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BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders that
will be held on Friday, June 4, 2004 at 10:30 am, local time, in Santa Barbara,
California.
The following notice of meeting identifies each business item for your
action. These items are the election of two directors and the ratification of
Deloitte & Touche LLP as the Company's independent public accountants and
auditors for the 2004 fiscal year. The Board of Directors recommends that you
vote FOR each of these items. We have also included a proxy statement that
contains more information about these items and the meeting.
Whether or not you plan to attend in person, please complete, sign, date
and return the enclosed proxy card(s) promptly to ensure that your shares will
be represented. If you do attend the meeting and wish to vote your shares
personally, you may revoke your proxy.
Thank you for your continued interest in Big Dog Holdings, Inc.
Sincerely,
Andrew D. Feshbach
Chief Executive Officer and Director
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BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 4, 2004
TO THE STOCKHOLDERS OF
BIG DOG HOLDINGS, INC.
The 2004 Annual Meeting of Stockholders of BIG DOG HOLDINGS, INC. (the
"Company") will be held at the Coral Casino Beach and Cabana Club, 1260 Channel
Drive, Santa Barbara, California 93108 on Friday, June 4, 2004 at 10:30 am,
local time, for the following purposes:
1. To elect two directors to serve until the Company's 2007 Annual
Meeting;
2. To ratify the appointment of Deloitte & Touche LLP as the
Company's independent public accountants and auditors for the
2004 fiscal year; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 21, 2004
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
Anthony J. Wall
Secretary
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BIG DOG HOLDINGS, INC.
121 Gray Avenue
Santa Barbara, California 93101
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 4, 2004
This Proxy Statement is furnished to stockholders by the Board of
Directors of Big Dog Holdings, Inc. (the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders of the
Company to be held in Santa Barbara, California, on Friday, June 4, 2004 at
10:30 am (local time). The Company's principal executive offices are located at
121 Gray Avenue, Santa Barbara, California 93101 and its telephone number is
(805) 963-8727. This Proxy Statement, Notice of Annual Meeting and the
accompanying proxy card(s) are being first mailed to stockholders on or about
April 26, 2004.
General Information, Voting Rights and Voting Procedures
April 21, 2004 is the record date (the "Record Date") for the
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournments or postponements of the meeting. 8,243,132 shares of
Common Stock of the Company ("Common Stock") were outstanding on the Record
Date, and are entitled to vote at the meeting. The Common Stock is the only
outstanding voting stock of the Company, with each share entitled to one vote.
Each accompanying proxy card that is properly signed and returned to the
Company, and not revoked, will be voted in accordance with the instructions
contained therein. The proxy may be revoked at any time before it is exercised
by delivery to the Secretary of the Company, either in person or by mail, of a
written notice of revocation. Attendance at the Annual Meeting will not in
itself constitute revocation of the proxy.
Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying proxy card(s) (or their substitutes) will (i) vote
FOR the election of Skip Coomber and Steven Good to the Board of Directors of
the Company, (ii) vote FOR the approval of Deloitte & Touche LLP as the
Company's independent public accountants and auditors for the 2004 fiscal year
and (iii) will use their discretion with regard to other matters (of which the
Company is not now aware) that may be properly presented at the meeting or any
adjournments or postponements of the meeting and all matters incident to the
conduct of the meeting.
The presence at the meeting, in person or by proxy, of a majority of the
shares of Common Stock outstanding on the Record Date will constitute a quorum.
Assuming the presence of a quorum, the directors nominated will be re-elected by
a plurality of the votes cast by the stockholders entitled to vote at the
meeting, and the approval and adoption of the Amendment to the Plan and the
approval of the appointment of Deloitte & Touche LLP as the Company's
independent accountants and auditors will require a majority of the votes cast
by the stockholders represented and entitled to vote at the meeting.
Abstentions will be treated as shares that are present in determining
those entitled to vote on a matter and the presence of a quorum. If a broker or
nominee indicates on its proxy that it does not have discretionary authority to
vote on a particular matter as to certain shares, those shares will be counted
for general quorum purposes, but will not be counted as represented at the
meeting in determining the number of shares necessary for approval of that
matter. Any unmarked proxies, including those submitted by brokers or nominees,
will be voted in favor of the nominees of the Board of Directors and appointment
of Deloitte & Touche LLP.
Security Ownership of Principal Shareholders and Management
The following table shows certain information, as of April 7, 2004, with
respect to the shares of the Company's Common Stock beneficially owned by (i)
persons or entities known by the Company to own 5% or more of the Company's
Common Stock, (ii) the Company's directors and Named Executive Officers (as
defined under "Executive Compensation") and (iii) all directors and Named
Executive Officers as a group.
Number of Percent
Shares of
Name and Address Owned(1) Options(2) Total Class(3)
---------------- ----- -------- ----- -----
Fred Kayne................................. 4,502,500 20,000 4,522,500 54.7%
c/o Fortune Financial
1800 Avenue of the Stars, Suite 310
Los Angeles, CA 90067
FA Value Strategies Fund................... 1,028,400(4) --- 1,028,400 12.5%
82 Devonshire Street
Boston, MA 02109
FMR Corp., Edward Johnson 3d and
Abigail Johnson
c/o FMR Corp.
82 Devonshire Street
Boston, MA 02109
Andrew D. Feshbach......................... 592,224(5) 170,000 762,224 9.1%
c/o Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Robert H. Schnell.......................... 157,341(6) 45,000 202,341 2.4%
Douglas N. Nilsen.......................... 49,600 141,500 191,100 2.3%
Anthony J. Wall............................ 58,032 93,500 151,032 1.8%
Roberta J. Morris.......................... 34,720 76,833 111,553 1.3%
David J. Walsh............................. 21,920 40,000 61,920 ---
Lee M. Cox................................. 0 51,000 51,000 ---
Steven C. Good............................. 248 40,000 40,258 ---
Skip R. Coomber, III....................... 200 25,000 25,200 ---
All directors and executive officers as a
group (10 persons).............................. 5,416,785 702,833 6,119,118 68.4%
1 Unless otherwise indicated, each person has sole voting and dispositive power
with respect to the shares shown.
2 Represents shares subject to options held by directors and Named Executive
Officers that are exercisable as of April 15, 2004 or become exercisable
within 60 days thereof.
3 Based on 8,243,132 shares outstanding. Percentage information is omitted for
individuals who own less than one percent of the outstanding shares of Common
Stock and the shares deemed outstanding due to exercisable options.
4 Based on a Schedule 13G dated February 14, 2003 filed with the Securities and
Exchange Commission. According to such 13G, all of the shares shown are owned
by FA Value Strategies Fund (the "Fund"). Fidelity Management & Research
Company ("Fidelity"), as advisor to the Fund, and FMR Corp., Edward Johnson
and Abigail Johnson, as a result of their direct or indirect control of
Fidelity, may also be deemed to be beneficial owners of the shares.
5 All such shares are owned by the Feshbach Trust, of which Mr. Feshbach and
his wife are co-trustees.
6 All such shares are owned by the Robert and Renee Schnell Living Trust, of
which Mr. Schnell and his wife are co-trustees.
PROPOSAL 1
ELECTION OF DIRECTORS
Board of Directors
The Board of Directors of the Company is comprised of six members divided
into three classes. Stockholders elect one-third of the members of the Board of
Directors each year, and the members of each class serve on the Board of
Directors for three years. The terms of Skip Coomber and Steven Good, the Class
I Directors, expire in 2004. Mr. Coomber and Mr. Good each have been nominated
to stand for re-election at the Annual Meeting to hold office until the
Company's Annual Meeting in 2007 or until his successor is duly elected and
qualified. The terms of other directors expire at the Annual Meeting in 2005 or
2006.
The Board of Directors recommends a vote "FOR" the election of each of
the nominees. Unless authority to do so is withheld, the persons named in the
enclosed proxy card(s) (or their substitutes) will vote the shares represented
thereby FOR the election of Skip Coomber and Steven Good. If either nominee
becomes unavailable or is unable to serve as a director, the persons named as
proxies (or their substitutes) will have full discretion and authority to vote
or refrain from voting for any other nominee.
The following table contains information regarding the nominees and the
other incumbent directors.
Nominees for Election--Term Expiring 2004 (Class I)
Year First
Name Age Elected
---- --- ----------
Skip R. Coomber, III................................. 43 2000
Steven C. Good....................................... 61 1997
Incumbent Directors--Term Expiring 2005 (Class II)
Year First
Name Age Elected
---- --- ----------
Robert H. Schnell..................................... 64 1997
David J. Walsh........................................ 44 1997
Incumbent Directors --Term Expiring 2006 (Class III)
Year First
Name Age Elected
---- --- -----------
Fred Kayne........................................... 65 1992
Andrew D. Feshbach................................... 43 1992
Mr. Kayne co-founded the Company in 1992 and has served as its Chairman
since that time. Mr. Kayne co-founded Fortune Fashions Industries, LLC, a custom
manufacturer of embellished apparel for the tourist industry, in 1991 and has
served as its President since that time. Mr. Kayne also founded Fortune
Financial, a private merchant banking firm, in 1986 and has served as its
Chairman and President since that time. Mr. Kayne is also a co-founder and
manager of Fortune Casuals, LLC, a manufacturer of casual apparel for the mass
market, and of Fortune Swimwear, LLC, a women's swimwear manufacturer.
Mr. Feshbach co-founded the Company in 1992 and has served as President,
Chief Executive Officer and as a director since that time. Mr. Feshbach has an
M.B.A. from Harvard University.
Mr. Coomber practices law in San Diego, California, which he has done for
more than five years. Mr. Coomber is also a Trustee of the San Diego County
Employees Retirement Association.
Mr. Good founded Good, Swartz, Brown & Berns, an accountancy corporation,
more than five years ago and is the senior partner of that firm. Mr. Good also
serves as a director of Opto Sensors, Inc. and Arden Realty Company.
Mr. Schnell co-founded Fortune Casuals, LLC in 1999 and has since served
as a manager. During the two years prior to that time, Mr. Schnell was a private
investor.
Mr. Walsh is the owner of KMJ Investments, a private consulting and
merchant banking firm formed in 2002. Mr. Walsh co-founded FortuneLinX, Inc.,
providing fraud control solutions for data networks, in 2000. He served as its
President until 2001, when it was acquired, after which he served as its General
Manager until 2002. Mr. Walsh served as Senior Vice President-Strategic Planning
of Transaction Network Services, Inc., a provider of data communications
services from 1994 to September 1999. Mr. Walsh has an M.B.A. from Harvard
University.
Board and Committee Meetings
During 2003, there were five meetings of the Board of Directors and one
action by written consent. The Board maintains an Audit, Compensation, Employee
Stock Option and Special Compensation Committee, the responsibilities of which
are summarized below. The Board does not maintain a Nominating Committee and all
nominees for the board are designated by full Board action. Each Board member
attended 75% or more of the meetings of the Board and the committees on which he
served that were held in 2003.
Audit Committee. The Charter for the Audit Committee requires that the
Committee be comprised of at least three members, all of whom are independent,
as defined in the NASDAQ Marketplace Rules. Steven Good, David Walsh and Skip
Coomber are the current members of the Audit Committee, all of whom have been
determined by the Board to be independent. The Board has also determined that
Mr. Good, the Chairman of the Committee, is the audit committee financial
expert. The Audit Committee is responsible for monitoring and reviewing
accounting methods adopted by the Company, internal accounting procedures and
controls and audit plans. The Audit Committee recommends to the Board of
Directors the engagement of the Company's independent auditors and monitors the
scope and results of the Company's audits, the internal accounting controls of
the Company, and the audit practices and professional services furnished by the
Company's independent auditors. The Audit Committee held four meetings during
2003.
Compensation Committee. Fred Kayne, Robert Schnell and David Walsh, none
of whom is an officer or employee of the Company, are the current members of the
Compensation Committee. The Compensation Committee is responsible for reviewing
and approving all compensation arrangements for the officers of the Company and
has principal responsibility for administering the Amended and Restated 1997
Performance Award Plan (the "1997 Plan"). The Compensation Committee held one
meeting and took one action by written consent during 2003.
Employee Stock Option Committee. The Employee Stock Option Committee is
comprised of Fred Kayne and Andrew Feshbach and is responsible for authorizing
grants of stock options and other awards under the 1997 Plan to employees of
the Company who have positions below that of vice president, within guidelines
established by the Compensation Committee. The Employee Stock Option Committe
took all actions by unanimous written consent and held no meetings during 2003.
Special Compensation Committee. Robert Schnell and David Walsh are the
current members of the Special Compensation Committee, which has the
responsibility of evaluating, authorizing and administering stock option grants
and other awards under the 1997 Plan to directors and executive officers whose
compensation may be subject to Section 162(m) limits under the Internal Revenue
Code. The Special Compensation Committee took all actions by unanimous written
consent and held no meetings during 2003.
Compensation of Directors
Cash Compensation of Directors. Each non-employee director (excluding Mr.
Kayne) receives a fee of $10,000 per year for his services and is entitled to be
reimbursed for expenses incurred in connection with attendance at Board or
committee meetings. Mr. Kayne is paid a fee of $10,000 per month for acting as
Chairman. Directors who are employees of the Company are not paid any additional
cash compensation for their services as a director. During 2003, each member of
the Compensation Committee received an additional $2,500 and each member of the
Audit Committee received an additional $10,000.
Option Grants to Directors. On June 6, 2003, each director was granted an
option to purchase 5,000 shares of Common Stock at an exercise price of $2.90
per share, which was equal to the market price of the Common Stock at the close
of trading on the date of grant.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid in the years indicated to the Company's Chief Executive
Officer and four other most highly compensated executive officers (the "Named
Executive Officers").
Summary Compensation Table
Long Term
Compensation
Annual Compensation(1) Awards
-------------------- --------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus(2) Options Compensation(3)
--------------------------- ---- ------ ------ ------- --------------
Andrew D. Feshbach........................ 2003 $340,000 $90,000 --- $1,000
President and Chief Executive Officer 2002 $340,000 $60,000 --- $1,000
2001 $337,115 $80,000 255,000 $1,000
Douglas N. Nilsen......................... 2003 $267,800 $25,000 --- $1,000
Executive Vice President 2002 $267,800 $20,000 --- $1,000
2001 $267,800 $25,000 50,000 $1,000
Anthony J.Wall........................... 2003 $265,000 $25,000 --- $1,000
Executive Vice President and General 2002 $265,000 $20,000 --- $1,000
Counsel 2001 $262,115 $25,000 40,000 $1,000
Lee M. Cox.............................. 2003 $175,000 $25,000 --- ---
Senior Vice President-Retail 2002 $175,000 $20,000 --- ---
2001 $170,933 $25,000 85,000 ---
Roberta J. Morris ...................... 2003 $165,000 $25,000 --- $1,000
Chief Financial Officer and Treasurer 2002 $165,000 $20,000 --- $1,000
2001 $162,115 $25,000 35,000 $1,000
1 Other Annual Compensation was not paid or did not exceed the minimum amounts
required to be reported pursuant to Securities and Exchange Commission Rules.
2 Amounts shown represent the bonus earned by the Named Executive Officer
during the year indicated, whether or not paid in that year.
3 This category includes the Company's contributions to the Profit Sharing
Plan/401k.
Option Grants
No Options or SARS were granted to the Named Executive officers during
the Company's 2003 fiscal year other than the Options granted to Andrew Feshbach
in his capacity as a director, as described above under "Compensation of
Directors."
Option Values
The following table sets forth certain information with respect to the
value of unexercised options held by the Named Executive Officers at the end of
2003. "Value" is calculated as the difference between the fair market value and
the exercise price of in-the-money options at year end. None of the Named
Executive Officers exercised options during 2003.
Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Name December 31, 2003 December 31, 2003
---- ----------------- -----------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Andrew D. Feshbach.......................... 120,000 150,000 $4,150 0
Douglas N. Nilsen........................... 107,500 70,000 $6,325 0
Anthony J. Wall............................. 73,500 44,000 $6,325 0
Lee Cox..................................... 34,000 51,000 0 0
Roberta J. Morris........................... 60,167 37,333 $5,175 0
Employment Contracts, Termination of Employment and Change in Control
Arrangements
The Company currently does not have any employment contracts with its
Chief Executive Officer or any other Named Executive Officers. Unless the
Compensation Committee provides otherwise, upon a change in control (as defined
in the 1997 Plan) each option and stock appreciation right issued under the 1997
Plan will become immediately exercisable, any restricted stock issued under the
1997 Plan will immediately vest free of restrictions, and the number of shares,
cash or other property covered by any "performance share award" issued under the
1997 Plan will be issued to the grantee of such award. The Company has to date
issued only options under the 1997 Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates the report by reference
therein. The report shall not be deemed soliciting material or otherwise deemed
filed under either such Act.
The Compensation Committee consists of Messrs. Kayne, Schnell and Walsh,
who are non-employee directors of the Company. The responsibilities of the
Compensation Committee and the other committees to which the Board has delegated
certain compensation responsibilities are described above under "Board and
Committee Meetings."
Compensation Philosophy
The Company's executive compensation program consists of three main
components: (1) base salary, (2) potential for annual cash incentive
compensation (bonus) based on the Company's overall performance and the
employee's individual performance and (3) stock options to provide long-term
incentives for performance and to align the interests of executive officers and
stockholders. There is no fixed ratio of total compensation to be represented by
salary, incentive compensation or stock options.
Compensation of Named Executive Officers
With respect to the base salaries and annual bonuses for 2003 for the
Named Executive Officers, the Compensation Committee and special Compensation
Committee met with Mr. Feshbach to review his recommendations. The decisions of
the Compensation Committees were not based on any set formula but focused on
consideration of the performance of each executive in his or her particular area
of responsibility, the executive's contribution to the Company's overall
management team, an assessment of the future contributions the executive may be
expected to make to the Company, and prevailing industry compensation levels.
Compensation of the Chief Executive Officer
In 2003, Mr. Feshbach's salary and bonus were determined by the
Compensation Committee based on the same factors applied to the other executive
officers. In addition, the determination of Mr. Feshbach's base salary and bonus
compensation also took into consideration the Company's achievement of sales and
profit goals and the implementation of growth plans, cost controls, and other
items affecting its business and stockholder value.
Section 162(m) Considerations
Section 162(m) of the Internal Revenue Code limits the tax deductibility
to the Company of compensation in excess of $1 million in any year for certain
executive officers, except for qualified "performance-based compensation" under
the Section 162(m) rules. No covered executive's compensation for these purposes
exceeded $1 million for 2003. The Compensation Committee considers the Section
162(m) rules as a factor with respect to compensation matters, but will not
necessarily limit compensation to amounts deductible under Section 162(m).
The Compensation Committee
Fred Kayne
Robert Schnell
David Walsh
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was, during 2003, an officer or
employee of the Company or any of its subsidiaries, nor was any member of the
Compensation Committee formerly an officer of the Company or any of its
subsidiaries. No executive officer of the Company served (i) as a member of the
compensation committee (or board of directors serving the compensation function)
of another entity, one of whose executive officers served on the Compensation
Committee or (ii) as a member of the compensation committee of another entity,
one of whose executive officers served on the Company's Board.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
During 2003, the Company purchased approximately $75,000 of merchandise
from a clothing manufacturer of which Fred Kayne, the Chariman of the Board and
controlling stockholder of the Company, is the majority owner. The Company
believes such purchases were on terms at least as favorable as could have been
obtained from an independent third party.
In March 2004, a newly formed subsidiary of the Company ("New
TWC") acquired the assets of The Walking Company, a California corporation
("TWC"), in a bankruptcy proceeding. In response to the demands of creditors in
such proceedings, Mr. Kayne and Mr. Feshbach, a director and the CEO of he
Company, agreed to personally guaranty certain obligations of the Company and
New TWC incurred in such acquisition. These obligations included the payment of
a potential administrative claim against New TWC of up to $2.9 million and a
potential obligation of the Company to purchase notes issued by New TWC to
creditors in connection with the acquisition (the "Creditor Notes" or "Notes")
if the Company cannot pay such obligation. The holders of the Creditor Notes
have the right, through June 30, 2004, to put, at a 20% discount to the
principal amount, approximately $1.65 million in principal amount of the Notes
to the Company and $700,000 in principal amount of the Notes to New TWC. In
consideration of providing such guaranties, Mr. Kayne and Mr. Feshbach have to
date been provided with a right to acquire (at the same 20% discount) the
Creditor Notes, and certain warrants to acquire Company stock at $4.35 through
June 30, 2004 associated with the Notes, if the Creditor Notes are put to the
Company, regardless of whether the Company then has the ability to pay. In
addition, Mr. Kayne also personally guaranteed a $3 million unsecured bank line
of credit obtained by the Company to finance the acquisition of TWC, for which
he was paid a fee of $75,000. The foregoing transactions were approved by the
Audit Committee of the Board of Directors, which determined that the terms of
the consideration provided to Mr. Kayne and Mr. Feshbach were at least as
favorable to the Company as could have been obtain from an independent third
party.
REPORT OF THE AUDIT COMMITTEE
Notwithstanding anything to the contrary in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, that might incorporate this Proxy Statement or future
filings with the Securities Exchange Commission, in whole or in part, the
following report shall not be deemed to be incorporated by reference into any
such filing.
The current members of the Company's Audit Committee are Steven Good,
David Walsh and Skip Coomber, none of whom is an officer or employee of the
Company. The members of the Audit Committee are considered independent as
defined by the listing standards imposed by the NASD Rule 4200(a)(15). The Audit
Committee has reviewed the 2003 audited financial statements with management,
discussed with the independent auditors matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications with Audit Committees)
and received the written disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standards No. 1 (Independence
Discussions with Audit Committees), as currently in effect. Based on the review
and discussions, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ending December 31, 2003 for filing with the Securities
and Exchange Commission.
The Audit Committee
Steven C. Good
David J. Walsh
Skip Coomber
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent auditor
during 2003 and has been recommended to continue to serve as the Company's
independent auditor for 2004. A representative of Deloitte & Touche LLP is
expected to be present at the 2004 Annual Meeting of Stockholders, will have the
opportunity to make a statement if they wish and will be available to respond to
appropriate questions.
Audit Fees. The aggregate fees billed by Deloitte & Touche LLP for
auditing services rendered for the 2002 and 2003 audit of the Company's annual
financial statements were $142,500 and $135,000, respectively. The Company has
not retained Deloitte & Touche LLP to perform services other than the audit of
the annual financial statements.
The Audit Committee must pre-approve all engagements of the Company's
independent accountants unless an exception to such requirement exists
under the Securities Exchange Act of 1934 or the rules of the Securities
Exchange Commission. Each year, the independent auditors' retention to audit the
Company's financial statements, including the associated fees, is approved by
the committee. The Audit Committee will also, if applicable, review other
potential engagements of the independent auditors, including the scope of the
proposed work and the proposed fees, and approve or reject such services taking
into account whether the services are permissible under applicable law and the
possible impact on the auditors' independence from management.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
The foregoing is a comparison of the cumulative total stockholder return
on a $100 investment in the Common Stock of the Company, including the
reinvestment of dividends, with the cumulative total return of a $100 investment
in the NASDAQ National Stock Market Index and the CRSP Total Return Industry
Index for Retail Trade Stocks for the period from December 31, 1998 through
December 31, 2003. The two comparison indexes are intended to provide a relevant
comparison of total annual return in the time period (through December 31, 2003)
in which the Company's Common Stock has been publicly traded.
BIG DOG HOLDINGS, INC.
Comparison of Five-Year Cumulative Total Return
Measurement Period BIG DOG NASDAQ MARKET NASDAQ RETAIL
(Fiscal Year Covered) HOLDINGS, INC. INDEX INDEX
- -------------------- ------------- ------------- -------------
12/1998 $ 100.0 $ 100.0 $ 100.0
12/1999 148.8 185.4 87.7
12/2000 80.5 111.8 53.8
12/2001 66.9 88.7 74.4
12/2002 52.8 61.3 63.2
12/2003 80.0 91.7 88.0
The Comparison of Cumulative Total Return shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing of the Company pursuant to the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended
except to the extent the Company specifically incorporates the Comparison by
reference therein. The Comparison shall not be deemed soliciting material or
otherwise deemed filed under either such Act.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS AND AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has appointed Deloitte & Touche LLP as the Company's independent
public accountants and auditors for the fiscal year ending December 31, 2004,
subject to stockholder approval. Deloitte & Touche LLP has served as the
Company's independent public accountants and auditors since 1992.
Services which will be provided to the Company and its subsidiaries by
Deloitte & Touche LLP with respect to the 2004 fiscal year include the
examination of the Company's consolidated financial statements, reviews of
quarterly reports, services related to filings with the SEC and consultations on
various tax matters.
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting to respond to appropriate questions, and to make such
statements as he or she may desire.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of Deloitte & Touche LLP as the Company independent public
accountants and auditors for the 2004 fiscal year.
MISCELLANEOUS
Other Matters
If any other matters properly come before the meeting, it is the
intention of the proxy holders to vote in their discretion on such matters
pursuant to the authority granted in the proxy and permitted under applicable
law.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that
executive officers, directors, and holders of more than 10% of a company's
registered class of securities file reports of their ownership of a company's
securities with the SEC. Based on a review of these reports, the Company
believes that its reporting persons complied with all applicable filing
requirements.
Cost of Soliciting Proxies
The expenses of preparing and mailing the Notice of Annual Meeting, the
Proxy Statement and the proxy card(s) will be paid by the Company. In addition
to the solicitation of proxies by mail, proxies may be solicited by directors,
officers and employees of the Company (who will receive no additional
compensation) by personal interviews, telephone, telegraph and facsimile. The
Company has not retained, and does not intend to retain, any other entities to
assist in the solicitation of proxies. It is anticipated that banks, custodians,
nominees and fiduciaries will forward proxy soliciting material to beneficial
owners of the Company's Common Stock and that such persons will be reimbursed by
the Company for their expenses incurred in so doing.
Form 10-K and Annual Report to Stockholders
Enclosed with the Proxy Statement is the Annual Report of the Company for
2003, which includes a copy of the Company's Annual Report on Form 10-K for
2003. The Annual Report is enclosed for the convenience of stockholders only and
should not be viewed as part of the proxy solicitation material. If any person
who was a beneficial owner of Common Stock of the Company on the record date for
the 2004 Annual Meeting desires additional copies of the Company's Annual
Report, it will be furnished without charge upon receipt of a written request.
The request should identify the person making the request as a stockholder of
the Company and should be directed to:
Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Attn: Stockholder Relations
Telephone requests may be directed to Stockholder Relations at
(805) 963-8727, ext. 1216.
Proposals of Stockholders
The 2005 Annual Meeting of stockholders is presently expected to be held
in June 2005. To be considered for inclusion in the Company's Proxy Statement
for the 2005 Annual Meeting, proposals of stockholders intended to be presented
at the meeting must be received by the Corporate Secretary, Big Dog Holdings,
Inc., 121 Gray Avenue, Santa Barbara, California 93101, no later than January 1,
2005.
A stockholder may wish to have a proposal presented at the 2005 Annual
Meeting, but not to have it included in the Company's Proxy Statement for the
meeting. If notice of the proposal is not received by the Company at the above
address by March 15, 2005, then the proposal will be deemed untimely under Rule
14a-4(e) under the Securities and Exchange Act of 1934, and the Company will
have the right to exercise discretionary voting authority with respect to the
proposal.
Stockholders wishing to bring proposals before the 2005 Annual Meeting
must also comply with Section 1.9 of the Company's Bylaws, which requires
certain information to be provided in connection with the submission of
stockholder proposals and sets forth certain requirements in regard thereto. Any
Stockholder who wishes to communicate with the Board of Directors or any
individual director can write to Big Dog Holdings, Inc., Corporate
Secretary/Board Administration, 121 Gray Avenue, Santa Barbara California 93101.
Anthony J. Wall
Executive Vice President,
General Counsel and Secretary