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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
LANDS' END, INC.
- --------------------------------------------------------------------------------
(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] No fee required.
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LANDS' END LOGO]
NOTICE OF 2001 ANNUAL MEETING
AND PROXY STATEMENT
April 16, 2001
Dear Shareholder:
The annual meeting of Lands' End, Inc. shareholders will be held at our
headquarters in Dodgeville, Wisconsin, on Wednesday, May 16, 2001, beginning
at 10:00 a.m. C.D.T. (See map for directions.)
The directors and officers of your company join me in extending you a
cordial invitation to attend.
For those of you interested in seeing, firsthand, how we fill an order,
tours of our facilities will be available before the meeting. The first tour
will leave the activity center at 8:00 a.m. and the last one will leave
promptly at 9:00 a.m.
The agenda for the meeting includes the election of two directors, the
ratification of the appointment of independent public accountants and the
consideration of a shareholder proposal. There also will be a brief management
presentation on the state of the business.
I hope you can be there, but whether you attend the meeting in person or
not, it's important that your shares be represented. To make sure they are,
please mark your votes on the enclosed proxy card and sign, date and mail it
in the postage-paid envelope or follow the instructions on the proxy card to
vote by telephone or over the Internet. It will help us keep postage costs
down if you take a minute to do so now.
/s/ Gary C. Comer
Gary C. Comer
Chairman
[LANDS' END LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16, 2001
To Our Shareholders:
The annual meeting of shareholders of Lands' End, Inc. (the "Company") will
be held at the offices of the Company, One Lands' End Lane, Dodgeville,
Wisconsin 53595, on May 16, 2001, at 10:00 a.m. C.D.T. for the following
purposes:
1. To elect two members to the Board of Directors of the Company to serve
until the annual meeting of shareholders in 2004, and until their
successors are duly elected and qualified.
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the fiscal year ending February 1, 2002.
3. To consider and act upon the shareholder proposal described in the
accompanying Proxy Statement, which the Board of Directors of the
Company opposes.
4. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 23, 2001 as
the record date for the meeting. All shareholders of record on that date are
entitled to notice of and to vote at the meeting.
Please complete and return the enclosed proxy in the envelope provided or
follow the instructions on the proxy card to vote by telephone or over the
Internet whether or not you intend to be present at the meeting in person.
By order of the Board of Directors,
/s/ Robert S. Osborne
Robert S. Osborne
Secretary
Dodgeville, Wisconsin
April 16, 2001
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO
VOTE BY TELEPHONE OR OVER THE INTERNET.
PROXY STATEMENT
Introduction
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Lands' End, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at the 2001 annual meeting of shareholders
on Wednesday, May 16, 2001 and at any adjournment thereof (the "Annual
Meeting"). This Proxy Statement and the accompanying proxy card are being
mailed to shareholders on or about April 16, 2001.
Proxies
Properly signed and dated proxies received by the Company's Secretary prior
to or at the Annual Meeting will be voted as instructed thereon or, in the
absence of such instructions, (a) FOR election to the Board of Directors of
the persons nominated by the Board, (b) FOR the ratification of the
appointment of Arthur Andersen LLP as independent public accountants for the
Company, (c) AGAINST the shareholder proposal and (d) in accordance with the
best judgment of the persons named in the proxy on any other matters which may
properly come before the meeting. Proxies may also be voted by telephone or
over the Internet by following the instructions on the proxy card. Any proxy
may be revoked for any reason prior to voting by notifying the Secretary of
the Company in writing of such revocation, by submitting a later-dated proxy
card, by providing subsequent telephone or Internet voting instructions or by
voting by ballot at the meeting, which will cancel any proxies previously
submitted. The Company has appointed an officer of Firstar Trust Company,
transfer agent for the Company, to act as an independent inspector at the
Annual Meeting.
Voting of Proxies and Shares Outstanding
Holders of record at the close of business on March 23, 2001 of shares of
the Company's common stock, $.01 par value per share (the "Common Stock"), are
entitled to vote on all matters which may be properly presented at the Annual
Meeting. The number of shares of Common Stock of the Company outstanding on
March 23, 2001, the record date for the meeting, was 29,375,472, all of one
class and each entitled to one vote, owned by 1,927 shareholders of record.
The holders of at least a majority of the shares of Common Stock must be
present in person or by proxy at the Annual Meeting in order for the Annual
Meeting to be held. Directors will be elected by a plurality of the votes cast
for the election of directors. The affirmative vote of the holders of a
majority of the shares of Common Stock present and entitled to vote at the
Annual Meeting is required for approval of each of the other actions proposed
to be taken at the Annual Meeting. On each such proposed action, pursuant to
Delaware law, abstentions are treated as present and entitled to vote and thus
have the effect of a vote against a proposed action. A broker non-vote (where
a broker submits a proxy but does not have authority to vote a customer's
shares on one or more matters) on a proposed action is considered not entitled
to vote on that action and thus is not counted in determining whether an
action requiring approval of a majority of the shares present and entitled to
vote at the Annual Meeting has been approved.
ELECTION OF DIRECTORS
The Board of Directors is currently composed of seven directors. The
directors are divided into three classes, two of which are composed of two
directors each, and one of which is composed of three directors. One class is
elected each year for a three year term. One of the directors in the class
whose current term ends at the Annual Meeting is not seeking nomination or
election as a director. Accordingly, in order to avoid an imbalance in the
size of the director classes, Gary C. Comer, whose current term is not
scheduled to end until 2002, has been nominated for election in the director
class to be elected at the Annual Meeting, with a term ending in 2004. In the
event that Mr. Comer is elected at the Annual Meeting, a vacancy will be
created in the director class whose term ends in 2002. The Nominating
Committee is currently conducting a search to identify an additional director
to be elected by the Board of Directors to fill this anticipated vacancy.
The Nominating Committee has nominated Gary C. Comer and Eliot Wadsworth,
II to serve as directors until the annual meeting of shareholders in 2004 and
until their respective successors are duly elected and qualified. The Board of
Directors recommends that shareholders vote "FOR" the election of Messrs.
Comer and Wadsworth.
The following tabulation sets forth, as of March 23, 2001, certain
information about each nominee for election to the Company's Board of
Directors and each continuing director.
Director Nominees for a Term to Expire in 2004
Gary C. Comer Age: 73
Founder of the Company and Chairman of the Board of Directors. Mr. Comer
was President of the Company from 1963 until 1989 and served as Chief
Executive Officer from 1963 until 1990. He has been a director of the
Company since 1963. Prior to 1963, Mr. Comer was employed for ten years as
a copywriter at Young & Rubicam.
Eliot Wadsworth, II Age: 58
Director of the Company since March 2001. Mr. Wadsworth has been the owner
and Chief Executive Officer of White Flower Farm, Inc, a mail-order nursery
business, since 1975. He was the founder of Boston Common Press, L.P., a
niche publishing company, has served as its Managing Director for the last
10 years and currently serves on its board of directors. Mr. Wadsworth is
also a co-founder and General Partner of Housatonic Partners, a private
equity investment partnership in Boston, founded in 1994.
Directors Whose Term Expires in 2002
David F. Dyer Age: 51
President, Chief Executive Officer and Member of the Board of Directors
since rejoining the Company in October 1998. In 1989, Mr. Dyer entered the
employ of the Company as Managing Director of Home Furnishings, became
Executive Vice President of Merchandising in 1990, and was named Vice
Chairman, Merchandising and Sales in 1993. He was a director of the Company
from 1991 until August 1994. Mr. Dyer was President and Chief Operating
Officer of the Home Shopping Network from August 1994 until August 1995, at
which time he became an independent catalog/retail consultant, most
recently with the Texas Pacific Group and the J. Crew Group. From 1972 to
1989, Mr. Dyer was employed at Burdine's, a specialty retail chain, where
he served as Senior Vice President of Marketing and General Merchandising
Manager of Women's Apparel, Accessories and Cosmetics. Mr. Dyer is also a
director of ADVO, Inc., a direct mail marketing services company.
Richard C. Marcus Age: 61
Director of the Company since January 2001. Mr. Marcus served as Chief
Executive Officer of Neiman Marcus from 1979 to 1988. Subsequently, he has
been an e-commerce entrepreneur and consultant, including with the
InterSolve Group, a company he co-founded in 1991. From 1994-1995 he served
as Chief Executive Officer of the Plaid Clothing Group. Since 1997, Mr.
Marcus has been Senior Advisor with the New York-based, investment banking
firm, Peter J. Solomon Company. He currently serves on the board of
directors for the Zale Corporation and Michaels Stores, Inc.
Directors Whose Term Expires in 2003
Richard C. Anderson Age: 71
Vice Chairman of the Company since 1984. Mr. Anderson served as Chief
Executive Officer of the Company from 1990 through January 1993. In
addition, Mr. Anderson served as President and Chief
2
Operating Officer from 1989 until 1992. He has been a director of the
Company since 1979. From 1977 to 1984, Mr. Anderson was a senior executive
of Needham, Harper & Steers, serving as Executive Vice President in charge
of programming and media from 1981 until 1984. Mr. Anderson provides
certain services to the Company and is compensated for such services. See
"Meetings and Compensation of Directors."
Paul D. Schrage Age: 64
Director of the Company since January 2001. Mr. Schrage served as Senior
Executive Vice President and Chief Marketing Officer of McDonald's
Corporation and as a member of that company's board of directors when he
retired in 1997. Mr. Schrage joined McDonald's in 1967 as National
Marketing Director, was elected Vice President in 1968, Executive Vice
President in 1970 and Chief Marketing Officer in 1980. Mr. Schrage also
serves on the board of directors of Wolverine World Wide, Inc., the Aid
Association for Lutherans and Valparaiso University.
MEETINGS AND COMPENSATION OF DIRECTORS
The Board of Directors held twelve formal meetings during the fiscal year
ended January 26, 2001. All directors attended at least 75% of the total
number of meetings of the Board and committees of which they were members.
Directors who are not salaried officers or employees of the Company are
eligible to receive compensation as described in the following paragraphs. In
addition, the reasonable expenses incurred by each director in connection with
his duties as a director are reimbursed by the Company. Each director who is a
salaried officer or employee of the Company earns no additional compensation
for service as a director.
Through the end of the Company's 2001 fiscal year, non-employee directors
were eligible to receive a cash retainer at the rate of $20,000 per year, all
or a portion of which could be irrevocably deferred in an account adjusted to
reflect the performance of the Company's Common Stock during the deferral
period. In addition, through the end of fiscal 2001, non-employee directors
were eligible to participate in the Company's Non-Employee Director Stock
Option Plan (the "DSOP"), which provided for certain initial grants of stock
options to persons who joined the Board and for annual grants of 5,000 stock
options to each eligible director as of the date of each Annual Meeting. Mr.
Anderson received an annual grant of 5,000 shares at the 2000 Annual Meeting,
with an exercise price of $32.375 per share. Mr. Comer waived his eligibility
to receive the cash retainer and to participate in the DSOP.
Several new directors joined the Board early in fiscal 2002. At that time,
Mr. Dyer and Mr. Comer, who have served as a special Board committee dealing
with non-employee director compensation, made recommendations to the Board
after discussions with the independent consulting firm that regularly advises
the Compensation Committee. Based on their recommendations, the Board approved
an increase in the cash retainer to $30,000 per year, commencing in fiscal
2002, without the option of deferral. In addition, the Board amended the DSOP
to provide that no further stock options would be issued thereunder, although
outstanding stock options will continue in accordance with their terms.
Accordingly, 277,083 of the stock options previously authorized but unissued
under the DSOP will no longer be available for issuance. In light of the
foregoing action, upon the recommendation of the committee, the Board adopted
a new plan for non-employee directors, known as the Director Stock Grant Plan
(the "DSGP"), effective as of the beginning of fiscal 2002. The DSGP provides
that each new non-employee director will receive an initial grant of 2,000
shares of the Company's Common Stock sixty days after joining the Board and
that each non-employee director will receive an annual grant of 2,000 shares
on the date of each Annual Meeting (or, if later, sixty days after joining the
Board). All of such grants will vest immediately. The Company has reserved
100,000 shares of Common Stock for issuance under the DSGP. Mr. Comer has
waived his eligibility to receive the cash retainer and to participate in the
DSGP.
In addition to the compensation described above, Mr. Anderson received
compensation of $22,000 from the Company in consideration for his providing
creative and merchandising consulting services to the Company
3
during fiscal year 2001. The Company contributed premiums of $1,700 each to
the Lands' End, Inc. Health Care Plan on behalf of Messrs. Anderson and Comer
in fiscal year 2001.
In fiscal 2001, Mr. Comer entered into a transaction with the Company in
which he assumed its contract for the purchase of an aircraft from the
manufacturer for the purchase price of approximately $7,300,000. The Company
had previously ordered two aircraft and had received a $100,000 volume
discount. The Company subsequently determined that it would only purchase one
of the aircraft and that it would be prohibitively expensive to locate an
independent third party willing to assume its contract to purchase the second
aircraft. Rather than abandon the purchase and forfeit the discount, the
Company accepted Mr. Comer's offer to assume the Company's contract to
purchase the second aircraft. Mr. Comer agreed to purchase the aircraft at the
contract cost after application of one-half of the volume discount.
BOARD COMPOSITION AND COMMITTEES
During fiscal 2001, the Board had three standing committees: the Audit
Committee, the Compensation Committee and the Performance Compensation
Committee. Early in fiscal 2002, the Board engaged in general discussions
about corporate governance matters, leading to its adoption of a Statement of
Board Policy Regarding Corporate Governance (the "Board Policy"). The Board
Policy provides for the establishment of an additional standing committee, the
Nominating Committee, and also contemplates that, effective as of the Annual
Meeting, the Compensation Committee and the Performance Compensation Committee
will be combined into a single committee. Each of the standing committees is
briefly described below.
The Board Policy also states the Board's intentions with respect to other
matters involving Board composition and activities. A copy of the current
Board Policy, which is subject to change from time to time by the Board of
Directors, is attached as an Appendix to this Proxy Statement.
Audit Committee
The current members of the Audit Committee are John N. Latter (chairman)
and Paul D. Schrage. Effective as of the Annual Meeting, Mr. Latter will cease
to be a member of this committee and two additional members will be appointed,
so that the committee will have not less than three members, each of whom
shall be an independent director as determined in accordance with rules of the
New York Stock Exchange. The functions of the Audit Committee are described in
the Audit Committee Charter, which was adopted by the Board of Directors in
fiscal 2001. These functions include, among other things, evaluating and
recommending annually to the Board of Directors the firm to be employed by the
Company as its external auditors, consulting with the internal audit
department and the external auditors regarding matters such as the plan of
audit, the adequacy of internal accounting controls and systems, and the
review of financial statements and reports to be included in quarterly and
annual reports. However, the Audit Committee is not expected to audit the
Company, to define the scope of the audit, to control the Company's accounting
practices, or to define the standards to be used in preparation of the
Company's financial statements. The Audit Committee held three formal meetings
during fiscal year 2001. A copy of the current Audit Committee Charter, which
is subject to change from time to time by the Board of Directors, is attached
as an Appendix to this Proxy Statement.
Compensation Committee
The current members of the Compensation Committee are Gary C. Comer
(chairman) and John N. Latter. Effective as of the Annual Meeting, the
Compensation Committee will be combined with the Performance Compensation
Committee as described in the Board Policy. The Compensation Committee
monitors the Company's overall compensation policies and specifically reviews
and approves all compensation to be paid to the Company's Chief Executive
Officer, to the four other most highly compensated executive officers (the
"Named Executive Officers") and to any other officer whose annual compensation
is $300,000 or more (except to the extent that such responsibility is
specifically vested in the Performance Compensation Committee). The
Compensation Committee administers the Long-Term Incentive Plan. The
Compensation Committee held two formal meetings during fiscal year 2001.
4
Except for the Non-Employee Director Stock Option Plan and the deferred and
other compensation arrangements described above, none of the members of the
Compensation Committee is or has been, for a period of at least one year prior
to appointment, eligible to receive a benefit under any plans of the Company
entitling participants to acquire Common Stock, stock options or stock
appreciation rights.
Performance Compensation Committee
The members of the Performance Compensation Committee are Richard C. Marcus
(chairman) and John N. Latter. Effective as of the Annual Meeting, the
Compensation Committee will be combined with the Performance Compensation
Committee as described in the Board Policy. The Performance Compensation
Committee administers the Company's Stock Option Plan and establishes the
terms of any benefits granted thereunder. The Performance Compensation
Committee also administers the Company's non-stock based compensation plans
which are intended to provide "performance-based compensation" (as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended) including,
but not limited to, establishing objective performance goals and measures and
certifying that such performance goals and other material terms are satisfied.
The Performance Compensation Committee is comprised solely of directors who
are not (i) current employees of the Company (or any related entity), (ii)
former employees of the Company (or any related entity) receiving compensation
for prior services (other than certain pension benefits), (iii) former
officers of the Company (or any related entity), or (iv) consultants or
individuals who are otherwise receiving compensation from the Company for
personal services in any capacity other than as a director. The Performance
Compensation Committee held five formal meetings during fiscal year 2001.
Nominating Committee
The Nominating Committee consists of all non-employee directors of the
Company, currently Messrs. Comer, Anderson, Marcus, Schrage and Wadsworth. The
Nominating Committee has responsibility for selecting any new Chief Executive
Officer of the Company and for selecting prospective directors to fill
vacancies on the Board of Directors that occur from time to time due to
retirement or resignation. In addition, prior to each annual meeting, those
members of the Nominating Committee whose director terms will not expire at
that annual meeting will determine the slate of directors proposed for
election at the annual meeting. Prior to the mailing of this Proxy Statement,
the Nominating Committee nominated Messrs. Comer and Wadsworth, in accordance
with the foregoing nominating procedure, for election to the Board of
Directors at the 2001 Annual Meeting. The Nominating Committee will consider
nominees recommended by shareholders, provided that such recommendations are
in writing and are received by the Director of Investor Relations not later
than December 17, 2001. Because it was not appointed until fiscal year 2002,
the Nominating Committee held no formal meetings during fiscal year 2001.
Compensation Committee Interlocks and Insider Participation
Gary C. Comer, who currently serves on the Compensation Committee, is the
Company's founder and Chairman of the Board of Directors. Mr. Comer was
President of the Company from 1963 until 1989, and served as Chief Executive
Officer from 1963 until 1990. Mr. Comer is retired from active employment at
the Company.
5
Audit Committee Report
The Audit Committee of the Board of Directors (the "Audit Committee") is
currently comprised of two independent directors and acts under a written
Audit Committee Charter adopted by the Board of Directors in fiscal 2001. Each
of the members of the Audit Committee is independent, as defined by the Audit
Committee Charter and the listing standards of the New York Stock Exchange. A
copy of the current Audit Committee Charter, which is subject to change from
time to time by the Board of Directors, is attached as an Appendix to this
Proxy Statement.
Management has the primary responsibility for the financial statements, the
reporting process and assurance for the adequacy of controls. The Company's
independent auditors are responsible for expressing an opinion on the
conformity of the Company's audited financial statements to generally accepted
accounting principles. The Audit Committee is responsible for monitoring and
overseeing these processes on behalf of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the
Company's audited financial statements with management and the independent
auditors. The Audit Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(SAS 61). SAS 61 requires independent auditors to communicate matters related
to the conduct of the audit to audit committees. Arthur Andersen LLP reported
to the Audit Committee that, based on its inquiries, to its knowledge, the
Company's internal controls are adequate and sufficient.
In addition, the Audit Committee has received from the independent auditors
the written disclosures required by Independence Standards Board Standard No.
1, which requires the written disclosure of all relationships between the
Company and its independent auditors that, in the independent auditors'
professional judgment, may reasonably be thought to bear on independence and
confirmation that, in its professional judgment, it is independent of the
company that it is auditing.
During fiscal year 2001, the Company retained Arthur Andersen LLP to
provide services as follows:
Audit Financial Information Systems
Fees Design and Implementation Fees All Other Fees
----- ------------------------------ --------------
$180,000 $0 $1,530,000
The category of "all other fees" consists primarily of services provided
for purchasing cost reduction, tax, Internet, forecasting and other
miscellaneous projects. The Audit Committee has considered whether the
independent auditors' provision of services other than audit services is
compatible with maintaining auditor independence and has concluded that it is.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 26, 2001 for filing with the Securities and Exchange
Commission. The Audit Committee also recommended the reappointment, subject to
shareholder ratification, of Arthur Andersen LLP as the Company's independent
auditors for fiscal year 2002.
Submitted by the Audit Committee
of the Board of Directors
John N. Latter, Chairman
Paul D. Schrage
6
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Overview
Our goal as a Compensation Committee is to provide a compensation framework
for recruiting, motivating, rewarding, and retaining the Company's employees,
including its executive officers. We regularly engage a nationally recognized
compensation consulting firm to assist our Committee in developing an overall
perspective on base and incentive compensation and benefit practices and to
advise on specific issues relating to the Company's compensation practices.
Representatives of the consulting firm meet with us (sometimes with other
Board members in attendance) from time to time and have other informal
discussions with members of our Committee.
Components of Fiscal Year 2001 Compensation
The principal elements of compensation for the Company's executive officers
currently consist of base salary, bonuses under the Annual Incentive Plan and
awards under the Stock Option Plan. In addition, executives may receive future
payments under the Long-Term Incentive Plan with respect to three-year
performance periods that commenced prior to fiscal 2000.
Base Salary. In determining and reviewing base salary levels, the
Compensation Committee considers the size and responsibility of the
individual's position, the individual's overall performance, the base salaries
paid by competitors for comparable positions, and, in the case of new hires,
the amount of the individual's prior compensation and the need to induce the
individual to enter the employ of the Company. In making salary decisions with
respect to senior executives and overseeing other salary decisions made by
management, the Committee exercises its discretion and judgment based on the
foregoing factors, without applying a specific formula to determine the weight
of each factor considered.
Annual Incentive Plan. The Annual Incentive Plan (bonus) provides for
participation by most of the Company's salaried employees (currently
approximately 836 individuals). Pursuant to this plan, each participant is
granted an annual incentive award at or about the beginning of each fiscal
year. Each annual incentive award consists of the right to be eligible to
receive a cash bonus, part of which is paid in December of the fiscal year to
which the grant relates and the balance of which is paid in the month of March
following such fiscal year, provided that the participant remains employed by
the Company at the end of such fiscal year.
Other than participants employed by international subsidiaries of the
Company, each participant's bonus eligibility amount is 10% of base salary,
provided that the Compensation Committee has the right to approve higher
levels for certain participants on an individual basis. For fiscal 2001 and
prior years, participants earned bonuses equal to their bonus eligibility
amount multiplied by a factor of 0% to 200%, depending on financial results
based on the Company's annual pre-tax margin. For fiscal 2001, the bonus
eligibility amounts for most of the Company's salaried employees were 10% of
base salary. The bonus eligibility amounts for fiscal 2001 were 100% for Mr.
Dyer, 80% for Mr. Jones and 60% for the other Named Executive Officers.
Long-Term Incentive Plan. The Long-Term Incentive Plan provides for
participation by certain of the Company's managers (currently approximately 33
individuals). Pursuant to this Plan, each participant was granted a long-term
incentive award at or about the beginning of each fiscal year prior to fiscal
2000, commencing with fiscal 1997. Each long-term incentive award consisted of
the right to be eligible to receive a cash bonus after the completion of a
three-year performance period, provided that the participant remained employed
by the Company at the end of such period (except in cases where employment
terminates due to retirement, disability or death).
The Company's most senior executives, including the Named Executive
Officers, have not participated in the Long-Term Incentive Plan. For those who
do participate, the cash bonus eligibility amounts range from 10%
7
to 30% of base salary, with most participants being eligible for 10% of base
salary. Participants earn a bonus equal to their bonus eligibility amount,
multiplied by a factor of 0% to 200%, depending on overall corporate results
measured by a matrix of (i) the Company's three year average pre-tax margin
and (ii) the Company's three year average return on invested capital. The
matrix is subject to adjustment from time to time at the discretion of the
Compensation Committee.
We concluded in January 1999 that it was desirable to discontinue the
making of awards under the Long-Term Incentive Plan. Accordingly, we
recommended to the Board that no new performance period commence under the
Plan in fiscal 2000. Participants would, however, remain eligible to receive
bonuses under the Plan with respect to the three-year performance periods that
commenced at the beginning of fiscal 1998 and fiscal 1999. The Board agreed
with and approved our recommendations.
Stock Option Plan. The Performance Compensation Committee awarded a total
of 1,031,500 stock options to a total of 136 recipients under the Company's
Stock Option Plan in fiscal year 2001. Jeffrey A. Jones received a total of
300,000 options as an inducement to join the Company as Chief Operating
Officer in December 2000. In November 2000, the Company awarded 50,000 options
to Mindy C. Meads, 50,000 options to Lee Eisenberg and 25,000 options to
Francis P. Schaecher. The other 606,500 stock option awards were granted to
132 other employees, none of whom is a Named Executive Officer. These grants
are consistent with our goal of broadening somewhat the participation in the
Stock Option Plan and providing significant stock-based incentive compensation
for senior executives so as to incent management to increase shareholder value
over time.
Chief Executive Officer Compensation
David F. Dyer rejoined the Company as Chief Executive Officer in October
1998. Mr. Dyer's annual base salary is $450,000, which is the level
established when Mr. Dyer rejoined the Company as Chief Executive Officer in
1998. As noted above, Mr. Dyer's bonus eligibility amount is 100% for purposes
of the Annual Incentive Plan.
Tax Matters
The Compensation Committee and the Board have considered the provisions of
Section 162(m) of the Internal Revenue Code, which impose an annual limit of
$1 million on the deductibility of compensation payments to a company's Chief
Executive Officer and the four other most highly compensated executive
officers for whom proxy statement disclosure is required and who are employed
at the end of such company's taxable year. "Performance-based compensation"
(as defined in the Code) is excluded from this limit. It is the Company's
intention to preserve the deductibility of compensation paid to its employees,
including gains realized upon the exercise of non-qualified stock options, to
the extent feasible and consistent with the Company's overall compensation
philosophy. Notwithstanding the foregoing, the Compensation Committee believes
that the Company's compensation philosophy is appropriate and consistent with
the long-term interests of the Company, without regard to tax considerations.
In the event of changes in the tax law or other circumstances that might
affect tax treatment, we would not currently anticipate that fundamental
changes would be made in the Company's overall compensation policies and
practices.
Submitted by the Compensation
Committee
of the Board of Directors
Gary C. Comer, Chairman
John N. Latter
8
Summary Compensation Table
Set forth below is certain information concerning the compensation for each
of the Named Executive Officers for the fiscal year ended January 26, 2001:
Long-Term
Annual Compensation Compensation Awards
----------------------------------- --------------------
Restricted
Other Annual Stock Stock All Other
Name and Principal Fiscal Salary Bonus Compensation Awards Options Compensation
Position Year ($) ($) ($) ($)(1) (#) ($)(2)
- ------------------ ------ ------ ----- ------------ ---------- --------- ------------
David F. Dyer........... 2001 450,000 112,500 -0- -0- -0- 285,185(4)
President and Chief 2000 450,000 202,500 -0- -0- -0- 117,469
Executive Officer 1999 1999 115,962 -0- 300,000(3) -0- 1,000,000 15,406
Jeffrey A. Jones(5)..... 2001 53,846 -0- 150,000(6) -0- 300,000 -0-
Chief Operating Officer
Mindy C. Meads.......... 2001 361,250 54,187 -0- -0- 50,000 23,083
Executive Vice
President, 2000 350,000 94,500 -0- -0- -0- 142,417
Merchandising and Design 1999 49,808 -0- 100,000(7) -0- 200,000 201
Lee Eisenberg(8)........ 2001 361,250 54,187 50,000(9) -0- 50,000 33,608(11)
Executive Vice
President, 2000 329,808 89,048 200,000(10) -0- 200,000 74,266
Creative Director
Stephen A. Orum(12)..... 2001 280,000 42,000 -0- -0- -0- 18,764
Executive Vice
President, 2000 280,000 75,600 -0- -0- -0- 19,155
Chief Financial Officer 1999 277,500 -0- -0- -0- 60,000 21,656
Francis P. Schaecher.... 2001 242,500 36,375 -0- -0- 25,000 16,373
Senior Vice President, 2000 235,000 63,450 -0- -0- -0- 16,304
Operations 1999 232,500 -0- -0- -0- 35,000 18,060
- --------
(1) Dividends, if any, on shares of restricted stock are paid at the same time
and at the same rate as dividends on the Company's unrestricted Common
Stock. The aggregate number and value (based on the closing price of the
Company's Common Stock ($30.40) on the New York Stock Exchange on January
26, 2001) of each Named Executive Officer's restricted stock holdings as
of such date are as follows: Mr. Dyer, 0 shares, $0; Mr. Jones, 0 shares,
$0; Ms. Meads, 0 shares, $0; Mr. Eisenberg, 0 shares, $0; Mr. Orum, 800
shares, $24,320; and Mr. Schaecher, 0 shares, $0.
(2) For fiscal year 2001, these amounts represent the taxable portion of
premiums on Company-provided life insurance, the Company's contributions
to the Retirement Plan and the Company's contributions to the Deferred
Compensation and Excess Benefit Plan, in the following amounts: Mr. Dyer
$1,656, $8,500, $29,750, respectively; Mr. Jones $0, $0, $0, respectively;
Ms. Meads, $1,080, $8,543, $13,460, respectively; Mr. Eisenberg, $1,656,
$9,553, $12,550, respectively; Mr. Orum, $1,656, $8,500, $8,608,
respectively; and Mr. Schaecher, $1,602, $8,529, $6,242, respectively.
(3) In fiscal year 1999, Mr. Dyer received a signing bonus of $300,000 from
the Company pursuant to the terms of his appointment as President and
Chief Executive Officer effective October 27, 1998.
(4) Of the $285,185 in fiscal year 2001, $69,552 is for personal use of
Company planes, $91,413 is for relocation expenses, $84,314 is for
reimbursement for his income tax liability on the relocation expenses paid
on his behalf and the remainder is described in footnote (2) above.
(5) Mr. Jones was appointed Chief Operating Officer of the Company on December
1, 2000.
(6) In fiscal year 2001, Mr. Jones received a signing bonus of $150,000 from
the Company pursuant to the terms of his appointment as Chief Operating
Officer effective December 1, 2000.
9
(7) In fiscal year 1999, Ms. Meads received a signing bonus of $100,000 from
the Company pursuant to the terms of her appointment as Executive Vice
President, Merchandising and Design effective December 10, 1998.
(8) Mr. Eisenberg was appointed Executive Vice President, Creative Director of
the Company on February 1, 1999.
(9) In fiscal year 2001, Mr. Eisenberg received the final portion of his
signing bonus of $50,000 from the Company. Mr. Eisenberg deferred this
portion of his signing bonus as part of his employment agreement.
(10) In fiscal year 2000, Mr. Eisenberg received a signing bonus of $200,000
from the Company pursuant to the terms of his appointment as Executive
Vice President, Creative Director effective February 1, 1999.
(11) Of the $33,608 in fiscal year 2001, $9,849 is for personal use of
Company planes and the remainder is described in footnote (2) above.
(12) Mr. Orum retired from his position of Executive Vice President, Chief
Financial Officer on January 26, 2001.
Stock Option Grants in Fiscal Year 2001
Set forth below is certain information relating to options to acquire
Common Stock granted to each Named Executive Officer during the fiscal year
ended January 26, 2001 and the grant-date present value of each option grant.
Potential Realizable
Value
at Assumed Annual
Percent of Rates of
Total Stock Stock Price
Options Appreciation for
Stock Granted to Exercise Option Term
Options Employees in Price Expiration ----------------------
Name Granted(#) Fiscal Year ($/Sh) Date 5%(3) 10%(3)
- ---- --------- ------------ -------- ---------- ---------- -----------
Jeffrey A. Jones (1).... 300,000 29.08% $25.91 12/31/10 $4,938,000 $12,546,000
Mindy C. Meads (2)...... 50,000 4.85% $25.56 12/31/10 $ 820,500 $ 2,089,000
Lee Eisenberg (2)....... 50,000 4.85% $25.56 12/31/10 $ 820,500 $ 2,089,000
Francis P. Schaecher
(2).................... 25,000 2.42% $25.56 12/31/10 $ 410,250 $ 1,044,500
- --------
(1) Options are exercisable starting on June 1, 2001, with 30% of the shares
covered thereby becoming exercisable at that time, and an additional 30%
and 40% of the option shares becoming exercisable on the second and third
anniversaries of the grant date, respectively.
(2) Options are exercisable starting on November 1, 2001, with 10% of the
shares covered thereby becoming exercisable at that time, and an
additional 20%, 30% and 40% of the option shares becoming exercisable on
the second, third and fourth anniversaries of the grant date,
respectively.
(3) The actual value, if any, an executive may realize will depend upon the
excess of the stock price over the exercise price on the date the option
is exercised, so there is no assurance that the value realized by the
executive will be at or near the amount shown. In order to realize the
potential value set forth in the 5% and 10% columns, the per share price
of the Common Stock would be approximately $42.37 and $67.73 for Mr. Jones
and $41.97 and $67.34 for Ms. Meads, Mr. Eisenberg and Mr. Schaecher.
10
Stock Option Exercises and Fiscal Year-End Value Table
Set forth below is certain information relating to options to acquire
Common Stock exercised by each Named Executive Officer during the fiscal year
ended January 26, 2001, and options to acquire Common Stock held by each Named
Executive Officer as of such date.
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Shares Value Stock Options at Money Stock Options at
Acquired on Realized FY-End(#) FY-End($)
Name Exercise(#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(2)
- ---- ----------- --------- ------------------------- ----------------------------
David F. Dyer........... -0- -0- 950,000/ 0 11,305,000/ 0
Jeffrey A. Jones........ -0- -0- 0/300,000 0/1,347,000
Mindy C. Meads.......... -0- -0- 120,000/130,000 1,166,400/1,019,600
Lee Eisenberg........... 28,000 563,500 32,000/190,000 800/ 245,500
Stephen A. Orum......... 86,100 990,531 6,000/ 61,500 0/ 98,625
Francis P. Schaecher.... 38,600 1,546,050 18,650/ 68,350 110,460/ 168,340
(1) Upon exercise of an option, an individual does not receive cash equal to
the amount contained in the Value Realized column of this table. Instead,
the amounts contained in the Value Realized column reflect the increase in
the price of the Company's Common Stock from the option award date to the
option exercise date. No cash is realized until the shares received upon
exercise of an option are sold.
(2) Calculated based upon the closing price of the Company's Common Stock
($30.40) on the New York Stock Exchange on January 26, 2001.
11
Performance Graph
The following graph presents the cumulative total shareholder return of the
Company, the Value Line Retail Index and the Standard & Poor's MidCap 400
Index for a five year period. Cumulative total shareholder return is defined
as share price appreciation assuming reinvestment of dividends. The Company's
Common Stock is included in both the Value Line Retail Index and the Standard
& Poor's MidCap 400 Index. In addition to the Company, 66 retailers (including
catalog companies) comprise the Value Line Retail Index. The dollar amounts
shown on the following graph assume that $100 was invested on February 1, 1996
in Company Common Stock, stocks constituting the Value Line Retail Index and
stocks constituting the Standard and Poor's MidCap 400 Index with all
dividends being reinvested. The January 31st dates shown on the following
graph do not correspond exactly with the last day of the Company's fiscal year
in calendar years 1998, 1999, 2000 and 2001.
being reinvested. The January 31st dates shown on the following graph do not
correspond exactly with the last day of the Company's fiscal year in calendar
years 1998, 1999, 2000 and 2001.
Comparison of Five-Year Total Return
Among Lands' End, Inc., Value Line Retail (Special Lines) Index and S&P MidCap
400 Index
[GRAPH]
Value of $100 invested on February 1,
1996 at
---------------------------------------
1/31/97 1/31/98 1/31/99 1/31/00 1/31/01
------- ------- ------- ------- -------
Lands' End, Inc......................... $194 $269 $221 $235 $203
Value Line Retail Index................. 128 180 270 263 291
S&P MidCap 400 Index.................... 122 152 178 206 255
12
PRINCIPAL SHAREHOLDERS
The following table shows certain information concerning the number of
shares of the Company's Common Stock beneficially owned, directly or
indirectly, by each director and nominee for director of the Company, the
Chief Executive Officer and each of the other most highly compensated
executive officers of the Company, and the directors and executive officers as
a group. The following table also sets forth information concerning each
person known to the Company as of March 23, 2001 to be the "beneficial owner"
(as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
of more than 5% of the Company's Common Stock. Unless otherwise indicated, the
persons named in the table have sole voting and investment power with respect
to all shares shown as beneficially owned by them. Except as described in the
notes below, all information in the table and the accompanying footnotes is
given as of March 23, 2001 and has been supplied by each of the persons
included in the table.
Percent
Beneficial Owners Amount of Class
----------------- ---------- --------
Gary C. Comer(1)..................................... 16,413,309 55.87%
Address: 20875 Crossroads Circle, Suite 100;
Waukesha, WI 53186
Richard C. Anderson(2)............................... 1,189,010 4.04%
Richard C. Marcus.................................... -0- *
Paul D. Schrage...................................... -0- *
Eliot Wadsworth...................................... 50,000 *
David F. Dyer(3)..................................... 863,431 2.86%
Jeffrey A. Jones..................................... -0- *
Mindy C. Meads(4).................................... 120,000 *
Lee Eisenberg(5)..................................... 93,500 *
Stephen A. Orum(6)................................... 54,500 *
Francis P. Schaecher(7).............................. 89,250 *
All directors and executive officers as a group (11
persons)(8)......................................... 18,873,000 61.84%
- --------
*Less than 1%.
(1) Share amount shown includes (i) 303,559 shares of the Company's Common
Stock held by a trust for the benefit of Mr. Comer and his family as to
which he disclaims beneficial ownership except to the extent of his
pecuniary interest therein and (ii) 2,104,531 shares of the Company's
Common Stock held by trusts for the benefit of Mr. Comer's family as to
which he disclaims beneficial ownership.
(2) Share amount shown includes (i) exercisable options for 25,000 shares of
Company Common Stock granted to Mr. Anderson under the DSOP, (ii) 38,141
shares of the Company's Common Stock held by a trust for the benefit of
Mr. Anderson and his family as to which he disclaims beneficial ownership
except to the extent of his pecuniary interest therein, (iii) 69,859
shares of the Company's Common Stock held by a trust for the benefit of
Mr. Anderson's family as to which he disclaims beneficial ownership and
(iv) 215,105 shares of the Company's Common Stock held by a trust for the
benefit of Mr. Anderson's family as to which he disclaims beneficial
ownership.
(3) Share amount shown includes exercisable options for 850,000 shares of
Company Common Stock granted to Mr. Dyer under the Stock Option Plan.
(4) Share amount shown includes exercisable options for 120,000 shares of
Company Common Stock granted to Ms. Meads under the Stock Option Plan.
(5) Share amount shown includes exercisable options for 92,000 shares of
Company Common Stock granted to Mr. Eisenberg under the Stock Option Plan.
(6) Share amount shown includes exercisable options for 25,500 shares of
Company Common Stock granted to Mr. Orum under the Stock Option Plan.
(7) Share amount shown includes exercisable options for 29,250 shares of
Company Common Stock granted to Mr. Schaecher under the Stock Option Plan.
13
(8) Share amount shown includes exercisable options for 1,141,750 shares of
Company Common Stock granted to certain executive officers under the Stock
Option Plan and certain directors under the DSOP.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that shareholders ratify the appointment
of Arthur Andersen LLP as independent public accountants to audit the
Company's consolidated financial statements for the fiscal year ending
February 1, 2002. A representative of Arthur Andersen LLP will be present at
the meeting with the opportunity to make a statement if such representative so
desires and will be available to respond to appropriate questions raised
orally at the meeting or submitted in writing to the Company's Secretary
before the meeting.
SHAREHOLDER PROPOSAL
Amalgamated Bank of New York's LongView MidCap 400 Index Fund, 11-15 Union
Square, New York, N.Y. 10003, owner of 3,500 shares of Common Stock of the
Company, and the Comptroller of New York City, as custodian and trustee of the
New York City Employees' Retirement System, 1 Centre Street, New York, N.Y.
10007-2341, owner of 47,178 shares of Common Stock of the Company, have given
notice that they intend to present for action at the annual shareholder
meeting the following resolution:
"Whereas, the Company currently has extensive overseas operations; and
"Whereas, reports of human rights abuses in the overseas subsidiaries and
suppliers of U.S.-based corporations have led to an increased public awareness
of the problems of child labor, "sweatshop" conditions, and the denial of
labor rights in U.S. corporate overseas operations; and
"Whereas, corporate violations of human rights in these overseas operations
can lead to negative publicity, public protests, and a loss of consumer
confidence which can have a negative impact on shareholder value; and
"Whereas, a number of corporations have implemented independent monitoring
programs with respected human rights and religious organizations to strengthen
compliance with international human rights norms in subsidiary and supplier
factories; and
"Whereas, these standards incorporate the conventions of the International
Labor Organization (ILO) on workplace human rights which include the following
principles:
"All workers have the right to form and join trade unions and to bargain
collectively. (ILO Conventions 87 and 98);
"Workers representatives shall not be the subject of discrimination and
shall have access to all workplaces necessary to enable them to carry out
their representation functions. (ILO Convention 135);
"There shall be no discrimination or intimidation in employment. Equality
of opportunity and treatment shall be provided regardless of race, color, sex,
religion, political opinion, age, nationality, social origin or other
distinguishing characteristics. (ILO Convention 100 and 111);
"Employment shall be freely chosen. There shall be no use of force,
including bonded or prison labor. (ILO Convention 29 and 105);
"There shall be no use of child labor. (ILO Convention 138); and
"Whereas, independent monitoring of corporate adherence to these standards
is essential if consumer and investor confidence in our Company's commitment
to human rights is to be maintained.
14
"Therefore, be it resolved that the shareholders request the board of
directors to commit the Company to the full implementation of these human
rights standards by its international suppliers and in its own international
production facilities and commit to a program of outside, independent
monitoring of compliance with these standards."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
We strongly support human rights in the workplace and are committed to the
fair and ethical treatment of all employees. We have a long history of being
recognized as an industry leader for our commitment to corporate social
responsibility, fairness and diversity. We oppose child and forced labor; we
strongly believe that no employer should discriminate against anyone or any
member of a group based on personal characteristics or beliefs; and we are
committed to operating within the spirit and letter of all laws and
regulations affecting our businesses and employees.
We already have strong corporate policies in place that cover each of the
substantive areas of this shareholder proposal. We select vendors and approve
factories for manufacture of our products based in part on their support of
these principles. As a condition to doing business with us, vendors must agree
to abide by the Lands' End Standards of Business Conduct ("Lands' End
Standards"), which require that vendors follow certain ethical employment and
business practices (pertaining to such issues as child labor, minimum wages
and benefits, forced labor, discriminatory employment practices, freedom of
association, and improper gifts and other inducements) and provide safe and
healthy working environments.
We employ a rigorous monitoring process to assure compliance with the
Lands' End Standards. We have contracted with a well-respected company that is
very knowledgeable and experienced in monitoring compliance with the laws of
the various countries in which the factories of our vendors are located. This
contractor has trained and continues to train our officers, merchants,
inventory personnel, sourcing staff, and quality inspectors (as well as our
outside sourcing agents) who visit the factories in which our products are
manufactured to identify and remedy, among other things, any employment and
environmental related problems that may exist at these offshore facilities. In
addition to this training, our contractor performs thorough in-plant audits of
selected vendors for compliance with the Lands' End Standards and local laws.
We believe that the company already has policies and procedures in place
that are designed to attain the underlying goals of the shareholder proposal,
and as a result, we believe that adoption of this proposal will provide no
benefit beyond that achieved by our current programs and policies. We believe
that our programs and policies are taken seriously and, in conjunction with
our compliance monitor, are in fact effective in achieving the substantive
goals of this proposal. In addition, we believe that the imposition of a new
and untested outside monitor as contemplated by this proposal could undermine
rather than support the best interests of the company and its shareholders, as
we believe the monitor now in place has as its objective and is responsive to
the best interests of the company and its shareholders and does not have an
agenda or bias that is out of alignment with this objective. Furthermore, the
proposal seeks the adoption of certain "standards" that, other than
incorporating some of the ILO Conventions, are undefined. There are over 40
different standards proposed by different organizations seeking to establish
rules for the appropriate conduct of business in foreign manufacturing
facilities. The number, variances and complexity of these different standards
would add significant difficulties and costs to our requirements and
monitoring processes.
For the foregoing reasons, the Board recommends a vote AGAINST this
proposal.
The affirmative vote of a majority of shares participating in the voting on
this proposal is required for adoption of this resolution. Proxies will be
voted AGAINST this proposal unless you instruct otherwise on the enclosed
proxy card. Abstentions indicated on such proxy card will not be counted as
either "for" or "against" this proposal. "Broker non-votes" specified on
proxies returned by brokers holding shares for beneficial owners who have not
provided instructions as to voting on this issue will be treated as not
present for voting on this issue.
15
OTHER INFORMATION
Compliance With Section 16(a) of The Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten-percent
beneficial owners are required by Securities and Exchange Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the best of the Company's knowledge, based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that no Section 16(a) forms were required for those persons,
all Section 16(a) filing requirements applicable to its officers, directors
and greater than ten-percent beneficial owners were complied with during the
fiscal year ended January 26, 2001.
Additional Matters
The Board of Directors is not aware of any other matters that will be
presented for action at the 2001 Annual Meeting. Should any additional matters
properly come before the meeting, properly signed and dated proxies will be
voted on those matters by the persons named therein in accordance with the
best judgment of such persons.
Submission of Shareholder Proposals
The Company's By-Laws require that the Company be provided with written
notice with respect to the nomination of a person for election as a director
or the submission of any proposal at an annual meeting of shareholders. Any
such notice must include certain information concerning the nominating or
proposing shareholder, and the nominee or the proposal, and must be furnished
to the Company not less than 10 business days prior to such meeting. A copy of
the applicable By-Law provision may be obtained, without charge, upon written
request to the Secretary of the Company at the address set forth below.
In addition, all shareholder proposals to be included in the Board of
Directors' Proxy Statement and proxy for the 2002 Annual Meeting of
shareholders must (i) be received by the Secretary of the Company not later
than December 17, 2001 and (ii) satisfy the conditions established by the
Securities and Exchange Commission as necessary to entitle such proposal to be
included in the Proxy Statement and form of proxy.
Cost of Proxy Solicitation
The Company will pay the cost of preparing, printing and mailing proxy
materials as well as the cost of soliciting proxies on behalf of the Board of
Directors. In addition to using the mails, officers and other employees of the
Company may solicit proxies in person and by telephone and telegraph.
Report to Shareholders
The Company has mailed this Proxy Statement along with a copy of the
Company's 2001 Annual Report to each shareholder entitled to vote at the
Annual Meeting. Included in the 2001 Annual Report are the Company's
consolidated financial statements for the fiscal year ended January 26, 2001.
16
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 26, 2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE
OBTAINED WITHOUT CHARGE BY SENDING A WRITTEN REQUEST TO THE SECRETARY, LANDS'
END, INC., ONE LANDS' END LANE, DODGEVILLE, WISCONSIN 53595.
By order of the Board of Directors,
/s/ Robert S. Osborne
Robert S. Osborne
Secretary
April 16, 2001
17
APPENDIX A
Lands' End, Inc.
Statement of Board Policy
Regarding Corporate Governance
This Statement of Policy has been adopted by the Board of Directors of
Lands' End, Inc., effective as of January 1, 2001, in order to provide an
appropriate framework for governance of the company. The policies set forth
are subject to applicable Delaware law and to the company's certificate of
incorporation and bylaws.
Oversight Function
The primary mission of the Lands' End Board of Directors is to serve the
long-term interests of the shareholders by providing oversight of the company
and its management. The Board will determine the appropriate scope of its
oversight activities from time to time in light of prevailing circumstances
and the nature of decisions that must be addressed. In general, the oversight
will include the following: (1) participating with management in developing
strategic plans for the future direction of the company, (2) monitoring the
company's performance against its plans and evaluating the performance of
management, (3) counseling management on strategic and other issues, (4)
determining appropriate compensation policies for the company and establishing
the compensation of senior management, (5) reviewing the adequacy of the
company's internal controls and financial reporting systems, and (6)
addressing issues regarding board composition and practices.
Composition
The Board currently consists of seven director positions. It is the policy
of the Board that these positions be filled by the chief executive officer and
by six other persons (the "outside directors") who are not current or former
employees of the company. Notwithstanding the foregoing, any former employee
who was serving as a director as of January 1, 2001, may continue as a
director and shall be deemed to be an outside director for all purposes of
this policy statement.
As provided in the company's certificate of incorporation, the board is
divided into three classes, with approximately one-third of the Board being
elected at each annual meeting and serving for a three-year term. It is the
policy of the Board that all persons who join the Board for the first time
after January 1, 2001 will retire from the Board no later than the annual
meeting next following their 70th birthday.
The Board will select one of the outside directors to serve as its Chairman
and may select another outside director as Vice Chairman. The Board will
maintain three standing committees of outside directors: audit, compensation
and nominating. The outside directors will also meet together from time to
time as they deem appropriate.
Audit Committee
The Audit Committee will be constituted in accordance with the Audit
Committee Charter adopted by the Board of Directors, as amended from time to
time, and the listing requirements of the New York Stock Exchange.
Compensation Committee
Commencing with the annual meeting of shareholders to be held in 2001, the
Compensation Committee will consist of three outside directors who meet the
eligibility requirements of SEC Rule 16b-3 and Section 162(m) of the Internal
Revenue Code. At that time, the Performance Compensation Committee will be
combined with the Compensation Committee, which will thereafter administer the
company's stock and incentive plans (other than such plans relating solely to
non-employee directors) and have such other responsibilities as shall be
delegated to it by the Board from time to time.
A-1
Nominating Committee
The Nominating Committee will consist of all of the outside directors. The
Nominating Committee will have the responsibility for selecting any new chief
executive officer of the company and will select prospective directors to fill
Board vacancies that occur from time to time due to retirement or resignation.
In addition, approximately four months before each annual meeting, those
members of the Nominating Committee whose director terms will not expire at
that meeting will determine the slate of directors to be proposed for election
at the meeting.
In selecting director candidates, the nominating Committee will seek
prospective directors who have had successful careers in fields related to the
business of the company. Directors will be selected on the basis of their
knowledge, expertise and judgment, their potential to contribute to the
oversight function of the Board and, in the case of existing directors slated
for renomination, their previous service and contributions to the Board.
A-2
APPENDIX B
LANDS' END, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
May 24, 2000
I. PURPOSE
The purpose of the Audit Committee is to assist the Board of Directors of
Lands' End, Inc. (the "Company") in fulfilling its oversight responsibilities
with respect to the financial reports and other financial information provided
by the Company to its stockholders and others, the Company's system of
internal controls and the Company's audit, accounting and financial reporting
processes in general.
II. COMPOSITION & INDEPENDENCE
The Audit Committee shall be appointed by the Board of Directors in
accordance with the Company's bylaws. Commencing with the annual meeting of
directors to be held in 2001, the Audit Committee shall consist of not less
than three members of the Board of Directors, each of whom shall be an
independent director as determined in accordance with rules of the New York
Stock Exchange. Members of the Audit Committee shall be financially literate
or become financially literate within a reasonable period of time after
appointment to the Audit Committee and at least one member of the Audit
Committee shall have accounting, related financial management expertise, or
any other comparable experience or background that results in the individual's
financial sophistication.
III. RESPONSIBILITIES
The Audit Committee shall be responsible for the matters listed below,
provided that its function shall be one of oversight and review. The Audit
Committee is not expected to audit the Company, to define the scope of the
audit, to control the Company's accounting practices or to define the
standards to be used in preparation of the Company's financial statements. The
Board of Directors recognizes that management, the internal audit department
and the external auditors will generally have more knowledge and more detailed
information about the Company's financial affairs than the members of the
Audit Committee, and that the Audit Committee's role is not to provide any
expert assurance as to the Company's financial statements or any professional
certification as to the work of the external auditors.
1. External Auditors. Recommend annually to the Board of Directors the firm
to be employed by the Company as its external auditors, with such firm
being ultimately accountable to the Board of Directors and the Audit
Committee, which shall have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the external auditors
(or to nominate the external auditors to be proposed for approval at any
meeting of stockholders).
2. Plan of Audit. Consult with the internal audit department and the
external auditors regarding the plan of audit. The Audit Committee also
shall review with the external auditors their report on the audit and
review with the internal audit department and management any comments
from the external auditors regarding suggested changes or improvements
in the Company's accounting practices or controls.
3. Accounting Principles and Disclosure. Review significant developments in
accounting rules. The Audit Committee shall review with management any
recommended changes in the Company's methods of accounting or financial
statements. The Audit Committee also shall review with the internal
audit department and the external auditors any significant proposed
changes in accounting principles and financial statements.
B-1
4. Internal Accounting Controls. Consult with the internal audit department
and the external auditors regarding the adequacy of internal accounting
controls. Where appropriate, consultation with the internal audit
department and the external auditors regarding internal controls shall
be conducted out of management's presence.
5. Financial Disclosure Documents. Review with management, the internal
audit department and the external auditors the financial information
contained in the Company's public disclosure documents, including review
prior to filing of all financial statements and reports to be included
in quarterly and annual reports filed with the Securities and Exchange
Commission. The Chairman of the Audit Committee may represent the entire
audit Committee, either in person or by telephone conference call, for
purposes of such review.
6. Internal Control Systems. Review with management and the internal audit
department the Company's internal control systems intended to ensure the
reliability of financial reporting and compliance with applicable codes
of conduct, laws and regulations, and consult with management the
internal audit department regarding the establishment and maintenance of
an environment that promotes ethical behavior, including the
establishment, communication, and enforcement of codes of conduct to
guard against dishonest, unethical, or illegal activities. The Audit
Committee shall also review internal audit plans in significant
compliance areas.
7. Oversight of External Auditors. Evaluate the external auditors on an
annual basis and where appropriate recommend a replacement for the
external auditors. In such evaluation, the external auditors shall
deliver to the Audit Committee a written statement delineating all
relationships (including services provided) between the external
auditors and the Company. The Audit Committee shall engage in a dialogue
with the external auditors with respect to any disclosed relationships
that may affect the objectivity and independence of the external
auditors and shall recommend that the Board of Directors take
appropriate action in response to the external auditors' report to
satisfy itself as to the external auditors' independence.
8. Adequacy of Personnel. Review periodically the adequacy of the Company's
accounting, financial, and internal audit personnel resources.
9. Risk Management. Review and evaluate risk management policies in light
of the Company's business strategy, capital strength, and overall risk
tolerance. The Audit Committee also shall evaluate on a periodic basis
the Company's investment and derivatives risk management policies,
including the internal system to review operational risks, procedures
for derivatives investment and trading, and safeguards to ensure
compliance with procedures.
10. Tax Policies. Review periodically the Company's tax policies and any
pending audits or assessments.
11. Review of Audit Committee Charter. Review this Charter periodically,
assess its continued adequacy and propose any appropriate amendments to
the Board of Directors.
12. Communication. Provide for open communication among the external
auditors, the internal audit department, other financial and senior
management, and the Board of Directors concerning the Company's
financial position and affairs.
IV. QUORUM AND MEETINGS
A quorum of the Audit Committee shall be declared when a majority of the
appointed members of the Audit Committee are in attendance. The Audit
Committee shall meet on a regular basis. Meetings shall be scheduled at the
discretion of the Chairman. Notice of the meetings shall be provided in
accordance with the Company's bylaws. The Audit Committee will keep minutes of
its meetings and will make such minutes available to the full Board of
Directors for its review.
B-2
V. REPORTS
The Audit Committee shall report to the Board of Directors from time to
time with respect to its activities and its recommendations. When presenting
any recommendation or advice to the Board of Directors, the Audit Committee
will provide such background and supporting information as may be necessary
for the Board of Directors to make an informed decision. The Audit Committee
shall report to stockholders in Company's proxy statement for each annual
meeting whether the Audit Committee has satisfied its responsibilities under
this Charter.
VI. FURTHER AUTHORITY
The Audit Committee is authorized to take all actions which it may deem
necessary or appropriate to carry out its purpose and to fulfill its
responsibilities, including giving direction to management, conducting
investigations and seeking outside legal or other advice (from the Company's
regular advisers or otherwise) to the extent it deems necessary or
appropriate.
B-3
(LAND'S END SITE MAP)
[LANDS' END, LOGO]
LANDS' END, INC.
PROXY SERVICES
P.O. BOX 9142
FARMINGDALE, NY 11735
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the
web site. You will be prompted to enter your 12-digit Control Number which is
located below to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions
the Vote Voice provides you.
VOTE BY MAIL -
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to LANDS' END, INC., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: LANDS1
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
LANDS' END, INC.
Election of Directors
1. To elect two members of the Board of Directors of the Company to serve
until the annual meeting of shareholders in 2004, and until their
successors are duly elected and qualified.
Nominees: 01) Gary C. Comer and 02) Eliot Wadsworth, II
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
[_] [_] [_]
To withhold authority to vote, mark For All Except and write the nominee's
number on the line below.
------------------------------------
VOTE ON PROPOSALS
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the fiscal year ending February 1, 2002.
For Against Abstain
[_] [_] [_]
3. To consider and act upon the shareholder proposal described in the
accompanying Proxy Statement.
[_] [_] [_]
4. In their discretion, the Proxies are authorized to consider and act upon
such other business as may properly come before the meeting or any
adjournment thereof.
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope.
---------------------------------- -------- ------------------------ ------
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
LANDS' END, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 16, 2001
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Gary C. Comer, David F. Dyer and Robert S.
Osborne as Proxies, each with the power to appoint his substitute and hereby
authorizes each of them to represent and to vote, as designated below, all of
the shares of common stock of Lands' End, Inc. held of record by the undersigned
on March 23, 2001, at the Annual Meeting of Shareholders to be held on May 16,
2001, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this Proxy will be voted
FOR the election of the nominees listed in Item 1, FOR Proposal 2 and AGAINST
Proposal 3.