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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 sec.240.14a-12
R. G. BARRY CORPORATION
(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)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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R. G. Barry Corporation Logo
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD N.W.
PICKERINGTON, OHIO 43147
March 27, 2000
Dear Fellow Shareholders:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of R. G. Barry Corporation, which will be held at 11:00 a.m., local time, on
Thursday, May 11, 2000, at our executive offices located at 13405 Yarmouth Road
N.W., Pickerington, Ohio 43147.
The formal notice of annual meeting of shareholders and proxy statement are
enclosed. The board of directors has nominated three directors, each for a term
to expire at the 2003 annual meeting of shareholders. The board of directors
recommends that you vote FOR the nominees.
On behalf of the board of directors and management, I cordially invite you
to attend the annual meeting. Whether or not you plan to attend the annual
meeting and regardless of the number of common shares you own, it is important
that your common shares be represented and voted at the annual meeting.
Accordingly, after reading the enclosed proxy statement, please complete, sign
and date the enclosed proxy card and mail it promptly in the reply envelope
provided for your convenience.
Thank you for your continued support.
Very truly yours,
Gordon Zacks signature
Gordon Zacks,
Chairman of the Board, President
and Chief Executive Officer
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R. G. Barry Corporation Logo
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
R. G. BARRY CORPORATION
13405 YARMOUTH ROAD N.W.
PICKERINGTON, OHIO 43147
(614) 864-6400
Pickerington, Ohio
March 27, 2000
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of R. G.
Barry Corporation (the "Company") will be held at the executive offices of the
Company at 13405 Yarmouth Road N.W., Pickerington, Ohio 43147, on Thursday, May
11, 2000, at 11:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for terms of three years each.
2. To transact any other business which properly comes before the annual
meeting or any adjournment.
Shareholders of record at the close of business on March 15, 2000, will be
entitled to receive notice of, and to vote at, the annual meeting and any
adjournment.
You are cordially invited to attend the annual meeting. The vote of each
shareholder is important, whatever the number of common shares held. Whether or
not you plan to attend the annual meeting, please sign, date and return your
proxy card promptly in the enclosed envelope. Should you attend the annual
meeting, you may revoke your proxy and vote in person. Attendance at the annual
meeting will not, in and of itself, constitute revocation of a proxy.
By Order of the Board of Directors,
Gordon Zacks signature
Gordon Zacks,
Chairman of the Board, President
and Chief Executive Officer
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R. G. BARRY CORPORATION
13405 YARMOUTH ROAD N.W.
PICKERINGTON, OHIO 43147
(614) 864-6400
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being mailed to
shareholders of R. G. Barry Corporation (the "Company") on or about March 27,
2000, in connection with the solicitation of proxies by the board of directors
of the Company for use at the annual meeting of shareholders on Thursday, May
11, 2000, or any adjournment. The annual meeting will be held at 11:00 a.m.,
local time, at our executive offices at 13405 Yarmouth Road N.W., Pickerington,
Ohio. The facility is located east of Columbus, Ohio, immediately south of the
intersection of Interstate 70 and State Route 256.
A proxy card for use at the annual meeting accompanies this proxy statement
and is solicited by the Company's board of directors. Without affecting any vote
previously taken, any shareholder appointing a proxy may revoke it at any time
before it is voted by filing with the Secretary of the Company, at the address
shown on the cover page of this proxy statement, written notice of revocation;
by executing a later-dated proxy card which is received by the Company prior to
the annual meeting; or by attending the annual meeting and giving notice of
revocation in person. Attendance at the annual meeting will not, in and of
itself, constitute revocation of a proxy.
The Company will bear the costs of preparing, printing and mailing this
proxy statement, the accompanying proxy card and any other related materials and
all other costs incurred in connection with the solicitation of proxies on
behalf of the board of directors. The Company has engaged D. F. King & Co., Inc.
to assist in the solicitation of proxies from shareholders at a fee of not more
than $4,500 plus reimbursement of reasonable out-of-pocket expenses. In
addition, proxies may be solicited, for no additional compensation, by officers,
directors or employees of the Company and our subsidiaries by further mailing,
telephone or personal contact. We will also pay the standard charges and
expenses of brokerage houses, voting trustees, banks, associations and other
custodians, nominees and fiduciaries, who are record holders of common shares
not beneficially owned by them, for forwarding materials to, and obtaining
proxies from, the beneficial owners of common shares entitled to vote at the
annual meeting.
Our annual report to shareholders for the fiscal year ended January 1, 2000
(the "1999 fiscal year") is enclosed with this proxy statement.
VOTING AT ANNUAL MEETING
Only shareholders of record at the close of business on March 15, 2000, are
entitled to receive notice of, and to vote at, the annual meeting and any
adjournment. At the close of business on March 15, 2000, 9,350,657 common shares
were outstanding and entitled to vote. Each common share entitles the holder
thereof to one vote on each matter to be submitted to shareholders at the annual
meeting. A quorum for the annual meeting is a majority of the outstanding common
shares.
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SHARE OWNERSHIP
The following table furnishes information regarding the beneficial
ownership of common shares by each person known to the Company to beneficially
own more than five percent (5%) of the outstanding common shares as of March 15,
2000 (unless otherwise indicated):
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------------
SOLE SHARED SOLE SHARED PERCENT
NAME AND ADDRESS VOTING VOTING DISPOSITIVE DISPOSITIVE OF
OF BENEFICIAL OWNER POWER POWER POWER POWER TOTAL CLASS(1)
------------------- ------- --------- ----------- ----------- --------- --------
Artisan Partners Limited -- 1,246,900(2) -- 1,246,900(2) 1,246,900(2) 13.3%
Partnership
Artisan Investment Corporation
Andrew A. Ziegler
Carlene Murphy Ziegler
1000 North Water Street, #1770
Milwaukee, WI 53202
Harris Associates L.P. -- 950,000(3) 50,000(3) 900,000(3) 950,000(3) 10.2%
Harris Associates Inc.
Harris Associates Investment
Trust
Two North LaSalle Street, Suite
500
Chicago, IL 60602-3790
Gordon Zacks 946,828(4) -- 499,702(4) -- 946,828 10.0%
13405 Yarmouth Road N.W.
Pickerington, OH 43147
Dimensional Fund Advisors Inc. 748,381(5) -- 748,381(5) -- 748,381(5) 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Schneider Capital Management 82,900(6) -- 556,400(6) -- 556,400(6) 6.0%
Corporation
480 E. Swedesford Road
Suite 1080
Wayne, PA 19087
Florence Zacks Melton 29,873 -- 476,999 -- 476,999 5.1%
1000 Urlin Avenue
Columbus, OH 43212
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(1) The percent of class is based upon the sum of 9,350,657 common shares
outstanding on March 15, 2000, and the number of common shares, if any, as
to which the named person has the right to acquire beneficial ownership upon
the exercise of options exercisable within 60 days of March 15, 2000.
(2) Based on information contained in filings with the Securities and Exchange
Commission (the latest of which is dated February 14, 2000), as of December
31, 1999, Artisan Partners Limited Partnership, a registered investment
adviser ("Artisan Partners"), its general partner Artisan Investment
Corporation ("Artisan Corp."), and Andrew A. Ziegler and Carlene Murphy
Ziegler, the principal stockholders of Artisan Corp., may be deemed to
beneficially own 1,246,900 common shares. Artisan Partners serves as
investment adviser to Artisan Funds, Inc., comprised of four series
designated Artisan Small Cap Fund, Artisan International Fund, Artisan Mid
Cap Fund and Artisan Small Cap Fund (the "Artisan Funds"). Although the
Artisan Funds are not controlled by Artisan Partners, under Rule 13d-3(a) of
the Securities Exchange Act of 1934 (the "Exchange Act"), the common shares
beneficially owned by an Artisan Fund, with respect to which that Artisan
Fund has delegated to Artisan Partners shared voting power and shared
dispositive power, are considered to be common shares beneficially owned by
Artisan Partners by reason of those delegated powers. The common shares
reported have been acquired on behalf of discretionary clients of Artisan
Partners.
(3) Based on information contained in filings with the SEC (the latest of which
are dated January 17, 2000), as of December 31, 1999, Harris Associates
L.P., a registered investment adviser ("Harris"), and its
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general partner Harris Associates Inc. ("Harris G/P") may be deemed to
beneficially own 950,000 common shares, including 900,000 common shares held
by Harris Associates Investment Trust ("Harris Trust"), in a series
designated The Oakmark Small Cap Fund. 50,000 of the common shares reported
by Harris and Harris G/P have been acquired on behalf of other advisory
clients of Harris. Harris has been granted the power to vote common shares
in circumstances it determines to be appropriate in connection with
assisting its advised clients to whom it renders financial advice in the
ordinary course of business, by either providing information or advice to
the persons having that power, or by exercising the power to vote. In
addition, Harris serves as investment adviser to the Harris Trust and
various of Harris' officers and directors are also officers and trustees of
the Harris Trust. Harris has shared voting and dispositive power with
respect to the 900,000 common shares held in The Oakmark Small Cap Fund
because of Harris' power to manage the investments of Harris Trust.
(4) Includes 204,770 common shares held of record by Mr. Zacks, and 157,002
common shares as to which Mr. Zacks has the right to acquire beneficial
ownership upon the exercise of options exercisable within 60 days of March
15, 2000. 50,000 of the common shares held of record by Mr. Zacks are
"restricted" common shares which were issued to Mr. Zacks in May of 1999.
Mr. Zacks is not permitted to dispose of or otherwise transfer these common
shares until the restrictions have lapsed. SEE "EXECUTIVE COMPENSATION --
EMPLOYMENT CONTRACTS, RESTRICTED STOCK AGREEMENTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS." Excludes 14,967 common
shares held of record and owned beneficially by the spouse of Mr. Zacks as
to which Mr. Zacks has no voting or dispositive power and disclaims
beneficial ownership.
Gordon Zacks is the voting trustee of the Zacks Voting Trust (the "Voting
Trust") and exercises sole voting power as to the 585,056 common shares
deposited in the Voting Trust. The beneficial owners of common shares
deposited in the Voting Trust retain dispositive power with respect to those
common shares (subject to certain limitations on the right to remove common
shares from the Voting Trust). Mr. Zacks is the beneficial owner of 137,930
of the common shares deposited in the Voting Trust. Mr. Zacks' mother,
Florence Zacks Melton, as trustee under a trust established by the will of
Aaron Zacks, deceased, is the owner of the remaining 447,126 common shares
deposited in the Trust. Mr. Zacks is the remainder beneficiary of the trust
created by that will. The Voting Trust will continue in existence until
October 29, 2005, unless extended or terminated in accordance with its
terms.
(5) Based on information contained in filings with the SEC (the latest of which
is dated February 4, 2000), Dimensional Fund Advisors Inc., a registered
investment adviser ("Dimensional"), may be deemed to have beneficial
ownership of 748,381 common shares as of December 31, 1999, all of which
common shares were held in portfolios of four investment companies to which
Dimensional furnishes investment advice and other investment vehicles for
which Dimensional serves as investment manager. In its role as investment
advisor and investment manager, Dimensional possesses both voting and
dispositive power over the common shares owned by these portfolios.
Dimensional disclaims beneficial ownership of these common shares.
(6) Based on information contained in filings with the SEC (the latest of which
is dated February 14, 2000).
The following table furnishes information regarding the beneficial
ownership of common shares, as of March 15, 2000, for each of the current
directors, each of the nominees for election as directors, each of the
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individuals named in the Summary Compensation Table and all current executive
officers and directors as a group:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
----------------------------------------------
COMMON SHARES
WHICH CAN BE
COMMON ACQUIRED UPON
SHARES EXERCISE OF OPTIONS PERCENT
NAME OF PRESENTLY EXERCISABLE WITHIN OF
BENEFICIAL OWNER HELD 60 DAYS TOTAL CLASS(2)
---------------- --------- ------------------- --------- --------
Gordon Zacks (3)...................... 789,826(4) 157,002 946,828 10.0%
Leopold Abraham II (5)................ 6,231 6,250 12,481 (6)
Philip G. Barach...................... 11,831 6,250 18,081 (6)
Edward Bucciarelli (3)................ 15,000(7) 0 15,000 (6)
Richard L. Burrell (3)................ 33,356(8) 76,444 109,800 1.2%
Christian Galvis (3).................. 42,198(9) 97,803 140,001 1.5%
William Giovanello (5)................ 5,000(10) 6,250 11,250 (6)
Harvey M. Krueger..................... 22,221 6,250 28,471 (6)
Roger E. Lautzenhiser................. 1,000 6,250 7,250 (6)
Harry Miller (3)...................... 9,176 40,055 49,231 (6)
David L. Nichols...................... 0 0 0 (6)
Janice Page........................... 0 0 0 (6)
Edward M. Stan........................ 34,557(11) 6,250 40,807 (6)
All current directors and executive
officers as a group (numbering
11)................................. 970,396 408,804 1,379,200 14.1%
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(1) Unless otherwise indicated, the beneficial owner has sole voting and
dispositive power as to all of the common shares reflected in the table.
(2) See Note (1) to preceding table.
(3) Executive officer of the Company named in the Summary Compensation Table.
(4) See Note (4) to preceding table.
(5) Messrs. Abraham and Giovanello have notified the Company that they will not
stand for re-election at the annual meeting.
(6) Represents ownership of less than 1% of the outstanding common shares of
the Company.
(7) Represents "restricted" common shares which were issued to Mr. Bucciarelli
in October of 1999. Mr. Bucciarelli is not permitted to dispose of or
otherwise transfer these common shares until the restrictions have lapsed.
SEE "EXECUTIVE COMPENSATION -- EMPLOYMENT CONTRACTS, RESTRICTED STOCK
AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS."
(8) Includes 15,528 common shares held jointly by Mr. Burrell and his spouse.
(9) Excludes 572 common shares held of record and owned beneficially by Mr.
Galvis' spouse as to which he exercises no voting or dispositive power and
disclaims beneficial ownership.
(10) Excludes 2,000 common shares held of record and owned beneficially by Mr.
Giovanello's spouse as to which he exercises no voting or dispositive power
and disclaims beneficial ownership.
(11) Includes 2,220 common shares held jointly by Mr. Stan and his spouse.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the knowledge of the Company, based solely on a review of copies of the
reports furnished to the Company and written representations that no other
reports were required to be filed in respect of the 1999 fiscal year, all filing
requirements under Section 16(a) of the Exchange Act, applicable to officers,
directors and beneficial owners of more than 10% of the outstanding common
shares were complied with; except Daniel D. Viren, a former executive officer,
filed late one report covering one transaction.
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ELECTION OF DIRECTORS
In accordance with Article SIXTH of the Company's articles of
incorporation, three directors are to be elected at the annual meeting for terms
of three years each and until their respective successors are elected and
qualified. The persons named in the accompanying proxy card intend to vote the
common shares represented by the proxies received under this solicitation for
the nominees named below who have been designated by the board of directors,
unless otherwise instructed on the proxy card. Under Ohio law and the Company's
regulations, the three nominees receiving the greatest number of votes will be
elected as directors. Common shares as to which the authority to vote is
withheld and broker non-votes will not be counted toward the election of
directors or toward the election of the individual nominees specified on the
proxy card.
The following information, as of March 15, 2000, concerning the age,
principal occupation, other affiliations and business experience of each nominee
has been provided by each nominee. Unless otherwise indicated, each individual
has had the same principal occupation for more than five years.
DIRECTOR OF
POSITION(S) HELD THE COMPANY NOMINEE
WITH THE COMPANY AND CONTINUOUSLY FOR TERM
NOMINEE AGE PRINCIPAL OCCUPATION(S) SINCE EXPIRING IN
------- --- ----------------------- ------------ -----------
Harvey M. Krueger........... 70 Vice Chairman, Lehman Brothers, Inc., 1980 2003
investment bankers(1)
David L. Nichols............ 59 Chairman of the Board, Flooring America, -- 2003
Inc., retailer of floor coverings, since
January 2000; private investor from 1998
to January 2000; Chairman and Chief
Executive Officer of Mercantile Stores
Company, Inc., apparel and home fashion
retail chain, from 1992 to 1998(2)
Janice Page................. 51 Retail/merchandising consultant since 1997; -- 2003
Senior (Group) Vice President, Sears,
Roebuck and Co. from 1992 to 1997(3)
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(1) Lehman Brothers, Inc. provided investment banking services to the Company
during the 1999 fiscal year and may do so during the 2000 fiscal year as
requested by the Company. Mr. Krueger is also a director of Automatic Data
Processing, Inc., Bernard Chaus, Inc., International Telecommunication Data
Systems, Inc. and Delta Galil Industries Ltd. and serves on The Club
Mediterranee International Advisory Board.
(2) Mr. Nichols is also a director of The Anderson's Inc., the Federal Reserve
Bank of Cleveland and Value City Department Stores, Inc. Mr. Nichols will be
nominated at the annual meeting for election as a director to serve as the
successor to one of the two incumbent directors who have determined not to
stand for re-election at the annual meeting.
(3) Ms. Page will be nominated at the annual meeting for election as a director
to serve as the successor to one of the two incumbent directors who have
determined not to stand for re-election at the annual meeting.
While it is contemplated that all nominees will stand for election, if one
or more of the nominees at the time of the annual meeting should be unavailable
or unable to serve as a candidate for election as a director, the proxies
reserve full discretion to vote the common shares represented by the proxies for
the election of the remaining nominees and for the election of any substitute
nominee(s) designated by the board of directors. The board of directors knows of
no reason why any of the above-mentioned individuals will be unavailable or
unable to serve if elected to the board.
Shareholders of the Company desiring to nominate candidates for election as
directors must provide timely notice in writing. To be timely, a shareholder's
notice must be delivered or mailed to the Secretary of the Company. Under the
Company's articles of incorporation, a shareholder must deliver or mail the
director nomination not less than 30 days nor more than 60 days prior to any
meeting of shareholders called for the election of directors. However, if less
than 35 days' notice of the meeting is given to the shareholders, the
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nomination must be mailed or delivered to the Company's Secretary not later than
the close of business on the seventh day following the day on which the notice
of the meeting was mailed. Each shareholder nomination must contain the
following information: (a) the name, age, and business and residence addresses
of the nominee; (b) the principal occupation or employment of the nominee; (c)
the number of common shares beneficially owned by the nominee and by the
nominating shareholder; and (d) any other information concerning the nominee
that must be disclosed of nominees in proxy solicitations under the SEC proxy
rules. Each nomination must be accompanied by the written consent of the
proposed nominee to serve as a director. Notice of nominations for the 2000
annual meeting must be mailed or delivered by April 11, 2000.
The following information, as of March 15, 2000, concerning the age,
principal occupation, other affiliations and business experience of the
continuing directors of the Company has been furnished by each director. Unless
otherwise indicated, each individual has had the same principal occupation for
more than five years.
DIRECTOR OF
POSITION(S) HELD THE COMPANY
WITH THE COMPANY AND CONTINUOUSLY TERM
NAME AGE PRINCIPAL OCCUPATION(S) SINCE EXPIRES IN
---- --- ----------------------- ------------ ----------
Edward M. Stan.............. 75 President, Edward M. Stan & Associates, 1971 2001
importing
Richard L. Burrell.......... 67 Senior Vice President -- Finance, 1984 2001
Treasurer and Secretary of the Company
Philip G. Barach............ 69 Private investor(1) 1991 2001
Gordon Zacks................ 67 Chairman of the Board, Chief Executive 1959 2002
Officer and President of the Company
Christian Galvis............ 58 Executive Vice President -- Operations 1992 2002
of the Company and, since January 1998,
President -- Operations of Barry
Comfort Group
Roger E. Lautzenhiser....... 46 Partner, Vorys, Sater, Seymour and Pease 1999 2002
LLP, attorneys at law(2)
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(1) Mr. Barach is also a director of Union Central Life Insurance Company (from
which he will retire on May 20, 2000), and Bernard Chaus, Inc. and a member
of the board of trustees of Glimcher Realty Trust.
(2) Vorys, Sater, Seymour and Pease LLP rendered legal services to the Company
during the 1999 fiscal year and continues to do so.
There are no family relationships among any of the directors, nominees for
election as directors and executive officers of the Company.
The board of directors held a total of eleven meetings during the 1999
fiscal year. Each incumbent director attended 75% or more of the aggregate of
the total number of meetings held by the board of directors during the period he
served as a director and the total number of meetings held by all committees of
the board of directors on which he served during the period he served.
The board of directors has standing audit, compensation and nominating
committees.
The audit committee consists of Leopold Abraham II, Philip G. Barach,
William Giovanello, Harvey M. Krueger and Edward M. Stan. The function of the
audit committee is to review the adequacy of the Company's system of internal
controls, to investigate the scope and adequacy of the work of the Company's
independent auditors and to recommend to the board of directors a firm to serve
as the Company's independent auditors. The audit committee met three times
during the 1999 fiscal year.
The compensation committee consists of Leopold Abraham II, Philip G.
Barach, William Giovanello and Harvey M. Krueger. The function of the
compensation committee is to review and supervise the operation of
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the Company's compensation plans, to select those eligible employees who may
participate in each plan (where selection is required), to prescribe the terms
of any options granted under the Company's stock option plans (where permitted)
and stock purchase plan and to approve the compensation of the Company's
executive officers. The compensation committee met two times during the 1999
fiscal year.
The nominating committee consists of Philip G. Barach, Edward M. Stan and
Gordon Zacks. The function of the nominating committee is to recommend to the
board of directors candidates for membership on the board. The nominating
committee was organized in February, 2000. The nominating committee will
consider nominees recommended by shareholders for the 2001 annual meeting of
shareholders provided that the names of such nominees are submitted in writing,
not later than November 1, 2000, to Edward M. Stan, c/o R. G. Barry Corporation,
13405 Yarmouth Road N.W., Pickerington, Ohio 43147. Each such submission must
include a statement of the qualifications of the nominee, a consent signed by
the nominee evidencing a willingness to serve as a director, if elected, and a
commitment by the nominee to meet personally with committee members.
REPORT OF
THE COMPENSATION COMMITTEE
OF
R. G. BARRY CORPORATION ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors is comprised entirely
of non-employee directors. Decisions on compensation of the executive officers
generally are made by the compensation committee, although compensation levels
for executive officers other than the Chairman and Chief Executive Officer are
recommended to the committee by the Chairman, who has substantially greater
knowledge of the contributions made by the executive officers.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
In determining the compensation of executive officers, the compensation
committee seeks to create a compensation program that links compensation to the
Company's operational results, rewards above average corporate performance,
recognizes individual contribution and achievement and assists the Company in
attracting and retaining outstanding executive officers and other key employees.
Executive compensation is set at levels that the compensation committee, with
the advice of the Company's executive compensation consultants, believes to be
competitive with the compensation paid by other companies that compete with the
Company for executive officers and other key employees having the experience and
abilities that are necessary to manage the Company's business.
BASE SALARIES
The base salaries of the executive officers and subsequent adjustments to
those base salaries are determined relative to the following factors: (i) the
criticality to the Company of the executive officer's job function; (ii) the
individual's performance in his position; (iii) the individual's potential to
make a significant contribution to the Company in the future; and (iv) a
comparison of industry pay practices. The compensation committee believes that
all of these factors are important and the relevance of each factor varies from
individual to individual. The compensation committee has not assigned any
specific weight to any of these factors in the evaluation of any executive
officer's base salary.
An executive officer's individual performance is measured against goals and
objectives that have been previously discussed with the executive officer.
Consideration is given to the individual's contribution to the management team
and the individual's overall value and contribution to the Company. The
compensation committee relies on the Chairman to make recommendations to the
committee regarding the appropriate base salaries of the executive officers
other than the Chairman. Before making his base salary recommendations to the
compensation committee, the Chairman reviews survey information from one or more
executive compensation consulting firms to determine competitive compensation
levels in each of the Company's senior management positions. The Company has
generally sought to provide base salary that is competitive to the
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75% to 90% for small to medium-sized consumer product companies. This
comparative data may not include the compensation paid by all of the companies
that are included in the "Apparel Industry" index which is used for comparative
purposes in the Performance Graph. The compensation committee believes that it
is critically important for the Company to remain competitive in its management
salaries in order to attract and retain the small group of senior managers who
are key to the Company's success.
ANNUAL PROFIT-SHARING INCENTIVE BONUS PROGRAM
Since 1989, the Company has provided to its executive officers and other
members of management an annual profit-sharing incentive bonus program. Annual
bonus awards are based on the extent to which the Company achieves or exceeds
specified annual planned profit goals. The board of directors meets during the
first quarter of each year to establish the Company's target profit goal
(defined as profit before such items as taxes, payments under the incentive
bonus program and charitable contributions) for the year. The compensation
committee then determines the amount of the target award opportunity (the
potential bonus) that is payable by the Company under the incentive bonus
program for that year at specified levels of attainment of the profit goal. For
example, the compensation committee might determine that an employee will
receive 50% of his or her maximum award opportunity if the Company achieves 100%
of the profit goal and 100% of his or her maximum award opportunity if the
Company achieves 120% of the profit goal. The compensation committee's
recommendation with respect to bonuses payable under the incentive bonus program
at specified threshold levels of profit are submitted to the full board for
final approval.
Each participant in the incentive bonus program is assigned a target award
opportunity (stated as a percentage of his or her base salary) that can be
achieved for the year. This percentage is based upon the participant's position
and responsibilities and the area of the Company's operations in which the
participant serves, with a greater percentage being assigned to those
participants who make a larger impact on corporate performance. The target award
opportunities for the Company's executive officers are set by the compensation
committee. The target award opportunities for other participants in the
incentive bonus program are assigned by senior management. A participant is not
entitled to receive a bonus unless an acceptable year-end performance evaluation
(as determined under the Company's performance evaluation guidelines) has been
received from the person to whom the participant reports. For 1999, none of the
participants in the incentive bonus program received bonuses because the Company
did not achieve the threshold profit goal established at the beginning of the
year.
MR. ZACKS' 1999 COMPENSATION
Mr. Zacks and the Company entered into a two-year employment agreement in
1998 under which Mr. Zacks is entitled to receive a minimum annual salary of
$490,000 plus other specified benefits. The employment agreement also provides
that during the employment term, Mr. Zacks is entitled to participate in the
incentive bonus program at a maximum level equal to 100% of his annual base
salary, the specific level of participation to be determined annually by the
compensation committee.
The compensation committee can increase Mr. Zacks' base salary above the
minimum level established by his employment agreement to reflect corporate
performance. The compensation committee evaluates Mr. Zacks' base salary on an
annual basis and determines whether an increase is warranted based on the
committee's consideration of a number of subjective and objective criteria,
including the Company's financial results, positive changes in the Company's
competitive position, the success of the Company's strategic planning,
achievements in the areas of customer satisfaction and product innovation and
overall leadership. The compensation committee feels that all of these factors
are significant and, therefore, no specific weight has been assigned to any
single factor in the evaluation of Mr. Zacks' base salary. Because the
employment agreement requires that the Company pay to Mr. Zacks a minimum annual
base salary, the compensation committee does not have the ability to reduce the
base salary below that minimum to reflect the Company's performance. However,
the minimum base salary in the employment agreement was established by the
compensation committee based upon advice from a nationally recognized executive
compensation consulting firm that the base salary provided for in the employment
agreement was consistent with base salaries paid to executive officers of
comparable companies. This comparative data was compiled and provided by the
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Company's executive compensation consulting firm and may or may not have
included the companies included in the Performance Graph.
Mr. Zacks' maximum award opportunity for 1999 was 100% of his base salary,
which was established by the compensation committee in March of 1999. This
maximum award opportunity was determined by the compensation committee based
upon advice of the Company's executive compensation consulting firm regarding
the range of performance-based compensation that is provided to chief executive
officers of comparable companies. Based upon the Company's 1999 fiscal year
results as compared to 1999 target profit goals established by the compensation
committee and the board in early 1999, none of the employees participating in
the incentive bonus program received bonuses.
Early in 1999, the compensation committee approved an award to Mr. Zacks of
50,000 restricted common shares, which will vest over a five-year period
beginning on the first anniversary of the award date. These restricted common
shares were granted in lieu of a larger option grant that would have been made
to Mr. Zacks if the restricted common shares had not been awarded.
STOCK-BASED COMPENSATION PLANS
The Company's long-term compensation program consists primarily of options
granted under the Company's employee stock option plans and restricted common
shares. Awards of options are designed to provide appropriate incentive to
employees to enhance shareholder value and to assist in the hiring and retention
of key employees. All options are granted with exercise prices at least equal to
the market value of the Company's common shares on the dates of grant. If there
is no appreciation in the market value of the Company's common shares, the
options are valueless. The compensation committee grants options based on its
subjective determination of the relative current and future contribution that
each prospective optionee has or may make to the long-term welfare of the
Company. The OPTION GRANTS IN LAST FISCAL YEAR table shows the options granted
to each of the named executive officers during the 1999 fiscal year.
From time to time, the compensation committee has also awarded restricted
common shares to executive officers of the Company. The compensation committee
believes that restricted stock awards which vest over a period of time can
provide powerful incentives to an executive to remain with the Company and to
strive to build shareholder value. Restrictive stock awards also provide a means
to increase share ownership by Company executives.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162(m) generally prohibits the Company from
deducting non-performance-based compensation in excess of $1,000,000 per taxable
year paid to the chief executive officer and the other four most highly
compensated executives required to be named in the proxy statement ("Covered
Employees"). The Company may continue to deduct compensation paid to its Covered
Employees in excess of $1,000,000 if the payment of that compensation qualifies
for an exception, including an exception for certain performance-based
compensation.
The compensation committee believes that Section 162(m) should not cause
the Company to be denied a deduction for 1999 compensation paid to the Covered
Employees. The compensation committee will continue to work to structure
components of its executive compensation package to achieve maximum
deductibility under Section 162(m) while at the same time considering the goals
of its executive compensation philosophy.
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ADDITIONAL COMPENSATION PLANS
At various times in the past, the Company has adopted broad-based employee
benefit plans in which the executive officers are permitted to participate on
the same terms as non-executive officer employees who meet applicable
eligibility criteria, subject to legal limitations on the amounts that may be
contributed or the benefits that may be payable under the plans. Benefits under
these plans are not tied to performance.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS:
William Giovanello, Chairman Philip G. Barach
Leopold Abraham II Harvey M. Krueger
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Harvey M. Krueger, who is Vice Chairman of Lehman Brothers, Inc., is a
member of the compensation committee of the board of directors. Lehman Brothers,
Inc., an investment banking firm, provided investment banking services to the
Company during the 1999 fiscal year and may provide investment banking services
during the 2000 fiscal year as requested by the Company.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND OTHER COMPENSATION
The following table shows, for the last three fiscal years, the cash
compensation and other benefits paid or provided by the Company to its Chief
Executive Officer and the four other most highly compensated executive officers.
All dollar amounts are rounded down to the nearest whole dollar.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------------
------------------------------------------------ COMMON SHARES ALL OTHER
NAME AND FISCAL BASE OTHER ANNUAL RESTRICTED STOCK UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($)(1) OPTIONS(#) ($)
------------------ ------ --------- -------- ---------------- ---------------- ------------- ------------
Gordon Zacks: 1999 $490,000 $ 0 $49,772(2)(3)(4) $418,750 25,000 $25,532(5)
Chairman of the Board, 1998 $490,000 $ 0 $49,576(2)(4)(6) -- 75,000 $11,189
Chief Executive Officer 1997 $490,000 $187,425 $48,743(2)(4)(7) -- 50,000 $10,002
and President
Christian Galvis: 1999 $258,000 $ 0 $15,495(2)(3)(8) --(8) 25,000 $11,969(5)
Executive Vice 1998 $258,000 $ 0 $23,888(2)(6)(8) --(8) 40,000 $ 5,726
President -- Operations 1997 $230,000 $ 70,380 $12,389(2)(7) -- 25,000 $ 4,446
and President -- Operations
of Barry Comfort Group
Richard L. Burrell: 1999 $175,000 $ 0 $22,498(2)(3) -- 50,000 $13,303(5)
Senior Vice President -- 1998 $175,173 $ 0 $22,383(2)(6) -- 15,000 $ 3,714
Finance, Treasurer and 1997 $166,000 $ 50,796 $22,342(2)(7) -- 15,000 $ 2,398
Secretary
Edward Bucciarelli: 1999 $ 76,923 $ 75,000 $ 1,928(2)(3) $ 65,610 100,000 $ 0
Executive Vice 1998 -- -- -- -- -- --
President -- Sales & 1997 -- -- -- -- -- --
Marketing and President --
Merchandising, Marketing
and Sales of Barry Comfort
Group(9)
Harry Miller: 1999 $130,096 $ 0 $15,195(2)(3) -- 25,000 $16,911(5)
Vice President -- 1998 $125,096 $ 0 $13,756(2)(6) -- 15,000 $ 5,564
Human Resources 1997 $120,096 $ 27,540 $16,000(2)(7) -- 15,000 $ 3,672
- ---------------
(1) On May 13, 1999, Mr. Zacks was awarded 50,000 restricted common shares. The
per share value of the Company's common shares on that date was $8.3750. The
restrictions on transfer generally lapse on 20% of the common shares on the
first through fifth anniversaries of the grant date. In addition, if Mr.
Zacks dies or becomes totally disabled prior to the fifth anniversary or if
there is a change of control of the Company, all remaining restrictions will
lapse. If Mr. Zacks' employment is terminated by the Company for "cause" or
by Mr. Zacks other than for "good reason," as those terms are defined in his
employment agreement, Mr. Zacks will forfeit any common shares whose
restrictions have not lapsed. If Mr. Zacks' employment is terminated by the
Company without cause or by Mr. Zacks with good reason, all remaining
restrictions will lapse. Mr. Zacks will be entitled to receive any dividends
payable on the restricted common shares.
On October 25, 1999, Mr. Bucciarelli was awarded 15,000 restricted common
shares. The per share value of the Company's common shares on that date was
$4.375. The restrictions will generally lapse on October 25, 2001. In
addition, if Mr. Bucciarelli dies or becomes totally disabled prior to that
date or if there is a change of control of the Company, the restrictions
will lapse. If Mr. Bucciarelli's employment is terminated for cause or if he
voluntarily terminates his employment prior to October 25, 2001, he will
forfeit any common shares whose restrictions have not lapsed. If Mr.
Bucciarelli's employment is
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terminated by the Company without cause, all remaining restrictions will
lapse. Mr. Bucciarelli will be entitled to receive any dividends payable on
the restricted common shares.
As of January 1, 2000, the aggregate holdings of restricted common shares by
Mr. Zacks and Mr. Bucciarelli and the market value (net of consideration
paid by the named executive officer) of such holdings were: Mr. Zacks,
50,000 common shares, $200,000; and Mr. Bucciarelli, 15,000 common shares,
$59,985.
(2) "Other Annual Compensation" for each of 1999, 1998 and 1997 includes premium
payments of $19,088, $6,165, $9,544, $328 and $6,400 on behalf of Messrs.
Zacks, Galvis, Burrell, Bucciarelli (1999 only) and Miller, respectively, in
each case to continue life insurance policies which provide for a level of
death benefits not available under the standard group life insurance
program.
(3) "Other Annual Compensation" for 1999 also includes for Messrs. Zacks,
Galvis, Burrell, Bucciarelli and Miller the amounts of $19,403, $5,658,
$12,954, $1,600 and $8,795, respectively, reflecting their personal use of
the Company furnished automobiles or automobile allowances paid to them.
(4) "Other Annual Compensation" for Mr. Zacks includes: (a) payments of $6,586,
$5,566 and $4,991 made during 1999, 1998 and 1997, respectively, to cover
Mr. Zacks' portion of the insurance premiums on a life insurance policy on
the life of Mr. Zacks; (b) payments of $2,466, $3,333 and $2,989 made during
1999, 1998 and 1997, respectively, to cover Mr. Zacks' estimated tax
liability with respect to those premium payments; and (c) travel allowances
of $2,229, $2,229 and $2,400 provided to Mr. Zacks in 1999, 1998 and 1997,
respectively.
(5) "All Other Compensation" for 1999 includes: (a) contributions in the amounts
of $14,700, $7,739, $8,750 and $10,246 to the R. G. Barry Corporation
Deferred Compensation Plan (the "Deferred Compensation Plan") on behalf of
Messrs. Zacks, Galvis, Burrell and Miller, respectively; (b) interest in the
amounts of $5,832, $2,211, $1,828 and $4,675 credited to the accounts of
Messrs. Zacks, Galvis, Burrell and Miller, respectively, under the Deferred
Compensation Plan; and (c) contributions in the amounts of $5,000, $4,019,
$2,725 and $1,990 to the R. G. Barry Corporation 401(k) Savings Plan (the
"401(k) Plan") on behalf of Messrs. Zacks, Galvis, Burrell and Miller,
respectively.
(6) "Other Annual Compensation" for 1998 also includes for Messrs. Zacks,
Galvis, Burrell and Miller the amounts of $19,360, $7,098, $12,839 and
$7,356, respectively, reflecting their personal use of the Company furnished
automobiles or automobile allowances paid to them.
(7) "Other Annual Compensation" for 1997 also includes for Messrs. Zacks,
Galvis, Burrell and Miller the amounts of $19,275, $6,224, $12,798 and
$9,600, respectively, reflecting their personal use of the Company furnished
automobiles or automobiles allowances paid to them.
(8) "Other Annual Compensation" for 1999 also includes the amount of $3,672 and
"Other Annual Compensation" for 1998 also includes the amount of $10,625,
reflecting the fair market value of 1,250 common shares issued to Mr. Galvis
on March 1, 2000 and March 1, 1999, respectively, under a restricted stock
agreement. SEE "EMPLOYMENT CONTRACTS, RESTRICTED STOCK AGREEMENTS AND
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS."
(9) Mr. Bucciarelli became an executive officer on October 25, 1999.
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GRANTS OF OPTIONS
The following table summarizes information concerning individual grants of
options during the 1999 fiscal year to each of the named executive officers. No
stock appreciation rights were granted during the 1999 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF SHARE
COMMON SHARES % OF TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE 5% 10%
---- ------------- ------------------ ----------- ---------- ---------- ----------
Gordon Zacks.......................... 6,250(2) 1.5% $9.2125 5/12/04 $ 15,907 $ 35,152
18,750(3) 4.6% $8.3750 5/12/09 $ 98,793 $250,275
Christian Galvis...................... 18,462(2) 4.5% $8.3750 5/12/09 $ 97,276 $246,430
6,538(3) 1.6% $8.3750 5/12/09 $ 34,448 $ 87,269
Richard L. Burrell.................... 19,238(2) 4.7% $8.3750 5/12/09 $101,365 $256,788
30,762(3) 7.5% $8.3750 5/12/09 $162,084 $410,611
Edward Bucciarelli.................... 100,000(4) 24.4% $4.3750 10/24/09 $275,100 $697,400
Harry Miller.......................... 12,649(2) 3.1% $8.3750 5/12/09 $ 66,647 $168,838
12,351(3) 3.0% $8.3750 5/12/09 $ 65,077 $164,861
- ---------------
(1) The amounts reflected in this table represent the specified assumed rates of
appreciation only. Actual realized values, if any, on option exercises will
be dependent on the actual appreciation of the common shares over the term
of the options. These amounts have been rounded down to the nearest dollar.
(2) These incentive stock options were granted on May 13, 1999, and become
exercisable as follows: (a) for Mr. Zacks, as to all 6,250 common shares on
the fourth anniversary of the grant date; (b) for Mr. Galvis, as to 1,731
common shares on each of the first and second anniversaries of the grant
date and as to 5,000 common shares on each of the third, fourth and fifth
anniversaries of the grant date; (c) for Mr. Burrell, as to 2,649 of the
common shares on the third anniversary of the grant date, as to 6,589 common
shares on the fourth anniversary of the grant date and as to 10,000 common
shares on the fifth anniversary of the grant date; (d) for Mr. Miller, as to
2,649 common shares on the third anniversary of the grant date and as to
5,000 common shares on each of the fourth and fifth anniversaries of the
grant date. Each of these options becomes fully exercisable in the event of
defined changes-in-control of the Company or upon the death, disability or
retirement of the executive officer.
(3) These non-qualified stock options were granted on May 13, 1999, and become
exercisable as follows: (a) for Mr. Zacks, as to 6,250 common shares on each
of the first, second and third anniversaries of the grant date; (b) for Mr.
Galvis, as to 3,269 common shares on each of the first and second
anniversaries of the grant date; (c) for Mr. Burrell, as to 10,000 common
shares on each of the first and second anniversaries of the grant date, as
to 7,351 on the third anniversary of the grant date and as to 3,411 common
shares on the fourth anniversary of the grant date; and (d) for Mr. Miller,
as to 5,000 common shares on each of the first and second anniversaries of
the grant date and as to 2,351 common shares on the third anniversary of the
grant date. Each of these options becomes fully exercisable in the event of
defined changes-in-control of the Company or upon the death, disability or
retirement of the executive officer.
(4) These incentive stock options were granted on October 25, 1999, and become
exercisable as to 20,000 common shares on each of the first, second, third,
fourth and fifth anniversaries of the grant date. These options become fully
exercisable in the event of defined changes-in-control of the Company or
upon the death, disability or retirement of Mr. Bucciarelli.
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OPTION EXERCISES AND HOLDINGS
The following table summarizes information concerning unexercised options
held as of the end of the 1999 fiscal year by each of the named executive
officers. None of these executive officers exercised options during the 1999
fiscal year.
AGGREGATED FISCAL YEAR-END OPTION VALUES
NUMBER OF COMMON SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#)(1)(2) FISCAL YEAR-END($)(3)(4)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Gordon Zacks............................... 127,314 110,938 -- --
Christian Galvis........................... 81,053 77,000 -- --
Richard L. Burrell......................... 60,944 76,000 $17,639 --
Edward Bucciarelli......................... 0 100,000 -- --
Harry Miller............................... 30,180 49,750 $ 3,277 --
- ---------------
(1) Reflects adjustments for 4-for-3 share split on June 1, 1994, for 4-for-3
share split on September 1, 1995, and for 5-for-4 share split on June 3,
1996.
(2) Outstanding options that are not fully exercisable will become so in the
event of certain defined changes-in-control of the Company.
(3) Rounded down to nearest dollar.
(4) "Value of Unexercised In-the-Money Options at FY-End" is based upon the fair
market value of common shares on December 31, 1999, the last trading day of
the 1999 fiscal year ($4.00), less the exercise price of in-the-money
options at the end of the 1999 fiscal year.
PENSION PLANS
The Company's pension plan provides for the payment of monthly benefits to
salaried employees at age 65 based upon 48% of a participant's "final average
monthly compensation" (subject to a limitation imposed by law on the amount of
annual compensation upon which benefits may be based) less a designated
percentage of the participant's primary social security benefits. Benefits under
the pension plan are reduced by 1/30th for each year of credited service less
than 30 years. The Company's supplemental retirement plan (known as the R. G.
Barry Corporation Restoration Plan) provides for the payment of additional
monthly retirement benefits based upon 2 1/2% of an eligible participant's
"final average monthly compensation" reduced by a designated percentage of his
primary social security benefits with the difference multiplied by his years of
credited service up to a maximum of 24 years, and the resulting product then
reduced by his monthly pension payable under the pension plan. The benefit to
which any employee who was a participant in the supplemental retirement plan on
December 31, 1988 is entitled will not be less than 60% of the participant's
"final average monthly compensation", reduced by (i) his monthly pension payable
under the pension plan and (ii) a designated percentage of his primary social
security benefits.
The following table shows the estimated pension benefits payable under the
pension plan and the supplemental retirement plan to persons who were
participants in the supplemental retirement plan on December 31, 1988, at age
65, based on compensation that is covered by the pension plan and the
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supplemental retirement plan, years of service with the Company and payment in
the form of a lifetime annuity:
PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO WERE PARTICIPANTS
IN THE SUPPLEMENTAL RETIREMENT PLAN ON DECEMBER 31, 1988)
ESTIMATED ANNUAL PENSION BENEFITS
FINAL AVERAGE BASED ON CREDITED YEARS OF SERVICE INDICATED
ANNUAL ----------------------------------------------------
COMPENSATION 10 15 20 25 30
------------- -------- -------- -------- -------- --------
$125,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
175,000 105,000 105,000 105,000 105,000 105,000
225,000 135,000 135,000 135,000 135,000 135,000
275,000 165,000 165,000 165,000 165,000 165,000
325,000 195,000 195,000 195,000 195,000 195,000
375,000 225,000 225,000 225,000 225,000 225,000
425,000 255,000 255,000 255,000 255,000 255,000
475,000 285,000 285,000 285,000 285,000 285,000
525,000 315,000 315,000 315,000 315,000 315,000
575,000 345,000 345,000 345,000 345,000 345,000
625,000 375,000 375,000 375,000 375,000 375,000
Annual benefits are shown before deduction of 50% of primary social
security benefits.
The following table shows the estimated pension benefits payable under the
pension plan and the supplemental retirement plan to persons who became
participants in the supplemental retirement plan after December 31, 1988, at age
65, based on compensation that is covered by the pension plan and the
supplemental retirement plan, years of service with the Company and payment in
the form of a lifetime annuity:
PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO BECAME PARTICIPANTS
IN THE SUPPLEMENTAL RETIREMENT PLAN AFTER DECEMBER 31, 1988)
ESTIMATED ANNUAL PENSION BENEFITS
FINAL AVERAGE BASED ON CREDITED YEARS OF SERVICE INDICATED
ANNUAL ----------------------------------------------------
COMPENSATION 10 15 20 25 30
------------- -------- -------- -------- -------- --------
$125,000 $ 31,250 $ 46,875 $ 62,500 $ 75,000 $ 75,000
175,000 43,750 65,625 87,500 105,000 105,000
225,000 56,250 84,375 112,500 135,000 135,000
275,000 68,750 103,125 137,500 165,000 165,000
325,000 81,250 121,875 162,500 195,000 195,000
375,000 93,750 140,625 187,500 225,000 225,000
425,000 106,250 159,375 212,500 255,000 255,000
475,000 118,750 178,125 237,500 285,000 285,000
525,000 131,250 196,875 262,500 315,000 315,000
575,000 143,750 215,625 287,500 345,000 345,000
625,000 156,250 234,375 312,500 375,000 375,000
Annual benefits are shown before deduction of 20.83% of primary social
security benefits after 10 years of service, 31.25% after 15 years of service,
41.67% after 20 years of service, 50% after 25 years of service, and 50% after
30 years of service.
A participant's "final average monthly compensation" for purposes of the
Company's pension plan and supplemental retirement plan is the average of the
participant's compensation (salary and commissions but excluding cash bonuses
and overtime pay) during the five consecutive calendar years of the last ten
years in
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which such total compensation is highest. However, for persons who became
participants in the supplemental retirement plan on or before December 31, 1988,
compensation used in determining "final average annual compensation" includes
bonuses and incentives. The "final average annual compensation" as of the end of
the 1999 fiscal year was $599,170, $232,861, $195,948, $400,000 and $128,319 for
Messrs. Zacks, Galvis, Burrell, Bucciarelli and Miller, respectively. Messrs.
Zacks, Galvis, Burrell, Bucciarelli and Miller have approximately 44, 9, 33, 0
and 7 years, respectively, of credited service under the pension plan and the
supplemental retirement plan. Messrs. Zacks and Burrell were participants in the
supplemental retirement plan on December 31, 1988. All of the other named
executive officers became participants in the supplemental retirement plan after
December 31, 1988.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company (a "Non-Employee
Director") receives $17,000 annually for services as a director. In addition,
each Non-Employee Director receives $1,000 for each regular meeting and $500 for
each telephonic meeting of the board of directors attended. All members of a
committee of the board receive (a) a fee of $500 for each meeting attended that
occurs on the same day as a board meeting, (b) a fee of $1,000 for attending a
committee meeting that does not occur on the same day as a board meeting and (c)
a fee of $500 for participating in a telephonic meeting of the committee.
Directors who are also employees of the Company receive no separate compensation
for serving as directors.
Each incumbent Non-Employee Director has been granted a non-qualified stock
option (an "NQSO") to purchase 6,250 common shares under the R. G. Barry
Corporation Stock Option Plan for Non-Employee Directors. Any person who becomes
a Non-Employee Director in the future (including Mr. Nichols and Ms. Page if
they are elected as directors at the annual meeting) will automatically be
granted an NQSO to purchase 6,250 common shares effective on the third business
day following the date on which he or she is appointed or elected to the board
of directors. The exercise price of each NQSO granted to a Non-Employee Director
has been and will be equal to the fair market value of the common shares on the
date of grant. NQSO's granted to Non-Employee Directors have terms of five years
and become exercisable six months after the grant date.
EMPLOYMENT CONTRACTS, RESTRICTED STOCK AGREEMENTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Gordon Zacks, the Chairman of the Board, President and Chief Executive
Officer, entered into an employment agreement with the Company, dated July 1,
1998, which provides for the employment of Mr. Zacks for a term of two years,
automatically renewable for an additional one-year term unless either party
gives notice to the other of non-renewal and for an additional two-year term
upon a "change of control" of the Company. The Company is obligated to cause Mr.
Zacks to be nominated as a director. Mr. Zacks is entitled to receive a minimum
annual salary of $490,000, subject to increases that the board of directors may
grant. In addition to his annual salary, Mr. Zacks is entitled to participate in
the Company's incentive bonus program and to receive certain health and life
insurance coverages, pension and retirement benefits and other employee
benefits.
If Mr. Zacks' employment is terminated by the Company without "cause" (as
defined in his employment agreement) or by Mr. Zacks for "good reason" (as
defined in the employment agreement) prior to a "change of control," until the
last day of the employment term, the Company will continue to pay his base
salary at the rate in effect immediately prior to the date of termination plus a
bonus amount based on his average annual bonus for the three years immediately
preceding the termination of employment. Mr. Zacks will receive for a period
ending on his 70th birthday or his earlier death, all life, medical and dental
insurance and other employee benefits to which he was entitled immediately prior
to the date of termination. If Mr. Zacks' employment is terminated by the
Company without "cause" or by Mr. Zacks for "good reason" following a "change of
control," he will receive $1,375,000 in consideration of his agreement to an
extended noncompetition agreement and $1,000,000 in consideration of his
agreement to provide consulting services. In addition, Mr. Zacks will receive a
pro-rated bonus for the portion of the current year preceding his termination of
employment based on his average bonuses for the prior three years. Mr. Zacks
will also receive for a period
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ending on his 70th birthday or his earlier death, all life, medical and dental
insurance benefits to which he was entitled immediately prior to the date of
termination and he will receive all of his other employee benefits for a period
of three years after the date of termination. A "change of control" is deemed to
have occurred if a third party acquires more than a majority of the total voting
power of the Company's outstanding voting securities or as a result of, or in
connection with, specified business combinations or a contested election, the
persons who were directors immediately before the transaction cease to
constitute a majority of the Company's board of directors or any successor to
the Company. The employment agreement also provides for the continuation of Mr.
Zacks' salary and benefits for a period of time following a permanent and total
disability.
Under an agreement dated September 27, 1989, as amended, the Company
agreed, upon the death of Mr. Zacks, to purchase from the estate of Mr. Zacks,
at the estate's election, up to $4 million of the common shares held by Mr.
Zacks at the time of his death. The common shares would be purchased at their
fair market value at the time the estate exercises its put right. The estate's
put right would expire after the second anniversary of the death of Mr. Zacks.
The Company agreed to fund its potential obligation to purchase the common
shares by purchasing and maintaining during Mr. Zacks' lifetime one or more
policies of life insurance on the life of Mr. Zacks. In addition, Mr. Zacks
agreed that, for a period of 24 months following his death, the Company will
have a right of first refusal to purchase any common shares owned by Mr. Zacks
at his death if his estate elects to sell the common shares. The Company would
have the right to purchase the common shares on the same terms and conditions as
the estate proposes to sell the common shares.
On May 13, 1999, Mr. Zacks was issued 50,000 restricted common shares under
the terms of a restricted stock agreement with the Company. Mr. Zacks will
exercise all voting rights and be entitled to receive dividends payable on the
common shares. The restrictions on transfer generally lapse on 20% of the common
shares on the first through fifth anniversaries of the grant date. In addition,
if Mr. Zacks dies or becomes totally disabled prior to the fifth anniversary or
if there is a change of control of the Company for purposes of his employment
agreement, all remaining restrictions will lapse. If Mr. Zacks' employment is
terminated by the Company for "cause" or by Mr. Zacks other than for "good
reason," as those terms are defined in his employment agreement, Mr. Zacks will
forfeit any common shares whose restrictions have not lapsed. If Mr. Zacks'
employment is terminated by the Company without cause or by Mr. Zacks with good
reason, all remaining restrictions will lapse.
Christian Galvis, the Executive Vice President -- Operations and
President -- Operations of Barry Comfort Group, is a party to an executive
employment agreement with the Company, dated January 4, 1998, which provides for
the employment of Mr. Galvis for a term of five years. Mr. Galvis is entitled to
receive a minimum annual salary of $258,000, subject to increases that the board
of directors may grant. In addition to his annual salary, Mr. Galvis is entitled
to participate in the incentive bonus program and to receive certain health and
life insurance coverages, pension and retirement benefits and other employee
benefits. If Mr. Galvis' employment is terminated by the Company without "cause"
(as defined in his employment agreement) or by Mr. Galvis for "good reason" (as
defined in the employment agreement), he will be entitled to receive a severance
payment equal to the total compensation (including bonus) paid to or accrued for
the benefit of Mr. Galvis by the Company for services rendered during the
12-month period immediately preceding the date of termination. Mr. Galvis'
employment agreement also provides for the continuation of Mr. Galvis' salary
for a period of time following a permanent and total disability.
Mr. Galvis is also party to a restricted stock agreement, dated January 4,
1998, with the Company, which provides for the issuance of an aggregate of up to
10,000 common shares over a period of up to eight years. He is entitled to
receive 1,250 common shares on the last business day of each fiscal year,
beginning with the 1998 fiscal year, so long as he is employed by the Company on
that date. In addition, he will receive an additional 1,250 common shares in
respect of any fiscal year in which the Company achieves 120% of the "target
profit goal" established by the board of directors for that fiscal year. If Mr.
Galvis' employment with the Company terminates for any reason (other than within
two years following a "change in control"), he will forfeit his right to receive
any common shares other than those previously earned under the terms of the
restricted stock agreement. If his employment is terminated by the Company
without "cause" (as defined in the restricted stock agreement) or by Mr. Galvis
for "good reason" within two years following a "change in control," he will be
entitled to be issued all of the common shares subject to the restricted stock
agreement which have not
17
21
previously been issued. Mr. Galvis received 1,250 common shares at the end of
each of the 1999 and 1998 fiscal years.
Edward Bucciarelli, the Executive Vice President -- Sales & Marketing and
President -- Merchandising, Marketing and Sales of Barry Comfort Group, is party
to an employment agreement, dated September 27, 1999, with the Company, which
provides for the employment of Mr. Bucciarelli for a term of three years. Mr.
Bucciarelli is entitled to receive an annual salary of $400,000, subject to
annual review by the board of directors. In addition to his annual salary, Mr.
Bucciarelli is entitled to participate in the incentive bonus program, with a
guaranteed minimum bonus of $100,000 in respect of the 2000 fiscal year. Mr.
Bucciarelli received a sign on bonus of $150,000, of which $75,000 was paid on
October 25, 1999 when he commenced employment and $75,000 was paid on March 1,
2000. He is also entitled to receive certain health and life insurance
coverages, pension and retirement benefits and other employee benefits. Mr.
Bucciarelli was granted options covering 100,000 common shares on October 25,
1999 and will be granted options covering 50,000 common shares on the first
anniversary of his employment, in each case with an exercise price equal to the
closing sale price on the relevant date. If Mr. Bucciarelli's employment is
terminated by the Company for any reason other than for cause prior to April 25,
2000, the Company will continue to pay his base salary for 18 months. If Mr.
Bucciarelli's employment is terminated on or after April 25, 2000 for any reason
other than for cause, the Company will continue to pay his base salary for 12
months. All such severance payments will cease if Mr. Bucciarelli accepts
another job.
On October 25, 1999, Mr. Bucciarelli was issued 15,000 restricted common
shares under the terms of a restricted stock agreement with the Company. Mr.
Bucciarelli will exercise all voting rights and be entitled to receive any
dividends payable on the common shares. The restrictions on transfer will
generally lapse on October 25, 2001. In addition, if Mr. Bucciarelli dies or
becomes totally disabled prior to that date or if there is a "change of control"
of the Company, the restrictions will lapse. If Mr. Bucciarelli's employment is
terminated for cause or if he voluntarily terminates his employment prior to
October 25, 2001, he will forfeit any common shares whose restrictions have not
lapsed. If Mr. Bucciarelli's employment is terminated by the Company without
cause, all remaining restrictions will lapse.
Richard L. Burrell, the Senior Vice President -- Finance, Treasurer and
Secretary, and Harry Miller, the Vice President -- Human Resources, each entered
into a severance agreement, dated January 4, 1998, with the Company, which
provides that if his employment is terminated by the Company without "cause" (as
defined in the agreement) or by him for "good reason" (as defined in the
agreement) within 36 months following a "change in control" (as defined in the
agreement), he will be entitled to receive a severance payment equal to the
greater of (1) the total compensation (including bonus) paid to him or accrued
for his benefit for services rendered during the calendar year ending prior to
the date on which the "change in control" occurred or (2) the total compensation
(including bonus) paid to him or accrued for his benefit for services rendered
during the 12-month period immediately preceding the date of termination of
employment. Prior to a "change in control," each severance agreement will
terminate immediately if his employment is terminated for any reason. Each
severance agreement provides for a term of three years unless earlier terminated
pursuant to its terms.
18
22
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's common shares with an index
for shares listed on the New York Stock Exchange and an index for Media General
Industry Group #320, Textile-Apparel Clothing, for the five-year period ended
December 31, 1999 (the last trading day during the Company's 1999 fiscal year).
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURNS OF R. G. BARRY CORPORATION
COMMON SHARES, NYSE MARKET INDEX AND
TEXTILE-APPAREL CLOTHING INDUSTRY INDEX
[Line graph]
TEXTILE-APPAREL CLOTHING
R.G. BARRY CORPORATION INDUSTRY NEW YORK STOCK EXCHANGE
---------------------- ------------------------ -----------------------
12/30/94 100.00 100.00 100.00
12/29/95 233.71 122.34 129.66
12/27/96 168.54 146.12 156.20
1/02/98 172.28 155.20 205.49
12/31/98 164.79 155.18 244.52
12/31/99 59.93 140.80 267.75
19
23
INDEPENDENT AUDITORS
The Company engaged KPMG LLP as its independent auditors to audit its
consolidated financial statements for the 1999 fiscal year. KPMG LLP, together
with its predecessors, has served as the Company's independent auditors since
1966. The audit committee will make its selection of the independent auditors
for the 2000 fiscal year later in the year.
The board of directors expects that representatives of KPMG LLP will be
present at the annual meeting, will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2001 annual
meeting of shareholders must be received by the Company no later than November
27, 2000, to be included in the Company's proxy materials relating to that
annual meeting. Upon receipt of a shareholder proposal, the Company will
determine whether or not to include the proposal in the proxy materials in
accordance with applicable rules and regulations promulgated by the SEC.
The SEC has promulgated rules relating to the exercise of discretionary
voting authority pursuant to proxies solicited by the board of directors. If a
shareholder intends to present a proposal at the 2001 annual meeting of
shareholders and does not notify the Company of the proposal by February 10,
2001, the proxies solicited by the board of directors for use at the 2001 annual
meeting may be voted on the proposal without discussion of the proposal in the
Company's proxy statement for that annual meeting.
In each case, written notice must be given to the Company's Secretary,
whose name and address are: Richard L. Burrell, Secretary, R. G. Barry
Corporation, 13405 Yarmouth Road N.W., Pickerington, Ohio 43147.
Shareholders desiring to nominate candidates for election as directors at
the 2001 annual meeting must follow the procedures described in "ELECTION OF
DIRECTORS."
OTHER MATTERS
As of the date of this proxy statement, the board of directors knows of no
other matter that will be presented for action by the shareholders at the annual
meeting of shareholders. However, if any other matter is properly presented at
the annual meeting or any adjournment, the persons acting under proxies
solicited by the board of directors, will vote and act according to their best
judgments in light of the conditions then prevailing.
It is important that proxies be completed and returned promptly; therefore,
shareholders who do not expect to attend the annual meeting in person are urged
to fill in, sign and return the enclosed proxy card in the self-addressed
envelope furnished herewith.
By Order of the Board of Directors,
Gordon Zacks Signature
Gordon Zacks,
Chairman of the Board, President
and Chief Executive Officer
March 27, 2000
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24
R. G. BARRY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of common shares of R. G. Barry Corporation
(the "Company") hereby constitutes and appoints Gordon Zacks and Richard L.
Burrell, or either of them, the Proxy or Proxies of the undersigned, with full
power of substitution, to attend the Annual Meeting of Shareholders of the
Company to be held on Thursday, May 11, 2000, at the Company's executive
offices, 13405 Yarmouth Road N.W., Pickerington, Ohio, at 11:00 A.M., local
time, and any adjournment(s) thereof, and to vote all of the common shares which
the undersigned is entitled to vote at such Annual Meeting or at any
adjournment(s) thereof:
WHERE A CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS
PROXY CARD WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO
CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY CARD WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE
COMPANY. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR
ANY ADJOURNMENT(S) THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN
THE PROXY STATEMENT IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE
COMMON SHARES REPRESENTED BY THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF
THE PROXIES ON SUCH MATTERS OR FOR SUCH SUBSTITUTE NOMINEE(S) AS THE DIRECTORS
MAY RECOMMEND.
All proxies previously given or executed by the undersigned are hereby
revoked. The undersigned acknowledges receipt of the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement for the May 11, 2000 meeting
and Annual Report to Shareholders for the fiscal year ended January 1, 2000.
R. G. BARRY CORPORATION
P.O. BOX 11152
NEW YORK, NY 10203-0152
(Continued, and to be executed and dated on other side.)
25
1. ELECTION OF DIRECTORS
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS
listed below to vote for all nominees listed
below
NOMINEES: Harvey M. Krueger David L. Nichols Janice Page
*(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S NAME.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS (NONE KNOWN AT THE TIME OF SOLICITATION OF THIS PROXY)
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT(S)
THEREOF.
Address Change
Mark Here [ ]
Please sign exactly as your name appears hereon.
When common shares are registered in two names,
both shareholders should sign. When signing as
attorney, executor, administrator, guardian or
trustee, please give full title as such. If
shareholder is a corporation, please sign in full
corporate name by President or other authorized
officer. If shareholder is a partnership or other
entity, please sign in entity name by authorized
person. (Please note any change of address on this
proxy.)
Dated:____________________________________, 2000
---------------------------------------------
Signature of Shareholder(s)
---------------------------------------------
Signature of Shareholder(s)
PLEASE FILL IN, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Votes must be indicated (X) in Black or Blue ink. [X]