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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-11(c) or 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 29, 1999
Dear Fellow Shareholders:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
(the "Annual Meeting") of R. G. Barry Corporation (the "Company"), which will be
held at 2:30 p.m., local time, on Thursday, May 13, 1999, at the Company's
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 2002 Annual Meeting. The Board of Directors recommends that you
vote FOR the nominees.
In addition to the election of directors, you are being asked to approve an
amendment to the R. G. Barry Corporation 1997 Incentive Stock Plan to increase
the number of common shares available thereunder from 450,000 to 900,000. The
Board of Directors recommends that you vote FOR this proposal.
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 of the Company 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 29, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") 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 13, 1999, at 2:30 p.m., local time, for the following
purposes:
1. To elect three directors to serve for terms of three years each.
2. To approve an amendment to the R. G. Barry Corporation 1997 Incentive
Stock Plan to increase the number of common shares available
thereunder from 450,000 to 900,000.
3. To transact such other business as may properly come before the
Annual Meeting and any adjournment(s) thereof.
Shareholders of record at the close of business on March 15, 1999, will be
entitled to receive notice of, and to vote at, the Annual Meeting and any
adjournment(s) thereof.
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 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 are being mailed to
shareholders of R. G. Barry Corporation, an Ohio corporation (the "Company"), on
or about March 29, 1999, in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting of Shareholders
of the Company (the "Annual Meeting") on Thursday, May 13, 1999, or at any
adjournment(s) thereof. The Annual Meeting will be held at 2:30 p.m., local
time, at the Company's 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 for use at the Annual Meeting accompanies this Proxy Statement and
is solicited by the Board of Directors of the Company. Without affecting any
vote previously taken, any shareholder executing a proxy may revoke it at any
time before it is voted by filing with the Secretary of the Company, at the
address of the Company set forth on the cover page of this Proxy Statement,
written notice of such revocation; by executing a later-dated proxy which is
received by the Company prior to the Annual Meeting; or by attending the Annual
Meeting and giving notice of such 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 and mailing this Proxy
Statement, the accompanying proxy 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 by further mailing, by telephone or by personal
contact. The Company 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 of the Company
not beneficially owned by them, for forwarding such materials to, and obtaining
proxies from, the beneficial owners of such common shares.
The Annual Report to the Shareholders of the Company for the fiscal year
ended January 2, 1999 (the "1998 fiscal year") is enclosed herewith.
VOTING AT ANNUAL MEETING
Only shareholders of the Company of record at the close of business on
March 15, 1999, are entitled to receive notice of, and to vote at, the Annual
Meeting and any adjournment(s) thereof. At the close of business on March 15,
1999, 9,747,100 common shares were outstanding and entitled to vote. Each common
share of the Company 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.
Common shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Abstain", "Against" or "Withhold Authority" on one or more or all
matters or they are not marked at all. Broker/dealers who hold their customers'
common shares in street name may, under the applicable rules of the exchange and
other self-regulatory organizations of which the broker/dealers are members,
sign and submit proxies for those common shares and may vote them on routine
matters, which, under those rules, typically include the election of directors
and the approval of certain compensation plans, but broker/dealers may not vote
the common shares on other matters, which typically include amendments to the
charter documents of a corporation and the approval of certain compensation
plans, without specific instructions from the customer who owns the common
shares. Proxies
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signed and submitted by broker/dealers which have not been voted on certain
matters as described in the previous sentence are referred to as broker
non-votes. Broker non-votes and abstentions will be counted for quorum purposes.
SHARE OWNERSHIP
The following table sets forth certain information with respect to those
persons known to the Company to be the beneficial owners of more than five
percent (5%) of the outstanding common shares of the Company as of March 15,
1999 (unless otherwise indicated):
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
---------------------------------------------------------------
SOLE SHARED PERCENT
NAME AND ADDRESS SOLE VOTING SHARED VOTING INVESTMENT INVESTMENT OF
OF BENEFICIAL OWNER POWER POWER POWER POWER TOTAL CLASS(1)
------------------- ----------- ------------- ---------- ---------- ------- --------
Harris Associates L.P. -- 950,000(2) 50,000(2) 900,000(2) 950,000(2) 9.7%
Harris Associates Inc.
Two North LaSalle Street
Suite 500
Chicago, IL 60602-3790
Harris Associates Investment -- 900,000(2) -- 900,000(2) 900,000(2) 9.2%
Trust, series designated
The Oakmark Small Cap Fund
Two North LaSalle Street
Suite 500
Chicago, IL 60602-3790
Gordon Zacks 885,137(3) -- 438,011(3) -- 885,137 8.9%
13405 Yarmouth Road N.W
Pickerington, OH 43147
Dimensional Fund Advisors Inc. 519,249(4) -- 519,249(4) -- 519,249(4) 5.3%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
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(1) The percent of class is based upon the sum of 9,747,100 common shares
outstanding on March 15, 1999, 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, 1999.
(2) Based on information contained in filings with the Securities and Exchange
Commission (the "SEC") (the latest of which are dated January 18, 1999), as
of December 31, 1998, Harris Associates L.P., a registered investment
adviser ("Harris"), and its general partner Harris Associates Inc. ("Harris
G/P") may be deemed to beneficially own 950,000 common shares; and Harris
Associates Investment Trust ("Harris Trust"), series designated The Oakmark
Small Cap Fund beneficially owned 900,000 of such 950,000 common shares. All
of the common shares reported by Harris and Harris G/P have been acquired on
behalf of advisory clients of Harris. Harris serves as investment adviser to
the Harris Trust and various of Harris' officers and directors are also
officers and trustees of the Trust. Harris does not consider that the Harris
Trust is controlled by such persons. The 900,000 common shares reported as
shared voting and investment power by Harris, Harris G/P and Harris Trust
were owned by The Oakmark Small Cap Fund, a series of Harris Trust.
(3) Includes 154,770 common shares held of record by Mr. Zacks, and 145,311
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, 1999. 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 investment power and disclaims beneficial ownership.
Gordon Zacks is the voting trustee of the Zacks-Streim 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
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of common shares deposited in the Voting Trust retain investment power with
respect to such 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 balance of the
common shares deposited in the Voting Trust. Mr. Zacks is a 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.
(4) Based on information contained in filings with the SEC (the latest of which
is dated February 11, 1999), Dimensional Fund Advisors Inc., a registered
investment adviser ("Dimensional"), may be deemed to have beneficial
ownership of 519,249 common shares as of December 31, 1998, 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
investment power over the common shares owned by such portfolios.
Dimensional disclaims beneficial ownership of these common shares.
The following table sets forth certain information with respect to the
Company's common shares beneficially owned by each of the directors and nominees
for election as directors of the Company, by each of the executive officers of
the Company named in the Summary Compensation Table and by all current executive
officers and directors of the Company as a group as of March 15, 1999:
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)...................... 739,826(4) 145,311 885,137 8.9%
Leopold Abraham II.................... 6,666 6,250 12,916 (5)
Philip G. Barach...................... 10,031 6,250 16,281 (5)
Richard L. Burrell(3)................. 28,556(6) 57,944 86,500 (5)
Christian Galvis(3)................... 42,198(7) 76,053 118,251 1.2%
William Giovanello.................... 666 6,250 6,916 (5)
Harvey M. Krueger..................... 22,221 6,250 28,471 (5)
Roger E. Lautzenhiser................. 1,000 0 1,000 (5)
Charles E. Ostrander(3)(8)............ 79,428(9) 21,610 101,038 1.0%
Edward M. Stan........................ 34,557(10) 6,250 40,807 (5)
Daniel D. Viren(3).................... 0 32,736 32,736 (5)
All current directors and executive
officers as a group (numbering
11)................................. 972,325 392,084 1,364,409 13.5%
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(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect 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 preceding table and Note (3) thereto.
(5) Represents ownership of less than 1% of the outstanding common shares of
the Company.
(6) Includes 7,728 common shares held jointly by Mr. Burrell and his spouse.
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(7) Excludes 572 common shares held of record and owned beneficially by Mr.
Galvis' spouse as to which he exercises no voting or investment power and
disclaims beneficial ownership.
(8) Mr. Ostrander has resigned from his positions as an executive officer of
the Company effective July 1, 1999 and notified the Company that he will
not stand for re-election at the 1999 Annual Meeting.
(9) Includes 2,118 common shares held jointly by Mr. Ostrander and his spouse,
and 8,600 common shares held by Mr. Ostrander as custodian for his two
minor daughters.
(10) Includes 2,220 common shares held jointly by Mr. Stan and his spouse.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY)
In accordance with Article SIXTH of the Articles of Incorporation of the
Company, 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. It is the intention of the persons named in the accompanying proxy to
vote the common shares represented by the proxies received pursuant to this
solicitation for the nominees named below who have been designated by the Board
of Directors, unless otherwise instructed on the proxy. 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.
The following table gives certain information concerning each nominee for
election as a director of the Company. Unless otherwise indicated, each person
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
------- --- ----------------------- ------------ -----------
Gordon Zacks................ 66 Chairman of the Board, Chief Executive 1959 2002
Officer and President of the Company
Christian Galvis............ 57 Executive Vice President -- Operations and, 1992 2002
since January 1998, Co-President and Co-Chief
Operating Officer of the Barry Comfort
Group, of the Company
Roger E. Lautzenhiser....... 45 Partner, Vorys, Sater, Seymour and Pease LLP, -- 2002
Attorneys at Law, Columbus, Ohio (1)
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(1) Vorys, Sater, Seymour and Pease LLP rendered legal services to the Company
during the 1998 fiscal year and continues to render legal services to the
Company during the 1999 fiscal year. Mr. Lautzenhiser will be nominated at
the Annual Meeting for election as a director to serve as the successor to
Charles E. Ostrander who is retiring as a director of the Company as of the
date of 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 of the Company, 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 persons will be
unavailable or unable to serve if elected to the Board.
Under the Company's Articles of Incorporation, shareholder nominations of
directors for election to the Company's Board of Directors must be made in
writing and must be delivered or mailed to the Secretary of the Company and
received by him not less than 30 days nor more than 60 days prior to any meeting
of shareholders called for the election of directors; provided, however, that if
less than 35 days' notice of the
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meeting is given to the shareholders, such nomination must be mailed or
delivered to the Secretary not later than the close of business on the seventh
day following the day on which the notice of the meeting was mailed. The
notification must contain the following information as to any proposed nominee
who is not an incumbent director: (a) the name, age, business address and, if
known, the residence address of the proposed nominee; (b) the principal
occupation or employment of the proposed nominee; (c) the total number of common
shares that are beneficially owned by the proposed nominee and by the nominating
shareholder; and (d) any other information concerning the proposed nominee that
must be disclosed of nominees in proxy solicitations pursuant to the SEC proxy
rules. Each nomination must be accompanied by the written consent of the
proposed nominee to serve as a director. Nominations which the chairman of the
Annual Meeting determines are not made in accordance with the foregoing
procedure will be disregarded.
The following table gives certain information concerning the current
directors whose terms will continue after the Annual Meeting. Unless otherwise
indicated, each person 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
---- --- ----------------------- ------------ ----------
Harvey M. Krueger........ 69 Vice Chairman, Lehman Brothers, Inc., 1980 2000
New York, New York, investment
bankers(1)
William Giovanello....... 79 President of Retail Requisites, 1985 2000
Columbus, Ohio, retail consultants
Leopold Abraham II....... 71 Chairman and Chief Executive Officer of 1993 2000
Associated Merchandising Corporation,
a retail merchandising and sourcing
company, from 1977 until his
retirement in 1993(2)
Edward M. Stan........... 74 President, Edward M. Stan & Associates 1971 2001
(formerly Chesta Co., Inc.),
Reynoldsburg, Ohio, importing
Richard L. Burrell....... 66 Senior Vice President -- Finance, 1984 2001
Treasurer and Secretary of the Company
Philip G. Barach......... 68 Private Investor(3) 1991 2001
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(1) Lehman Brothers, Inc. provided investment banking services to the Company
during the Company's 1998 fiscal year and is expected to provide investment
banking services during the Company's 1999 fiscal year as requested by the
Company. Mr. Krueger is also a director of Automatic Data Processing, Inc.,
Bernard Chaus, Inc., Electric Fuel Corporation and International
Telecommunication Data Systems, Inc. and serves on the Club Mediterranee
International Advisory Board.
(2) Mr. Abraham is also a director of Galey & Lord, Inc. and Signet Group PLC
and a Trustee of the Salomon Smith Barney Shearson Income Funds and the
Salomon Smith Barney Shearson Equity Funds.
(3) Mr. Barach is also a director of Union Central Life Insurance Company,
Bernard Chaus, Inc., Glimcher Realty, REIT and SYMS Corp.
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 of the Company held a total of five meetings during
the Company's 1998 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 Company's Board of Directors has standing Audit and Compensation
Committees. There is no standing nominating committee or committee performing
similar functions.
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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 1998 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 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 its stock
purchase plan and to approve the compensation of the Company's executive
officers. The Compensation Committee met three times during the 1998 fiscal
year.
REPORT OF
THE COMPENSATION COMMITTEE
OF
R. G. BARRY CORPORATION ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised entirely of non-employee directors. Decisions on compensation of the
Company's executive officers generally are made by the Committee, although
compensation levels for executive officers other than the Chairman 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 the Company's executive officers, the
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 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 Company's executive officers and subsequent
adjustments to such base salaries are determined relative to the following
factors: (1) the criticality to the Company of the executive officer's job
function; (2) the individual's performance in his or her position; (3) the
individual's potential to make a significant contribution to the Company in the
future; and (4) a comparison of industry pay practices. The Committee believes
that all of these factors are important and the relevance of each factor varies
from individual to individual. The Committee has not assigned any specific
weight to any of these factors in the evaluation of an 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
Committee relies on the Company's Chairman and Chief Executive Officer 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 Committee, the Company's Chairman obtains 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 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 "Textile-Apparel
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Clothing Industry" index which is used for comparative purposes in the
shareholder return graph (see "PERFORMANCE GRAPH"). The 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 (the
"Incentive 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 Program and charitable contributions) for the year. The Committee
then determines the amount of the target award opportunity (the potential bonus)
that is payable by the Company under the Incentive Program for such year at
specified levels of attainment of the profit goal. For example, the Committee
might determine that an employee will receive 50% of his maximum award
opportunity if the Company achieves 100% of the profit goal and 100% of his
maximum award opportunity if the Company achieves 120% of the profit goal. The
Committee's recommendation with respect to bonuses payable under the Incentive
Program at specified threshold levels of profit are submitted to the full Board
for final approval.
Each participant in the Incentive 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 profits. The target award
opportunities for the Company's executive officers are set by the Committee; the
target award opportunities for other participants in the Incentive 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 such participant reports. For 1998, none of the participants in the
Incentive Program received bonuses because the Company did not achieve the
threshold profit goal established at the beginning of the year.
MR. ZACKS' 1998 COMPENSATION
Mr. Zacks and the Company entered into a two-year Employment Agreement (the
"Employment Agreement") in 1998 under which Mr. Zacks is entitled to receive a
minimum annual salary of $490,000 plus certain other benefits. The Employment
Agreement also provides that during the employment term, Mr. Zacks is entitled
to participate in the Incentive Program at a maximum level equal to 100% of his
annual base salary, the specific level of participation to be determined
annually by the Committee.
The Committee can increase Mr. Zacks' base salary above the minimum level
established by the Employment Agreement to reflect corporate performance. The
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 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 Committee does not have the ability to reduce
the base salary below such minimum to reflect the Company's performance.
However, the minimum base salary in the Employment Agreement was established by
the 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
Company's executive compensation consulting firm and may or may not have
included the companies included in the Performance Graph.
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Mr. Zacks' maximum award opportunity for 1998 was 100% of his base salary,
which was established by the Committee in March of 1998. This maximum award
opportunity was determined by the 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 1998 fiscal year results as compared to 1998
target profit goals established by the Committee and the Board in early 1998,
none of the employees participating in the Incentive Program received bonuses.
STOCK-BASED COMPENSATION PLANS
The Company's long-term compensation program consists primarily of stock
options granted under the Company's employee stock option plans. 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 stock 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 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 1998 fiscal year.
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 such compensation qualifies
for an exception, including an exception for certain performance-based
compensation.
The Committee believes that Section 162(m) should not cause the Company to
be denied a deduction for 1998 compensation paid to the Covered Employees. The
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.
ADDITIONAL COMPENSATION PLANS
At various times in the past, the Company has adopted certain broad-based
employee benefit plans in which the Company's 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 COMPANY'S 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 Company's Board of Directors. Lehman
Brothers, Inc., an investment banking firm, provided investment banking services
to the Company during the Company's 1998 fiscal year and is expected to provide
investment banking services during the Company's 1999 fiscal year as requested
by the Company.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the last three fiscal years, cash
compensation and other benefits paid or provided by the Company to the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company in all capacities in which they served. All dollar
amounts are rounded down to the nearest whole dollar.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------- ----------------
SHARES ALL
NAME AND FISCAL BASE OTHER ANNUAL UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) STOCK OPTIONS(#) COMPENSATION
------------------ ------ --------- -------- --------------- ---------------- ------------
Gordon Zacks: 1998 $490,000 $ 0 $49,576 (1)(2)(3) 75,000 $11,189(4)
Chairman of the Board, 1997 $490,000 $187,425 $48,743 (1)(3)(5) 50,000 $10,002
Chief Executive Officer 1996 $468,000 $351,000 $46,498 (1)(3)(6) 18,750(7) $ 4,693
and President
Charles E. Ostrander: 1998 $258,000 $ 0 $20,087 (1)(2)(8) 40,000 $ 6,088(4)
Executive Vice President -- 1997 $258,000 $ 78,948 $13,782 (1)(5) 25,000 $ 4,832
Sales & Marketing and 1996 $245,000 $147,000 $13,782 (1)(6) 12,499(7) $ 2,869
Co-President and Co-Chief Operating
Officer of Barry Comfort Group(9)
Christian Galvis: 1998 $258,000 $ 0 $23,888 (1)(2)(8) 40,000 $ 5,726(4)
Executive Vice President -- 1997 $230,000 $ 70,380 $12,389 (1)(5) 25,000 $ 4,446
Operations and Co- 1996 $200,000 $120,000 $10,427 (1)(6) 12,499(7) $ 2,494
President and Co-Chief Operating
Officer of Barry Comfort Group
Richard L. Burrell: 1998 $175,173 $ 0 $22,383 (1)(2) 15,000 $ 3,714(4)
Senior Vice President -- 1997 $166,000 $ 50,796 $22,342 (1)(5) 15,000 $ 2,398
Finance, Treasurer and 1996 $158,000 $ 94,800 $18,925 (1)(6) 12,500(7) $ 123
Secretary
Daniel D. Viren: 1998 $168,193 $ 0 $13,690 (1)(2) 15,000 $ 4,046(4)
Senior Vice President -- 1997 $158,000 $ 36,261 $12,684 (1)(5) 15,000 $ 3,188
Administration 1996 $151,000 $ 67,950 $12,689 (1)(6) 9,375(7) $ 1,885
- ---------------
(1) "Other Annual Compensation" for each of 1998, 1997 and 1996 includes premium
payments of $19,088, $4,182, $6,165, $9,544 and $4,537 on behalf of Messrs.
Zacks, Ostrander, Galvis, Burrell and Viren, respectively, in each case to
continue life insurance policies which provide for a level of death benefits
not available under the Company's standard group life insurance program.
(2) "Other Annual Compensation" for 1998 also includes for Messrs. Zacks,
Ostrander, Galvis, Burrell and Viren the amounts of $19,360, $5,280, $7,098,
$12,839 and $9,153, respectively, reflecting their personal use of Company
furnished automobiles or automobile allowances paid to them.
(3) "Other Annual Compensation" for Mr. Zacks includes: (a) payments of $5,566,
$4,991 and $4,252 made during 1998, 1997 and 1996, respectively, to cover
Mr. Zacks' portion of the insurance premiums on a life insurance policy in
the face amount of $1,310,000 on the life of Mr. Zacks; (b) payments of
$3,333, $2,989 and $2,546 made during 1998, 1997 and 1996, respectively, to
cover Mr. Zacks' estimated tax liability with respect to such premium
payments; and (c) travel allowances of $2,229, $2,400 and $2,400 provided to
Mr. Zacks in 1998, 1997 and 1996, respectively.
(4) "All Other Compensation" for 1998 includes: (a) contributions in the amounts
of $1,131, $595, $595, $383 and $365 to the R. G. Barry Corporation Deferred
Compensation Plan (the "Deferred Compensation Plan") on behalf of Messrs.
Zacks, Ostrander, Galvis, Burrell and Viren, respectively;
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(b) interest in the amounts of $5,058, $2,218, $1,856, $1,086 and $1,523
credited to the accounts of Messrs. Zacks, Ostrander, Galvis, Burrell and
Viren, respectively, under the Deferred Compensation Plan; and (c)
contributions in the amounts of $5,000, $3,275, $3,275, $2,245 and $2,158 to
the R. G. Barry Corporation 401(k) Savings Plan (the "401(k) Plan") on
behalf of Messrs. Zacks, Ostrander, Galvis, Burrell and Viren, respectively.
(5) "Other Annual Compensation" for 1997 also includes for Messrs. Zacks,
Ostrander, Galvis, Burrell and Viren the amounts of $19,275, $9,600, $6,224,
$12,798 and $8,147, respectively, reflecting their personal use of Company
furnished automobiles or automobile allowances paid to them.
(6) "Other Annual Compensation" for 1996 also includes for Messrs. Zacks,
Ostrander, Galvis, Burrell and Viren the amounts of $18,212, $9,600, $4,311,
$9,382 and $8,153, respectively, reflecting their personal use of Company
furnished automobiles or automobiles allowances paid to them.
(7) Reflects adjustments for 5-for-4 share split on June 3, 1996.
(8) "Other Annual Compensation" for 1998 also includes the amount of $10,625
reflecting the fair market value of 1,250 common shares issued to each of
Messrs. Ostrander and Galvis on March 1, 1999 under a Restricted Stock
Agreement. See "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
(9) Mr. Ostrander has resigned from his positions as Executive Vice President
-- Sales & Marketing and Co-President and Co-Chief Operating Officer of the
Barry Comfort Group effective July 1, 1999.
GRANTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning individual grants of
options made under the R. G. Barry Corporation 1997 Incentive Stock Plan (the
"1997 Plan") and the R. G. Barry Corporation 1994 Stock Option Plan (the "1994
Plan") during the 1998 fiscal year to each of the named executive officers. No
stock appreciation rights were granted during the 1998 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE APPRECIATION
SHARES % OF TOTAL OPTIONS FOR
UNDERLYING GRANTED TO OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------------
NAME GRANTED(#) IN FISCAL YEAR PRICE($/SH) DATE 5% 10%
---- ---------- ------------------ ----------- ---------- ----------- -------------
Gordon Zacks......................... 6,694(2) 2.3% $16.4313 5/11/03 $ 30,389 $ 66,909
68,306(3) 24.0% $14.9375 5/11/08 $641,667 $1,626,134
Charles E. Ostrander................. 40,000(4) 14.0% $11.6875 1/4/08 $294,012 $ 745,080
Christian Galvis..................... 40,000(4) 14.0% $11.6875 1/4/08 $294,012 $ 745,080
Richard L. Burrell................... 10,886(2) 3.8% $14.9375 5/11/08 $102,263 $ 259,159
4,114(3) 1.4% $14.9375 5/11/08 $ 38,647 $ 97,940
Daniel D. Viren...................... 12,349(2) 4.3% $14.9375 5/11/08 $116,007 $ 293,988
2,651(3) 0.9% $14.9375 5/11/08 $ 24,903 $ 63,111
- ---------------
(1) The amounts reflected in this table represent assumed rates of appreciation
only. Actual realized values, if any, on option exercises will be dependent
on the actual appreciation of the common shares of the Company over the term
of the options. These amounts have been rounded to the nearest dollar.
(2) These incentive stock options were granted under the 1997 Plan on May 12,
1998, and become exercisable as follows: (a) for Mr. Zacks, as to all 6,694
common shares on the fourth anniversary of the grant date; (b) for Mr.
Burrell, as to 2,443 of the common shares on each of the second and third
anniversaries of the grant date and as to 3,000 common shares on each of the
fourth and fifth anniversaries of the grant date; and (c) for Mr. Viren, as
to 443 common shares on the first anniversary of the grant date, as to 2,953
common shares on each of the second and third anniversaries of the grant
date
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and as to 3,000 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 under the 1997 Plan (except
for 28,306 of those granted to Mr. Zacks, which were granted under the 1994
Plan) on May 12, 1998, and become exercisable as follows: (a) for Mr. Zacks,
as to 18,750 common shares on each of the first, second and third
anniversaries of the grant date and as to 12,056 common shares on the fourth
anniversary of the grant date; (b) for Mr. Burrell, as to 3,000 common
shares on the first anniversary of the grant date and as to 557 common
shares on each of the second and third anniversaries of the grant date; and
(c) for Mr. Viren, as to 2,557 common shares on the first anniversary of the
grant date and as to 47 common shares on each of the second and third
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.
(4) These non-qualified stock options were granted under the 1997 Plan on
January 5, 1998, and become exercisable as to 8,000 common shares on each of
the first, second, third and fourth 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.
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to options
exercised during the 1998 fiscal year by each of the named executive officers
and unexercised options and stock appreciation rights held as of the end of the
1998 fiscal year by each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SHARES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
UNDERLYING FY-END(#)(1)(2) SARS AT FY-END($)(3)(4)
OPTIONS ------------------------------ ---------------------------
NAME EXERCISED(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ----------------- ----------- ---------------- ----------- -------------
Gordon Zacks.......... 55,555 $640,866 121,874 121,875 $230,517 $ 0
Charles E.
Ostrander........... 26,666 $192,430 0 78,610 -- $28,472
Christian Galvis...... 28,332 $326,069 54,443 78,610 $113,885 $28,472
Richard L. Burrell.... 0 -- 47,999 38,945 $218,747 $11,390
Daniel D. Viren....... 10,000 $ 71,378 23,416 37,070 $ 65,955 $11,390
- ---------------
(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 to nearest dollar.
(4) "Value of Unexercised In-the-Money Options/SARs at FY-End" is based upon the
fair market value of the Company's common shares on December 31, 1998, the
last trading day of the 1998 fiscal year ($11.00), less the exercise price
of in-the-money options and stock appreciation rights at the end of the 1998
fiscal year.
PENSION PLANS
The Company's Pension Plan (the "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
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designated percentage of the participant's primary Social Security benefits.
Benefits under the Plan are reduced by 1/30th for each year of credited service
less than 30 years. The Company's Supplemental Retirement Plan (the
"Supplemental 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 Plan. The benefit to which any employee who was a
participant in the Supplemental Plan on December 31, 1988 is entitled will not
be less than 60% of such participant's "Final Average Monthly Compensation",
reduced by (i) his monthly pension payable under the Plan and (ii) a designated
percentage of his primary Social Security benefits.
The following table shows the estimated pension benefits payable under the
Plan and the Supplemental Plan to persons who became participants in the
Supplemental Plan on December 31, 1988, at age 65, based on compensation that is
covered by the Plan and the Supplemental 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 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
675,000 405,000 405,000 405,000 405,000 405,000
Annual benefits are shown before deduction of 50% of primary Social
Security benefits.
The following table shows the estimated pension benefits payable under the
Plan and the Supplemental Plan to persons who became participants in the
Supplemental Plan after December 31, 1988, at age 65, based on compensation that
is covered by the Plan and the Supplemental Plan, years of service with the
Company and payment in the form of a lifetime annuity:
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PENSION PLANS TABLE
(MINIMUM BENEFIT FOR PERSONS WHO BECAME PARTICIPANTS
IN THE SUPPLEMENTAL 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
675,000 168,750 253,125 337,500 405,000 405,000
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 plans 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 which such total
compensation is highest. However, for persons who became participants in the
Supplemental 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 1998 fiscal year
was $623,894, $252,341, $213,698, $206,609 and $152,668 for Messrs. Zacks,
Ostrander, Galvis, Burrell and Viren, respectively. Messrs. Zacks, Ostrander,
Galvis, Burrell and Viren have approximately 43, 12, 8, 32 and 10 years,
respectively, of credited service under the Plan and the Supplemental Plan.
Messrs. Zacks and Burrell were participants in the Supplemental Plan on December
31, 1988. All of the other persons named in the Summary Compensation Table
became participants in the Supplemental 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 Company's 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 of the Company pursuant to
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.
Lautzenhiser if he is elected as a director 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 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.
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OTHER COMPENSATION
In 1952, Mrs. Florence Zacks Melton transferred to the Company the
exclusive right to manufacture all slippers created and designed by her. Under
the agreement, Mrs. Melton receives 1% of the Company's gross receipts from
sales of such products. The agreement terminates five years after the death of
Mrs. Melton. During 1998, the Company accrued royalty payments (which were paid
in 1999) aggregating $91,607 pursuant to this agreement. Mrs. Melton is the
mother of Gordon Zacks.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Gordon Zacks, the Chairman of the Board, President and Chief Executive
Officer of the Company, and the Company entered into an Employment Agreement,
dated July 1, 1998 (the "Zacks Employment Agreement"), which provides for the
employment of Mr. Zacks by the Company as its Chairman, President and Chief
Executive Officer for a term of two years, automatically renewable for
additional, consecutive one-year terms unless the Company or Mr. Zacks gives
notice to the other of non-renewal and for an additional two-year term upon a
"change of control" (as defined in the Zacks Employment Agreement) of the
Company. The Company is obligated to cause Mr. Zacks to be nominated to
membership on the Board of Directors. Mr. Zacks is entitled to receive a minimum
annual salary of $490,000, subject to increases that from time to time may be
granted by the Board of Directors. In addition to his annual salary, Mr. Zacks
is entitled to participate in the Company's Incentive Program and to receive
certain health and life insurance coverages, pension and retirement benefits and
other benefits and perquisites.
If Mr. Zacks' employment is terminated by the Company without "cause" (as
defined in the Zacks Employment Agreement) or by Mr. Zacks for "good reason" (as
defined in the Zacks 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 and
will pay an additional monthly payment equal to one-twelfth of the average
annual bonus paid to Mr. Zacks for the last three full fiscal years prior to the
date of termination (the "Average Annual Bonus"). In addition, he will receive a
prorated bonus payment (based on his Average Annual Bonus) for the portion of
the current year preceding his termination of employment. Mr. Zacks and his
spouse 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 and his spouse were 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, he will receive a pro-rated bonus
(based on his Average Annual Bonus) for the portion of the current year
preceding his termination of employment. Mr. Zacks and his spouse will also
receive for a period ending on his 70th birthday or his earlier death, all life,
medical and dental insurance benefits to which he and/or his spouse was entitled
immediately prior to the date of termination (less any benefits provided by
government-funded health insurance) and he will receive all of his perquisites
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, certain specified business combinations or a
contested election, the persons who were directors of the Company immediately
before the transaction cease to constitute a majority of the Board of Directors
of the Company or any successor to the Company. The Zacks 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 of the Company
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 of Gordon Zacks 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 such 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
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common shares of the Company owned by Mr. Zacks at his death if his estate
elects to sell such common shares. The Company would have the right to purchase
such common shares on the same terms and conditions as the estate proposes to
sell such common shares.
Charles E. Ostrander, the Executive Vice President-Sales & Marketing and a
Co-President and Co-Chief Operating Officer of the Barry Comfort Group of the
Company, and the Company entered into an Executive Employment Agreement,
effective as of January 4, 1998 (the "Ostrander Employment Agreement"), which
provides for the employment of Mr. Ostrander by the Company as a Co-President of
its Barry Comfort Group and as a senior executive officer of the Company for a
term of five years. Mr. Ostrander is entitled to receive a minimum annual salary
of $258,000, subject to increases that from time to time may be granted by the
Board of Directors. In addition to his annual salary, Mr. Ostrander is entitled
to participate in the Company's Incentive Program and to receive certain health
and life insurance coverages, pension and retirement benefits and other benefits
and perquisites. Mr. Ostrander has resigned from his positions as Executive Vice
President -- Sales & Marketing and a Co-President and Co-Chief Operating Officer
of the Barry Comfort Group effective July 1, 1999. Under the terms of the
Ostrander Employment Agreement, Mr. Ostrander will be paid his salary at the
current rate through July 1, 1999.
Christian Galvis, the Executive Vice President -- Operations and a
Co-President and Co-Chief Operating Officer of the Barry Comfort Group of the
Company, and the Company entered into an Executive Employment Agreement,
effective as of January 4, 1998 (the "Galvis Employment Agreement"), which
provides for the employment of Mr. Galvis by the Company as a Co-President of
its Barry Comfort Group and as a senior executive officer of the Company for a
term of five years. Mr. Galvis is entitled to receive a minimum annual salary of
$258,000, subject to increases that from time to time may be granted by the
Board of Directors. In addition to his annual salary, Mr. Galvis is entitled to
participate in the Company's Incentive Program and to receive certain health and
life insurance coverages, pension and retirement benefits and other benefits and
perquisites. If Mr. Galvis' employment is terminated by the Company without
"cause" (as defined in the Galvis Employment Agreement) or by Mr. Galvis for
"good reason" (as defined in the Galvis 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. The Galvis Employment Agreement also provides for the
continuation of Mr. Galvis' salary for a period of time following a permanent
and total disability.
Messrs. Ostrander and Galvis are each party to a Restricted Stock
Agreement, effective as of January 4, 1998, with the Company, which provides for
the issuance to each of them of an aggregate of up to 10,000 common shares of
the Company over a period of up to eight years. They are each entitled to
receive 1,250 common shares on the last business day of each fiscal year of the
Company, beginning with the 1998 fiscal year, so long as they are employed by
the Company on such date. In addition, they will each receive an additional
1,250 common shares in respect of any fiscal year of the Company in which the
Company achieves 120% of the "target profit goal" established by the Company's
Board of Directors for that fiscal year. If the employment of Mr. Ostrander or
Mr. Galvis 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 the employment of Mr. Ostrander or Ms. Galvis is
terminated by the Company without "cause" (as defined in the Stock Agreement) or
by Mr. Ostrander or 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 previously been issued.
As of March 1, 1999, each of Mr. Ostrander and Mr. Galvis was issued 1,250
common shares in respect of the 1998 fiscal year. As a result of his resignation
effective July 1, 1999, Mr. Ostrander will not receive any further common
shares.
Richard L. Burrell, the Senior Vice President -- Finance, Treasurer and
Secretary of the Company, and Daniel D. Viren, the Senior Vice President --
Administration of the Company, each entered into an Agreement, effective as of
January 4, 1998, with the Company (the "Severance Agreement"), which provides
that if his employment is terminated by the Company without "cause" (as defined
in the Severance Agreement) or by him for "good reason" (as defined in the
Severance Agreement) within 36 months
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following a "change in control" (as defined in the Severance 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.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's cumulative total shareholder return on its 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 ("Textile-Apparel Clothing
Industry"), for the five-year period ended December 31, 1998 (the last trading
day during the Company's 1998 fiscal year). The index for the Textile-Apparel
Clothing Industry is being used in lieu of the index for Media General Industry
Group 57, Textiles/Apparel, which is no longer available. Media General has
reconfigured its industry groupings and Group 320 contains many of the companies
formerly included in Group 57.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURNS OF R. G. BARRY CORPORATION
COMMON SHARES, NYSE MARKET INDEX AND
TEXTILE-APPAREL CLOTHING INDUSTRY INDEX
R.G. BARRY TEXTILE-APPAREL NEW YORK STOCK
CORPORATION CLOTHING INDUSTRY EXCHANGE
----------- ----------------- -----------
12/31/93 100.00 100.00 100.00
12/30/94 97.27 91.30 98.06
12/29/95 227.32 111.70 127.15
12/27/96 163.93 133.41 153.16
1/2/98 167.58 141.70 201.50
12/31/98 160.29 141.68 239.77
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PROPOSAL TO APPROVE AN AMENDMENT TO
INCREASE THE NUMBER OF COMMON SHARES
AVAILABLE UNDER THE R. G. BARRY CORPORATION
1997 INCENTIVE STOCK PLAN
(ITEM 2 ON PROXY)
GENERAL
The Board of Directors adopted the 1997 Plan on February 20, 1997, and the
Company's shareholders approved the 1997 Plan at the May 16, 1997 Annual
Meeting. The 1997 Plan authorizes the granting of (i) incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986 (the
"Code"), (ii) non-qualified stock options ("NQSOs"), (iii) stock appreciation
rights ("SARs") and (iv) restricted shares (ISOs, NQSOs, SARs and restricted
shares are referred to herein as "Awards"). The purpose of the 1997 Plan is to
attract, retain and motivate key employees of the Company and its subsidiaries,
and to encourage them to have a financial interest in the Company.
The Company also maintains the 1994 Plan and the R. G. Barry Corporation
1988 Stock Option Plan (the "1988 Plan") under which options have been granted
to key employees. No further options may be granted under the 1988 Plan. As of
March 15, 1999, a total of 10,084 common shares remained available under the
1994 Plan and 75,306 common shares remained available under the 1997 Plan. The
Board believes the number of common shares remaining available for the grant of
Awards under the 1994 Plan and the 1997 Plan is not sufficient to satisfy Awards
which the Company expects to make over the next several years. For that reason,
the Board is recommending the approval of an amendment to the 1997 Plan which
will make an additional 450,000 common shares available for the grant of Awards
to key employees.
The following is a brief summary of the 1997 Plan, as proposed to be
amended. This summary is qualified in its entirety by reference to the full text
of the 1997 Plan, as proposed to be amended, a copy of which is included
herewith as Annex A and made a part hereof.
COMMON SHARES AVAILABLE UNDER THE 1997 PLAN
If the amendment is approved, the aggregate number of common shares for
which Awards may be made under the 1997 Plan will increase from 450,000 to
900,000 common shares. The common shares covered by the 1997 Plan will be made
available from authorized but unissued common shares or from common shares held
in treasury. If there is a forfeiture, termination or cancellation of any Award,
the common shares subject to that Award will be available for future grants. The
1997 Plan contains customary provisions with respect to adjustments for stock
splits and similar transactions and the rights of participants upon mergers and
other business combinations.
ADMINISTRATION OF THE 1997 PLAN
The 1997 Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee has the discretion to select the
employees to whom Awards are granted under the 1997 Plan and the terms and
conditions of those Awards. The Committee has sole and complete authority to
interpret the provisions of the 1997 Plan.
ELIGIBILITY
All full-time employees of the Company and its subsidiaries, including
officers and employee directors, are eligible to receive Awards under the 1997
Plan if selected by the Committee. As described in the Report of the
Compensation Committee on Executive Compensation, the grant of Awards under the
1997 Plan is a significant element of the Company's executive compensation
program. The following table sets forth the number and average exercise price of
options granted under the 1997 Plan to: (i) each of the executive officers of
the Company named in the Summary Compensation Table; (ii) all current executive
officers of the Company as a group; (iii) each nominee for election as a
director; and (iv) all employees, including all
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current officers who are not executive officers, of the Company as a group. The
Non-Employee Directors of the Company have not received and will not receive
options under the 1997 Plan. No options have been granted under the Plan to
associates of any director, executive officer or nominee for election as a
director of the Company. Other than the persons identified in the following
table, no person has received 5% or more of the options granted under the 1997
Plan. No SARs or restricted shares have been awarded under the 1997 Plan.
NUMBER OF
COMMON AVERAGE EXERCISE
SHARES SUBJECT TO PRICE PER SHARE
NAME OF INDIVIDUAL OR GROUP OPTIONS RECEIVED OF OPTIONS RECEIVED
--------------------------- ----------------- -------------------
Gordon Zacks, Chairman of the Board, Chief Executive 96,694 $ 13.20
Officer and President (also a Director Nominee)(1)
Charles E. Ostrander, Executive Vice President -- Sales & 65,000 $ 11.42
Marketing and Co-President and Co-Chief Operating Officer
of Barry Comfort Group(1)
Christian Galvis, Executive Vice President -- Operations 65,000 $ 11.42
and Co-President and Co-Chief Operating Officer of Barry
Comfort Group (also a Director Nominee) (1)
Richard L. Burrell, Senior Vice President -- Finance, 30,000 $ 12.97
Treasurer and Secretary (1)
Daniel D. Viren, Senior Vice President -- Administration 15,000 $ 14.94
All Current Executive Officers, as a Group 286,694 $ 12.55
Nominee for Election as Non-Employee Director:
Roger E. Lautzenhiser -0- N/A
All Employees, including All Current Officers who are not 88,000 $ 14.86
Executive Officers, as a Group
- ---------------
(1) Messrs. Zacks, Ostrander, Galvis and Burrell have each received more than 5%
of the options granted thus far under the 1997 Plan.
It is estimated that approximately 100 employees of the Company and its
subsidiaries are currently eligible to participate in the 1997 Plan (including
the executive officers named in the Summary Compensation Table). However, no
determination has been made as to the individual identity of the persons to whom
future Awards may be granted or the number of common shares which may be
allocated to any specific person or persons. It is anticipated that the
Committee's determination of which eligible employees will be granted Awards in
the future and the terms thereof will be based on each individual's present and
potential contribution to the success of the Company and its subsidiaries.
DURATION OF 1997 PLAN
No Award may be granted under the 1997 Plan after February 19, 2007.
TERMS OF AWARDS
Term of the Options; Limitations
ISOs and NQSOs (together, "Options") may be granted under the 1997 Plan for
terms of up to ten years. An ISO granted to a 10% shareholder of the Company may
have a term of up to five years. No person may be granted ISOs under the 1997
Plan if the grant would cause the aggregate fair market value (determined as of
the date an ISO is granted) of the common shares with respect to which ISOs are
first exercisable by the optionee during any calendar year under the 1997 Plan
and all other stock option plans
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maintained by the Company to exceed $100,000. In addition, during the period in
which the 1997 Plan remains in effect, no person may be granted Awards
(including Options, SARs and restricted shares) under the 1997 Plan covering, in
the aggregate, more than 100,000 common shares, subject to adjustment upon
changes in capitalization.
With the permission of the Committee, a person who has been granted an NQSO
may transfer the NQSO to a revocable inter vivos trust as to which the optionee
is the settlor or may transfer the NQSO to a "Permissible Transferee." A
Permissible Transferee is any member of the immediate family of the optionee,
any trust, whether revocable or irrevocable, solely for the benefit of members
of the optionee's immediate family, or any partnership whose only partners are
members of the optionee's immediate family. Any transferee of an NQSO will
remain subject to all of the terms and conditions applicable to the NQSO. An
NQSO may not be retransferred by a Permissible Transferee except by will or the
laws of descent and distribution and then only to another Permissible
Transferee. Other than as described above, an Option, SAR or restricted share
award made under the Plan may not be transferred except by will or the laws of
descent and distribution and, during the lifetime of the employee to whom made,
may be exercised only by the employee, his guardian or legal representative.
Exercise of Options; Expiration and Termination
If an optionee's employment is terminated for any reason other than for
willful, deliberate or gross misconduct, permanent disability, death or
retirement, his vested Options must be exercised within three months after the
date of termination of employment, subject to the stated term of the Options. If
an optionee's employment is terminated for willful, deliberate or gross
misconduct, his unexercised Options expire immediately. If an optionee dies
while in the employment of the Company or within three months after his
termination of employment, other than for willful, deliberate or gross
misconduct, his Options will become exercisable in full by his estate for a
period of twelve months after the date of death, subject to the stated term of
the Options. If an optionee retires or becomes permanently disabled, his Options
will become exercisable in full and his ISOs will expire on the earlier of (1)
the fixed expiration date of the ISO or (2) (a) three months after the
termination of employment (in the case of retirement) or (b) twelve months after
the termination of employment (in the case of permanent disability) and his
NQSOs will expire on the earlier of (1) the fixed expiration date or (2) (a)
twelve months after the date of termination of employment (in the case of
permanent disability) and (b) twelve months after the date of death (in the case
of retirement). In addition, if the Company or its shareholders enter into one
or more agreements to dispose of all or substantially all of the assets of the
Company or 50% or more of the outstanding capital stock of the Company by means
of a sale, merger, reorganization or liquidation in one or a series of related
transactions, an optionee's right to exercise his Options will be accelerated.
Option Exercise Price
The exercise price of each Option will be determined by the Committee and
may not be less than the fair market value of a common share on the grant date.
For purposes of the 1997 Plan, the fair market value of the Company's common
shares on a particular date will be the closing sale price of the common shares
as shown on the New York Stock Exchange on that date. On March 15, 1999, the
fair market value of the Company's common shares was $9.1875. An ISO granted to
a 10% shareholder must have an exercise price at least equal to 110% of the fair
market value of a common share on the grant date.
Payment of Exercise Price
Payment of the exercise price may be made in cash or by check and, if
permitted by the Committee, by exchange of already-owned common shares, or a
combination of common shares and cash or check. Each Option will provide for the
satisfaction of all tax withholding requirements applicable to the exercise of
the Option. In addition, each restricted share award will provide for the
satisfaction of all tax withholding requirements applicable to the issuance or
lapse of restrictions on transfer of the restricted shares. The award holder may
transfer already-owned common shares or have common shares withheld to satisfy
applicable tax withholding requirements.
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Stock Appreciation Rights
The Committee may, in its discretion, grant an SAR, either alone or in
conjunction with any Option granted under the 1997 Plan. An SAR granted in
conjunction with an Option may be granted at the time the Option is granted or,
in the case of NQSOs, at a later date with respect to an existing NQSO. If an
SAR granted in conjunction with an Option is exercised, the obligation of the
Company with respect to the related Option will be discharged by payment of the
exercised SAR. No SAR granted in conjunction with an Option may exceed the
difference between 100% of the fair market value on the date of exercise of the
common shares subject to the Option surrendered by the optionee, and the
aggregate exercise price of those common shares. The Committee may provide for
the payment of an SAR in cash or in common shares valued at fair market value as
of the date of exercise, or in any combination of cash and common shares.
Restricted Shares
Restricted share awards consist of common shares transferred to eligible
employees, without other payment therefor (other than the payment of the par
value of the common shares if required by applicable law), as additional
compensation for their services to the Company or one of its subsidiaries.
Restricted share awards will be subject to the terms and conditions set by the
Committee including restrictions on the sale or other disposition of the common
shares and rights of the Company to acquire the common shares upon termination
of the employee's employment within specified periods. Subject to any other
restrictions imposed by the Committee, the common shares covered by a restricted
share award may not be sold or transferred until six months after the grant
date.
Amendment and Termination
The Board of Directors of the Company may terminate, amend or modify the
1997 Plan in whole or in part. However, the Board may not amend the 1997 Plan,
without shareholder approval, if shareholder approval is required to satisfy the
requirements of (a) Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"); (b) the Code; or (c) any securities exchange on which the
Company's common shares are then listed.
FEDERAL INCOME TAX MATTERS
Based on current provisions of the Code and the existing regulations
thereunder, the anticipated federal income tax consequences in respect of Awards
granted under the 1997 Plan are as described below. The following discussion is
not intended to be a complete statement of applicable law and is based upon the
federal income tax laws as in effect on the date hereof.
ISOs
An optionee who is granted an ISO does not recognize taxable income either
on the date of grant or on the date of exercise. However, upon the exercise of
an ISO, the difference between the fair market value of the common shares
received and the exercise price is a tax preference item potentially subject to
the alternative minimum tax. However, on the later sale or other disposition of
the common shares, generally only the difference between the fair market value
of the common shares on the exercise date and the amount realized on the sale or
disposition is includable in alternative minimum taxable income.
Upon disposition of common shares acquired upon the exercise of an ISO,
capital gain or loss is generally recognized in an amount equal to the
difference between the amount realized on the sale or disposition and the
exercise price. However, if the optionee disposes of the common shares within
two years of the date of grant or within one year from the date of the issuance
of the common shares to the optionee (a "Disqualifying Disposition"), then the
optionee will recognize ordinary income, as opposed to capital gain, at the time
of disposition. In general, the amount of ordinary income recognized will be
equal to the lesser of (i) the amount of gain realized on the disposition, or
(ii) the difference between the fair market value of the common shares received
on the date of exercise and the exercise price. Any remaining gain or loss is
treated as a short-term or long-term capital gain or loss, depending upon the
period of time the common shares have been held.
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The Company is not entitled to a tax deduction upon either the exercise of
an ISO or the disposition of common shares acquired upon exercise, except to the
extent that an optionee recognizes ordinary income in a Disqualifying
Disposition.
If the holder of an ISO pays the exercise price, in whole or in part, with
already-owned common shares, the exchange should not effect the ISO tax
treatment of the exercise. Upon such exchange, and except for Disqualifying
Dispositions, no gain or loss is recognized by the optionee upon delivering
already-owned common shares to the Company for payment of the exercise price.
The common shares received by the optionee, equal in number to the already-owned
common shares exchanged therefor, will have the same basis and holding period
for capital gain purposes as the already-owned common shares. The optionee,
however, will not be able to use the prior holding period for the purpose of
satisfying the ISO statutory holding period requirements. Common shares received
by the optionee in excess of the number of already-owned common shares will have
a basis of zero and a holding period which commences as of the date the common
shares are transferred to the optionee upon exercise of the ISO. If the exercise
of an ISO is effected using common shares previously acquired through the
exercise of an ISO, the exchange of such already-owned common shares will be
considered a disposition of those common shares for the purpose of determining
whether a Disqualifying Disposition has occurred.
NQSOs
An optionee receiving an NQSO does not recognize taxable income on the date
of grant of the NQSO, provided that the NQSO does not have a readily
ascertainable fair market value at the time it is granted. In general, the
optionee must recognize ordinary income at the time of exercise of the NQSO in
the amount of the difference between the fair market value of the common shares
of the Company on the date of exercise and the exercise price. The ordinary
income recognized will constitute compensation for which tax withholding
generally will be required. The amount of ordinary income recognized by an
optionee will be deductible by the Company in the year that the optionee
recognizes the income if the Company complies with the applicable withholding
requirements.
If the sale of the common shares could subject the optionee to liability
under Section 16(b) of the Exchange Act, the optionee generally will recognize
ordinary income only on the date that the optionee is no longer subject to that
liability in an amount equal to the fair market value of the common shares on
that date less the exercise price. Nevertheless, the optionee may elect under
Section 83(b) of the Code within 30 days of the date of exercise to recognize
ordinary income as of the date of exercise, without regard to the restrictions
of Section 16(b).
Common shares acquired upon exercise of an NQSO will have a tax basis equal
to their fair market value on the exercise date or other relevant date on which
ordinary income is recognized, and the holding period for the common shares
generally will begin on the date of exercise or other relevant date. Upon
subsequent disposition of the common shares, the optionee will recognize
long-term capital gain or loss if the optionee has held the common shares for
more than one year prior to disposition, or short-term capital gain or loss if
the optionee has held the common shares for one year or less.
If an optionee pays the exercise price of an NQSO, in whole or in part,
with already-owned common shares, the optionee will recognize ordinary income in
the amount by which the fair market value of the common shares received exceeds
the exercise price. The optionee will not recognize gain or loss upon delivering
the already-owned common shares to the Company. Common shares received by an
optionee, equal in number to the already-owned common shares exchanged therefor,
will have the same basis and holding period as the already-owned common shares.
Common shares received by an optionee in excess of the number of already-owned
common shares will have a basis equal to the fair market value of the additional
common shares as of the date ordinary income is recognized. The holding period
for the additional common shares will commence as of the date of exercise or
other relevant date.
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SARs
The holder of an SAR is not taxed upon the grant of the SAR. Rather, an SAR
holder will generally be taxed on the exercise date, at ordinary income tax
rates, on the amount of cash received and the fair market value of any common
shares received. However, if the sale of common shares could subject an SAR
holder to liability under Section 16(b) of the Exchange Act, that person
generally will not recognize ordinary income with respect to the common shares
until he is no longer subject to liability, at which time he will recognize
ordinary income in an amount equal to the fair market value of the common shares
on such date. Nevertheless, the holder of an SAR may elect under Section 83(b)
of the Code within 30 days of the exercise date to recognize ordinary income as
of the exercise date, without regard to the Section 16(b) restriction. The
amount of ordinary income recognized by the holder of an SAR will be deductible
by the Company in the year the SAR holder recognizes income.
Restricted Share Awards
An employee who is granted a restricted share award will not be taxed upon
the acquisition of the common shares so long as his interest in the common
shares is subject to a substantial risk of forfeiture. Upon lapse or release of
the restrictions, the employee will be taxed at ordinary income tax rates on an
amount equal to either the current fair market value of the common shares (in
the case of lapse or termination) or the sale price (in the case of a sale),
less any consideration paid for the common shares. The Company will be entitled
to a corresponding deduction. The basis of restricted shares held after lapse or
termination of restrictions will be equal to their fair market value on the date
of lapse or termination of restrictions, and upon subsequent disposition, any
further gain or loss will be long-term or short-term capital gain or loss,
depending upon the length of time the common shares are held.
An employee who is granted a restricted share award may elect under Section
83(b) of the Code to be taxed at ordinary income tax rates on the full fair
market value of the restricted shares at the time of issuance (less any
consideration paid). The basis of the common shares will be equal to the fair
market value at that time. If the election is made, no tax will be payable upon
the subsequent lapse or release of the restrictions, and any gain or loss upon
disposition will be a capital gain or loss.
Other Matters
The 1997 Plan is intended to comply with Section 162(m) of the Code with
respect to Options and SARs granted thereunder. Upon approval of the proposed
amendment of the 1997 Plan by the shareholders, Options and SARs granted under
the 1997 Plan covering the additionally authorized common shares will qualify as
performance-based compensation, as defined in Code Section 162(m) and the
regulations promulgated thereunder. As such, any income attributable to those
Options and SARs will not be subject to the deduction limit of Code Section
162(m).
RECOMMENDATION AND VOTE
The Board of Directors of the Company unanimously recommends that the
shareholders vote for the proposal to approve the amendment of the 1997 Plan to
increase the common shares available thereunder from 450,000 to 900,000. Unless
otherwise directed, the persons named in the enclosed proxy card will vote the
common shares represented by all proxies received prior to the Annual Meeting,
and not properly revoked, in favor of the proposal to approve the amendment of
the 1997 Plan.
SHAREHOLDER APPROVAL OF THE AMENDMENT OF THE 1997 PLAN WILL REQUIRE THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMPANY'S COMMON SHARES
PRESENT IN PERSON OR BY PROXY. ABSTENTIONS AND BROKER NON-VOTES ARE COUNTED AS
PRESENT; THE EFFECT OF AN ABSTENTION OR A BROKER NON-VOTE IS THE SAME AS A "NO"
VOTE ON THE PROPOSAL.
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INDEPENDENT AUDITORS
The Company engaged KPMG LLP as its independent auditors to audit its
consolidated financial statements for the 1998 fiscal year. KPMG LLP, together
with its predecessor Peat, Marwick, Mitchell & Co., has served as independent
auditors for the Company since 1966. The Company's Audit Committee will make its
selection of the Company's independent auditors for the 1999 fiscal year at its
next meeting, which will be held after the Annual Meeting.
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 2000 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company no later than November
30, 1999, to be included in the Company's proxy, notice of meeting and proxy
statement relating to that Annual Meeting. Upon receipt of any proposal, the
Company will determine whether or not to include the proposal in the proxy
statement and proxy 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 Company's Board of
Directors. If a shareholder intends to present a proposal at the 2000 Annual
Meeting of Shareholders and does not notify the Company of the proposal by
February 13, 2000, the proxies solicited by the Company's Board of Directors for
use at the 2000 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 Secretary of the Company,
whose name and address are: Richard L. Burrell, Secretary, R. G. Barry
Corporation, 13405 Yarmouth Road N.W., Pickerington, Ohio 43147.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
business to be presented for action by the shareholders at the 1999 Annual
Meeting of Shareholders other than as set forth in this Proxy Statement.
However, if any other matter is properly presented at the Annual Meeting, or at
any adjournment(s) thereof, it is intended that the persons named in the
enclosed proxy may vote the common shares represented by such proxy on such
matters in accordance with their best judgment 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 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 29, 1999
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ANNEX A
R. G. BARRY CORPORATION
1997 INCENTIVE STOCK PLAN
(AS PROPOSED TO BE AMENDED)
PART I
GENERAL
L. PURPOSE
The purpose of this R. G. Barry Corporation 1997 Incentive Stock Plan (the
"Plan") is to advance the interests of R. G. Barry Corporation or any adopting
successor thereto (the "Company") and its present and future subsidiaries and to
enhance the value of the shareholders' investment in the Company by encouraging
key employees to acquire or increase and retain a financial interest in the
Company and thereby encourage the key employees to remain in the employment of
the Company and its subsidiaries and to put forth maximum efforts for the
success of the Company. In addition, the Plan is intended to enable the Company
and its subsidiaries to compete effectively for the services of potential
employees by furnishing an additional incentive to join the employment of the
Company and its subsidiaries.
2. ADMINISTRATION OF THE PLAN
(a) Committee. The Plan shall be administered by a committee (the
"Committee") of at least three persons which shall be either the Compensation
Committee of the Board of Directors or such other committee comprised entirely
of (i) "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor provision, and
the regulations and rulings thereunder; and (ii) "non-employee directors" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor rule or regulation, as the Board of
Directors of the Company may from time to time designate.
(b) Authority of the Committee. The Committee shall have full power and
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the power and
authority specifically granted to it under the Plan or necessary or advisable,
in the sole and absolute discretion of the Committee, to the administration of
the Plan including, without limitation, the authority to: select from among
eligible employees those persons to whom options, stock appreciation rights or
restricted share awards may be granted pursuant to the Plan; fix the terms and
provisions and restrictions of any option, stock appreciation right or
restricted share award granted under the Plan; grant options, stock appreciation
rights and restricted share awards; interpret and construe any provision of the
Plan or of any option, stock appreciation right or restricted share award
granted hereunder; make all required or appropriate determinations under the
Plan or any option, stock appreciation right or restricted share award granted
hereunder; adopt, amend and rescind such rules and regulations relating to the
Plan as the Committee shall determine in its discretion, subject to the express
provisions of the Plan; and make all other determinations deemed by it necessary
or advisable for the administration of the Plan. All decisions and designations
made by the Committee pursuant to the provisions of the Plan shall be final,
binding and conclusive with respect to all interested parties.
(c) Vacancies, etc. The Board of Directors shall fill all vacancies,
however caused, in the Committee. The Board of Directors may from time to time
appoint additional members to the Committee, and may at any time remove one or
more Committee members and substitute others. One member of the Committee shall
be selected by the Board of Directors to serve as chairman of the Committee. The
Committee shall hold its meetings at such times and places as it shall deem
advisable. All determinations of the Committee shall be made by a majority of
its members. The Committee may appoint a secretary and make such rules and
regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings.
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(d) Indemnification. Each person who is or shall have been a member of the
Committee or of the Board of Directors shall be indemnified and held harmless by
the Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of judgment in any such
action, suit or proceeding against him; provided that he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person may be entitled under the Company's Articles of Incorporation
or Regulations, as a matter of law, or otherwise, or any power that the Company
may have to indemnify him or hold him harmless.
3. ELIGIBILITY
(a) General. All full-time employees of the Company, including those who
are officers or directors, are eligible to receive options, stock appreciation
rights and restricted share awards pursuant to the Plan if selected as a
participant; provided, however, that members of the Committee may not
participate in the Plan. More than one option, stock appreciation right or
restricted share award may be granted to an employee.
(b) Factors. In determining the employees to whom options, stock
appreciation rights and/or restricted share awards are to be granted under the
Plan, the Committee shall consider such factors as it deems pertinent in
selecting such employees and in determining the type and amount of their
respective awards, including, without limitation: (a) the financial condition of
the Company and its subsidiaries; (b) anticipated profits for the current or
future years; (c) contributions of the employees to the profitability and
development of the Company and its subsidiaries; and (d) other compensation
provided to employees of the Company.
(c) No Other Rights. Nothing contained in the Plan, nor any option, stock
appreciation right or restricted share award granted pursuant to the Plan, shall
confer upon any employee any right to continue in the employment of the Company
nor limit in any way the right of the Company to terminate the employment of any
employee at any time.
4. SHARES SUBJECT TO THE PLAN
(a) The shares for which options, stock appreciation rights and restricted
share awards may be granted under the Plan shall consist of 900,000 Common
Shares, par value $1.00 per share (the "Common Shares"), of the Company;
provided, however, that whatever number of said Common Shares is not issued
pursuant to the exercise of options, stock appreciation rights and restricted
share awards at the time of any stock split, stock dividend or other change in
the Company's capitalization shall be appropriately and proportionately adjusted
to reflect such stock split, stock dividend or other change in capitalization.
(b) Common Shares subject to the Plan may be, at the discretion of the
Board of Directors, either authorized and unissued Common Shares or Common
Shares reacquired by the Company and held as treasury shares.
(c) If any outstanding option or stock appreciation right under the Plan
for any reason expires or is terminated without having been exercised in full or
surrendered in full in connection with the exercise of a stock appreciation
right, the Common Shares allocable to the unexercised portion of such option or
stock appreciation right shall (unless the Plan shall have been terminated)
become available for subsequent grants of options, stock appreciation rights and
restricted share awards under the Plan. If any Common Shares issued pursuant to
a restricted share award under the Plan are forfeited to the Company or
otherwise acquired by the Company, such Common Shares shall become available for
subsequent grants of options, stock appreciation rights and restricted share
awards under the Plan.
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5. EFFECTIVE DATE AND TERMINATION OF PLAN
The Plan was approved by the affirmative vote of the Board of Directors and
became effective on February 20, 1997; provided, however, that, if the Plan is
not approved by the shareholders of the Company within twelve (12) months
following such adoption, the Plan and all outstanding options, stock
appreciation rights and restricted shares, if any, shall be deemed null and void
and shall be of no force or effect. No options or stock appreciation rights
granted under the Plan may be exercised and no restricted share award shall
become vested prior to approval of the Plan by the shareholders of the Company.
The Plan shall terminate upon the earlier of (i) February 19, 2007; or (ii) the
date on which all Common Shares available for issuance under the Plan have been
issued pursuant to restricted share awards or the exercise of options or stock
appreciation rights granted hereunder or with respect to which payments have
been made upon the exercise of a stock appreciation right or other rights; or
(iii) the determination of the Board that the Plan shall terminate. No options,
stock appreciation rights or restricted share awards may be granted under the
Plan after such termination date, provided that the options, stock appreciation
rights and restricted share awards granted and outstanding on such date shall
continue to have force and effect in accordance with the provisions of the
documents evidencing such options, stock appreciation rights and restricted
share awards.
6. AMENDMENT OF THE PLAN
The Board of Directors may from time to time amend or modify or make such
changes in and additions to this Plan as it may deem desirable, without further
action on the part of the shareholders of the Company except as such shareholder
approval may be required (a) to satisfy the requirements of Rule 16b-3 under the
Exchange Act, or any successor rule or regulation; (b) to satisfy applicable
requirements of the Code; or (c) to satisfy applicable requirements of any
securities exchange on which are listed any of the Company's equity securities.
No such action to amend the Plan shall reduce the then-existing number of
options, stock appreciation rights or restricted shares granted to any employee
or adversely change the terms and conditions thereof without such employee's
consent.
7. NOTICES
Each notice relating to this Plan shall be in writing and delivered in
person or by first class or certified mail to the proper addressee. Each notice
shall be deemed to have been given on the date it is received. Each notice to
the Committee shall be addressed as follows:
R. G. Barry Corporation
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147
Attention: Secretary
Each notice to a holder of options, stock appreciation rights or restricted
shares (or other person or persons then entitled to exercise an option or stock
appreciation right) shall be addressed to the holder (or such other person or
persons), at the holder's address set forth in the Company's current personnel
records. Anyone to whom a notice may be given under this Plan may designate, in
writing, a new address by notice to that effect.
8. DEFINITIONS
(a) The term "Code," when used in this Plan, shall mean the Internal
Revenue Code of 1986, as amended, or any successor provision.
(b) The term "subsidiary," when used in this Plan, shall have the meaning
set forth in Section 424 of the Code.
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PART II
OPTIONS, STOCK APPRECIATION RIGHTS AND RESTRICTED SHARES
9. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS OR RESTRICTED SHARES
(a) To the extent not inconsistent with the provisions of this Plan, the
Committee shall fix the terms and provisions and restrictions of options and
stock appreciation rights, including the number of Common Shares to be subject
to each option or stock appreciation right, the dates on which options or stock
appreciation rights may be fully or partially exercised, the minimum period (if
any) during which the same must be held until exercisable and the expiration
dates thereof. In addition, to the extent not inconsistent with the provisions
of this Plan, the Committee shall fix the terms and conditions of restricted
share awards, as described in Section 9(f) of the Plan. During the period in
which this Plan remains in effect, no person shall be granted options, stock
appreciation rights and/or restricted shares under this Plan covering, in the
aggregate, more than 100,000 Common Shares, subject to adjustments upon changes
in capitalization. Options, stock appreciation rights and restricted shares
granted hereunder shall be evidenced by a written agreement (an "Agreement")
between the employee and the Committee. The Agreement shall contain such terms,
conditions and limitations as provided by the Committee, but shall also be
subject to the provisions of this Section 9 and other applicable Sections of
Part II of this Plan.
(b) It is intended that certain options granted pursuant to this Plan shall
constitute incentive stock options within the meaning of Section 422 of the Code
("Incentive Stock Options"). Non-qualified stock options may also be granted
under this Plan in accordance with the Plan's terms and conditions. An eligible
employee may be granted Incentive Stock Options, non-qualified stock options or
both, but only on the terms and subject to the restrictions set forth in this
Plan.
(c) Notwithstanding anything in this Plan to the contrary, no person shall
be eligible to receive an Incentive Stock Option if, at the time of grant, such
person owns of record and beneficially more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, then outstanding
and entitled to vote; provided, however, that the foregoing limitation shall not
apply if the option price at the time the option is granted is at least one
hundred ten percent (110%) of the fair market value (as defined in Section 9(e)
of this Plan) of the Common Shares subject to the option on the date of grant of
the option and the option term is not more than five (5) years. Further, the
aggregate fair market value (determined at the time the option is granted) of
the Common Shares with respect to which Incentive Stock Options are exercisable
for the first time by the option holder during any calendar year (under all
stock option plans of the Company) shall not exceed One Hundred Thousand Dollars
($100,000).
(d) Subject to the exception set forth in Section 9(c) of this Plan, the
purchase price of the Common Shares covered by each option shall not be less
than one hundred percent (100%) of the fair market value of such Common Shares
on the date of grant of such option.
(e) The fair market value of Common Shares on a particular date shall be
the closing sale price for the Company's Common Shares as reported on any
securities exchange on which the Company's Common Shares may be listed on such
date or, if no such sale occurred on that date, then for the next preceding date
on which a sale was made. If the Common Shares should be no longer listed on a
securities exchange, the fair market value shall be determined by the Committee.
Subject to the foregoing, the Committee, in fixing the purchase price, shall
have full authority and discretion and be fully protected in doing so.
(f) To the extent not inconsistent with the terms of this Plan, the
Committee may grant restricted share awards to employees who are eligible to
participate in the Plan. Restricted share awards will consist of Common Shares
transferred to an employee who is eligible to participate in the Plan without
other payment therefor (other than the payment of the par value of such Common
Shares if required by applicable law) as additional compensation for his or her
services to the Company or one of its subsidiaries. Restricted share awards
shall be subject to such terms and conditions as the Committee determines
appropriate including, without limitation, restrictions on the sale or other
disposition of such shares and rights of the Company to reacquire such shares
upon termination of the employee's employment within specified periods. Subject
to such other restrictions as are imposed by the Committee, the Common Shares
covered by a restricted share
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award granted to an eligible employee under the Plan may be sold or otherwise
disposed of only after six (6) months from the grant date of the award.
(g) An option, stock appreciation right or restricted share award granted
hereunder shall provide as determined by the Committee for appropriate
arrangements for the satisfaction by the Company and the holder of all federal,
state, local or other income, excise or employment taxes or tax withholding
requirements applicable to the issuance or lapse of restrictions on transfer of
restricted shares or the exercise of any option or stock appreciation right or
the later disposition of the Common Shares or other property acquired upon
exercise thereof and all such additional taxes or amounts as determined by the
Committee in its discretion, including, without limitation, the right of the
Company to receive transfers of Common Shares or other property from such holder
or to deduct or withhold in the form of cash or shares from any transfer or
payment to such holder, in such amount or amounts deemed required or appropriate
by the Committee in its sole and absolute discretion.
(h) The Committee shall have the authority to effect, at any time and from
time to time, with the consent of the affected option holder or option holders,
the cancellation of any or all outstanding options granted under the Plan and
the grant in substitution therefor of new options under the Plan (subject to the
limitations hereof) covering the same or different numbers of Common Shares at
an option price per share in all events not less than the fair market value of
the Common Shares on the new grant date (as determined under Section 9(e)).
10. NOTICE OF GRANT OF OPTION, STOCK APPRECIATION RIGHT OR RESTRICTED SHARE
AWARD
Upon the granting of any option, stock appreciation right or restricted
share award to an employee, the Committee shall promptly cause such employee to
be notified of the fact of such grant. The date on which an option, stock
appreciation right or restricted share award shall be granted shall be the date
of the Committee's authorization of such grant or such later date as may be
determined by the Committee at the time such grant is authorized, subject to
satisfaction of any conditions the Committee may place on the effectiveness of
the grant.
11. ADJUSTMENTS AND CHANGES IN THE COMMON SHARES
(a) In the event that the Common Shares as presently constituted shall be
changed into or exchanged for a different kind of shares or other securities of
the Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up, combination of
shares or otherwise) or if the number of such shares shall be increased through
the payment of a stock dividend, then except as otherwise provided in Section 12
hereof, there shall be substituted for or added to each share of the Company
theretofore appropriated or thereafter subject or which may become subject to an
option or other award under this Plan, the number and kind of shares or other
securities into which each outstanding share of the Company shall be so changed,
or for which each such share shall be exchanged, or to which the holder of each
such share shall be entitled, as the case may be. Outstanding options or other
awards under this Plan shall also be appropriately amended as to price and other
terms as may be necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding shares of the
Company, or of any shares or other securities into which such shares shall have
been changed, or for which they shall have been exchanged, then if the Committee
shall, in its sole discretion, determine that such change equitably requires an
adjustment in any option or other award theretofore granted under the Plan or
which may be granted under the Plan, such adjustment shall be made in accordance
with such determination. Fractional shares resulting from any adjustment
pursuant to this Section 11 shall be rounded down to the nearest whole number of
shares.
(b) Notwithstanding the foregoing, any and all adjustments in connection
with an Incentive Stock Option shall comply in all respects with Sections 422
and 424 of the Code and the regulations promulgated thereunder.
(c) Notice of any adjustment shall be given by the Company to each holder
of an option or other award under this Plan which shall have been so adjusted,
provided that such adjustment (whether or not such notice
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is given) shall be effective and binding for all purposes of the Plan and any
instrument or agreement issued thereunder.
12. ACCELERATION OF AWARDS
(a) In the event that the Company or its shareholders enter into one or
more agreements to dispose of all or substantially all of the assets or fifty
percent or more of the outstanding capital stock of the Company by means of sale
(whether as a result of a tender offer or otherwise), merger, reorganization or
liquidation in one or a series of related transactions (each, an "Acceleration
Event"), then each option and stock appreciation right outstanding under the
Plan shall become exercisable during the fifteen days immediately prior to the
scheduled consummation of the Acceleration Event with respect to the full number
of Common Shares for which such option or stock appreciation right has been
granted. Upon consummation of the Acceleration Event, all outstanding options
and stock appreciation rights, whether or not accelerated, shall terminate and
cease to be exercisable, unless assumed by the successor corporation or parent
thereof.
(b) Subject to the six month holding requirement of Section 9(f) and unless
otherwise provided in the Agreement pursuant to which the restricted shares are
granted, in the event an Acceleration Event (as defined in Section 12(a)) shall
occur, all terms and conditions of the restricted share awards shall be deemed
satisfied as of the date of the Acceleration Event, including all restrictions
on transfer of the restricted shares.
(c) The grant of options, stock appreciation rights or restricted share
awards under this Plan shall in no way affect the right of the Company to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
13. STOCK APPRECIATION RIGHTS
(a) The Committee may, in its sole and absolute discretion, grant a stock
appreciation right (an "SAR"), either alone or in conjunction with any option
granted under the Plan. An SAR granted in conjunction with an option may be
granted at the time said option is granted or (in the case of options other than
Incentive Stock Options) at a later date during the term of the option with
respect to an existing option (except as otherwise provided in Section 5 of this
Plan).
(b) An option holder who is granted an SAR may exercise the SAR by oral or
written notice to the Company, stating the number of Common Shares with respect
to which the SAR is being exercised, to the extent that said SAR is then
exercisable. Any oral notice of exercise of said SAR shall be confirmed in
writing in all cases no later than the date of payment to the option holder. In
the event of the exercise of an SAR granted in conjunction with an option, the
obligation of the Company in respect of the option to which the SAR relates (or
such portion thereof) shall be discharged by payment of the SAR so exercised.
(c) The Agreement evidencing any SAR granted hereunder shall set forth the
method of computation and form of payment of the SAR and such other terms and
conditions as determined by the Committee in its discretion or as otherwise
required by this Plan, provided that no SAR granted in conjunction with an
option shall exceed the difference between one hundred percent (100%) of the
then fair market value (as determined under Section 9(e)) on the date of
exercise of the Common Shares subject to the option or portion thereof
surrendered by the option holder, and the aggregate option exercise price of
such Common Shares. Without limiting the generality of the foregoing, the
Committee may provide for the payment of an SAR in cash or in Common Shares
valued at fair market value as of the date of exercise, or in any combination
thereof as determined by the Committee.
(d) Notwithstanding any contrary provision hereof: (i) each SAR shall
expire upon its stated maturity date or, in the case of an SAR granted in
conjunction with an option, upon the expiration of the option to which such SAR
relates, and each SAR granted in conjunction with an option shall be exercisable
only to the extent the option to which such SAR relates is then exercisable
(further subject to such additional conditions and restrictions as may be
imposed by the Committee), and (ii) in the case of any SAR related to an
Incentive Stock Option granted hereunder, said SAR shall be exercisable only
when the then fair market value
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of the Common Shares subject to the option (or portion thereof) surrendered by
the option holder exceeds the exercise price of such option (or such portion
thereof).
(e) References in this Plan to the term "option" shall, where appropriate,
include an SAR.
14. ADDITIONAL PROVISIONS
Any Agreements authorized under the Plan shall contain such other
provisions as the Committee and the Board of Directors of the Company shall deem
advisable which are not inconsistent with the terms herein stated. All Incentive
Stock Option Agreements shall contain such limitations and restrictions upon the
exercise of the option governed thereby as shall be necessary in order that such
option will be an "incentive stock option" as defined in Section 422 of the
Code, or to conform to any change in the applicable law, rulings or regulations.
15. EXERCISE OF OPTIONS
Each option granted under this Plan shall be exercisable on such date or
dates and during such period and for such number of Common Shares as shall be
determined pursuant to the terms of the Agreement evidencing such option. An
option may be exercised by notice given to the Committee in such form as the
Committee shall require. No fractions of a Common Share may be purchased by an
option holder upon exercising his option, and to the extent that the use of
fractional or percentage computations would otherwise give rise to the right of
the option holder to purchase a fraction of a Common Share, the total Common
Shares subject to exercise shall be adjusted down to the nearest whole number.
16. EXERCISE AFTER TERMINATION OF EMPLOYMENT
(a) Except as otherwise provided in the Plan, an option holder's options
(i) are exercisable only while the option holder is in the employment of the
Company and then only if the options have become exercisable by their terms, and
(ii) if not exercisable by their terms at the time the option holder ceases to
be in the employment of the Company, shall immediately expire on the date of
termination of employment.
(b) Except as otherwise provided in this Section 16, any option holder's
option which is exercisable by its terms at the time the option holder ceases to
be in the employment of the Company must be exercised on or before the earlier
of three (3) months after the date of termination of employment or the fixed
expiration date of such option after which period such option shall expire. If
an option holder is terminated for willful, deliberate or gross misconduct (such
as, for example, dishonesty), however, all options granted to such option holder
shall, to the extent not previously exercised, expire immediately upon such
termination.
(c) In the event of the death of an option holder (i) while in the
employment of the Company or (ii) within three (3) months after his termination
of employment other than for willful, deliberate or gross misconduct, each of
that option holder's unexercised options (whether or not then exercisable by
their terms) shall become immediately exercisable by his estate for a period
ending on the earlier of the fixed expiration date of such option or twelve
months after the date of death, after which period such option shall expire. For
purposes hereof, the estate of an option holder shall be defined to include the
legal representatives thereof or any person who has acquired the right to
exercise an option by reason of the death of the option holder.
(d) In the case of any options, other than Incentive Stock Options, in the
event of the termination of employment by reason of the permanent disability (as
defined below) of the option holder, each of that option holder's unexercised
options (whether or not then exercisable by their terms) shall become
exercisable for a period ending on the earlier of the fixed expiration date of
such option or twelve months from the date of termination of employment, after
which period such option shall expire. For purposes of this Section 16(d),
"permanent disability" shall be deemed to be the inability of the option holder
to perform the duties of his job with the Company because of a physical or
mental disability as evidenced by the opinion of a Company-approved doctor of
medicine licensed to practice medicine in the United States of America.
(e) In the case of any options, other than Incentive Stock Options, in the
event of the normal retirement of the option holder, each of that option
holder's unexercised options (whether or not then exercisable by its
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terms) granted to that option holder on or before his 65th birthday shall become
immediately exercisable for a period ending on the earlier of the fixed
expiration date of such option or twelve months after the date of death, after
which period such option shall expire. Also, in the event of the normal
retirement of the option holder, each of that option holder's unexercised
options, other than Incentive Stock Options (whether or not then exercisable by
its terms) granted to that option holder after his 65th birthday and held for a
period of at least twelve consecutive months of active employment with the
Company after the date of grant shall become immediately exercisable for a
period ending on the earlier of the fixed expiration date of such option or
twelve months after the date of death, after which period such option shall
expire. For purposes of this Section 16(e), retirement shall be deemed to be
"normal retirement" if the option holder is at least 65 years of age and has
completed at least five consecutive years of employment with the Company at the
date of retirement.
(f) In the case of Incentive Stock Options, in the event of the termination
of employment by reason of the permanent disability or the normal retirement of
the option holder (as defined in Sections 16(d) and (e), respectively, above),
each Incentive Stock Option then held by the option holder shall become
exercisable and terminate on the earlier of the period ending three months after
the termination of employment or the fixed expiration date of such option;
provided, however, that, if such termination of employment occurs by reason of
"disability" within the meaning of Section 22(e)(3) of the Code, said
three-month period shall be extended to twelve months.
17. PAYMENT FOR COMMON SHARES
Common Shares which are subject to an option shall be transferred only upon
exercise of the option in whole or in part and upon full payment of the purchase
price for the Common Shares as to which the option is exercised. The option
price shall be payable upon exercise of the option in United States dollars in
cash (including check, bank draft or money order). If permitted by the
Committee, the option price may also be paid (a) by delivery of Common Shares of
the Company already owned by the option holder, or (b) by delivery of a
combination of Common Shares and cash. Any Common Shares delivered to the
Company in payment of the option price shall be valued at their fair market
value (as defined in Section 9(e) of this Plan) on the date of delivery. An
employee to whom an option or stock appreciation right has been granted shall
have none of the rights of a shareholder with respect to the Common Shares to be
acquired until such Common Shares are issued to him.
18. TERMINATION OF OPTION OR STOCK APPRECIATION RIGHT
Each option and stock appreciation right shall terminate in any event no
later than ten (10) years from the date of grant except as provided in Section
9(c) of this Plan.
19. ASSIGNABILITY
With the permission of the Committee, a person who has been granted a
non-qualified stock option (that is, a stock option that is not an Incentive
Stock Option) under the Plan, may transfer such option to a revocable inter
vivos trust as to which the option holder is the settlor or may transfer such a
stock option to a "Permissible Transferee." A Permissible Transferee shall be
defined as any member of the immediate family of the option holder, any trust,
whether revocable or irrevocable, solely for the benefit of members of the
option holder's immediate family, or any partnership whose only partners are
members of the option holder's immediate family. Any such transferee of a
non-qualified stock option shall remain subject to all of the terms and
conditions applicable to such non-qualified stock option and subject to the
rules and regulations prescribed by the Committee. A non-qualified stock option
may not be retransferred by a Permissible Transferee except by will or the laws
of descent and distribution and then only to another Permissible Transferee.
Other than as described above, an option, stock appreciation right or restricted
share award granted under the Plan may not be transferred except by will or the
laws of descent and distribution and, during the lifetime of the employee to
whom granted, may be exercised only by him, his guardian or legal
representative.
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20. LAWS AND REGULATIONS
(a) The Plan and all options, stock appreciation rights and restricted
share awards granted pursuant to it are subject to all laws and regulations of
any governmental authority which may be applicable thereto, and notwithstanding
any provisions of this Plan or the options, stock appreciation rights or
restricted share awards granted hereunder, the holder of an option, a stock
appreciation right or restricted share award shall not be entitled to exercise
such option, stock appreciation right or restricted share award, nor shall the
Company be obligated to issue any Common Shares or pay any cash under the Plan
to the holder, if such exercise, issuance or payment shall constitute a
violation by the holder or the Company of any provisions of any such law or
regulation.
(b) The Company, in its discretion, may postpone the issuance and delivery
of Common Shares upon any exercise of an option or the grant of a restricted
share award until completion of any stock exchange listing or registration or
other qualification of such Common Shares under any state or federal law, rule
or regulation as the Company may consider appropriate; and may require any
person exercising an option or receiving a restricted share award to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance of the Common Shares in compliance with applicable
law.
(c) Common Shares issued and delivered upon exercise of an option or stock
appreciation right or pursuant to a restricted share award shall be subject to
such restrictions on trading, including appropriate legending of certificates to
that effect, as the Company, in its discretion, shall determine are necessary to
satisfy applicable legal requirements and obligations.
21. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Shares
pursuant to the options or other awards granted under this Plan shall be used
for general corporate purposes.
22. EXPENSES
The expenses of the Plan shall be borne by the Company.
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R. G. BARRY CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 13, 1999
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 13, 1999, at the Company's executive
offices, 13405 Yarmouth Road N.W., Pickerington, Ohio, at 2:30 P.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 WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS SPECIFIED. IF NO
CHOICE IS INDICATED, THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM NO. 1 AS DIRECTORS OF THE
COMPANY AND FOR PROPOSAL NO. 2. 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 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 13, 1999 meeting
and Annual Report to Shareholders for the fiscal year ended January 2, 1999.
R. G. BARRY CORPORATION
P.O. BOX 11152
NEW YORK, NY 10203-0152
(Continued, and to be executed and dated on other side.)
37
1. ELECTION OF DIRECTORS
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS
listed below to vote for all nominees
listed below
NOMINEES: Gordon Zacks Christian Galvis Roger E. Lautzenhiser
*(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S
NAME.)
2. APPROVAL OF AMENDMENT TO R. G. BARRY CORPORATION 1997
INCENTIVE STOCK PLAN TO INCREASE THE NUMBER OF COMMON SHARES
AVAILABLE THEREUNDER FROM 450,000 TO 900,000 COMMON SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS 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:_____________________________, 1999
----------------------------------------
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]