | | Securities | | | |
| | | | | | | Restricted | | | Underlying | | | |
| | | | Salary | | | Bonus | | | Stock | | | Options | | | All Other | |
Name and Principal Position | | Year | | | ($)(1) | | | ($) | | | ($)(2) | | | (# shares)(3) | | | Compensation($)(4) | |
| | | | | | | | | | | | | | | | | | |
J. Hicks Lanier | | | 2005 | | | | 738,461 | | | | 1,000,000 | | | | 253,155 | | | | None | | | | 71,072 | |
| Chairman of the Board and | | | 2004 | | | | 581,154 | | | | 709,734 | | | | None | | | | 13,000 | | | | 54,563 | |
| Chief Executive Officer | | | 2003 | | | | 505,052 | | | | 736,950 | | | | None | | | | 10,000 | | | | 57,861 | |
Michael J. Setola | | | 2005 | | | | 770,584 | | | | 500,000 | | | | 216,990 | | | | None | | | | 12,969 | |
| President | | | 2004 | (5) | | | 382,846 | | | | 350,000 | | | | None | | | | None | | | | None | |
| | | | 2003 | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
Thomas Caldecot Chubb III | | | 2005 | | | | 358,071 | | | | 250,000 | | | | 144,660 | | | | None | | | | 8,153 | |
| Executive Vice President | | | 2004 | (6) | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | 2003 | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
S. Anthony Margolis | | | 2005 | | | | 1,130,981 | | | | 673,381 | | | | None | | | | None | | | | 9,984 | |
| Group Vice President | | | 2004 | | | | 1,035,697 | | | | 741,942 | | | | None | | | | None | | | | 12,000 | |
| | | | 2003 | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
Knowlton J. O’Reilly | | | 2005 | | | | 478,986 | | | | 125,000 | | | | 108,495 | | | | None | | | | 19,624 | |
| Group Vice President | | | 2004 | | | | 470,770 | | | | 180,000 | | | | None | | | | 13,000 | | | | 9,507 | |
| | | | 2003 | | | | 450,480 | | | | 300,000 | | | | None | | | | 10,000 | | | | 6,744 | |
| |
(1) | Salary includes additional compensation paid under the executive savings program, which was discontinued as of December 31, 2004, in the amount of (i) $31,738 for Mr. Setola, (ii) $9,929 for Mr. Chubb and (iii) $18,265 for Mr. O’Reilly. Salary also includes for Mr. Chubb compensation of $2,046 attributable to certain contributions under the Employee Stock Purchase Plan. |
(2) | Certain executives were awarded the opportunity to earn shares of restricted stock based on the performance of the Company during the second half of fiscal 2005 (see the “Report on Executive Compensation” below for additional information on these awards). Following the end of fiscal 2005,Gallagher’s resignation, the Nominating, Compensation and Governance Committee determined thatapproved a waiver of the named executive officers had earned sharesforfeiture restrictions on all previous Company grants of restricted stock as follows for the performance period ending June 3, 2005: (i) 5,250 shares forto Mr. Lanier, (ii) 4,500 shares for Gallagher. |
|
(4) | | Mr. Setola, (iii) 3,000 shares for Mr. Chubb and (iv) 2,250 shares for Mr. O’Reilly. The restricted stockGuynn was issued on August 15, 2005. The dollar value of the restricted stock disclosed above is based on the number of shares awarded multiplied by $48.22, which was the closing value ofappointed to the Company’s common stock on August 15, 2005 as reported by the NYSE. The sharesBoard of restricted stock will become fully vested and nonforfeitable on June 3, 2008. Recipients are entitled to cash dividends paid on the shares of restricted stock during the restricted period.Directors effective January 8, 2007. |
Director Stock Ownership Guidelines
On July 27, 2007, the Board of Directors established stock ownership guidelines for our non-employee directors. The ownership guidelines specify a target number of shares of our common stock that our non-employee directors are expected to accumulate and hold within three years of the later of the effective date of the guidelines or the date of appointment to the Board of Directors (which we refer to as the “director’s determination date”). The specific guidelines for each applicable individual are established based on the fair market value of our common stock (based on a365-day trailing average for our common stock price as reported on the NYSE as of the director’s determination date) and the amount of the director’s annual retainer as of the director’s determination date. Pursuant to these guidelines, each of our non-employee directors is expected to own or acquire shares of our common stock having a fair market value equal to one times his or her annual retainer.
Shares owned outright by a non-employee director or by members of his or her immediate family sharing the same household, restricted stock and shares held in trust for the benefit of the non-employee director or his or her immediate family are counted towards satisfying the applicable guideline.
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15
| |
(3) | Adjusted to reflect our two-for-one stock split on December 1, 2003. |
(4) | All other compensation includes the following items in the amounts set forth beside each executive officer’s name in the table set forth below for fiscal 2005. |
| | | | | | | | | | | | | | | | |
| | | | | | | | Matching Non-Qualified | |
| | Excess Group Life | | | Executive Medical | | | Matching 401(k) | | | Deferred Compensation | |
Executive Officer | | Insurance($) | | | Plan($) | | | Contributions($) | | | Contributions($) | |
| | | | | | | | | | | | |
J. Hicks Lanier | | | 8,176 | | | | 14,242 | | | | 5,538 | | | | 43,116 | |
Michael J. Setola | | | None | | | | 10,061 | | | | 2,908 | | | | None | |
Thomas C. Chubb III | | | 335 | | | | 1,834 | | | | 5,984 | | | | None | |
S. Anthony Margolis | | | 1,584 | | | | None | | | | 8,400 | | | | None | |
Knowlton J. O’Reilly | | | 11,161 | | | | 4,909 | | | | 3,554 | | | | None | |
| |
(5) | Mr. Setola’s 2004 compensation was prorated for 28 weeks in fiscal 2004. |
(6) | Mr. Chubb was first appointed as an executive officer in fiscal 2005. |
Aggregated Options TableEQUITY COMPENSATION PLAN INFORMATION
The Company did not make any new stock option grants tofollowing table sets forth information concerning the named executive officers in fiscal 2005. The table below shows information with respect to options exercised during fiscal 2005 and options held atCompany’s equity compensation plans as of June 1, 2007, which was the end of fiscal 2005 by each named executive officer. All options are options to purchase our Common Stock.2007:
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
| | | | | | | | | | | | | | | | |
| | | | | | Number of Shares | | | |
| | | | | | Underlying Unexercised | | | Value(1) of Unexercised | |
| | Shares | | | | | Options at | | | In-the-Money Options at | |
| | Acquired | | | Value | | | Fiscal Year-End(#) | | | Fiscal Year-End($) | |
Name | | on Exercise(#) | | | Realized($) | | | Exercisable/Unexercisable | | | Exercisable/Unexercisable | |
| | | | | | | | | | | | |
J. Hicks Lanier | | | 0 | | | | 0 | | | | 68,600/24,400 | | | | 1,879,538/584,898 | |
Michael J. Setola | | | 0 | | | | 0 | | | | 8,000/32,000 | | | | 73,160/292,640 | |
Thomas C. Chubb III | | | 0 | | | | 0 | | | | 14,470/19,000 | | | | 382,582/412,680 | |
S. Anthony Margolis | | | 0 | | | | 0 | | | | 0/0 | | | | 0/0 | |
Knowlton J. O’Reilly | | | 14,600 | | | | 347,336 | | | | 0/24,400 | | | | 0/584,898 | |
| | | | | | | | | | | | |
| | | | | | | | (c)
| |
| | | | | | | | Number of
| |
| | (a)
| | | | | | Securities
| |
| | Number of
| | | | | | Remaining
| |
| | Securities to be
| | | (b)
| | | Available for
| |
| | Issued Upon
| | | Weighted-Average
| | | Future Issuance
| |
| | Exercise of
| | | Exercise Price of
| | | Under Equity
| |
| | Outstanding
| | | Outstanding
| | | Compensation Plans
| |
| | Options,
| | | Options,
| | | (Excluding Securities
| |
| | Warrants
| | | Warrants
| | | Reflected in
| |
Plan Category | | and Rights | | | and Rights | | | Column (a)) | |
|
Equity compensation plans approved by security holders(1) | | | | | | | | | | | | |
1992 Stock Option Plan | | | 46,650 | | | $ | 13.77 | | | | — | |
1997 Stock Option Plan | | | 318,300 | | | | 22.72 | | | | — | |
Long-Term Stock Incentive Plan | | | —(2 | ) | | | — | | | | 884,939(3 | ) |
Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| |
(1) | These amounts reflect the difference between: |
| | |
(1) | • | Excludes shares to be issued under the fair market valueCompany’s Employee Stock Purchase Plan because the number of the shares of our Common Stock underlying the options held by each officer based on anand weighted average of the “high” and “low” salepurchase price per share of our Common Stock of $41.295 on June 3, 2005 as reported on the NYSE, andcannot be determined at this time. |
|
(2) | • | the aggregate exercise price of such options. |
| |
| On August 3, 2006, the Nominating, Compensation and Governance Committee Interlocksawarded performance share awards and Insider Participationrestricted share unit awards to its non-employee directors and certain of its employees, including the Company’s executive officers. Restricted shares and restricted share units were issuable pursuant to these awards based on the Company’s performance during fiscal 2007 and other factors. The maximum, aggregate number of shares of our common stock that could have been granted pursuant to these awards was 107,775. The Nominating, Compensation and Governance Committee certified on July 31, 2007 that the Company’s performance during fiscal 2007 did not satisfy the threshold earnings per share target (calculated after giving effect to certain accounting adjustments) established under such awards. Accordingly, no restricted shares or restricted share units were granted pursuant to these awards, and the awards were cancelled. Accordingly, the table reflects the actual number of securities to be issued pursuant to the performance share awards and restricted share unit awards in respect of the fiscal 2007 performance period. |
|
(3) | | The LTIP provides that, among other things, shares that were available for grant as of the effective date of the LTIP, or that thereafter otherwise become available for grant, under any stock option or restricted stock plan of the Company other than LTIP (including the Oxford Industries, Inc. 1992 Stock Option Plan, the Oxford Industries, Inc. 1997 Stock Option Plan, and the Oxford Industries, Inc. 1997 Restricted Stock Plan) shall be deemed null and void and shall not be granted or available for grant under those plans or under the LTIP. Accordingly, the LTIP, which initially became effective on July 27, 2004, is the only currently-outstanding equity compensation plan pursuant to which new awards may be made. |
43
Ms.
NOMINATING, COMPENSATION AND GOVERNANCE COMMITTEE REPORT The Nominating, Compensation and Governance Committee of the Company’s Board of Directors has three members, each of whom is an independent, non-employee director. The Nominating, Compensation and Governance Committee administers our stock-based compensation plans. The Nominating, Compensation and Governance Committee also determines the compensation of our Chief Executive Officer and approves the compensation of our other executive officers. In previous proxy statements, the Nominating, Compensation and Governance Committee submitted reports that sought to describe in detail the philosophy and execution of our executive compensation programs. In accordance with the rules of the U.S. Securities and Exchange Commission that are now effective for this and future proxy statements, a new“Compensation Discussion and Analysis” section includes this information. In addition, the“Executive Compensation” section of this proxy statement includes more information concerning the compensation of our named executive officers than has been published previously. In this regard, the Nominating, Compensation and Governance Committee has reviewed and discussed the“Compensation Discussion and Analysis” section of this proxy statement with management. Based on this review, the Nominating, Compensation and Governance Committee recommended to the Board of Directors that the“Compensation Discussion and Analysis” section be included in this proxy statement.
Respectively submitted,
Robert E. Shaw, Chairman
Cecil D. Conlee
Helen B. Weeks and Messrs.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Cecil D. Conlee, and Robert E. Shaw and Helen B. Weeks served on the Nominating, Compensation and Governance Committee of the Board of Directors during fiscal 2005.2007. None of them are current or former officers or employees of our companythe Company or any subsidiary, none of them are former officers of the Company or any subsidiary (except as described below) and none of them have any other direct or indirect relationship
16
with our companythe Company or any other entity that could reasonably be expected to influence their actions as members of the Nominating, Compensation and Governance Committee.
CERTAIN TRANSACTIONS
Certain Relationships and Related Transactions
SunTrust Banks, Inc. and its subsidiaries (“SunTrust”) are principal shareholdersMr. Conlee was an employee of the Company (see“Common Stock Ownership by Managementfrom 1963 to 1968. He served as the Company’s assistant treasurer during 1966 and Certain Beneficial Owners” above).as the Company’s treasurer and chief financial officer between 1967 and 1968. The Board of Directors determined that Mr. Conlee’s previous service to the Company would not reasonably be expected to influence his actions as a member of the Nominating, Compensation and Governance Committee.
Our Chief Executive Officer, J. Hicks Lanier, is ona member of the board of directors and the compensation committee of Genuine Parts Company. During fiscal 2007, Thomas C. Gallagher served as a member of the Company’s Board of Directors. Mr. Gallagher is Chairman, Chief Executive Officer and President of Genuine Parts Company and served in that capacity during fiscal 2007. Mr. Gallagher resigned from the Company’s Board of Directors of SunTrust and its Audit Committee.on January 8, 2007.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During fiscal 2007, Mr. E. Jenner Wood, III, one of our directors, was Chairman, President and Chief Executive Officer of SunTrust Bank, Central Group, ata subsidiary of SunTrust Banks, Inc. (to which we refer collectively with its subsidiaries as “SunTrust”), and also served on the endManagement Committee of fiscal 2005.SunTrust Banks, Inc. Mr. J. Hicks Lanier, our Chief Executive Officer, is on the board of directors of SunTrust and its Audit Committee.
44
In fiscal 2004, we establishedWe maintain a $275 million syndicated credit facility under which subsidiaries of SunTrust servedserve as agent and lender. In fiscal 2005, the credit facility was amended and restated to $280 million. As of June 3, 2005,1, 2007, we had direct borrowings of $90.1 million and $113 million in letters of credit outstanding of approximately $51.3 million under thethis credit facility. In fiscal 2005,2007, the services provided and interest and fees paid to SunTrust in connection with suchcertain services arewere as set forth below.below:
| | | | |
Service | | Fees and Interest | |
| | | |
Agent for credit facility | | $ | 2,998,591 | |
Cash management, trust and other services | | $ | 151,089 | |
| | | | |
Service | | Fees and Interest | |
|
Interest and agent fees for our credit facility | | $ | 525,000 | |
Cash management and senior notes related services | | $ | 56,000 | |
Trustee for deferred compensation plan | | $ | 8,000 | |
Stock transfer agent | | $ | 2,000 | |
Our aggregate payments to SunTrust and its subsidiaries for these services together with all of the other services described above in this section, did not exceed 1% of our gross revenues during fiscal 20052007 or 1% of SunTrust Banks’SunTrust’s gross revenues during its fiscal year ended December 31, 2004.2006.
REPORT OF THE AUDIT COMMITTEE
The ultimate responsibility for good corporate governance rests with the Board of Directors, whose primary role is providing oversight, counseling, and direction to the Company’s management in the best long-term interests of the Company and its shareholders. The Audit Committee, which operates under a written charter adopted by ourthe Board of Directors, is composed of independent directors and oversees, on behalf of the Board of Directors, ourthe Company’s financial reporting process and system of internal control over financial reporting. We have posted theThe Audit Committee’s charter is posted on ourthe Company’s Internet website atwww.oxfordinc.com. Our
The Company’s management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control over financial reporting. The Company has a full-time Internal Audit Department that reports to the Audit Committee and the Company’s senior management. The Internal Audit Department is responsible for objectively reviewing and evaluating the adequacy, effectiveness and quality of the Company’s system of internal controls related to, among other things, the reliability and integrity of the Company’s financial information and the safeguarding of the Company’s assets. Ernst & Young LLP, the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the auditing standards of the Public Company Accounting Oversight Board, expressing opinions on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and making its own assessment of the effectiveness of the Company’s internal control over financial reporting. In accordance with law, the Audit Committee has ultimate authority and responsibility for selecting, compensating, evaluating and, when appropriate, replacing the Company’s independent auditors. The Audit Committee has the authority to engage its own outside advisers, including experts in particular areas of accounting, as it determines appropriate, apart from counsel or advisers hired by management.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements to be included in the Company’s annual report onForm 10-K for the fiscal year ended June 3, 20051, 2007 (“fiscal 2005”2007”) with management,, including a discussion of the quality not just theand acceptability of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The Audit Committee discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgmentsErnst & Young LLP its judgment as to the quality, not just the acceptability, of ourthe Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards (including Statement on Auditing Standards No. 61 (Communication with Audit Committees)), as amended by Statement on Auditing Standards No. 90, and applicable law.
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In addition, the independent auditorsErnst & Young LLP provided to the Audit Committee the written disclosures and the letter regarding itstheir independence from management and ourthe Company as required by Independence Standards
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Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee discussed this information with the independent auditors. The Audit Committee discussed with ourErnst & Young LLP and the Company’s internal and independent auditorsInternal Audit Department the overall scope and plans for their respective audits. The Audit Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of ourthe Company’s internal controls and the overall quality of ourthe Company’s financial reporting. The Audit Committee also considered whether the independent auditors’ provision of other non-audit services to ourthe Company is compatible with the auditors’ independence. The Audit Committee held fivefour meetings and acted by written consent on one occasion during fiscal 2005.2007.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the boardBoard of Directors approved) that the audited financial statements be included in the annual reportAnnual Report onForm 10-K for fiscal 20052007 for filing with the SEC.U.S. Securities and Exchange Commission.
Respectfully Submitted,
Cecil D. Conlee, Chairman
James A. Rubright
Clarence H. Smith
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The foregoing report should not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal No. 2)At the recommendation of the Audit Committee, the Company’s Board of Directors has selected Ernst & Young LLP, independent registered public accounting firm, to serve as our independent auditors during the current fiscal year which commenced on June 2, 2007. Ernst & Young LLP has served as auditors for the Company since May 2002. The Board of Directors considers such accountants to be well qualified and recommends that the shareholders vote to ratify their appointment. Shareholder ratification of the appointment of auditors is not required by law; however, the Company’s Board of Directors considers the solicitation of shareholder ratification to be in the Company’s and its shareholders’ best interests.
Ratification of the appointment of Ernst & Young LLP to serve as our independent auditors during fiscal 2008 requires the affirmative vote of at least a majority of the outstanding shares of our common stock present at the annual meeting, in person or by proxy, and entitled to vote on the proposal. Abstentions will have the same effect as a vote against this proposal.
In view of the difficulty and expense involved in changing auditors on short notice, if the Company’s shareholders do not ratify the appointment of Ernst & Young LLP at the annual meeting, it is contemplated that the appointment of Ernst & Young LLP to serve as our independent auditors during fiscal 2008 will be permitted to stand unless the Company’s Board of Directors finds other compelling reasons for making a change. Disapproval by the shareholders will be considered a recommendation that the Company’s Board of Directors select other auditors for the following year. A representative of Ernst & Young LLP is expected to attend the annual meeting. The representative will be given the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to questions from shareholders.
INDEPENDENT AUDITORSFees Paid to Ernst & Young LLPThe following table summarizes certain fees that we paid to Ernst & Young LLP for professional services rendered for fiscal 20052007 and fiscal 2004:2006:
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Fee Category | | Fiscal 2005 Fees($) | | | Fiscal 2004 Fees($) | |
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Audit fees | | | 1,391,000 | | | | 644,000 | |
Audit-related fees | | | 72,000 | | | | None | |
Tax fees | | | 63,000 | | | | 28,000 | |
All other fees | | | None | | | | None | |
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Total fees | | | 1,526,000 | | | | 672,000 | |
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Fee Category | | Fiscal 2007 Fees($) | | | Fiscal 2006 Fees($) | |
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Audit fees | | | 1,290,000 | | | | 1,417,000 | |
Audit-related fees | | | 35,000 | | | | 30,000 | |
Tax fees | | | 57,000 | | | | 95,000 | |
All other fees | | | — | | | | — | |
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Total fees | | | 1,382,000 | | | | 1,542,000 | |
Audit Fees. Audit fees“Audit fees” are fees for the audit of our annual and quarterly financial statements and for services normally provided in connection with statutory and regulatory filings. The auditfilings, including fees for fiscal 2005 include fees related toincurred in meeting the auditcompliance requirements of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees. Audit-related fees“Audit-related fees” are fees for audit-related services such as services related to potential business acquisitions and dispositions, the audit of employee benefit plan financial statements, assistance with implementation of recently adopted rules and regulations, and compliance with rules and regulations applicable to accounting matters and internal control matters.audits performed pursuant to certain royalty and lease agreements.
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Tax Fees. Tax fees“Tax fees” are fees for tax compliance, planning and advisory services.
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The Audit Committee considered the effects that the provision of the services described above under the subheadings“Audit-Related Fees”Audit-related fees”and“Tax Fees”fees”may have on the auditor’sauditors’ independence and has determined that such independence has been maintained.
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| Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors |
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors. Unless a service to be provided by the independent auditors has received general pre-approval under the policy, it requires specific pre-approval by the Audit Committee or the Chair of the Audit Committee before the commencement of the service.
Specific pre-approval is required for significant recurring annual engagements such as engagements for the required annual audit and quarterly reviews (including the audit of internal control over financial reporting), and statutory or employee benefit plan audits.
Under the policy, general pre-approval is provided for:
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| • | audit services associated with a change in the scope of the annual audit engagement and additional audit procedures arising out of the Company’s adoption of (1) new accounting pronouncements, or (2) business transactions, regulatory matters, or unanticipated matters arisingnot reasonably anticipated that arise in the conduct of the audit; |
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| • | work associated with registration statements under the Securities Act of 1933 (for example, post-report review procedures, comfort letters or consents); |
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| • | statutory audits, employee benefit plan audits or other financial audit work fornon-U.S. subsidiaries that is not required for the audits under the Securities Exchange Act of 1934;Act; |
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| • | due-diligence work for potential acquisitions or disposals; |
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| • | attest services not required by statute or regulation;to verify compliance; |
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| • | advice and consultation as to proposed or newly adopted accounting and auditing standards and interpretations;interpretations and financial accounting and disclosure requirements imposed by the SEC, the Financial Accounting Standards Board and other regulatory agencies and professional standard setting bodies; |
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| • | assistance and consultation as to questions from the Company and access to the Ernst & Young LLP internet-based accounting and reporting resources; |
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| • | assistance to the Company with understanding its internal control review and reporting obligations; |
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| • | review of information systems security and controls; |
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| • | tax compliance, tax planningreturn preparationand/or review and related tax services, excluding any tax service prohibited by regulatory or other oversight authorities; andservices; |
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| • | international tax planning, including foreign tax credit and cash repatriation planning.planning; and |
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| • | subject to certain exceptions, general federal, state and international tax planning and advice. |
Any individual engagement with an estimated cost of more than $75,000 must be specifically pre-approved before the commencement of the engagement by the Audit Committee or by the Chair of the Audit Committee, even if the service in question has received general pre-approval. In addition, further Audit
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Committee pre-approval is required if the aggregate fees for such engagements would exceed $200,000. AtAs appropriate, at each Audit Committee meeting, the entire Audit Committee reviews services performed since the prior meeting pursuant to the general pre-approvals granted under the policy, as well as services pre-approved by the Chair.Chair of the Audit Committee. The nature and dollar value of services performed under the general pre-approval guidelines are reviewed with the Audit Committee on at least an annual basis.
REPORT ON EXECUTIVE COMPENSATION
The Nominating, Compensation and Governance Committee of the Board has three members, each of whom is an independent, non-employee director. The Committee administers our stock-based compensation plans. The Committee also determines the compensation of our Chief Executive Officer and approves the compensation of the other executive officers. The Committee met twice in the fiscal year ended June 3, 2005 (“fiscal 2005”).
Our Company’s compensation policy is to pay for performance. Compensation practices for all executives, including the executive officers, are designed to encourage and reward the achievement of our Company’s objectives. The achievement of these objectives should enhance shareholder value.
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| Executive Compensation Program |
Our Executive Compensation program currently consists of three elements. Those elements are base salary, short-term incentive compensation and long-term incentive compensation. These elements comprise virtually all of the compensation of our executives.
Base Salary. Each position in our Company is assigned a job grade based on the responsibilities of the position. For each job grade, a salary range is determined based on compensation surveys. An individual’s salary is determined by the person’s job grade and individual performance. Our executive officers approve the salary of each executive in the executive officer’s business unit or department. The Chief Executive Officer approves the salaries of all other executive officers, and the Committee approves the salary of the Chief Executive Officer and ratifies the salaries of all other executive officers.
Short-term Incentive Compensation. Each executive officer participates in the Company’s Executive Performance Incentive Plan (EPIP). The EPIP is designed to encourage the achievement of our Company’s objectives by rewarding executives when these objectives are met or exceeded. For fiscal 2005, a target bonus level was established for each executive officer eligible to participate in the EPIP. In addition, a “threshold” return on net assets (“RONA”), a “target” RONA and a “maximum” RONA was established for each business unit and our Company as a whole.
The threshold RONA must be met before any bonus is earned. If a business unit’s RONA for the fiscal year equals or exceeds the threshold RONA, and if other requirements of the bonus plan are met, eligible participants will earn a bonus. The bonus amount increases as the business unit’s RONA increases above the threshold RONA, up to the maximum RONA. If the threshold RONA is met or exceeded, the bonus for the business unit may be adjusted upward or downward to reflect the business unit’s sales increase or decrease.
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Each RONA level may be adjusted by up to plus or minus 25% for the applicable business unit’s sales increase or decrease from the prior year. Finally, if the threshold RONA is met or exceeded, an individual may receive an additional bonus amount based on his or her individual accomplishments. This individual performance element cannot exceed one hundred percentRecommendation of the individual’s earned bonus. Mr. Lanier, with the approval of the Committee, determines the bonus targets and individual performance bonuses for each of the named executive officers. The bonus paid to each of the named executive officers other than Mr. O’Reilly and Mr. Margolis is based on our Company’s overall RONA. The bonus paid to Mr. O’Reilly is based on the RONA for the Womenswear Group. The bonus paid to Mr. Margolis is based on the Tommy Bahama Group’s achievement of certain performance-based goals under the agreements related to our acquisition of the Tommy Bahama Group.
Long-term Incentive Compensation. Prior to fiscal 2005, the Company’s long-term incentive compensation program generally consisted of annual grants of nonqualified stock options. For the second half of fiscal 2005 (following shareholder approval of the Company’s Long-Term Stock Incentive Plan at the 2004 Annual Meeting of Shareholders), the Committee implemented a new long-term incentive compensation program under that Plan. The Committee believes that this program will more closely align the interests of the Company’s executives with its shareholders, as well as assist in the attraction and retention of key executives.
The new long-term incentive compensation program is based on the issuance of “performance share awards.” These performance share awards provide recipients with the ability to earn shares of restricted stock based on the Company’s attainment of specified performance objectives during the performance period. The performance period for the initial grant of performance share awards (the “2005 Performance Share Awards”) was November 27, 2004 through June 3, 2005. Each recipient was assigned a maximum number of shares of restricted stock that could be earned under the award, generally based on the recipient’s level of responsibility within the Company. Performance share awards are forfeited if the recipient’s employment with the Company terminates for any reason before the end of the performance period, unless otherwise approved in writing by the Committee.
Following the end of the performance period, the Committee determined the number of restricted shares earned by each recipient based on the performance actually attained by the Company. Restricted shares earned under the performance share awards become vested three years after the end of the performance period. The recipient forfeits the restricted shares if his or her employment with the Company terminates for any reason during the vesting period, unless otherwise approved in writing by the Committee. During the vesting period, the recipient is entitled to all voting rights and to all dividends paid in cash with respect to the restricted shares. Neither the performance share award nor the shares of restricted stock earned under the award are transferable in circumstances other than the death of the recipient.
Following the end of fiscal 2005, the Committee determined that, based on the Company’s performance during the performance period, each of the performance share award recipients had earned the maximum number of shares of restricted stock available under the recipient’s award. The Committee also approved the grant of new performance share awards (the “2006 Performance Share Awards”) for which the performance period is the 2006 fiscal year (June 4, 2005 through June 2, 2006).
Compensation of the Chief Executive Officer
In reviewing Mr. Lanier’s base salary, the Committee took into account our Company’s excellent financial performance relative to the results of other publicly-traded apparel companies. The Committee determined that this performance was noteworthy given the continuously challenging retail environment and
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increasingly adverse economic conditions that prevailed during fiscal 2005. The Committee reviewed the strategic actions taken by Mr. Lanier to improve the future profitability and growth prospects of our Company. In particular, the Committee noted Mr. Lanier’s continued leadership of the Company’s successful integration of the Tommy Bahama Group into our Company, as well as the successful negotiation and completion of the Ben Sherman acquisition and related bank financing.
The Committee also noted that Mr. Lanier’s base salary was low in comparison to other chief executive officers in the apparel industry. Based on those determinations, the Committee increased Mr. Lanier’s annual base salary from $750,000 to $775,000 effective August 1, 2005. (The Committee notes that Mr. Lanier participates in some Company-provided benefit programs that increase his compensation as reported in the Executive Compensation Table.)
For fiscal 2005, Mr. Lanier’s target bonus amount under our Performance Bonus Program was $550,000. Based on our Company’s results for fiscal 2005, Mr. Lanier’s earned bonus was $608,300. In addition to his earned bonus, Mr. Lanier was eligible to receive an individual performance bonus of up to 100% of his earned bonus. In determining the amount of this individual performance bonus, the Committee considered the factors described above with respect to base salary, as well as the individual performance bonuses being given to the other executive officers of our Company. Based on these considerations, the Committee awarded Mr. Lanier an individual performance bonus of $391,700, for a total bonus of $1,000,000 for fiscal 2005.
The Committee left Mr. Lanier’s target bonus level for fiscal 2006 under the Executive Performance Incentive Plan unchanged at $550,000. The Committee will continue to have the discretion to award Mr. Lanier an individual performance bonus of up to 100% of his earned bonus.
Code Section 162(m) Implications for Executive Compensation
It is the responsibility of the Committee to address the issues raised by Section 162(m) of the Internal Revenue Code of 1986. This Section limits our Company’s annual deduction to $1,000,000 for compensation paid to its chief executive officer and to the next four most highly compensated executives of our Company. Certain compensation that qualifies as performance-based or that meets other requirements under the Code may be exempt from the Code Section 162(m) limit. Our shareholders ratified the Oxford Industries, Inc. Executive Performance Incentive Plan so that a portion of the bonuses paid under that Plan may be treated as performance-based compensation not subject to the limits of Code Section 162(m). The Committee will continue to monitor the impact of Code Section 162(m) and reserves the right to award compensation in excess of the limits as it deems necessary or appropriate.
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Conclusion
The Nominating, Compensation and Governance Committee believes that our Company’s Executive Compensation program is competitive and provides the appropriate mix of incentives to achieve the goals of our Company. The achievement of these goals should enhance the profitability of our Company and provide sustainable value to our shareholders.
Respectfully submitted,
Robert E. Shaw, Chairman
Cecil D. Conlee
Helen B. Weeks
The foregoing report should not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.
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STOCK PRICE PERFORMANCE GRAPH
The graph below reflects cumulative total shareholder return (assuming the reinvestment of dividends) on our Common Stock compared to the cumulative total return for a period of five years beginning June 2, 2000 and ending June 3, 2005 of:
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| • | the S&P SmallCap 600 Index and |
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| • | the S&P 500 Apparel, Accessories and Luxury Goods. |
The performance graph assumes an initial investment of $100 and reinvestment of dividends.
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Company/ Index | | 6/2/00 | | | 6/1/01 | | | 5/31/02 | | | 5/30/03 | | | 5/28/04 | | | 6/3/05 | |
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Oxford Industries, Inc. | | $ | 100 | | | $ | 140.73 | | | $ | 183.22 | | | $ | 280.91 | | | $ | 514.17 | | | $ | 590.68 | |
S&P SmallCap 600 Index | | $ | 100 | | | $ | 108.92 | | | $ | 118.06 | | | $ | 105.21 | | | $ | 138.33 | | | $ | 161.49 | |
S&P 500 Apparel, Accessories & Luxury Goods | | $ | 100 | | | $ | 133.25 | | | $ | 147.25 | | | $ | 115.59 | | | $ | 139.18 | | | $ | 173.04 | |
The foregoing stock performance graph should not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our officers and directors, and persons who beneficially own more than 10% of our Common Stock, file with the Securities and Exchange Commission certain reports, and to furnish copies thereof to us, with respect to each such person’s beneficial ownership of our equity securities. To the Company’s knowledge, based solely upon a review of the copies of such reports furnished to us and certain representations made by such persons, all such persons complied with the applicable reporting requirements during fiscal 2005, except that the statements of changes in beneficial
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ownership on Form 4 required to be filed by the following individuals were filed late: (1) for S. Anthony Margolis, a Form 4 reporting the acquisition of shares of our Common Stock pursuant to an earnout agreement was filed on September 16, 2004; (2) for S. Anthony Margolis, a Form 4 reporting the sale of shares of our Common Stock was filed on November 5, 2004; and (3) for L. Wayne Brantley, a Form 4 reporting the sale of shares of our Common Stock was filed on November 5, 2004.
APPOINTMENT OF AUDITORS
(Item 2)
The Board of Directors has selected Ernst & Young LLP, independent registered public accounting firm, as auditors for the current year. Ernst & Young LLP have served as auditors for the Company since May 2002. The Board of Directors considers such accountants to be well qualified and recommends that the shareholders vote to ratify their appointment. Shareholder ratification of the appointment of auditors is not required by law; however, the Board of Directors considers the solicitation of shareholder ratification to be in the Company’s and shareholders’ best interests.
In view of the difficulty and expense involved in changing auditors on short notice, should the shareholders not ratify the selection of Ernst & Young LLP, it is contemplated that the appointment of Ernst & Young LLP for the fiscal year ending June 2, 2006 will be permitted to stand unless the Board of Directors finds other compelling reasons for making a change. Disapproval by the shareholders will be considered a recommendation that the Board select other auditors for the following year. A representative of Ernst & Young LLP is expected to attend the annual meeting. The representative will be given the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THIS PROPOSAL.THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS OUR INDEPENDENT AUDITORS DURING THE FISCAL YEAR WHICH COMMENCED JUNE 2, 2007.
OTHER MATTERS
The Board of Directors knows of no other matters that will be brought before the annual meeting. If other matters are introduced, the persons named in the enclosed proxy as the proxy holders will vote on such matters in their discretion.
ADDITIONAL INFORMATION
Annual Report onForm 10-K
We will provide without charge, at the written request of any shareholder of record as of August 22, 2005,15, 2007, a copy of our Annual Report onForm 10-K, including the financial statements, as filed with the SEC, excluding exhibits. We will provide copies of the exhibits if they are requested by eligible shareholders. We may impose a reasonable fee for providing the exhibits. Requests for copies of our Annual Report onForm 10-K should be mailed to: Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, GA 30308, Attention: Investor Relations.
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Shareholder Proposals and Communications to the Board of Directors How do I submit a shareholder proposal?
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Q. | How do I submit a shareholder proposal? |
On April 2, 2007, our Board of Directors amended the Bylaws of Oxford Industries, Inc. to, among other things, specify the date and process by which shareholders must give notice of a shareholder proposal in order for such proposal or nomination to be timely and acceptable for consideration at any annual meeting of the shareholders.
We
Pursuant to our Bylaws, as now in effect, to be timely, a shareholder proposal (other than a director nomination, which is discussed elsewhere in this proxy statement under the heading“Election of Directors — Submission of Director Candidates by Shareholders”) must receive proposalsbe delivered to our Secretary within the time period specified inRule 14a-8(e)(2) adopted pursuant to the Exchange Act. Pursuant toRule 14a-8(e)(2), a shareholder proposal must be received by us not less than 120 calendar days before the date of our proxy statement to shareholders intendedin connection with our annual meeting during the preceding year, provided that if the date of the annual meeting changes by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before we begin to print and send proxy materials. Accordingly, in order for a shareholder proposal (other than a director nomination) to be presented at the 2006 Annual Meetingour 2007 annual meeting of shareholders, we must receive the proposal on or before May 7, 2008, provided that in the event the date of our 2008 annual meeting of shareholders is advanced more than 30 days prior to or delayed more than 30 days after October 9, 2006,2008, in order for the proposals to be eligible for inclusiontimely, a proposal by a shareholder (other than a director nomination) must be delivered a reasonable time before we begin to print and send proxy materials in connection with such annual meeting.
In addition, a shareholder proposal (other than a director nomination) should include the following:
(1) the names and business addresses of the shareholder proponent and all persons acting in concert with the proponent (including the names and addresses as set forth in our proxy statementbooks);
(2) the class and proxy relating to that meeting. These proposals should be sent tonumber of shares of our capital stock beneficially owned by the Secretary by fax to (404) 653-1545 or by mail toproponent and the Officeother persons identified in clause (1);
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(3) a description of the Secretary, 222 Piedmont Ave., N.E., Atlanta, Georgia 30308. Eachproposal, containing all material information relating thereto; and
(4) other information our Board of Directors reasonably determines is necessary or appropriate to enable it and our shareholders to consider the proposal.
How can a shareholder proposal must complyor other interested party communicate with Rule 14a-8 under the Exchange Act to be acceptable to us.Company’s directors, with the Company’s non-management directors as a group or with the Company’s presiding independent director?
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Q. | How can a shareholder communicate with the Company’s outside directors? |
Mail can be addressed to Directorsdirectors in care of the Office of the Secretary, Oxford Industries, Inc., 222 Piedmont Ave., N.E., Atlanta, Georgia 30308. At the direction of the Company’s Board of Directors, all mail received will be opened and screened for security purposes. The mail will then be logged in. All mail, other than trivial or obscene items, will be forwarded. Trivial items will be delivered to the Directorsdirectors at the next scheduled meeting of the Board meeting.of Directors. Mail addressed to a particular Directordirector will be forwarded or delivered to that Director.director. Mail addressed to “Outside Directors,” “Non- Management Directors” or “Non-Management Directors”the “Presiding Independent Director” will be forwarded or delivered to the Chairman of the Nominating, Compensation andpresiding independent director, as designated in accordance with our Corporate Governance Committee.Guidelines. Mail addressed to the “Board of Directors” will be forwarded or delivered to the Chairman of the Board.Board of Directors.
We will bear the cost of solicitation of proxies by the Board of Directors in connection with the annual meeting. We will reimburse brokers, fiduciaries and custodians for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of our Common Stockcommon stock held in their names. Our employees may solicit proxies by mail, telephone, facsimile, electronic mail and personal interview. We do not presently intend to pay compensation to any individual or firm for the solicitation of proxies. Ifproxies, however, if the Company’s management should deem it necessary andor appropriate, however, we may retain the services of an outside individual or firm to assist in the solicitation of proxies.
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| By Order of the Board of Directors |
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| Sheridan B. Johnson |
| Secretary |
By Order of the Board of Directors
Thomas E. Campbell
Secretary
Our annual reportAnnual Report to shareholdersShareholders for fiscal 2005,Fiscal 2007, which includes audited financial statements, accompanies this proxy statement. The annual report does not form any part of the material for the solicitation of proxies.
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OXFORD INDUSTRIES, INC.
PROXY — ANNUAL MEETING OF SHAREHOLDERS, OCTOBER 10, 2005
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned appoints J. HICKS LANIER, THOMAS C. CHUBB III and SHERIDAN B. JOHNSON, and each of them, proxies, with full power of substitution, for and in the name of the undersigned, to vote all shares of the common stock of Oxford Industries, Inc. that the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders to be held on Monday, October 10, 2005, at 3:00 p.m., local time, at the principal offices of Oxford Industries, Inc., 222 Piedmont Avenue, N.E., Atlanta, Georgia 30308, and at any adjournment thereof, upon the matters described in the accompanying Notice of Annual Meeting and Proxy Statement, receipt of which is acknowledged, and upon any other business that may properly come before the meeting or any adjournment thereof. Said persons are directed to vote as follows, and otherwise in their discretion upon any other business. If no direction is made, this proxy will be voted “FOR” all of the Board of Directors’ nominees and proposals.
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1. | Proposal to elect the nominees listed below. If a nominee becomes unable to serve, the proxy will be voted for a substitute nominee or will not be voted in the discretion of said persons appointed above. |
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oFORall nominees listed below (except as marked to the contrary*)
| | oWITHHOLD AUTHORITYto vote for all nominees listed below |
Nominees: Cecil D. Conlee, J. Reese Lanier, Sr. and Robert E. Shaw
*INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.
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2. | Proposal to ratify the appointment of Ernst & Young LLP, independent registered public accounting firm, as the Company’s independent auditors for the fiscal year ending June 2, 2006. |
oFOR oAGAINST oABSTAIN
Please sign and date below and return this proxy immediately in the enclosed envelope, whether or not you plan to attend the annual meeting. | | | | | | |
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| | Signature | | |
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| | Signature if held jointly | | |
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| | Dated: | | | | , 2005 |
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| IMPORTANT: Please date this proxy and sign exactly as your name or names appear. If shares are jointly owned, both owners should sign. If signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If signing as a corporation, please sign in full corporate name by President or other authorized officer. If signing as a partnership, please sign in partnership name by authorized person. |