SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
G-III APPAREL GROUP, LTD.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to 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 applies:
.......................................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
.......................................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................................
(5) Total fee paid:
.......................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................................
(3) Filing Party:
.......................................................................
(4) Date Filed:
.......................................................................
[Logo]
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held on Thursday, June 20, 1996 at 10:00 A.M., Eastern
Standard Time, at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue,
31st Floor, New York, New York 10103.
The formal Notice of Meeting and the accompanying Proxy Statement set forth
proposals for your consideration this year. You are being asked to elect
directors and to ratify the appointment of Grant Thornton LLP as the independent
certified public accountants of the Company.
At the meeting, the Board of Directors will also report on the affairs of
the Company, and a discussion period will be provided for questions and comments
of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date and mail, at your earliest convenience, the enclosed
proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
/s/ MORRIS GOLDFARB
President and Chief Executive Officer
May 22, 1996
G-III APPAREL GROUP, LTD.
345 WEST 37TH STREET
NEW YORK, NEW YORK 10018
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 20, 1996
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of G-III
Apparel Group, Ltd. (the 'Company') will be held on Thursday, June 20, 1996 at
10:00 A.M., Eastern Standard Time, at the offices of Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, 31st Floor, New York, New York 10103, for the
following purposes:
(1) To elect nine directors to serve for the ensuing year.
(2) To consider and act upon a proposal to ratify the appointment of
Grant Thornton LLP as the Company's independent certified public
accountants for the fiscal year ending January 31, 1997.
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on May 8, 1996 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. HOWEVER, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY
AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. No postage is required if the
proxy is mailed in the United States. Stockholders who attend the Annual Meeting
may revoke their proxy and vote their shares in person.
By Order of the Board of Directors
ALAN FELLER
Secretary
New York, New York
May 22, 1996
G-III APPAREL GROUP, LTD.
345 WEST 37TH STREET
NEW YORK, NEW YORK 10018
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PROXY STATEMENT
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GENERAL INFORMATION
GENERAL
This Proxy Statement (first mailed to stockholders on or about May 22,
1996) is furnished to the holders of Common Stock, par value $.01 per share (the
'Common Stock'), of G-III Apparel Group, Ltd. (the 'Company') in connection with
the solicitation by the Board of Directors of the Company of proxies for use at
the Annual Meeting of Stockholders (the 'Annual Meeting'), or at any adjournment
thereof, pursuant to the accompanying Notice of Annual Meeting of Stockholders.
The Annual Meeting will be held on Thursday, June 20, 1996, at 10:00 A.M.,
Eastern Standard Time, at the offices of Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, 31st Floor, New York, New York 10103.
It is proposed that at the Annual Meeting: (i) nine directors will be
elected and (ii) the appointment of Grant Thornton LLP as the independent
certified public accountants of the Company for the fiscal year ending January
31, 1997 will be ratified.
Management currently is not aware of any other matters which will come
before the Annual Meeting. If any other matters properly come before the Annual
Meeting, the persons designated as proxies intend to vote in accordance with
their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be solicited chiefly by mail; however,
certain officers, directors, employees and agents of the Company, none of whom
will receive additional compensation therefor, may solicit proxies by telephone,
telegram or other personal contact. The Company will bear the cost of the
solicitation of the proxies, including postage, printing and handling, and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
material to beneficial owners of shares of Common Stock.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. Unless otherwise indicated on the form of proxy, shares of
Common Stock represented by any proxy in the enclosed form, assuming the proxy
is properly executed and received by the Company prior to the Annual Meeting,
will be voted with respect to the following items on the agenda: (i) the
election of each of the nominees for director as shown on the form of proxy and
(ii) the appointment of Grant Thornton LLP as the independent certified public
accountants of the Company.
Stockholders may revoke the authority granted by their execution of a proxy
at any time prior to the effective exercise of the powers conferred by that
proxy, by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of Common Stock represented by executed and unrevoked
proxies will be voted in accordance with the instructions specified in such
proxies. If no specifications are given, the proxies
intend to vote the shares represented thereby 'for' the election of each of the
nominees for director as shown on the form of proxy and 'for' the ratification
of the appointment of Grant Thornton LLP as the independent certified public
accountants of the Company, and in accordance with their best judgment on any
other matters which may properly come before the meeting.
RECORD DATE AND VOTING RIGHTS
On May 8, 1996, there were 6,465,836 shares of Common Stock outstanding,
each of which shares is entitled to one vote upon each of the matters to be
presented at the Annual Meeting. Only stockholders of record at the close of
business on May 8, 1996 are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. The holders of a majority of the outstanding
shares of Common Stock, present in person or by proxy and entitled to vote, will
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will
be counted for purposes of determining the presence or absence of a quorum, but
will not be counted with respect to the specific matter being voted upon.
'Broker non-votes' are shares held by brokers or nominees which are present in
person or represented by proxy, but which are not voted on a particular matter
because instructions have not been received from the beneficial owner.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting is required for
the ratification of the appointment of Grant Thornton LLP.
2
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of April 1, 1996 (except as
otherwise noted in the footnotes) regarding the beneficial ownership of the
Company's Common Stock of: (i) each person known by the Company to own
beneficially more than five percent of the outstanding Common Stock; (ii) each
director and nominee for director of the Company; (iii) each executive officer
named in the Summary Compensation Table (see 'Executive Compensation' below);
and (iv) all directors and executive officers of the Company as a group. Except
as otherwise specified, the named beneficial owner has the sole voting and
investment power over the shares listed.
AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNERSHIP OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
------------------------------------ ----------------------- ------------
Aron Goldfarb(1)...................................................... 1,189,816(2) 18.1%
Morris Goldfarb(1).................................................... 2,127,349(3) 32.3%
Lyle Berman .......................................................... 307,049(4) 4.7%
433 Bushaway Road
Wayzata, MN 55391
Thomas J. Brosig ..................................................... 7,350(5) *
4695 Forestview Lane
Plymouth, MN 55442
Alan Feller(1)........................................................ 33,175(6) *
Carl Katz(1).......................................................... 35,750(7) *
Willem van Bokhorst .................................................. 4,460(8) *
c/o Smeets Thesseling van Bokhorst Spigt
805 Third Avenue
New York, NY 10022
Sigmund Weiss ........................................................ 12,875(9) *
c/o Green & Weiss
225 West 34th Street
New York, NY 10001
George J. Winchell ................................................... 1,250(10) *
c/o Sea Oaks
8785 Lakeside Boulevard
Vero Beach, FL 32963
Dimensional Fund Advisors Inc. ....................................... 388,640(11) 6.0%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Jeanette Nostra-Katz(1)............................................... 56,050(12) *
Keith S. Jones(1)..................................................... 54,275(13) *
All directors and executive officers as a group (16 persons).......... 3,888,849(14) 56.3%
- ------------
* Less than one percent.
(1) The address of such individual is c/o G-III Apparel Group, Ltd., 345 West
37th Street, New York, New York 10018.
(2) Includes 82,500 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(footnotes continued on next page)
3
(footnotes continued from previous page)
(3) Includes 133,000 Shares of Common Stock which may be acquired within 60
days upon the exercise of options.
(4) Includes 7,100 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(5) Includes 4,200 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(6) Includes 28,675 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(7) Includes 35,250 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(8) Includes an aggregate of 210 shares held by Mr. van Bokhorst's children.
Mr. van Bokhorst expressly disclaims beneficial ownership of these shares.
Also includes 1,250 shares of Common Stock which may be acquired within 60
days upon the exercise of options granted.
(9) Includes 11,300 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(10) Shares may be acquired within 60 days upon the exercise of options.
(11) Information is derived from the Schedule 13G, dated February 7, 1996 (the
'DFA Schedule 13G'), filed by Dimensional Fund Advisors Inc. ('DFA') with
the Commission. The DFA Schedule 13G states that DFA is deemed to have
beneficial ownership as of December 31, 1995 of 388,640 shares of the
Common Stock, all of which shares are owned by advisory clients of DFA, no
one of which, to the knowledge of DFA, owns more than 5% of the outstanding
Common Stock.
(12) Includes 55,550 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(13) Includes 26,275 shares of Common Stock which may be acquired within 60 days
upon the exercise of options.
(14) Includes an aggregate of 437,300 shares which may be acquired within 60
days upon the exercise of options.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Nine directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below (all of whom are currently directors of the
Company) to serve until the next annual meeting of stockholders and until their
respective successors shall have been duly elected and qualified. If any of
these nominees becomes unavailable for any reason, or if a vacancy should occur
before the election, the shares represented by the proxy will be voted for the
person, if any, who is designated by the Board of Directors to replace the
nominee or to fill the vacancy on the Board. All nominees have consented to be
named and have indicated their intent to serve if elected. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve or that any vacancy on the Board of Directors will occur.
4
The nominees, their respective ages, the year in which each first became a
director of the Company and their principal occupations or employment during the
past five years are as follows:
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- ---------- --------------------------
Morris Goldfarb.............. 45 1974 President and Chief Executive Officer of the Company. Served as
either President or Vice President of the Company and its
predecessors since its formation in 1974. Director of Grand
Casinos, Inc.
Aron Goldfarb................ 73 1974 Chairman of the Board of the Company. Served as either President
or Vice President of the Company and its predecessors since
its formation in 1974. As of January 1, 1995, Mr. Goldfarb
became a consultant to the Company.
Lyle Berman.................. 54 1989 Since February 1991, Chairman and Chief Executive Officer of
Grand Casinos, Inc. From July 1987 to January 1991, President
or Chairman of Berman Consulting Corporation. From March 1987
until November 1988, Chairman of the Board of Directors,
President and Chief Executive Officer of Bermans Specialty
Stores, Inc., a leather retailer. Chief Executive Officer and
Director of Stratosphere Corporation, a gaming company, since
1994. Director of Casino Data Systems, Casino Hospitality
Corp., Grand Casinos, Inc., Innovative Gaming Corporation of
America and Mississippi Gaming Development Corp.
Thomas J. Brosig............. 46 1992 Since August, 1994, Executive Vice President, Investor Relations
of Grand Casinos, Inc. From May 1993 to August 1994, President
of Grand Casinos, Inc. From February 1991 to May 1993, Chief
Operating Officer of Grand Casinos, Inc. Director of Grand
Casinos, Inc. and Game Financial Corporation.
Alan Feller.................. 54 1995 Executive Vice President, Treasurer and Secretary of the
Company. Mr. Feller has served as Chief Financial Officer of
the Company since January 1990 and Chief Operating Officer of
the Company since July 1995.
Carl Katz.................... 56 1989 Executive Vice President of the Siena Leather division ('Siena')
of the Company. Mr. Katz has been an executive of Siena since
1981.
Willem van Bokhorst.......... 50 1989 Partner in the Netherlands Antilles law firm of Smeets
Thesseling van Bokhorst Spigt for more than the past five
years.
Sigmund Weiss................ 75 1974 Certified public accountant since 1948. Operated a general
accounting practice for the past 35 years. Served as an
accountant for the Company since its inception.
George J. Winchell........... 70 1990 Retired as Senior Vice President of W.R. Grace & Co. in 1994.
Mr. Winchell joined W.R. Grace & Co. in 1949 and held
positions with the controller's office, the Specialty
Chemicals Group, the Office of the President and the Retail
Group.
5
Aron Goldfarb and Morris Goldfarb are father and son, respectively. Carl
Katz and Jeanette Nostra-Katz, Executive Vice President of the Company and of
Siena, are married to each other.
The Board of Directors of the Company has several committees, including an
Executive Committee, Audit Committee, Option Committee and Compensation
Committee. During the fiscal year ended January 31, 1996, each director in
office during such fiscal year attended not less than 75% of the aggregate
number of meetings of the Board of Directors and of meetings of committees of
the Board on which he served, except for Lyle Berman, Thomas J. Brosig, George
J. Winchell and Willem van Bokhorst, each of whom missed one meeting. The Board
of Directors held three meetings during the fiscal year ended January 31, 1996.
The Executive Committee, composed of Morris Goldfarb, Aron Goldfarb and
Carl Katz, is vested with the powers of the Board of Directors, to the fullest
extent permitted by law, between meetings of the Board.
The Audit Committee, composed of Lyle Berman, Sigmund Weiss and Willem van
Bokhorst, is charged with reviewing the Company's audit and meeting with the
Company's independent accountants to review the Company's internal controls and
financial management practices. The Audit Committee met once during the fiscal
year ended January 31, 1996, with all members of the Committee in attendance.
The Option Committee, composed of George Winchell and Willem van Bokhorst,
is empowered to oversee and make all decisions regarding the Company's 1989
Stock Option Plan (the 'Stock Option Plan'), functioning as the 'Committee'
under the Plan. The Option Committee acted by unanimous written consent two
times in the fiscal year ended January 31, 1996. The G-III Apparel Group, Ltd.
Stock Option Plan For Non-Employee Directors (the 'Non-Employee Directors Plan')
is administered by the Board of Directors.
The Compensation Committee, composed of Thomas J. Brosig and Sigmund Weiss,
is empowered to establish and review compensation practices and policies of the
Company. The Compensation Committee is empowered to recommend and/or set the
compensation for the executive officers and key employees of the Company as well
as authorize and approve employment agreements.
VOTE REQUIRED
The nine nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them
shall be elected as directors. Only votes cast for a nominee will be counted,
except that the accompanying proxy will be voted for all nominees in the absence
of instructions to the contrary. Abstentions, broker non-votes and instructions
on the accompanying proxy card to withhold authority to vote for one or more
nominees will not be counted as a vote for any such nominee.
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS DIRECTORS OF THE NINE NOMINEES
LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE 'FOR' THEIR ELECTION.
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Company's chief executive
officer and each of the four other most highly compensated executive officers
for the fiscal year ended January 31, 1996 for services in all capacities to the
Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) ------------
-------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(2) SALARY($) BONUS($) (#) COMPENSATION($)(3)
--------------------------- ------- -------- -------- ------------ ------------------
Morris Goldfarb ....................... 1996 $495,000 -- 25,000 $ 14,633
President and Chief Executive Officer 1995 $605,917 -- 140,500 $ 14,628
1994 $650,000 -- -- $ 14,628
Jeanette Nostra Katz .................. 1996 $220,673 $ 5,000 10,000 --
Executive Vice President 1995 $249,017 -- 12,500 --
1994 $250,000 $ 46,000 21,000 --
Michael Laskau ........................ 1996 $210,000 $ 20,800 5,000 --
Vice President-JL Colebrook Division 1995 $123,745 -- 12,500 --
of G-III Leather Fashions, Inc.(4) 1994 -- -- -- --
Alan Feller ........................... 1996 $192,019 $ 5,000 10,000 --
Executive Vice President, Treasurer 1995 $196,154 -- 12,000 --
and Secretary 1994 $200,000 $ 35,000 -- --
Keith S. Jones ........................ 1996 $180,000 $ 5,000 5,000 --
Vice President-Foreign Manufacturing 1995 $197,081 -- -- --
of G-III Leather Fashions, Inc. 1994 $147,624 $ 50,000 -- --
- ------------
(1) Amounts reflected do not include perquisites and other personal benefits
received by any named executive, which, in all instances, were less than the
lesser of $50,000 or 10% of the total of annual salary and bonus reported
for the named executive.
(2) Represents the fiscal year ended January 31 of that year.
(3) Amounts represent insurance premiums paid by the Company for term life
insurance for the benefit of the named executive's spouse.
(4) Mr. Laskau has been employed by the Company since July 1994.
7
The following table sets forth information on option grants in the fiscal
year ended January 31, 1996 to the persons named in the Summary Compensation
Table.
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED TO ANNUAL RATES OF
UNDERLYING EMPLOYEES EXERCISE STOCK PRICE
OPTIONS IN FISCAL PRICE EXPIRATION APPRECIATION FOR
NAME GRANTED YEAR(1) ($/SH) DATE OPTION TERM(2)
---- ---------- ----------- -------- ------------- --------------------
5% 10%
------- --------
Morris Goldfarb................. 25,000 26.3% $2.75 Dec. 11, 2005 $43,250 $109,500
Jeanette Nostra-Katz............ 10,000 10.5% $2.75 Dec. 11, 2005 $17,300 $ 43,800
Michael Laskau.................. 5,000 5.3% $2.75 Dec. 11, 2005 $ 8,650 $ 21,900
Alan Feller..................... 10,000 10.5% $2.75 Dec. 11, 2005 $17,300 $ 43,800
Keith S. Jones.................. 5,000 5.3% $2.75 Dec. 11, 2005 $ 8,650 $ 21,900
- ------------
(1) Based upon options to purchase 95,000 shares granted to all employees in the
fiscal year ended January 31, 1996.
(2) These amounts represent assumed rates of appreciation in the price of the
Common Stock during the terms of the options in accordance with rates
specified in applicable Federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the Common
Stock and overall market conditions. There is no representation that the
rates of appreciation reflected in this table will be achieved.
The following table sets forth information with respect to unexercised
stock options held at January 31, 1996 by the persons named in the Summary
Compensation Table. There were no exercises of options to purchase the Common
Stock by such individuals during the fiscal year ended January 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END FISCAL YEAR END($)(1)
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCIABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- -------------
Morris Goldfarb........................................ 133,000 111,250 $94,500 $78,594
Jeanette Nostra-Katz................................... 55,550 38,925 $48,606 $26,560
Michael Laskau......................................... 4,500 13,000 $ 3,938 $ 7,625
Alan Feller............................................ 28,675 22,200 $25,091 $11,925
Keith S. Jones......................................... 26,275 19,100 $22,991 $12,963
- ------------
(1) Computed based on the difference between the last sale price per share of
the Common Stock of $2.875 on January 31, 1996 and the exercise price.
8
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Morris Goldfarb effective
through January 31, 1997. The agreement renews annually unless either party
notifies the other of its or his intent not to renew within 90 days of the
scheduled termination date thereof. The agreement provides for a base annual
salary of $650,000, with increases at the discretion of the Board of Directors.
Mr. Goldfarb is currently being paid at the rate of $495,000 per year pursuant
to his voluntarily agreeing to a reduction in his salary. The agreement also
provides for a $2,000,000 life insurance policy which names Mr. Goldfarb's wife
as beneficiary and an annual incentive bonus equal to varying percentages of
pre-tax income (as defined in the employment agreement) if pre-tax income
exceeds $2,000,000. The percentages vary from 3% of pre-tax income in excess of
$2,000,000 up to 6% of pre-tax income in excess of $2,000,000 if pre-tax income
exceeds $4,000,000. Pursuant to the agreement, the Company will contribute
$50,000 per year to a supplemental pension trust for Mr. Goldfarb's benefit for
each year in which net after-tax income (as defined in the employment agreement)
exceeds $1,500,000. In addition, pursuant to the employment agreement, in the
event that Morris Goldfarb's employment is terminated (i) by the Company without
cause or (ii) by Morris Goldfarb because of a material breach by the Company of
the agreement, in either case at any time after a 'Change in Control' (as
defined in the agreement), then Mr. Goldfarb will be entitled to receive from
the Company, in general, (a) an amount equal to 2.99 times his base salary and
bonus, as well as (b) certain employment-related benefits for a period of three
years from the date of his termination.
The Company has a severance agreement with Aron Goldfarb which provided for
the termination of Aron Goldfarb's employment with the Company, effective
January 1, 1995, and for the payment for the two-year period commencing on
January 1, 1995 (the 'Severance Period') of base annual payments of $125,000,
payable in accordance with the Company's customary payroll policy. Pursuant to
the agreement, during the Severance Period, the Company will continue to provide
Aron Goldfarb with medical insurance and certain other enumerated benefits.
Additionaly, Mr. Goldfarb acts as a consultant to the Company and is paid at the
rate of $1,000 per month for services rendered in such capacity.
The Company has an agreement with Alan Feller, providing for the payment to
Mr. Feller of a base annual salary of $160,000. Mr. Feller, who became chief
operating officer of the Company in July 1995, is currently being paid at the
rate of $205,000 per year. The agreement also provides for the continued payment
to Mr. Feller of his salary for a period of one year (or until Mr. Feller gains
satisfactory comparable employment, if a lesser period), in the event he is
terminated for other than 'cause' (as specified in the agreement).
COMPENSATION OF DIRECTORS
Directors who are not employees or consultants of the Company receive
$5,000 per year, in addition to $500 for each meeting of the Board attended and
$500 for each meeting of each Committee of the Board attended, plus
reimbursement of reasonable out-of-pocket expenses incurred in connection with
attendance at Board of Directors' meetings.
In December, 1995, Thomas J. Brosig, a director of the Company, was granted
options to purchase 5,000 shares of Common Stock at a price of $2.75 per share,
the closing price of the Common Stock on the date of grant. One half of the
shares subject to the option vests six months after the date of grant and the
balance vests one year after the date of grant. The options are exercisable for
ten years from the date of grant. These options were granted in recognition of
Mr. Brosig's participation in assisting senior management with strategic
planning.
9
Non-Employee Directors Plan
Pursuant to the Non-Employee Directors Plan, the Company automatically
grants options on an annual basis to members of its Board of Directors who are
not also employees of, or consultants to, the Company (a 'Non-Employee
Director'). A maximum of 30,000 shares of Common Stock may be issued under the
Non-Employee Directors Plan. Each Non-Employee Director is automatically granted
an option to purchase 1,000 shares of the Company's Common Stock on the day
after each annual meeting of the Company's stockholders (each, a 'Grant Date').
All options are exercisable at a per share exercise price equal to the closing
sales price of a share of Common Stock on the Grant Date. The Plan will
terminate on June 25, 2001, unless sooner terminated by the Board.
In general, an option granted under the Non-Employee Directors Plan becomes
exercisable in equal increments of 200 shares on each of the first through fifth
anniversaries of the date the option is granted, and subject to the foregoing,
may be exercised during the ten-year period from the date the option is granted.
However, a Non-Employee Director who ceases to perform services for the Company
will have three months (one year in the case of termination by reason of death
or total disability) to exercise such person's options, but only to the extent
otherwise exercisable under the vesting schedule.
The Non-Employee Directors Plan is administered by the Board of Directors
of the Company. The Board of Directors may amend the Non-Employee Directors
Plan, except that, in general, any amendment which would increase the aggregate
number of shares of Common Stock as to which options may be granted under the
Plan, materially increase the benefits under the Plan, or modify the class of
persons eligible to receive options under the Plan, requires the approval of the
Company's stockholders.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee, consisting of Thomas J. Brosig and
Sigmund Weiss, was established in March 1994. Prior to the establishment of the
Compensation Committee, the Board of Directors administered the Company's
executive compensation programs, monitored corporate performance and its
relationship to compensation of executive officers, and made appropriate
decisions concerning matters of executive compensation. The Company's
compensation policies have evolved over the years since the Company's initial
public stock offering in December 1989. At the time of the public offering and
periodically since then, the compensation levels of the Company's executive
officers were reviewed and compared to officers of other publicly held apparel
companies. The Stock Option Plan is considered an integral part of the Company's
incentive compensation. The Stock Option Plan is administered by the Option
Committee, which is composed of Willem van Bokhorst and George J. Winchell.
One of the Company's strengths is a strong management team. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who contribute to the Company's success. Equity
participation and a strong alignment to stockholders' interests are key elements
of the Company's compensation philosophy. The Company's executive compensation
policies are intended to (i) attract and retain the most highly qualified
managerial and executive talent; (ii) afford appropriate incentives to produce
superior performance; (iii) emphasize sustained performance by aligning rewards
with stockholder interests; (iv) motivate executives and employees to achieve
the Company's annual and long-term business goals; and (v) reward executives for
superior individual contributions to the Company. To implement these policies,
the Board designed an executive
10
compensation program consisting, in general, of base salary, performance-based
incentive compensation and stock options.
Base Salary. Base salaries reflect individual responsibilities, experience,
leadership and contribution to the success of the Company. Prior to the fiscal
year ended January 31, 1995 ('fiscal 1995'), annual salary adjustments had
previously been determined by evaluating the performance of the executive and
any increased responsibilities assumed by the executive, the performance of the
Company and the competitive marketplace. During fiscal 1995, however, the
Company reduced the salaries of its mid-level and senior executives in
connection with a review of operating expenses in light of the difficult
business climate faced by the Company. In the fiscal year ended January 31, 1996
('fiscal 1996'), the Company generally maintained salaries at fiscal 1995 levels
except for a limited number of increases based on individual merit or a
significant increase in responsibility.
Annual Bonuses and Incentive Compensation Program. Historically, the
Company's executives, other than Morris Goldfarb, were eligible to receive a
discretionary bonus, determined by Mr. Goldfarb, based on an evaluation of
individual performance and overall Company earnings. The Compensation Committee,
after consultation with the Board of Directors, determined that a bonus plan
with specified goals and objectives better served the Company's needs.
Accordingly, commencing with fiscal 1996, the Company's executive officers,
other than Morris Goldfarb, were entitled to receive an annual bonus under an
Incentive Compensation Program. Under this program, bonuses for merchandise
division officers and key personnel are based 50% on targeted division
performance and 50% on targeted overall Company performance, while bonuses for
administrative officers and key personnel are based solely on targeted overall
Company performance. Officers are entitled to bonuses of up to 15% of base
salary if targets are met and up to 20% of base salary if targets are exceeded
by at least 25%. The purpose of this program is to more directly and objectively
incentivize and reward key personnel. The targeted levels of performance were
met by certain divisions in fiscal 1995. However, it was determined that due to
the extraordinary level of effort of Company personnel which resulted in
significant improvements in fiscal 1996 compared to fiscal 1995, it would be
appropriate to pay bonuses ranging from one week's salary to $5,000 to many
Company personnel as well. Mr. Goldfarb has a performance-based incentive bonus
provision in his employment agreement. This incentive provision is intended to
recognize Mr. Goldfarb's unique role in overall management and corporate
strategy and provide incentive compensation based on overall performance by the
Company. No bonus was paid to Mr. Goldfarb in fiscal 1996 under the terms of
this provision.
Stock Options. The Compensation Committee endorses the position that equity
ownership by management is beneficial in aligning management's and stockholders'
interests in the enhancement of stockholder value and, accordingly, endorses the
stock option plan currently in place. Stock option awards provide a long-term
view and incentives tied to growth in stockholder values. The Committee strongly
believes that the compensation program should provide employees with an
opportunity to increase their ownership and potentially gain financially from
Company stock price increases. By this approach, the best interests of
stockholders, executives and employees will be closely aligned.
The Committee believes that the use of stock options as the basis for
long-term incentive compensation meets the Company's compensation strategy and
business needs of the Company by
11
achieving increased value for stockholders and retaining key employees. The
Committee intends to work closely with the Option Committee to achieve these
goals.
COMPENSATION COMMITTEE OPTION COMMITTEE
Thomas J. Brosig Willem van Bokhorst
Sigmund Weiss George J. Winchell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Morris Goldfarb, President, Chief Executive Officer and director of the
Company is a director of Grand Casinos, Inc. Thomas J. Brosig, a director of the
Company, is a director of Grand Casinos, Inc. and is also the Executive Vice
President, Investor Relations for Grand Casinos, Inc. Mr. Brosig served as
Executive Vice President of Administration and Finance of the Company from
August 1989 through March 1990.
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock with
the cumulative total stockholder return of (i) a broad equity market index and
(ii) a published industry index or peer group. This chart compares the Common
Stock with (i) the S&P 500 Composite Index and (ii) the S&P Textiles Index, and
assumes an investment of $100 on January 31, 1991 in each of the Common Stock,
the stocks comprising the S&P 500 Composite Index and the stocks comprising the
S&P Textile Index.
G-III APPAREL GROUP, LTD.
COMPARISON OF CUMULATIVE TOTAL RETURN
(JANUARY 31, 1991-JANUARY 31, 1996)
[PERFORMANCE GRAPH]
G-III $100.00 $135.00 $190.00 $ 80.00 $ 33.00 $ 58.00
S&P 500 $100.00 $128.00 $134.00 $145.00 $145.00 $195.00
S&P TEXTILE $100.00 $136.00 $141.00 $ 99.00 $ 97.00 $108.00
1/31/91 1/31/92 1/31/93 1/31/94 1/31/95 1/31/96
12
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, the Company's directors, executive officers and
beneficial owners of more than ten percent of the Company's Common Stock are in
compliance with the reporting requirements of Section 16(a) under the Securities
Exchange Act of 1934, as amended.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1986, the New York City Industrial Development Agency ('IDA')
issued $1,442,000 of floating rate Industrial Development Revenue Bonds to a
commercial bank for the purpose of acquiring and renovating real property
located at 345 West 37th Street in New York City (the '345 Property').
Simultaneously, the IDA leased the 345 Property for a term of 15 years to 345
West 37th Corp. ('345 Corp.'), a company owned and managed by Morris and Aron
Goldfarb, for sublease to a subsidiary of the Company as its headquarters.
Monthly rental payments are due under the sublease in an amount equal to the
aggregate of all amounts due under the bonds (including principal, redemption
premium, if any, and interest), plus real estate taxes and building operating
expenses. Two of the Company's subsidiaries and Morris and Aron Goldfarb
(collectively, the 'Guarantors'), have jointly and severally guaranteed the
payments and obligations under the lease and the payment of principal and
interest on the bonds.
In April 1988, 345 Corp. received a loan in the principal amount of
$1,153,000 from the New York Job Development Authority (the 'Authority'), to
assist 345 Corp. in its renovation of the 345 Property. The loan, which is
financed by long-term bonds issued by the Authority, is for a period of 15 years
and is repayable in principal installments of $10,689 monthly, plus interest at
a variable rate, not to exceed 1 1/2% above the Authority's cost of the funds
loaned. At January 31, 1996, the interest rate on and the outstanding principal
amount of the loan were 8.25% and approximately $732,200, respectively. Each of
the Guarantors has guaranteed the loan.
Each of Morris Goldfarb and Aron Goldfarb have jointly and severally
guaranted up to $2.5 million of the Company's bank debt. In consideration for
these guarantees, in June 1994, the Company granted to each of Morris Goldfarb
and Aron Goldfarb ten-year options to purchase 25,000 shares of Common Stock at
$5.50 per share and 25,000 shares of Common Stock at $6.50 per share. One-half
of the options at each price are currently exercisable and the balance of the
options have expired by their terms. Additionally, Morris Goldfarb has pledged
250,000 shares of the Common Stock owned by him as additional security for the
Company's bank debt.
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Grant Thornton
LLP as the independent certified public accountants of the Company for the
fiscal year ending January 31, 1997. Grant Thornton LLP audited the financial
statements of the Company for the fiscal year ended January 31, 1996. A
representative of Grant Thornton LLP is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if such person desires to
do so and is expected to be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE 'FOR' APPROVAL THEREOF.
13
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the Annual
Meeting of Stockholders of the Company to be held in 1997 must be received by
the Company no later than January 22, 1997 for inclusion in the Board of
Directors' proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
ALAN FELLER
Secretary
Dated: May 22, 1996
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: G-III APPAREL GROUP,
LTD., ATTENTION: CORPORATE SECRETARY, 345 WEST 37TH STREET, NEW YORK, NEW YORK
10018.
14
APPENDIX I--PROXY
G-III APPAREL GROUP, LTD.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 20, 1996
The undersigned, a stockholder of G-III Apparel Group, Ltd. (the
'Corporation'), hereby constitutes and appoints Morris Goldfarb, Aron Goldfarb
and Alan Feller and each of them, the true and lawful proxies and
attorneys-in-fact of the undersigned, with full power of substitution in each of
them, to vote all shares of Common Stock of the Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Corporation to be held on Thursday, June 20, 1996, and at any and all
adjournments or postponements thereof, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR the nominees listed below (except as marked [ ] WITHHOLDING AUTHORITY to vote for
to the contrary below) all the nominees listed below
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Nominees: Morris Goldfarb, Aron Goldfarb, Lyle Berman, Thomas J. Brosig, Alan
Feller, Carl Katz, Willem van Bokhorst, Sigmund Weiss and George J.
Winchell
2. PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion upon such other business as may properly come before
the meeting and any and all adjournments and postponements thereof.
(Continued on reverse side.)
(Continued)
Shares represented by this Proxy will be voted in accordance with the
instructions indicated in items 1 and 2 above. IF NO INSTRUCTION IS INDICATED,
THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES FOR DIRECTORS AND FOR PROPOSAL
2.
Any and all proxies heretofore given by the undersigned are hereby revoked.
Dated: ___________________________
__________________________________
__________________________________
Please sign exactly as your
name(s) appear hereon. If shares
are held by two or more persons
each should sign. Trustees,
executors and other fiduciaries
should indicate their capacity.
Shares held by corporations,
partnerships, associations, etc.
should be signed by an authorized
person, giving full title or
authority.
PLEASE DATE, SIGN AND MAIL IN THE ENCLOSED REPLY ENVELOPE