SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 14A
(RULE 14A-101)
------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY REGISTRANT /X/
FILED BY PARTY OTHER THAN REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/ / PRELIMINARY PROXY STATEMENT
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14-11 (C) OR RULE 14A-12
CACHE INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CACHE INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT
-----------------------
Payment of filing fee (Check appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1) or 14a-6(j) (2)
/ / $500 per each party to the controversy pursuant of Exchange Act Rule
14a-6(i) (3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction apllies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1)
4. Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, of the form or schedule and the date of filing.
CACHE, INC.
1460 Broadway
New York, New York 10036
May 17, 1996
Dear Shareholder:
On behalf of the officers and directors of the Company,
you are cordially invited to attend the Cache, Inc. Annual
Meeting of Shareholders to be held at 10:00 a.m. on Tuesday, June
25, 1996, at our headquarters, 1460 Broadway, New York, New York,
15th Floor.
The Notice of Meeting and Proxy Statement on the
following pages cover the formal business of the meeting, which
includes proposals (i) to elect seven named nominees as
directors and (ii) to ratify the appointment of Arthur Andersen &
Co., certified public accountants, as Cache's auditors for the
fiscal year ending December 28, 1996.
The Board of Directors unanimously recommends that
shareholders vote in favor of each proposal. We strongly
encourage all shareholders to participate by voting their shares
by Proxy whether or not they plan to attend the meeting. Please
sign, date and mail the enclosed Proxy as soon as possible. If
you do attend the Annual Meeting, you may still vote in person.
Sincerely,
/s/ Andrew M. Saul
-------------------------------
Andrew M. Saul
Chairman of the Board
CACHE, INC.
1460 Broadway
New York, New York 10036
_______________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1996
_______________
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Cache, Inc.
will be held on Tuesday, June 25, 1996 at 10:00 a.m. local time,
at our headquarters, 1460 Broadway, 15th Floor, New York, New
York 10036, for the purpose of considering and acting upon the
following proposals as set forth in the accompanying Proxy
Statement:
1. To elect seven named nominees as Directors of
the Company to serve until the next Annual Meeting of
Shareholders and until their successors are elected and
qualified.
2. To ratify the appointment of Arthur Andersen
LLP, certified public accountants, as auditors of the
Company for the fiscal year ending December 28, 1996.
3. To transact such other business as may
properly come before the Annual Meeting or any
adjournment thereof.
Only shareholders of record at the close of business on
May 14, 1996 are entitled to notice of and to vote at the meeting
or any adjournment thereof.
Whether or not you plan to attend the Annual Meeting,
please complete, date and sign the enclosed Proxy and return it
promptly to the Company in the return envelope enclosed for your
use, which requires no postage if mailed in the United States.
You may revoke your Proxy at any time before it is voted by
delivering to the Secretary of the Company a written notice of
revocation bearing a later date than the Proxy, by duly executing
a subsequent Proxy relating to the same shares of Common Stock
and delivering it to the Secretary of the Company, or by
attending and voting at the Annual Meeting.
You are cordially invited to attend.
By Order of the Board of Directors,
/s/ Victor J. Coster
-------------------------
VICTOR J. COSTER
Secretary
May 17, 1996
CACHE, INC.
1460 Broadway
New York, New York 10036
_______________
PROXY STATEMENT
_______________
Accompanying this Proxy Statement is a Notice of Annual
Meeting of Shareholders and a form of Proxy for such meeting
solicited by the Board of Directors. The Board of Directors has
fixed the close of business on May 14, 1996 as the record date
for the determination of shareholders who are entitled to notice
of and to vote at the meeting or any adjournment thereof. The
holders of a majority of the outstanding shares of Common Stock
present in person, or represented by proxy, will constitute a
quorum at the meeting. This Proxy Statement and the enclosed
Proxy are being sent to the shareholders of the Company on or
about May 17, 1996.
Only shareholders of record at the close of business on
May 14, 1996 will be entitled to vote at the Annual Meeting. At
the close of business on such record date the Company had out-
standing 9,091,338 shares of Common Stock, par value $.01 per share
("Common Stock"). No other class of voting security of the
Company is issued and outstanding. Each share of Common Stock
entitles the holder to one vote. Shareholders do not have
cumulative voting rights.
As of April 15, 1996, Messrs. Andrew and Joseph Saul
and certain Saul family trusts (sometimes collectively referred
to herein as the "Sauls") owned of record an aggregate of
5,765,629 shares of Common Stock, representing approximately
63.42% of the outstanding shares of Common Stock. See "Principal
Shareholders and Share Ownership by Management." The Sauls
intend to vote their Common Stock in favor of Proposals 1 and 2
which assures the approval of such proposals.
A Proxy that is properly submitted to the Company may
be properly revoked at any time before it is voted. Proxies may
be revoked by (i) delivering to the Secretary of the Company at
or before the Annual Meeting a written notice of revocation
bearing a later date than the Proxy, (ii) duly executing a
subsequent Proxy relating to the same shares of Common Stock and
delivering it to the Secretary of the Company at or before the
Annual Meeting, or (iii) attending the Annual Meeting and voting
in person (although attendance at the Annual Meeting will not in
and of itself constitute revocation of a Proxy). With respect to
Proposal 1, unless authority to vote for all Directors or any
individual Director is withheld, all the shares represented by
the Proxy will be voted for the election of Directors as set
forth in the Proxy Statement. Where a shareholder has specified
a vote for or against Proposal 2, such Proxy will be voted as
specified; if no direction is given, all the shares represented
by the Proxy will be voted in favor of the Proposal.
-1-
Under SEC rules, boxes and a designated blank space are
provided on the proxy card for shareholders to mark if they wish
either to vote "for," "against" or "abstain" on one or more of
the proposals, or to withhold authority to vote for one or more
of the Company's nominees for director. Florida law requires the
presence of a quorum for the annual meeting, defined as a
majority of the votes entitled to be cast at the meeting. Votes
withheld from director nominees and abstentions will be counted
in determining whether a quorum has been reached. Broker-dealer
non-votes, which are defined in the third paragraph below, are
not counted for quorum purposes.
Assuming a quorum has been reached, a determination
must be made as to the results of the vote on each matter
submitted for shareholder approval: (1) the election of
directors; and (2) the ratification of auditors. Director
nominees must receive a plurality of the votes cast at the
meeting, which means that a vote withheld from a particular
nominee or nominees will not affect the outcome of the meeting.
In order to pass, the proposal to approve the ratification of the
Company's auditors must be approved by a majority of the votes
cast on such matter. Abstentions are not counted in determining
the number of votes cast in connection with the selection of
auditors.
Brokers who hold shares in street name have the
authority to vote on certain items when they have not received
instructions from beneficial owners. Brokers that do not receive
instructions are entitled to vote on the election of directors
and ratification of auditors. Under applicable law, a broker non-
vote will have no effect on the outcome of the election of
directors, or ratification of auditors.
The cost of soliciting Proxies will be paid by the
Company, which will reimburse brokerage firms, custodians,
nominees and fiduciaries for their expenses in forwarding proxy
material to the beneficial owners of the Company's stock.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY
SHAREHOLDER UPON WRITTEN REQUEST A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K (EXCLUDING EXHIBITS BUT INCLUDING THE FINAN-
CIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES) FOR THE FISCAL
YEAR ENDED DECEMBER 30, 1995 AND/OR A COPY OF ANY OF THE
COMPANY'S QUARTERLY REPORTS ON FORM 10-Q OR CURRENT REPORTS ON
FORM 8-K. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO: THOMAS
REINCKENS, CHIEF FINANCIAL OFFICER, CACHE, INC., 1460 BROADWAY,
NEW YORK, NEW YORK 10036.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THIS
MEETING,
PLEASE SIGN, DATE AND MAIL THE PROXY PROMPTLY ELECTION OF
DIRECTORS
-2-
ELECTION OF DIRECTORS
(Proposal 1)
The Board of Directors of the Company presently consists
of the following seven members: Messrs. Andrew M. Saul, Joseph E.
Saul, Roy C. Smith, Thomas E. Reinckens, Morton J. Schrader,
Mark E. Goldberg and Mae Soo Hoo, each of whom is a nominee for
re-election. Ms. Soo Hoo was appointed to the Board by the Board of
Directors as of September 13, 1995, the date as of which Mr. Michael
Warner, a former Director and President, resigned from the Board and
as President.
Unless authority to vote on the election of all Directors
or any individual Director is specifically withheld by appropriate
designation on the face of the Proxy, the persons named in the
accompanying Proxy will nominate as Directors, and vote such Proxy
for the election as Directors of, the persons named below. If
elected, such persons will serve as Directors until the next Annual
Meeting of Shareholders and until their successors are elected and
qualified.
Management does not contemplate that any of the nominees
for Director will be unable to serve, but if such a situation should
arise, the persons named in the accompanying Proxy will nominate and
vote for the election of such other person or persons as the Board
of Directors may recommend.
NOMINEES FOR DIRECTORS
Name Age Principal Occupation Since
- - - - ------------------------ --- ---------------------------------- -----
Andrew M. Saul ......... 49 Partner, Saul Partners (1) 1986
Roy C. Smith ........... 58 Executive Vice-President of 1993
the Company (2)
Thomas E. Reinckens .... 42 Executive Vice-President, Chief 1993
Financial Officer of the Company (3)
Mae Soo Hoo ............ 41 Executive Vice President of 1995
the Company (4)
Joseph E. Saul ......... 76 Partner, Saul Partners (5) 1986
Morton J. Schrader ..... 64 Real Estate Broker (6) 1989
Mark E. Goldberg ....... 39 Attorney in Private Practice (7) 1989
_________________________
(1) Mr. Saul, who became Chairman of the Board of Directors on
February 27, 1993, has been a partner of Saul Partners, an
investment partnership, since 1986. He is the son of Mr.
Joseph E. Saul.
(2) Mr. Smith has served as an Executive Vice President of the
Company since October 1990; from December 30, 1986 to October
1990, Mr. Smith was Vice President/Director of Store
Operations of the Company.
(3) Mr. Reinckens has served as Vice President and Chief
Financial Officer of the Company since November 30, 1989;
from 1987 to November 1989, Mr. Reinckens served as the
Company's Controller. He was appointed Executive Vice President
on September 13, 1995.
-3-
(4) Ms. Soo Hoo has served as a Vice President of Merchandising
since February 1987. She was appointed to the Board of
Directors on September 13, 1995 and was also appointed
Executive Vice President/General Merchandise Manager on that
date.
(5) Mr. Saul has been a partner of Saul Partners, an investment
partnership, since 1986. He is the father of Mr. Andrew M.
Saul.
(6) Mr. Schrader was the President of Abe Schrader Corp., a
manufacturer of women's apparel, from 1968 through March
1989. Since 1989 he has been active as a real estate broker.
(7) Mr. Goldberg has been an attorney in private practice since
1985. Mr. Goldberg has provided legal assistance to the
Company since 1988 and is expected to continue to do so in
1996.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the year ended December 30, 1995 ("Fiscal 1995"), the
Board of Directors held three meetings. Each Director attended all
of such Board meetings. All non-employee Directors are compensated
for their services to the Company by participation in the Company's
group medical insurance program at an approximate cost to the
Company of $11,500 per individual per year.
The Board of Directors has an Audit Committee and a
Compensation and Plan Administration Committee, but has no standing
nominating committee. The Audit Committee of the Board of
Directors, established in July 1989, currently consists of Messrs.
Andrew Saul, Goldberg and Schrader. The Audit Committee met once in
Fiscal 1995. Each member of the Audit Committee attended such
committee meeting.
Duties of the Audit Committee include meeting with the
independent accountants and certain personnel of the Company to
discuss the planned scope of their examinations, the adequacy of
internal controls and financial reporting; reviewing the results of
the annual examination of the financial statements and periodic
internal audit examinations; reviewing the services and fees of the
Company's independent accountants; authorizing special
investigations and studies; and performing any other duties or
functions deemed appropriate by the Board of Directors.
The Compensation and Plan Administration Committee was
established in July 1991 as the Plan Administration Committee to
administer the Company's stock option plans. In May 1993 it was
renamed the Compensation and Plan Administration Committee and
delegated additional authority to determine the remuneration
arrangements for the three most senior executive officers and to
review and approve the remuneration arrangements for the Company's
other executive officers. It currently consists of Messrs. Andrew
M. Saul, Mark E. Goldberg and Morton J. Schrader. The Plan
Administration Committee met once in Fiscal 1995 and each member
attended such committee meeting.
-4-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation for the past
three years of the Chief Executive Officer and the Company's other four
most highly compensated executive officers (collectively, the "Named
Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME FISCAL COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($)(2) OPTIONS (#) ($)(3)
- - - - -------------------------- ------ ----------- ------------ ------------ ------------ -------------
Andrew M. Saul 1995 -
(Chairman since 2/27/93) 1994 -
1993 -
Michael A. Warner 1995 350,000 42,300 - - 506
(President/Director, who 1994 302,169 250,000 3,923
resigned as of 9/13/95) 1993 269,074 - 125,000 3,197
Roy C. Smith 1995 229,231 - 50,000 7,767
(Executive Vice 1994 207,567 - 97,500 11,772
President/Director) 1993 187,303 78,125 - 37,500 7,205
Thomas E. Reinckens 1995 189,231 - 50,000 2,204
(Executive Vice 1994 169,308 - 75,000 2,052
President/ Chief 1993 150,725 62,480 - 25,000 1,465
Financial Officer/
Director)
Mae Soo Hoo 1995 178,077 - 50,000 1,762
(Executive Vice 1994 154,065 - 103,750 1,652
President) 1993 139,965 46,875 8,750 1,308
Karen M. Hubchik 1995 169,904 6,000 - - 280
(Vice President, who 1994 155,577 - 37,500 4,128
resigned as of 9/14/95) 1993 139,809 - 18,750 996
(1) Included in the figures shown under this column are bonuses which were
paid to the Company's executive officers pursuant to the 1989
Executive Bonus Program. The amounts paid in 1993 were $78,125 to Mr.
Smith, $62,480 to Mr. Reinkens and $46,875 to Ms. Soo Hoo. Also
included are amounts paid in 1995 to Mr. Warner $42,300 and Ms.
Hubchik $6,000 which represent bonus payments as part of their
severance agreements.
(2) The Company has concluded that the amount of personal benefits paid to
each named executive officer is less than the lesser of $50,000 and
10% of such person's cash compensation reported in such table.
Accordingly, none of such personal benefits is included in the table.
(3) Included in the figures shown under this column for 1995 are the
following insurance premiums paid by the Company with respect to term
life insurance for the benefit of the executive officer and long-term
disability insurance: $506 and $0, respectively, for Mr. Warner;
$2,375 and $5,392, respectively, for Mr. Smith; $823 and $1,381,
respectively, for Mr. Reinckens; $541 and $1,221, respectively, for
Ms. Soo Hoo and $280 and $0, respectively, for Ms. Hubchik.
-5-
Included in the figures shown under this column for 1994 are the
following insurance premiums paid by the Company with respect to term
life insurance for the benefit of the executive officer and long-term
disability insurance: $894 and $3,029, respectively, for Mr. Warner;
$6,744 and $5,028, respectively, for Mr. Smith; $776 and $1,276,
respectively, for Mr. Reinckens; $522 and $1,130, respectively, for
Ms. Soo Hoo and $3,367 and $761 respectively, for Ms. Hubchik.
Included in the figures shown under this column for 1993 are the
following insurance premiums paid by the Company with respect to term
life insurance for the benefit of the executive officer and long-term
disability insurance: $386 and $2,811, respectively, for Mr. Warner;
$2,522 and $4,683, respectively, for Mr. Smith; $284 and $1,181,
respectively, for Mr. Reinckens; $255 and $1,053, respectively, for
Ms. Soo Hoo and $291 and $705, respectively, for Ms. Hubchik.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES AC- VALUE UNDERLYING UNEXERCISED IN-THE-MONEY STOCK OPTIONS
QUIRED REALIZED STOCK OPTIONS AT FY-END(#) AT FY-END ($) (1)
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - - ------------------- ----------- -------- -------------------------- ---------------------------
Roy C. Smith - - 147,500 147,500
Thomas E. Reinckens - - 125,000 125,000
Mae Soo Hoo - - 153,750 153,750
_________________________
(1) In-the money Stock Options are those where the fair market
value of the underlying stock exceed the exercise price of
the Option. The amounts in this column represent the
difference between the exercise price of the Stock Options
and the closing price of the Company's Common Stock on
December 30, 1995 (the last day of trading for Fiscal 1995)
for all options exercisable by each Named Executive Officer,
whether vested or unvested. The closing price of the
Company's Common Stock as reported on NASDAQ/NMS on December
30, 1995 was $3.375 per share.
-6-
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to stock options
granted in Fiscal 1995 to each of the Named Executive Officers.
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (3)
------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL YR (($)/SHARE) DATE 5% ($) 10% ($)
- - - - --------------------- ----------- ------------ ----------- ------------- ------ --------
Roy C. Smith (1) 50,000 33.33% $3.25 10/13/05 (2) 44,896 99,208
Thomas E. Reinckens (1) 50,000 33.33% $3.25 10/13/05 (2) 44,896 99,208
Mae Soo Hoo (1) 50,000 33.33% $3.25 10/13/05 (2) 44,896 99,208
_________________________
(1) On October 13, 1995 the Company cancelled options previously granted
under the Company's 1994 Stock Option and Performance Incentive
Plan ("the 1994 Plan") to Mr. Warner and Ms. Hubchik, who had resigned
in September 1995. On the same date the Company issued new options
pursuant to such plan having an exercise price of $3.25 (the closing
price of the Common Stock on NASDAQ/NMS on October 13, 1995) per share,
expiring on October 13, 2005 and becoming exercisable on October 13, 2000,
subject to accelerated vesting at the maximum rate of up to 25% per year
for the four years ended September 30, 1996, 1997, 1998 and 1999 to the
extent the Company's earnings plan was achieved. Such options were granted
to the following executives, exercisable for the following number of shares
of Common Stock: Roy C. Smith, 50,000 shares; Thomas E. Reinckens, 50,000
shares and Mae Soo Hoo, 50,000 shares.
(2) The options become exercisable on October 13, 2005, subject to
accelerated vesting as described in the next sentence. The options may
become exercisable earlier at the maximum rate of up to 25% per year
for the four years ended September 30, 1996, 1997, 1998 and 1999 to the
extent the Company earnings plan as approved by the Company's
Compensation and Plan Administration Committee, is achieved, based on
the following sliding scale:
Options
Will Become
Percentage of Plan Earnings Achieved Exercisable
------------------------------------ -----------
Greater than or equal to 90% 25%
Greater than or equal to 75%, but 20%
less than 90%
Greater than or equal to 60%, but
less than 75% 15%
Less than 60% 0%
These options also become immediately exercisable as of the effective date
of a "change in control" (as defined in the 1994 Plan).
(3) Potential realizable value is based on an assumption that the market
price of the stock appreciates at the stated rate compounded annually,
from the date of grant to the expiration date. These values are
calculated on requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock
price appreciation. Actual gains, if any, are dependent on the future
market price of the Company's Common Stock.
-7-
Employment Contracts and Change-of-Control Provisions
Pursuant to an agreement made as of September 30, 1993
between Mr. Warner and the Company, in exchange for Mr. Warner's
services as President and a Director of the Company, he received
an annual base salary initially of $300,000 (with a $25,000
increase in each of the second and third years of the agreement).
This agreement's term was through October 7, 1996. This
agreement also entitled Mr. Warner to a term life insurance
policy of three times his annual salary and to participate in the
Company's long-term disability coverage and its medical and
dental package. The agreement provided that if the Company
terminated Mr. Warner's employment for any reason other than
those set forth in the next sentence, or if Mr. Warner's
employment was not continued after October 7, 1996 for any reason
other than those set forth in the next sentence, until Mr. Warner
accepted other employment, Mr. Warner would continue to receive
his compensation at the rate in effect at the date of such
termination for a maximum period of twelve months. The agreement
would become null and void if the Company unilaterally terminates
Mr. Warner's employment for (i) theft or other fraudulent
conversion of corporate assets, (ii) willful malfeasance with
respect to his responsibilities or (iii) permanent disability.
On October 25, 1995, the Company and Mr. Warner entered into a
termination agreement, where upon Mr. Warner received a lump sum
payment of $87,500, as well as a bonus payment of $42,300 for
services rendered in 1995. On September 13, 1995, the Company
cancelled stock options previously granted to Mr. Warner under
the 1994 Plan.
All of the options granted under the Company's 1994
Stock Option Plan contain a provision under which the option will
become immediately exercisable (the "Accelerated Exercise") with
respect to all shares subject to it as follows: (i) except as
provided in clause (iii) below, immediately after the first date
on which less than 25% of the outstanding Common Stock in the
aggregate is beneficially owned (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) by Andrew M. Saul and Joseph
E. Saul, members of their immediate families and one or more
trusts established for the benefit of such individuals or
members, (ii) immediately prior to the sale of the Company
substantially as an entirety (whether by sale of stock, sale of
assets, merger, consolidation or otherwise), (iii) immediately
prior to the expiration of any tender offer or exchange offer for
shares of Common Stock of the Company, where: (x) all holders of
Common Stock are entitled to participate, and (y) the Sauls have
agreed (or have announced their intent) to sell such number of
their shares of Common Stock as will result in the Sauls
beneficially owning less than 25% of the outstanding shares of
Common Stock in the aggregate, and (iv) immediately, if 20% or
more of the directors elected by shareholders to the Board of
Directors are persons who were not nominated by management in the
most recent proxy statement of the Company. The Company is
required to give appropriate notice so as to permit an optionee
to take advantage of the foregoing provisions.
-8-
Board of Directors Report on Repricing of Options
In December 1994, the Board of Directors reviewed options
granted to executive officers of the Company pursuant to the
Company's 1993 Stock Option Plan ("the 1993 Plan") and determined that
the exercise price of these options exceeded the fair market value of the
Company's Common Stock. The Board was concerned that the
Company's total compensation package for its senior executives
was less attractive than compensation offered by its competitors
and other comparable companies because the exercise price of
options granted to new executives of such companies would afford
greater opportunity for appreciation than the Company's options.
The Board concluded that (i) the Company's future success is
dependent in large part on its ability to retain its key
executives; (ii) competition for such personnel is intense; (iii)
the loss of key executives would have an adverse impact on the
Company's business; and (iv) it is important and cost-effective
to provide equity incentives to executive officers of the Company
to improve the Company's performance and the value of the Company
for its shareholders. On balance, considering all of these
factors, the Board determined it to be in the best interests of
the Company and its shareholders to restore the incentive for its
executive officers to remain employees of the Company and to
exert their maximum efforts on behalf of the Company by granting
stock options to replace outstanding options with exercise prices
reflecting recent trading prices.
As a consequence, on December 16, 1994 the Board of
Directors terminated the Company's the 1993 Plan and
cancelled all options issued thereunder. On the same date the Board
of Directors replaced the 1993 Plan with the Cache, Inc. 1994
Stock Option and Performance Incentive Plan, subject to
shareholder approval. The Compensation and Plan Administration
Committee was appointed by the Board to administer the 1994 Plan
and, subject to shareholder approval, granted options to Messrs.
Warner, Smith and Reinckens and Ms. Hubchik and Ms. Soo Hoo
exercisable for 250,000, 97,500, 75,000, 37,500 and 103,750
shares of Common Stock, respectively. All such options granted
under the 1994 Plan have an exercise price of $4.25 per share
(which reflected the closing price of the Common Stock on
NASDAQ/NMS on December 16, 1994), terminate on December 31, 2003
and become exercisable on December 31, 1998, subject to
accelerated vesting as described in footnote (1) to the "Option
Grants in Last Fiscal Year" table under the heading "Executive
Compensation."
The foregoing report has been furnished on May 4, 1995, by
the Board of Directors of the Company consisting of Messrs. Joseph E.
Saul, Andrew M. Saul, Morton J. Schrader, Mark E. Goldberg,
Michael A. Warner, Thomas E. Reinckens and Roy C. Smith.
-9-
TEN-YEAR OPTION REPRICING
The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer of the Company during the last ten years:
Length of
Number Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining at
Options Time of Time of Excercise Date of
Name Date Repriced Repricing ($) Repricing ($) Price ($) Repricing
- - - - --------------------- -------- ------------ ------------- ------------- ----------- ----------------
Michael A. Warner 7/28/94 125,000 $x 6.75 8.50 6.75 47 months
(Former President/ 12/16/94 125,000 4.25 6.75 4.25 42 months
Director)
Roy C. Smith 10/15/90 118,750 (1) 2.00 (1) 1.50 (1) 2.00 (1) 26.5 months
(Executive Vice 7/28/94 37,500 6.75 8.50 6.75 47 months
President/Director) 12/16/94 37,500 4.25 6.75 4.25 42 months
Thomas E. Reinckens 10/15/90 62,500 (1) 2.00 (1) 5.00 (1) 2.00 (1) 26.5 months
(Executive Vice 7/28/94 25,000 6.75 8.50 6.75 47 months
President 12/16/94 25,000 4.25 6.75 4.25 42 months
Chief Financial
Officer/Director)
Mae Soo Hoo 10/15/90 31,250 (1) 2.00 (1) 5.00 (1) 2.00 (1) 26.5 months
(Executive Vice 7/28/94 18,750 6.75 8.50 6.75 47 months
President) 12/16/94 18,750 4.25 6.75 4.25 42 months
Karen M. Hubchik 7/28/94 18,750 6.75 8.50 6.75 47 months
(Former Vice 12/16/94 18,750 4.25 6.75 4.25 42 months
President)
Roy C. Chapman (2) 10/15/90 712,500 (1) 2.00 (1) 1.50 (1) 2.00 26.5 months
__________________________
(1) Adjusted to reflect the Company's one-for-four reverse stock split of
its Common Stock on September 15, 1993.
(2) Mr. Chapman was an executive officer of the Company from January 1987
through February 1993.
-10-
Compensation of Directors
All non-employee Directors (Messrs. Andrew Saul, Joseph
Saul, Mark Goldberg and Morton Schrader) are compensated for
their services to the Company by participation in the Company's
group medical insurance program at an approximate cost to the
Company of $11,500 per individual per year.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation and Plan Administration
Committee consists of Messrs. Andrew M. Saul, Mark E. Goldberg
and Morton J. Schrader. Andrew M. Saul is also the Chairman of
the Board of the Company.
Mr. Goldberg is also an attorney in private practice.
He has been retained by the Company to provide legal services
since 1988 and is expected to provide further legal services in
1995. During the fiscal year ended December 30, 1995, Mr.
Goldberg received $88,648 from the Company for legal services
rendered during Fiscal 1995.
In December 1994, the Company determined to repurchase
all of its outstanding Series A Preferred Stock, par value $.01
per share, at its liquidation value of $1,000 per share plus
accrued dividends. Andrew M. Saul, Chairman of the Board of the
Company, received $890,545 from the Company's repurchase of
shares of Series A Preferred Stock owned by him.
COMPENSATION AND PLAN ADMINISTRATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
General
Executive compensation consists generally of two
components - base salary and option awards, and sometimes a third
component - a discretionary bonus award. The Compensation Plan
Administration Committee (the "Committee"), currently consisting
of Messrs. Andrew M. Saul, Mark E. Goldberg and Morton J.
Schrader, administers the Company's option plans pursuant to
which option awards are granted, determines the remuneration
arrangements for the three most senior executive officers and
reviews and approves the remuneration arrangements for the other
executive officers of the Company, which arrangements are
determined by the Chairman, in accordance with parameters set by
the Committee.
This report of the Committee of the Board of Directors
addresses the Company's compensation policies for Fiscal 1995
applicable to Cache's executives including the Named Executive
Officers.
-11-
The Committee's Report on Executive Compensation shall
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 or under the Securities Exchange
Act of 1934, except to the extent that the Company specifically
incorporates this Report on Executive Compensation by reference,
and shall not otherwise be deemed filed under such Acts.
Philosophy
The Cache executive compensation program is designed to
attract and retain key executives. Its objectives are to reward
executives who contribute to the success of the Company through
individual and company performances. Specifically, compensation
includes a competitive base salary program and long-term stock
option awards. The Company will sometimes grant discretionary
bonuses to certain key executive officers with respect to prior
contributions as well as to serve as incentives to attract key
executives into the Company's employ.
Base Salary
The Company believes a competitive base salary is
necessary to retain key management employees. Base salaries are
determined upon a review of an individual's experience and
responsibilities, general industry practice and the competitive
environment for each position. Annual salary adjustments are
determined based upon an individual's performance, the Company's
performance, general industry practice and any new duties or
responsibilities assumed by the individual during the last year.
Long-Term Incentives
The Company believes that employee equity ownership is
highly motivating, provides a major incentive to employees in
building stockholder value, and serves to align the interests of
employees with stockholders. Options are based upon the relative
position and responsibilities of each executive officer,
historical and expected contributions of each officer to the
Company, and previous option grants to such executive officers.
Options are recommended with a goal to provide competitive equity
compensation for executive officers compared to executive
officers of similar rank in companies of the Company's industry,
geographic location and size.
-12-
Cache's stock option programs were designed by the
Company as a long-term incentive program for key executives. The
stock option programs have created an incentive for executives to
maximize shareholder return, by linking long-term compensation
with the valuation of the Company's Common Stock. The stock
option plans typically have included initial grants which have
vested from three to five years. Stock options granted under the
1994 Plan are required to have an exercise price at
least equal to the fair market value of the Company's common
stock at the date of grant. Among other factors considered by
the Committee in determining who qualified for stock option
grants under the 1993 Plan and 1994 Plan and the amount
of such grants were an executive's business experience and his
potential to contribute to the future success of the Company.
In establishing incentive arrangements for 1995, the
Compensation and Plan Administration Committee, which
administered the Company's 1993 Plan and administers
the 1994 Plan, granted stock options to Messrs. Smith and
Reinckens and Ms. Soo Hoo, described in this proxy statement
under "Executive Compensation -- Options Granted in Last Fiscal
Year." See "Compensation and Plan Administration Committee's
Report on Repricing of Options" and "Board of Directors Report on
Repricing of Options."
Other Compensation
The Company provides certain other benefits, such as
health insurance, to the executive officers that are generally
available to Company employees.
In addition, the Company provides its executives,
including the Named Executive Officers, with term life insurance
and additional long-term disability insurance, at the Company's
cost.
The foregoing report has been furnished by the
Compensation and Plan Administration Committee consisting of
Messrs. Andrew M. Saul, Morton J. Schrader and Mark E. Goldberg.
-13-
FIVE-YEAR PERFORMANCE COMPARISON
The following graph compares the yearly percentage
change in the Company's cumulative total shareholder return on
Common Stock with (i) the cumulative total return of the NASDAQ
National Market Index (which tracks the aggregate performance of
equity securities of companies traded on the NASDAQ National
Market System ("NASDAQ/NMS")) and (ii) the cumulative total
return of companies with the same four-digit standard industrial
code (SIC) as the Company (SIC Code 5621, titled "Women's
Clothing Stores"), over the period from December 29, 1990 to
December 30, 1995. The graph assumes an initial investment of
$100 and reinvestment of dividends. The graph is not necessarily
indicative of future price performance.
The graph shall 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 or
under the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such
Acts.
COMPANY 1990 1991 1992 1993 1994 1995
- - - - ------------------ -------- -------- -------- -------- -------- --------
CACHE INC. 100 333.31 323.78 228.55 199.98 128.56
INDUSTRY INDEX 100 162.87 173.28 126.94 122.13 98.41
BROAD MARKET 100 128.38 129.64 155.50 163.26 211.77
-14-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1990, the Sauls loaned the Company an aggregate
of $1,750,000. All such loans bore interest at the rate of
8 1/2% per annum with interest payable quarterly. The principal
amount of each of such loans was due to mature on January 1,
1994. On December 14, 1993, Joseph Saul agreed to replace the
promissory note with a new promissory note due January 31, 1997,
which note is subordinated to the National Westminster Bank loan
dated December 15, 1993. The new loan bears interest at the rate
of 7% per annum with interest payable quarterly.
During 1991, Joseph Saul loaned the Company an
aggregate of $1,070,000, $600,000 of which was repaid in December
1991 and $220,000 of which was repaid in December 1992. The
remaining $250,000 in loans outstanding consisted of a $250,000
long-term subordinated note due on January 1, 1994. The note
bore interest at the rate of 7 1/2% per annum with interest
payable quarterly. On December 14, 1993, Joseph Saul agreed to
replace the promissory note with a new promissory note due
January 31, 1997, which note is subordinated to the National
Westminster Bank loan dated December 15, 1993. The new loan
bears interest at the rate of 7% per annum with interest payable
quarterly.
On December 16, 1994, the Company loaned $600,000 to
Michael A. Warner, the President and a Director of the Company,
$170,000 to Roy Smith, Executive Vice President and a Director of
the Company, $80,000 to Thomas E. Reinckens, Vice President,
Chief Financial Officer and a Director of the Company, and
$63,000 to Karen Hubchik, Vice President of the Company, in each
case for personal reasons. All such loans are with full recourse
to the executive, payable on demand from the Company, secured by
a pledge of shares of the Company's Common Stock owned by such
executive and bear interest at a rate of 9% per annum. In
September 1995, Mr. Warner and Ms. Hubchik repaid all amounts outstanding
to the Company.
In December 1994, the Company repurchased all of its
outstanding Series A Preferred Stock at its liquidation value of
$1000 per share plus accrued dividends. Joseph E. Saul, a
Director of the Company, received $1,804,380 from the Company's
repurchase of shares of Series A Preferred Stock owned by him.
See Also "Executive Compensation--Compensation
Committee Interlocks and Insider Participation."
As of April 15, 1996, the Sauls beneficially owned in
the aggregate 5,765,629 shares of the Company's outstanding
Common Stock, representing approximately 63.42% of the Company's
outstanding Common Stock. See "Principal Shareholders and Share
Ownership by Management."
-15-
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP
BY MANAGEMENT
The following table sets forth certain information as
to the beneficial ownership of the Company's equity securities as
of April 15, 1996 by (i) each director or nominee of the Company,
(ii) each Named Executive Officer, (iii) each person who is known
to the Company to be the beneficial owner of more than 5% of the
Common Stock, and (iv) all executive officers and directors as a
group. Unless otherwise indicated, the beneficial ownership for
each person consists of the sole voting and sole investment power
with respect to all shares beneficially owned by him. For
purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares as of a given date
which such person has the right to acquire within 60 days after
such date. For purposes of computing the percentage of outstand
ing shares held by each person or group of persons named above on
a given date, any security which such person or persons has the
right to acquire within 60 days after such date is deemed to be
outstanding, but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person.
Percentage of
Number of Shares Outstanding Shares
Person and Address of Common Stock of Common Stock
- - - - ----------------------- ----------------- -------------------
Andrew M. Saul
630 Fifth Avenue
New York, NY 10111 (1) 5,765,629 63.42%
Mark E. Goldberg
225 Broadway
New York, NY 10067 9,425 Less than 1%
Joseph E. Saul
630 Fifth Avenue
New York, NY 10111 (2) 5,765,629 63.42%
Morton J. Schrader
733 Park Avenue
New York, NY 10021 5,000 Less than 1%
Trust f/b/o
Jennifer B. Saul
pursuant to Trust
Agreement dated
March 28, 1995
630 Fifth Avenue
New York, NY 10111 (3) 756,314 8.32%
Trust f/b/o
Kimberly E. Saul
pursuant to Trust
Agreement dated
March 28, 1995
630 Fifth Avenue
New York, NY 10111 (3) 756,314 8.32%
-16-
Percentage of
Number of shares Outstanding Shares
Person and Address Outstanding Shares of Common Stock
- - - - ----------------------- ------------------ --------------------
Jane Saul Berkey
Cache, Inc.
1460 Broadway
New York, NY 10036 (4) 463,046 5.09%
Roy C. Smith
Cache, Inc.
1460 Broadway
New York, NY 10036 85,000 Less than 1%
Thomas E. Reinckens
Cache, Inc.
1460 Broadway
New York, NY 10036 41,500 Less than 1%
Mae Soo Hoo
Cache, Inc.
1460 Broadway
New York, NY 10036 41,731 Less than 1%
All Current
Executive Officers
and Directors as a
Group (nine persons) 5,948,285 65.43%
_________________________
(1) Represents shares beneficially owned by the group consisting
of Messrs. Andrew Saul, Joseph Saul and the Trusts (defined
below) according to a Schedule 13D, as amended, filed by the
group with the Securities and Exchange Commission. Mr.
Andrew Saul may be deemed to beneficially own 2,891,218
shares of Common Stock, representing approximately 31.80% of
the outstanding shares of Common Stock, consisting of (i)
2,585,158 shares of Common Stock owned by Andrew M. Saul,
(ii) 140,530 shares of Common Stock owned by Trust f/b/o
Kimberly E. Saul, pursuant to Trust Agreement dated December
18, 1984, of which Andrew Saul is a trustee, (iii) 140,530
shares of Common Stock owned by Trust f/b/o Jennifer B.
Saul, pursuant to Trust Agreement dated December 18, 1984,
of which Andrew Saul is a trustee, and (iv) 25,000 shares of
Common Stock owned by the Andrew and Denise Saul Foundation,
of which Andrew Saul, his wife Denise and Sidney Silberman
comprise the Board of Directors and Andrew Saul is its
President. The trusts described in clauses (ii) and (iii)
of this footnote (1) and in clauses (ii) and (iii) of
footnote (2) are collectively referred to herein as the
"Trusts." Joseph E. Saul and Andrew M. Saul (who are father
and son) and the Trusts have an informal arrangement under
which they have agreed to vote and dispose of their shares
together. Andrew Saul disclaims beneficial ownership of the
shares not directly owned by him.
-17-
(2) Represents shares beneficially owned by the group consisting
of Messrs. Andrew Saul, Joseph Saul and the Trusts,
according to a Schedule 13D, as amended, filed by the group
with the Securities and Exchange Commission. Mr. Joseph
Saul may be deemed to beneficially own 2,874,411 shares of
Common Stock, representing approximately 31.62% of the
outstanding shares of Common Stock, consisting of (i)
1,254,283 shares of Common Stock owned by Joseph E. Saul,
(ii) 756,314 shares of Common Stock owned by Trust f/b/o
Jennifer B. Saul, pursuant to Trust Agreement dated March
28, 1985, of which Joseph Saul is a trustee, (iii) 756,314
shares of Common Stock owned by Trust f/b/o Kimberly E.
Saul, pursuant to Trust Agreement dated March 28, 1985, of
which Joseph Saul is a trustee, and (iv) 107,500 shares of
Common Stock owned by the Joseph E. and Norma G. Saul
Foundation, of which Joseph Saul, his wife Norma, and Sidney
Silberman comprise the Board of Directors and Joseph Saul is
its President. Joseph Saul and Andrew Saul (who are father
and son) and the Trusts have an informal arrangement under
which they have agreed to vote and dispose of their shares
together. Joseph Saul disclaims beneficial ownership of the
shares not directly owned by him.
(3) The trust f/b/o Jennifer B. Saul and the Trust f/b/o
Kimberly E. Saul each own 756,314 shares of Common Stock.
Joseph E. Saul, his wife Norma Saul and Sidney J. Silberman,
Esq., are trustees of such trusts.
(4) Jane Saul Berkey is the daughter of Mr. Joseph Saul and the sister of Mr.
Andrew Saul.
-18-
RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN & CO. AS AUDITORS
(Proposal 2)
The Board of Directors has appointed the firm of Arthur
Andersen LLP to examine the financial statements of the Company
for the year ending December 28, 1996, subject to ratification by
shareholders. Arthur Andersen & Co. was employed by the Company
as its independent auditors for Fiscal 1995. Shareholders are
asked to ratify the action of the Board of Directors in making
such appointment.
Representatives of Arthur Andersen & Co. will attend
the Annual Meeting. They also will have the opportunity to make
a statement if they desire to do so and will be available to
respond to appropriate questions.
The Board of Directors recommends a vote for
ratification. The affirmative vote of a majority of the votes
cast with respect to this proposal is required for the
ratification of the appointment of auditors. The Sauls intend to
vote shares of Common Stock they own in favor of Proposal 2 and
the vote of such shares will be sufficient to obtain the required
shareholder approval.
OTHER BUSINESS
Management knows of no business to be brought before
the meeting other than Proposals 1 and 2 in the Notice of Annual
Meeting. If any other proposals come before the meeting, it is
intended that the shares represented by Proxies shall be voted in
accordance with the judgment of the person or persons exercising
the authority conferred by the Proxies.
Financial statements of the Company, the Company's
certified public accountants' report thereon and management's
discussion and analysis of the Company's financial condition and
results of operations are contained in the Company's 1995 Annual
Report to Shareholders, a copy of which has been sent to each
shareholder of record along with a copy of this Proxy Statement.
The Annual Report is not to be regarded as proxy soliciting
material or a communication by means of which any solicitation is
to be made.
-19-
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at
the next Annual Meeting (to be held in 1997) must be received by
the Company on or before January 3, 1997 in order to be included
in the Proxy Statement and Proxy for that meeting. The mailing
address of the Company for submission of any such proposal is
given on the first page of the Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
THEREFORE, SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND RETURN
THE PROXY CARD AS SOON AS POSSIBLE, WHETHER OR NOT THEY EXPECT TO
ATTEND THE 1996 ANNUAL MEETING IN PERSON.
By Order of the Board of Directors,
/s/ Victor J. Coster
-----------------------------------
VICTOR J. COSTER
Secretary
-20-