SCHEDULE 14A INFORMATION
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MARISA CHRISTINA, INCORPORATED
(Name of Registrant as Specified in its Charter)
MARISA CHRISTINA, INCORPORATED
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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:
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:
MARISA CHRISTINA, INCORPORATED
8101 Tonnelle Avenue
North Bergen, New Jersey 07047
April 9, 2004
Dear Stockholder:
You are cordially invited to attend the 2004 Annual Meeting of
Stockholders of Marisa Christina, Incorporated (the "Company"). This meeting
will be held at the offices of Mayer, Brown, Rowe & Maw LLP, 1675 Broadway, New
York City, New York at 10:00 AM, local time, on May 11, 2004.
At the meeting, you are being asked to (i) elect eight directors to the
Company's Board of Directors, each for one-year terms expiring at the 2005
Annual Meeting of Stockholders, and (ii) ratify the appointment of KPMG LLP as
independent public accountants for the Company.
The Board of Directors has unanimously approved these proposals and I urge
you to vote in favor of these proposals and the other matters submitted to you
for a vote at the meeting.
Your vote is very important and I hope you will be able to attend the
meeting. To ensure your representation at the meeting, even if you anticipate
attending in person, I urge you to mark, sign, date and return the enclosed
proxy card. If you attend, you will, of course, be entitled to vote in person.
Sincerely,
/s/ MICHAEL H. LERNER
--------------------------
MICHAEL H. LERNER
Chairman of the Board,
Chief Executive Officer
and President
MARISA CHRISTINA, INCORPORATED
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Marisa Christina, Incorporated:
The 2004 Annual Meeting of Stockholders (the "Annual Meeting") of Marisa
Christina, Incorporated, (the "Company") a Delaware corporation, will be held at
the offices of Mayer, Brown, Rowe & Maw LLP, 1675 Broadway, New York City, New
York, on May 11, 2004 at 10:00 AM, local time, for the following purposes:
(1) To elect eight directors to the Company's Board of Directors, each
to hold office until their successors are elected at the 2005 Annual
Meeting of Stockholders;
(2) To ratify the appointment of KPMG LLP as independent public
accountants for the Company for the fiscal year ending December 31,
2004; and
(3) To transact such other business as may properly be presented at the
Annual Meeting or any adjournment thereof.
A proxy statement with respect to the Annual Meeting accompanies and forms
a part of this Notice. The Annual Report of the Company for the fiscal year
ended December 31, 2003 also accompanies this Notice.
The Board of Directors have fixed the close of business on April 2, 2004
as the record date for determining stockholders entitled to notice of, and to
vote at, the Annual Meeting.
By order of the Board of Directors,
/s/ S. E. MELVIN HECHT
----------------------------
S. E. MELVIN HECHT
Assistant Secretary
North Bergen, New Jersey
April 9, 2004
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING.
MARISA CHRISTINA, INCORPORATED
8101 TONNELLE AVENUE
NORTH BERGEN, NEW JERSEY 07047
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board of Directors") of Marisa Christina,
Incorporated, (the "Company") a Delaware corporation, of proxies for use at the
2004 Annual Meeting (the "Annual Meeting") of Stockholders of the Company to be
held on May 11, 2004, and any adjournment thereof. This Proxy Statement and
accompanying form of proxy are first being mailed to stockholders on or about
April 9, 2004.
VOTING SECURITIES; PROXIES; REQUIRED VOTE
VOTING SECURITIES
The Board of Directors has fixed the close of business on April 2, 2004 as
the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, the Company had outstanding 7,295,065 shares of common stock, par value
$.01 per share ("Common Stock"). Holders of Common Stock are entitled to notice
of and to vote, one vote per share of Common Stock owned as of the Record Date
at the Annual Meeting.
PROXIES
Michael H. Lerner and S.E. Melvin Hecht, the persons named as proxies on
the proxy card accompanying this Proxy Statement, were selected by the Board of
Directors of the Company to serve in such capacity. Mr. Lerner is Chairman,
Chief Executive Officer and President of the Company and Mr. Hecht is the
Company's Vice Chairman, Chief Financial Officer, Treasurer and Assistant
Secretary. Each executed and returned proxy will be voted in accordance with the
directions indicated thereon, or if no direction is indicated, such proxy will
be voted in accordance with the recommendations of the Board of Directors
contained in this Proxy Statement. Each stockholder giving a proxy has the power
to revoke it at any time before the shares it represents are voted. Revocation
of a proxy is effective upon receipt by the Secretary of the Company of either
(i) an instrument revoking the proxy or (ii) a duly executed proxy bearing a
later date. Additionally, a stockholder may change or revoke a previously
executed proxy by voting in person at the Annual Meeting.
REQUIRED VOTE
The holders of at least one-third of the outstanding shares of Common
Stock represented in person or by proxy will constitute a quorum at the Annual
Meeting. At the Annual Meeting, the vote of a majority in interest of the
stockholders present in person or by proxy and entitled to vote thereon is
required to elect directors and to ratify the appointment of KPMG LLP as
independent public accountants for the Company for the fiscal year ending
December 31, 2004.
1
The election inspectors appointed for the meeting will tabulate the votes
cast in person or by proxy at the Annual Meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the stockholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
PROPOSAL 1:
ELECTION OF DIRECTORS
Each director of the Company holds office until his or her successor is
duly elected and qualified unless or until his or her earlier death,
resignation, retirement, disqualification or removal.
The nominees for whom the enclosed proxy is intended to be voted are set
forth below. Each nominee for election as director currently serves as a
director of the Company. It is not contemplated that any of these nominees will
be unavailable for election, but if such a situation should arise, the proxy
will be voted in accordance with the best judgment of the proxyholder for such
person or persons as may be designated by the Board of Directors unless the
stockholder has directed otherwise.
NOMINEES FOR ELECTION AS DIRECTORS BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
---- --- ---------------------
Michael H. Lerner .............. 59 Mr. Lerner joined the Company in August 1986, and has
served as Chief Executive Officer, President and Chairman
of the Board since that time. Prior to joining the Company,
Mr. Lerner was President of TFM Industries, Inc.
("TFM"), a maker of moderate sportswear. He is also a
director of Apparel Ventures, Inc., an affiliate of The
Jordan Company, as well as a director of Educational
Housing Services, Inc.
S.E. Melvin Hecht, C.P.A ....... 69 Mr. Hecht joined the Company in December 1993, and has
served as Chief Financial Officer and Treasurer since that
time. In April 1999, he was also named Vice Chairman of
the Board of Directors. From 1978 until 1991, Mr. Hecht
was a partner at Hertz, Herson & Company, certified public
accountants and, since 1991, had served as a financial
consultant to various companies. Prior to 1978, Mr. Hecht
was an Executive Office Partner at Touche Ross & Co., a
predecessor company to Deloitte & Touche, LLP.
G. Michael Dees ................ 50 Mr. Dees joined the Company in September 1986, and has
served as a director of the Company and Executive Vice-
President of Design and Merchandising since that time. In
April 1999, he was named President of Marisa Christina
Apparel. Prior to joining the Company, Mr. Dees was
Divisional Merchandise Manager of ladies' sportswear
for Belk Stores, Inc.
2
NOMINEES FOR ELECTION AS DIRECTORS BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
---- --- ---------------------
Robert Davidoff ................ 77 Mr. Davidoff has been a director of the Company since
1981. Mr. Davidoff is a Managing Director of Carl
Marks & Co., Inc., the general partner of CMNY Capital,
L.P. and CMNY Capital II, L. P., and Chairman and Chief
Executive Officer of CM Capital Corporation. Mr. Davidoff is also a
director of Hubco Exploration, Inc., Rex Stores Corporation and
Access Integrated Technologies, Inc.
Lawrence D. Glaubinger ......... 78 Mr. Glaubinger has been a director of the Company since
1981. Mr. Glaubinger is President of Lawrence Economic
Consulting Inc. and a director of Leucadia National Corp.
Mr. Glaubinger is also Manager of Beegee Trading Company, LLC, a
commodity trading company.
Brett J. Meyer ................. 58 Mr. Meyer has been a director of the Company since
October 1994. Mr. Meyer is a member of the law firm
Pryor, Cashman, Sherman & Flynn, LLP. Mr. Meyer has
acted as general counsel to the Company since 1986.
Mr. Meyer is a member of the Financial Management
Committee of the American Apparel & Footwear Manufacturers'
Association.
Barry S. Rosenstein ............ 44 Mr. Rosenstein has been a director of the Company since
October 1994. Mr. Rosenstein is the Managing Partner of
JANA Partners, LLC, a hedge fund which he founded in
2001. Mr. Rosenstein is also the Managing Partner of
Sagaponack Partners, L. P., a private investment
partnership, which he co-founded in 1996. Mr.
Rosenstein is also a director of Cobra, Inc. and Waterworks.
David W. Zalaznick ............. 49 Mr. Zalaznick has been a director of the Company since
1981. Mr. Zalaznick is a managing partner of The
Jordan Company L. P. and Jordan/Zalaznick Capital
Company, a private investment firm, which he
co-founded in 1982. Mr. Zalaznick is also a director of
Carmike Cinemas, Inc., Jordan Industries, Inc., Kinetek, Inc. and
several private companies.
3
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE.
DIRECTOR INDEPENDENCE
The Board of Directors has determined that the following directors are
independent in accordance with the requirements of The Nasdaq Stock Market:
Robert Davidoff
Lawrence D. Glaubinger
Barry S. Rosenstein
David W. Zalaznick
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In 2003, there were 5 meetings of the Board of Directors (including
regularly scheduled and special meetings). With the exception of Mr. Dees and
Mr. Rosenstein who attended 60% of the meetings, during 2003, no director
participated in fewer than 80% of the aggregate number of meetings and actions
by written consent of the Board of Directors and the committees thereof on which
he served.
The Board of Directors has established three standing committees: the
Audit Committee, the Compensation Committee and the Executive Committee. The
Board of Directors has a Nominating Committee beginning in 2004.
Audit Committee. The Audit Committee recommends the appointment of a firm
of independent public accountants to audit the Company's consolidated financial
statements, as well as reviews and approves the scope, purpose and type of audit
services to be performed by the external auditors. The Audit Committee is
composed of Messrs. Glaubinger, Davidoff and Rosenstein. Messrs. Glaubinger,
Davidoff and Rosenstein are independent (as independence is defined by Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards). The Audit Committee held 4 meetings in 2003. The Company's Board of
Directors has adopted a written charter for the Audit Committee which was filed
as an appendix to the Company's proxy in 2001. The Report of the Audit Committee
is attached hereto as Exhibit A.
Audit Committee Financial Experts. The Board of Directors has determined
that Robert Davidoff and Barry S. Rosenstein, members of the Audit Committee,
are each an Audit Committee financial expert.
Compensation Committee. The duties of the Compensation Committee are to
make recommendations to the Board of Directors concerning the salaries of the
Company's officers and to advise the Board of Directors on other compensation
and benefit matters. The Compensation Committee is composed of Messrs.
Zalaznick, Davidoff and Glaubinger. The Compensation Committee held no meetings
in 2003.
Executive Committee. Except as expressly limited by applicable law or the
Company's Amended and Restated Certificate of Incorporation, the Executive
Committee exercises all the powers and authorities of the Board of Directors in
the management of the business and affairs of the Company between meetings of
the full Board of Directors. The Executive Committee is composed of Messrs.
Lerner, Hecht and Zalaznick. The Executive Committee conferred by telephone on
numerous occasions in 2003.
Nominating Committee. The Board of Directors has created a nominating
committee, details of which are found in the section named Nominations Process
and Exhibit B.
4
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $8,000 per year for
serving as a director. In addition, the Company reimburses directors for their
travel and other expenses incurred in connection with attending meetings of the
Board of Directors. Each Independent Director of the Company, as defined in the
Company's Stock Option Plan (the "Stock Option Plan"), is also entitled to
receive an option to purchase 5,000 shares of Common Stock upon his or her
appointment to the Board of Directors, subject to the terms and conditions
contained in the Stock Option Plan (such options being referred to as "Formula
Options").
ADDITIONAL INFORMATION ABOUT MANAGEMENT AND THE BOARD OF DIRECTORS
Other Business Relationships. Mr. Meyer is a member of the law firm Pryor,
Cashman, Sherman & Flynn, LLP which has provided legal services to the Company
in the last fiscal year.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Board of Directors has appointed
KPMG LLP as the independent public accountants for the Company. Representatives
of KPMG LLP will be present at the Annual Meeting and will be given the
opportunity to make a statement if they so desire. They will also be available
to respond to appropriate questions.
FEES
Audit Fees. Aggregate fees billed for professional services rendered in
connection with the audit of the Company's consolidated financial statements for
the year ended December 31, 2003, including the review of the Company's
consolidated financial statements included in the Forms 10-Q, were $89,500.
Aggregate fees billed for professional services rendered in connection with the
audit of the Company's consolidated financial statements for the year ended
December 31, 2002, including the review of the Company's financial statements
included in the Forms 10-Q, were $81,000.
Audit Related Fees. No audit was performed of the Company's 401(k) Plan
for the year ended December 31, 2003 and therefore there were no fees. Aggregate
fees billed for professional services rendered in connection with the audit of
the Company's 401(k) Plan for the year ended December 31, 2002 were $10,000.
Tax Fees. Aggregate fees billed for professional services rendered in
connection with the Company's tax services for the year ended December 31, 2003,
primarily tax return preparation, were $38,500. Aggregate fees billed for
professional services rendered in connection with the Company's tax services for
the year ended December 31, 2002, primarily tax return preparation, were
$38,000.
All Other Fees. There were no aggregate fees billed for any other services
for the year ended December 31, 2003, or for the year ended December 31, 2002.
5
PRE-APPROVAL POLICIES
All services provided by KPMG LLP in 2003 were, and all services to be provided
by KPMG LLP in 2004 will be, permissible under applicable laws and regulations
and have been, and will continue to be, pre-approved by the Audit Committee. In
accordance with applicable law, the Company is required to disclose the
non-audit services approved by the Audit Committee performed by KPMG. Non-audit
services are defined as services other than those provided in connection with an
auditor a review of the consolidated financial statements of the Company.
The Audit Committee has determined that the provision of these services is
compatible with maintaining the independence of KPMG LLP.
If stockholders do not ratify the appointment of KPMG LLP, other certified
public accountants will be considered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2004.
6
OTHER INFORMATION
SECURITY OWNERSHIP OF COMMON STOCK OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date, certain information
with respect to the number of shares of Common Stock beneficially owned by (i)
each director of the Company who beneficially owns Common Stock, (ii) each
executive officer of the Company named in the table below under "Compensation of
Executive Officers -- Summary Compensation Table" who beneficially owns Common
Stock, (iii) all directors and executive officers of the Company as a group and
(iv) each person or entity known to the Company to own beneficially (directly or
indirectly) more than 5% of the Common Stock. The Company believes that each
individual or entity named has sole investment and voting power with respect to
shares of Common Stock indicated as beneficially owned by them, except as
otherwise noted.
COMMON STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED (1) OWNERSHIP (1)
---- --------- -------------
DIRECTORS AND EXECUTIVE OFFICERS
Michael H. Lerner (2) ..................................... 1,050,217 14.4%
S.E. Melvin Hecht ......................................... 50,000 *
G. Michael Dees ........................................... 100,052 1.3
Robert Davidoff (3) ....................................... 468,620 6.4
Lawrence D. Glaubinger .................................... 136,135 1.8
Brett J. Meyer (4) ........................................ 102,500 1.4
Barry S. Rosenstein ....................................... 49,900 *
David W. Zalaznick (5) .................................... 348,518 4.7
All Directors and Executive Officers as a Group (8 Persons) 2,305,942 31.6%
OTHER PRINCIPAL STOCKHOLDERS
Edwin Marks (6) ........................................... 785,988 10.7%
Marjorie Boas (7) ......................................... 609,538 8.3
John W. Jordan II (8) ..................................... 590,154 8.0
Dimensional Fund Advisors Inc. (9) ........................ 396,900 5.4
Hummingbird Management LLC (10) ........................... 370,600 5.1
- ------------
* Denotes beneficial ownership of less than 1%.
(1) Rounded to the nearest tenth and calculated pursuant to Rule 13d-3(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Under Rule 13d-3(d), shares not outstanding which are subject to options,
warrants, rights or conversion privileges exercisable within 60 days are
deemed outstanding for the purpose of calculating the number and
percentage owned by such person, but not deemed outstanding for the
purpose of calculating the percentage owned by each other person listed.
As of the Record Date, there were 7,295,065 shares of Common Stock issued
and outstanding.
7
(2) Mr. Lerner's address is c/o Marisa Christina, Incorporated, 8101 Tonnelle
Avenue, North Bergen, New Jersey 07047. Does not include 8,000 shares
transferred by gift to Mr. Lerner's adult children in 1996, January 1997,
February 1998,10,000 shares in March 1999 and April 2000 and 9,000 shares
in September 2003.
(3) Address is c/o Carl Marks & Co., 900 Third Avenue, New York, New York
10022.
(4) Includes 16,000 shares of Common Stock owned by Mr. Meyer's wife, as to
which Mr. Meyer disclaims beneficial ownership, and 14,000 shares of
Common Stock owned in the name of Mr. Meyer's minor children, as to which
Mr. Meyer has voting and investment power.
(5) Includes 14,833 shares of Common Stock owned by the Amy Y. Zalaznick 1995
Irrevocable Trust, 14,834 shares of Common Stock owned by the Jeffrey C.
Zalaznick 1995 Irrevocable Trust, and 14,833 shares of Common Stock owned
by the Samantha M. Zalaznick 1995 Irrevocable Trust. Mr. Zalaznick's wife
is a trustee of each trust, and Mr. Zalaznick disclaims beneficial
ownership of these shares. Address is c/o The Jordan Company, 767 Fifth
Avenue, 48th Floor, New York, NY, 10153.
(6) Address is c/o CMCO, Inc., 900 Third Avenue, New York, New York 10022.
Includes 415,219 shares of Common Stock owned by Mr. Marks' wife, as to
which Mr. Marks shares voting and investment power, 10,000 shares owned by
the Marks Family Foundation and 51,400 shares owned by CMCO, Inc.
(7) Address is c/o Carl Marks & Co., 900 Third Avenue, New York, New York
10022.
(8) Represents shares held by the John W. Jordan II Revocable Trust, of which
Mr. Jordan is the sole trustee and beneficiary. Mr. Jordan's address is
c/o The Jordan Company, 767 Fifth Avenue, 48th Floor, New York, New York
10153.
(9) Address is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
(10) Address is 135 East 53rd Street, 55th Floor, New York, NY 10022.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Number of securities
remaining available for
Number of securities to be issuance under equity
issued upon exercise of Weighted-average exercise compensation plans (excluding
outstanding options, warrants price of outstanding options, securities reflected in
and rights warrants and rights column (a))
Plan Category (a) (b) (c)
------------- --- --- ---
Equity compensation plans
approved by security holders 756,450 $1.68 138,460
Equity compensation plans not
approved by security holders 0 0 0
Total 756,450 $1.68 138,460
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth a summary of certain information regarding
compensation paid or accrued by the Company for services rendered to the Company
for the fiscal year ended December 31, 2003, and the two prior fiscal years,
paid or awarded to those persons who were, at December 31, 2003: (i) the
Company's chief executive officer and (ii) the Company's two most highly
compensated executive officers other than the chief executive officer
(collectively, the "Named Executive Officers"), some of which received the same
remuneration during the fiscal year ended December 31, 2003. The Company had no
other executive officers. Information for prior years is omitted in accordance
with the rules of the SEC.
8
Long-Term
Annual Compensation Compensation
--------------------------------------------------- ------------------
Other Annual Securities
Name and Principal Position Year Salary(1) Bonus(2) Compensation(3) Underlying Options
--------------------------- ---- --------- -------- --------------- ------------------
Michael H. Lerner ........................................ 2003 $414,827 $ -- $ -- --
Chairman, President and Chief Executive Officer 2002 500,000 $ -- $ -- 80,000
2001 500,000 $ -- $ -- --
S.E. Melvin Hecht ........................................ 2003 $250,000 $ -- $ -- --
Vice Chairman of the Board , Chief 2002 250,000 $ -- $ -- 47,000
Financial Officer and Treasurer 2001 250,000 $ -- $ -- --
G. Michael Dees .......................................... 2003 $300,000 $ -- $ -- --
President - Marisa Christina Apparel 2002 300,000 $ -- $ -- 47,000
2001 300,000 $ -- $ -- --
- ----------
(1) Includes amounts deferred under the Company's 401(k) plan.
(2) The Company grants each of the Named Executive Officers a discretionary
annual bonus based on the profitability of operations and other criteria
determined by the Board of Directors. See "-- Board of Directors
Compensation Committee Report on Executive Compensation."
(3) For the periods indicated, no executive officer named in the table
received any Other Annual Compensation in an amount in excess of the
lesser of either $50,000 or 10% of the total of Annual Salary and Bonus
reported for him or her in the two preceding columns.
Aggregate Option/SAR Exercises in Fiscal 2032 and Year-End Option/SAR Values
The following table summarizes certain information with respect to the
exercises of Company stock options by each of the Named Executive Officers and
the value of year-end options beneficially owned by each of the Named Executive
Officers.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 2003 December 31, 2003 (1)
--------------------------- ---------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Michael H. Lerner -- -- 80,000 80,000 $2,720 $10,880
S.E. Melvin Hecht -- -- 92,400 47,600 1,598 6,392
G. Michael Dees -- -- 91,400 48,600 1,598 6,392
(1) The option exercise price for all options granted prior to 2001 was $1.88
per share and for options granted in 2002 was $1.43. The closing market
price for the Common Stock on December 31, 2003 was $1.60. The above
valuations reflect the actual valuation of unexercised options as the
value of unexercised options fluctuates with market activity.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy. The Compensation Committee has devoted
considerable attention to developing the Company's compensation philosophy which
embodies four primary objectives:
1. to provide incentives based on value delivered to the Company's
stockholders and customers;
2. to clearly connect individual executive pay action with performance;
3. to maintain a system of rewards that is competitive with industry
standards; and
4. to attract, motivate and retain executives of the highest quality.
9
The Company's compensation programs reflect the Compensation Committee's
commitment to the mission, values and performance of the Company. Continuous
review and refinement of the Company's compensation practices in response to the
changing business environment will serve to reinforce this commitment.
The most important performance yardstick in the Company's compensation
program is the Company's ability to deliver long-term value to stockholders
through appreciation in share price, cash flow and earnings. On an ongoing
basis, the Compensation Committee will test and refine the compensation program
to ensure a high correlation between the level of compensation and these
measures. Achieving desirable stockholder returns over a sustained period of
time requires management's attention to a number of financial, operational and
strategic elements which enables the Company to focus on the on-going
requirements of the customer. The Company's compensation program, therefore,
focuses executives on actions that directly impact stockholder return and serve
the needs of the Company's customers.
The Compensation Committee uses multiple sources of information to
evaluate and establish appropriate compensation practices. The Compensation
Committee relies on data from benchmark companies within the apparel industry to
assess the Company's relative performance and compensation levels. Benchmark
companies are selected by meeting multiple criteria including product lines,
markets served, revenue size, revenue source and comparable operations.
Consistent with the Compensation Committee's objectives, the Compensation
Committee will position its executive compensation targets competitively with
the benchmark companies. Annual executive compensation will be below, at or
above the competitive target depending on individual and Company performance.
The Compensation Committee strongly believes that incentive compensation
should only be awarded for commensurate performance. The Compensation Committee
has approved compensation plans which include high minimum levels of performance
to ensure that incentives are paid only when truly earned. The Compensation
Committee will follow an annual cycle to administer each of the three components
of executive compensation. The integrity of the Company's compensation program
relies on a rigorous annual performance evaluation process.
Description of Compensation Programs. The Company's executive compensation
program has three components: base salary, annual incentives and long-term
incentives. Base salary and annual incentives are primarily designed to reward
current performance. Long-term incentives are primarily designed to provide
strong incentives for long-term future performance for executive officers and
employees.
1. Base Salary. Base salaries are set at levels sufficient to
attract and retain qualified executives. To accomplish these goals, the
Compensation Committee has generally targeted base salaries within a
competitive range of average base salaries for similar positions in
benchmark companies within the apparel industry. Aggregate base salary
increases are intended to parallel increases in the pay levels of the
apparel industry as a whole. Individual executive salary increases will
strongly reflect the individual's level of performance and, to a lesser
extent, trends within the apparel industry.
2. Annual Incentive. The Compensation Committee reviews and approves
an executive bonus plan each year. Bonus payments have generally depended
on the Company's performance in achieving revenue, profitability and other
operating objectives, the scope of that officer's responsibility, and
other significant corporate objectives. Individual performance is also
considered in determining bonuses.
3. Long-Term Incentives. The Company's current method of providing
long-term incentive compensation opportunities to its employees is through
the use of stock options. The Stock Option Plan allows for the awarding of
incentive stock options, non-qualified stock options and stock
appreciation rights. The purposes of the Stock Option Plan are to
encourage
10
ownership of Common Stock by officers and other key employees of the
Company and its subsidiaries, to attract and retain highly qualified
personnel for positions of substantial responsibility and to provide
additional incentive to promote the success of the Company's business. The
incentive provided executives under the Stock Option Plan is directly
related to increases in the value of the Company to all stockholders, as
measured by the trading price of the Common Stock. The factors considered
in determining the size of grants include, but are not limited to, length
of service to the Company, performance, contribution to the development of
the Company, dedication, and loyalty.
Compensation Deductible under Section 162(m) of the Internal Revenue Code.
On August 10, 1993, the Revenue Reconciliation Act of 1993 (the "Act") was
enacted. The Act amended the Code by adding Section 162(m), which eliminates the
deductibility of most cash and noncash compensation over $1 million paid to
certain "covered employees" (generally defined as a corporation's chief
executive officer and its four other highest compensated employees).
Contributions to qualified plans, items excluded from the employee's gross
income, compensation paid pursuant to a binding agreement entered into on or
before February 17, 1993, commission-based compensation, and certain
"performance-based" compensation are types of remuneration that are not affected
by the deduction limitation. Grants of stock options under the Stock Option Plan
will not be considered compensation subject to the Section 162(m) limitation.
During the fiscal year ended December 31, 2003, none of the Named
Executive Officers received total compensation in excess of $1 million. However,
it is possible that in some future year some portion of the compensation paid to
the Company's chief executive officer and its five other highest compensated
employees will not be tax deductible under Section 162(m). The Lerner Employment
Agreement has been structured to take into account Section 162(m). If the
compensation of any of the Company's other affected executives becomes closer to
the $1 million deduction limitation, the Compensation Committee plans to
consider the requirements of Section 162(m) and decide what actions, if any,
will be taken when setting the compensation levels for these executives.
COMPENSATION COMMITTEE,
David W. Zalaznick
Robert Davidoff
Lawrence D. Glaubinger
The report of the Compensation Committee and the accompanying Performance
Graph shall not be deemed to be incorporated by reference as a result of any
general incorporation by reference of this proxy statement or any part thereof
in the Company's Annual Report on Form 10-K for the year ended December 31,
2003.
11
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return on its Common Stock since December 29, 1998, with the cumulative total
return of the S&P 500 and the S&P Textile & Apparel Index. Cumulative total
returns are calculated assuming that $100 was invested on December 29, 1998, in
each of the Common Stock, the S&P 500 and the S&P Textile & Apparel Index, and
the reinvestment of all dividends, if any.
The price of the Common Stock ranged from a low of $1.00 to a high of
$2.49 during the period of January 1, 2003 through December 31, 2003.
Marisa Christina S&P 500 S&P Textile and Apparel
12/31/98 100 100 100
12/31/99 130.5555556 119.526 73.19228609
12/31/00 130.5555556 107.407 85.24620858
12/31/01 51.38888889 93.3983 39.78655682
12/31/02 90.27777778 71.5749 57.51357424
12/31/03 111.1111111 90.4566 76.46882606
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Zalaznick, Davidoff and Glaubinger served as members of the
Company's Compensation Committee during the year ended December 31, 2003.
PROXY SOLICITATION EXPENSE
The expense of the proxy solicitation will be paid by the Company. In
addition to the solicitation of proxies by use of the mails, solicitation also
may be made by telephone, telegraph or personal interview by directors, officers
and regular employees of the Company, none of whom will receive additional
compensation for any such solicitation. The Company does not anticipate that the
costs and expenses incurred in connection with this proxy solicitation will
exceed those normally expended for a proxy solicitation for those matters to be
voted on in the Annual Meeting. The Company will, upon request, reimburse
brokers, banks and similar organizations for out-of-pocket and reasonable
clerical expenses incurred in for warding proxy material to their principals.
NOMINATIONS PROCESS
GENERAL
The Board of Directors has a nominations committee ("Committee"). All
selections for members of the board of directors are made by the Committee in
accordance with the requirements of The Nasdaq Stock Market, Inc. The Committee
has a written charter that governs the nominations process and other related
matters as may be required under the federal securities laws. A copy of this
charter is attached as Exhibit B.
NOMINATION OF DIRECTORS
Directors may be nominated by the Committee or by shareholders in
accordance with the Bylaws of the Company. As a matter or course, the Committee
will review the qualifications of various persons to determine whether they
might make good candidates for consideration for membership on the board of
directors. The Committee will review all proposed nominees for the board of
directors, including those proposed by shareholders, in accordance with the
mandate contained in the charter. This will include a review of the person's
judgment, experience, independence, understanding of the Company's business or
other related industries and such other factors as the Committee determine are
relevant in light of the needs of the Board of Directors and the Company. The
Committee will select qualified candidates and review its recommendations with
the entire board of directors, which will decide whether to invite the candidate
to be a nominee for election to the board of directors.
The Company does not pay a fee to any third party to identify or assist in
identifying or evaluating potential nominees.
Each nominee for election as a director is either an executive officer of
the Company or is standing for reelection.
For a shareholder to submit a candidate for consideration by Committee, a
shareholder must notify the Company's assistant secretary. In addition, our
Bylaws permit shareholders to nominate directors at a shareholder meeting. To
make a director nomination at the 2005 Annual Meeting, a shareholder must notify
the Company's assistant secretary no later than January 5, 2005. Notices should
be sent to: Assistant Secretary, Marisa Christina, Inc., 8101 Tonnelle Avenue,
North Bergen, NJ 07047. In either case, the notice must meet all of the
requirements contained in our Bylaws.
The notice must set forth:
13
- the name, age, business address and residence address of the
proposed nominee and the person submitting the proposed nominee;
- a representation that the person submitting the proposed nominee is
a holder of record of stock in the Company and entitled to vote at
the annual meeting of stockholders;
- the principal occupation or employment of the proposed nominee;
- any other information relating to the proposed nominee that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder;
- any other information the shareholder believes is relevant
concerning the proposed nominee;
- a written consent of the proposed nominee(s) to being named as a
nominee and to serve as a director if elected;
- whether the proposed nominee is going to be nominated at the annual
meeting of shareholders or is only being provided for consideration
by the Committee;
- the name and record address of the shareholder who is submitting the
notice;
- the class or series and number of voting shares of the Company which
are owned of record or beneficially by the shareholder who is
submitting the notice;
- a description of all arrangements or understanding between the
shareholder who is submitting the notice and any other person
(naming such person) pursuant to which the nomination is being made
by the shareholder who is submitting the notice;
- if the shareholder who is submitting the notice intends to nominate
the proposed nominee at the annual meeting of shareholders, a
representation that the shareholder intends to appear in person or
by proxy at the annual meeting to nominate the proposed nominee
named in the notice; and
- any other information relating to the shareholder that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
The presiding officer of the annual meeting of stockholders shall, if the facts
warrant, refuse to acknowledge a nomination not made in compliance with the
foregoing procedures and any such nomination not properly brought before the
meeting will not be considered.
COMMUNICATING WITH THE BOARD
Shareholders may communicate directly with the board of directors. All
communications should be directed to the Company's assistant secretary at:
Marisa Christina, Inc., 8101 Tonnelle Avenue, North Bergen, NJ 07047 and should
prominently indicate on the outside of the envelope that it is intended for the
board of directors. Each communication intended for the board of directors and
received by the assistant secretary, which is related to the operation of the
Company and is not otherwise commercial in nature, will be promptly forwarded to
the specified
14
party following its clearance through normal security procedures. The
communication will not be opened, but rather will be forwarded unopened to the
intended recipient.
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT THE ANNUAL MEETING OF
SHAREHOLDERS
The Company encourages each member of the board of directors to attend
each annual meeting of shareholders. Six directors attended the annual meeting
of shareholders held on May 8, 2003.
STOCKHOLDER PROPOSALS
Proposals of stockholders must be received in writing by the Secretary of
the Company no later than 120 days in advance of the first anniversary of the
date of the mailing of this proxy statement in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to the
2005 Annual Meeting of Stockholders.
If a stockholder desires to submit a proposal for consideration at the
2005 Annual Meeting of Stockholders, written notice of such stockholder's intent
to make such a proposal must be given and received by the Secretary of the
Company at the principal executive offices of the Company either by personal
delivery or by United States mail not later than December 7, 2004. Each notice
must describe the proposal in sufficient detail for the proposal to be
summarized on the agenda for the 2005 Annual Meeting of Stockholders and must
set forth: (i) the name and address, as it appears on the books of the Company,
of the stockholder who intends to make the proposal; (ii) a representation that
the stockholder is a holder of record of stock of the Company entitled to vote
at such meeting and intends to appear in person or by proxy at such meeting to
present such proposal; and (iii) the class and number of shares of the Company
which are beneficially owned by the stockholder. In addition, the notice must
set forth the reasons for conducting such proposed business at the 2005 Annual
Meeting of Stockholders and any material interest of the stockholder in such
business. The presiding officer of the 2005 Annual Meeting of Stockholders will,
if the facts warrant, refuse to acknowledge a proposal not made in compliance
with the foregoing procedure, and any such proposal not properly brought before
the 2005 Annual Meeting of Stockholders will not be considered.
SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our directors, executive
officers and beneficial owners of more than ten percent of the outstanding
common stock to file reports of ownership and changes in beneficial ownership of
the common stock with the Securities and Exchange Commission and to send copies
of those reports to us. Based solely on a review of those reports and amendments
thereto furnished to us and on representations made to us by our directors and
executive officers, we believe that no such person failed to file any such
report or report any transactions on a time basis during 2003.
15
OTHER BUSINESS
The Board of Directors is not aware of any matters to be presented at the
Annual Meeting other than those enumerated in the Company's Notice of Annual
Meeting of Stockholders enclosed herewith. If any other matters do come before
the meeting, it is intended that the holders of the proxies will vote thereon in
their discretion. Any such other matter will require for its approval the
affirmative vote of a majority in interest of the stockholders present in person
or by proxy at the Annual Meeting, provided a quorum is present or such greater
vote as may be required under the Certificate of Incorporation, the Company's
Amended and Restated By-laws or the General Corporation Law of the State of
Delaware.
By order of the Board of Directors,
/s/ S. E. MELVIN HECHT
---------------------------
S. E. MELVIN HECHT
Assistant Secretary
North Bergen, New Jersey
April 9, 2004
Each stockholder, whether or not he or she expects to be present in person at
the Annual Meeting, is requested to MARK, SIGN, DATE and RETURN THE ENCLOSED
PROXY in the accompanying envelope as promptly as possible. A stockholder may
revoke his or her proxy at any time prior to voting.
16
EXHIBIT A
REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF MARISA CHRISTINA, INC.
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
consolidated financial statements and the reporting process including the
systems of internal controls. In fulfilling its oversight responsibilities, the
Committee reviewed the audited consolidated financial statements in the Annual
Report with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the consolidated financial
statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on conformity of those audited consolidated financial
statements with accounting principles generally accepted in the United States of
America, their judgments as to the quality, not just the acceptability, of the
Company' s accounting principles and such other matters as are required to be
discussed with the Committee under auditing standards generally accepted in the
United States of America. In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the Company
including the matters in the written disclosures required by the Independence
Standard Board.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their respective audits. The Committee met with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Committee held four meetings during 2003.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited consolidated financial statements be included in the Annual Report on
Form 10-K for the year ended December 31, 2003 for filing with the Securities
and Exchange Commission. The Committee has also recommended, subject to Board
and shareholder approval, the selection of the Company's independent auditors.
AUDIT COMMITTEE,
Robert Davidoff
Lawrence D. Glaubinger
Barry S. Rosenstein
EXHIBIT B
MARISA CHRISTINA, INCORPORATED
NOMINATING COMMITTEE CHARTER
A. NAME
There shall be a committee of the Board of Directors (the "Board") of
Marisa Christina, Incorporated (the "Company") which shall be called the
Nominating Committee.
B. PURPOSE
As described in detail below, the purpose of the Nominating Committee
shall be to (1) identify and recommend Director nominees and (2) deal with
corporate governance matters impacting the Company.
C. ORGANIZATION AND PROCEDURE
The Nominating Committee shall consist of no fewer than two members. Each
member of the Nominating Committee shall satisfy the independence
requirements set forth in The NASDAQ Stock Market, Inc. rules, as amended
from time to time and as interpreted by the Board in its business
judgment.
The Board shall appoint the members of the Nominating Committee,
considering the views of the Chairman of the Board and the Chief Executive
Officer, as appropriate. The members of the Nominating Committee shall
serve until their successors are appointed and qualify. Unless a
Chairperson is elected by the full Board, the members of the Nominating
Committee may designate a Chairperson by majority vote of the full
committee membership.
The Board shall have the power at any time to change the membership of the
Nominating Committee and to fill vacancies in it. Except as expressly
provided in this Charter or the By-laws of the Company, the Nominating
Committee shall fix its own rules of procedure.
D. COMMITTEE RESPONSIBILITIES
Board Nominees. Identify and recommend Director nominees to fill
expiring and vacant Board seats.
Committee Recommendations. Make recommendations to the Board with
respect to the directors to serve on committees of the Board.
Code of Business Conduct and Ethics. Develop and recommend to the
Board a Code of Business Conduct and Ethics that should be adopted
by the Board; consider and grant any requests for waivers from the
Company's Code of Business Conduct and Ethics; and review and
reassess as appropriate the adequacy of the Code of Business Conduct
and Ethics.
Advisor to Board. Serve in an advisory capacity to the Board and
Chairman of the Board on matters of organizational and governance
structure of the Company and the conduct of the Board.
Retain Advisors. Obtain advice and assistance from internal or
external legal, accounting or other advisors as appropriate.
Delegation. Form and delegate authority to subcommittees when
appropriate.
Board Reports. Report periodically to the Board on its meetings and
other activities.
PROXY
MARISA CHRISTINA, INCORPORATED
8101 TONNELLE AVENUE, NORTH BERGEN, NEW JERSEY 07047
THIS PROXY IS SOLICITED
ON BEHALF OF THE
BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2004
The undersigned stockholder(s) hereby appoint(s) Michael H. Lerner and S.E.
Melvin Hecht, and each of them, with power of substitution, as attorneys and
proxies for and in the name and place of the undersigned, and hereby authorizes
them to represent and to vote all of the shares of Common Stock of Marisa
Christina, Incorporated held of record as of April 2, 2004, which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Marisa
Christina, Incorporated to be held on May 11, 2004 at the offices of Mayer,
Brown, Rowe & Maw, 1675 Broadway, New York City, New York, at 10: 00 AM local
time, and at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE DIRECTOR NOMINEES LISTED IN
PROPOSAL 1 AND A VOTE FOR PROPOSALS 2 AND 3.
1. ELECTION OF DIRECTORS
<Table>
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL
(EXCEPT AS MARKED TO THE CONTRARY BELOW) NOMINEES LISTED BELOW
</Table>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
<Table>
Michael H. Lerner S.E. Melvin Hecht Brett J. MEYER
Robert Davidoff Barry S. Rosenstein G. Michael Dees
Lawrence D. Glaubinger David W. Zalaznick
</Table>
(continued, and to be signed, on reverse side)
(continued from other side)
2. RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2004
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THIS ANNUAL MEETING OF STOCKHOLDERS.
[ ] FOR [ ] AGAINST
This proxy, when properly executed, will be voted in the manner directed
herein by the under signed stockholder. If no direction is made, this proxy will
be voted for Proposals 1, 2 and 3.
Please sign exactly as the name
appears on your stock certificate.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please give title as
such. When signing as a
corporation, please sign in full
corporate name by President or
other authorized officer. If you
sign for a partnership, please
sign in partnership name by an
authorized person.
DATED , 2004
----------------------------------
Signature
----------------------------------
Signature (if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.