UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PERRY ELLIS INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
PERRY ELLIS INTERNATIONAL, INC.
3000 N.W. 107th Avenue
Miami, Florida 33172
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 2002
-----------------
To the Shareholders of Perry Ellis International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Perry Ellis International, Inc., a Florida corporation (the
"Company"), will be held at the Company's principal executive offices at 3000
N.W. 107th Avenue, Miami, Florida 33172 at 10:00 A.M. on June 11, 2002 for the
following purposes:
1. To elect two directors of the Company to serve until 2005;
2. To consider and vote upon a proposal to adopt the Company's 2002 Stock
Option Plan;
3. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants
for the fiscal year ending January 31, 2003; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponements thereof.
The Board of Directors has fixed the close of business on May 1, 2002 as the
record date for determining those shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the pre-addressed envelope provided for that purpose as
promptly as possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Fanny Hanono,
Secretary
Miami, Florida
May 8, 2002
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. THOSE
SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY URGED TO EXECUTE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO
EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE ANNUAL MEETING, REVOKE THEIR
PROXY AND VOTE THEIR SHARES IN PERSON.
PERRY ELLIS INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 2002
-----------------
PROXY STATEMENT
-----------------
TIME, DATE AND PLACE OF ANNUAL MEETING
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation by the Board of Directors of Perry Ellis International, Inc.,
a Florida corporation (the "Company"), of proxies from the holders of the
Company's common stock, par value $.01 per share (the "Common Stock"), for use
at the Annual Meeting of Shareholders of the Company to be held at the
Company's principal executive offices at 3000 N.W. 107th Avenue, Miami, Florida
33172 at 10:00 A.M. on June 11, 2002, and at any adjournments or postponements
thereof (the "Annual Meeting") pursuant to the enclosed Notice of Annual
Meeting.
The approximate date this Proxy Statement and the enclosed form of proxy are
first being sent to shareholders is May 8, 2002. Shareholders should review the
information provided herein in conjunction with the Company's Annual Report to
Shareholders which accompanies this Proxy Statement. The Company's principal
executive offices are located at 3000 N.W. 107th Avenue, Miami, Florida 33172,
and its telephone number is (305) 592-2830.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and the enclosed proxy is to be borne by the Company.
In addition to the use of mail, employees of the Company may solicit proxies
personally and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. The Company may reimburse such
persons for their expenses in so doing.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
1. To elect two directors of the Company to serve until 2005;
2. To consider and vote upon a proposal to adopt the Company's 2002 Stock
Option Plan;
3. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent public accountants
for the fiscal year ending January 31, 2003; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
of Common Stock represented by valid proxies received pursuant to this
solicitation (and which have not been revoked in accordance with the procedures
set forth herein) will be voted (a) for the election of the respective nominees
for director named below and (b) in favor of all other proposals described in
the Notice of Annual Meeting. In the event a shareholder specifies a different
choice by means of the enclosed proxy, his shares will be voted in accordance
with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 1, 2002 as the
record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were approximately 6,320,474 shares of Common Stock issued and
outstanding, all of which are entitled to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote on each matter submitted to
shareholders for approval at the Annual Meeting.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The affirmative votes of the holders of a majority of
the shares of Common Stock represented in person or by proxy at the Annual
Meeting will be required for approval of the other proposals covered by this
Proxy Statement. If less than a majority of the outstanding shares entitled to
vote are represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting to another date, time or place, and
notice need not be given of the new date, time or place if the new date, time
or place is announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the meeting. Such inspector(s) shall determine the number of
shares of Common Stock represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and shall receive, count and tabulate
ballots and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the name of
its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election
of directors and other matters addressed at the Annual Meeting. Any such shares
which are not represented at the Annual Meeting either in person or by proxy
will not be considered to have cast votes on any matters addressed at the
Annual Meeting.
2
BENEFICIAL SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to beneficially own 5% or more of the
Company's outstanding Common Stock, (ii) the Company's Chief Executive Officer
and each of the other "Named Executive Officers" (as defined below in
"Executive Compensation-Summary Compensation Table"), (iii) each director of
the Company, and (iv) all directors and executive officers of the Company as a
group. The Company is not aware of any beneficial owner of more than 5% of the
outstanding Common Stock other than as set forth in the following table.
Number of % of Class
Name and Address of Beneficial Owner(1)(2) Shares Outstanding
------------------------------------------ --------- -----------
George Feldenkreis(3).................................. 2,021,546 30.1
Oscar Feldenkreis(4)................................... 1,406,978 21.6
Fanny Hanono(5)........................................ 398,648 6.3
Salomon Hanono(5)(6)................................... 434,898 6.8
Timothy B. Page(7)..................................... 7,500 *
GFX, Inc............................................... 361,525 5.7
Joseph Roisman(8)...................................... 20,250 *
Allan Zwerner(9)....................................... 6,250 *
Ronald Buch(10)........................................ 25,750 *
Gary Dix(11)........................................... 42,800 *
Joseph P. Lacher(12)................................... 17,000 *
Leonard Miller(13)..................................... 78,250 1.2
All directors and executive officers as a group
(11 persons)(14).................................... 3,810,146 53.7
FMR Corporation
82 Devonshire Street
Boston, Massachusetts 02109(15)...................... 672,400 10.6
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401(16)........................... 427,400 6.8
- --------
* Less than 1%.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
Perry Ellis International, Inc., 3000 N.W. 107th Avenue, Miami, Florida
33172.
(2) Except as otherwise indicated, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
listed, which include shares of Common Stock in which such persons have
the right to acquire a beneficial interest within 60 days from the Record
Date.
(3) Represents (a) 1,176,325 shares of Common Stock held directly by George
Feldenkreis, (b) 400,000 shares of Common Stock issuable upon the exercise
of stock options held by George Feldenkreis, (c) 361,525 shares of Common
Stock held by GFX, Inc. ("GFX"), formerly known as Carfel, Inc, of which
company Mr. Feldenkreis is a director, executive officer and principal
shareholder and (d) 83,690 shares of Common Stock held by a charitable
foundation of which George Feldenkreis, Oscar Feldenkreis and Fanny Hanono
are each directors and officers (the "Foundation").
(4) Represents (a) 1,122,288 shares of Common Stock held by a limited
partnership of which Oscar Feldenkreis is the sole shareholder of the
general partner and the sole limited partner, (b) 1,000 shares of Common
Stock held directly by Oscar Feldenkreis, (c) 200,000 shares of Common
Stock issuable upon the exercise of stock options held by Oscar
Feldenkreis and (d) 83,690 shares held by the Foundation.
(5) Represents (a) 314,958 shares of Common Stock held by a limited
partnership of which Fanny Hanono is the sole shareholder of the general
partner and the sole limited partner and (b) 83,690 shares held by the
Foundation. Salomon Hanono and Fanny Hanono are husband and wife.
3
(6) Also includes 36,250 shares of Common Stock issuable upon the exercise of
stock options held by Mr. Hanono.
(7) Represents 7,500 shares of Common Stock issuable upon the exercise of
stock options held by Mr. Page.
(8) Represents (a) 1,500 shares of Common Stock held directly by Mr. Roisman
and (b) 18,750 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Roisman.
(9) Represents 6,250 shares of Common Stock issuable upon the exercise of
stock options held by Mr. Zwerner.
(10) Represents (a) 750 shares of Common Stock held directly by Mr. Buch and
(b) 25,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Buch.
(11) Represents (a) 4,000 shares of Common Stock held directly by Mr. Dix, (b)
1,800 shares of Common Stock held in trust for his children, (c) 750
shares held in an individual retirement account and (d) 36,250 shares of
Common Stock issuable upon the exercise of stock options held by Mr. Dix.
(12) Represents (a) 2,000 shares of Common Stock held directly by Mr. Lacher,
(b) 5,000 shares held by Mr. Lacher's spouse and (c) 10,000 shares of
Common Stock issuable upon the exercise of stock options held by Mr.
Lacher.
(13) Represents (a) 42,000 shares of Common Stock held by Mr. Miller and (b)
36,250 shares of Common Stock issuable upon the exercise of stock options
held by Mr. Miller.
(14) Includes 776,250 shares of Common Stock issuable upon the exercise of
stock options.
(15) Based solely on information contained in Schedule 13G and filed with the
Securities and Exchange Commission ("Commission") for the period ending
December 31, 2001. All 672,440 shares of Common Stock are owned by
Fidelity Low Priced Stock Fund, a wholly owned subsidiary of FMR
Corporation.
(16) Based solely on information contained in Schedule 13G and filed with the
Commission for the period ending December 31, 2001.
4
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board of Directors
be divided into three classes. Each class of directors serves a staggered
three-year term. Ronald L. Buch and Salomon Hanono hold office until the 2002
Annual Meeting. Allan Zwerner, Oscar Feldenkreis and Joseph P. Lacher hold
office until the 2003 Annual Meeting. Gary Dix, Leonard Miller and George
Feldenkreis hold office until the 2004 Annual Meeting.
At the Annual Meeting, two directors will be elected by the shareholders to
serve until the Annual Meeting to be held in 2005 or until their successors are
duly elected and qualified. The accompanying form of proxy when properly
executed and returned to the Company, will be voted FOR the election as
directors of the two persons named below, unless the proxy contains contrary
instructions. Proxies cannot be voted for a greater number of persons than the
number of nominees named in the Proxy Statement. Management has no reason to
believe that any of the nominees is unable or unwilling to serve if elected.
However, in the event that any of the nominees should become unable or
unwilling to serve as a director, the proxy will be voted for the election of
such person or persons as shall be designated by the Board of Directors.
Nominees
The persons nominated as directors are as follows:
Name Age Position with the Company
---- --- -------------------------
Ronald L. Buch............................ 66 Director
Salomon Hanono............................ 52 Director
- --------
Ronald L. Buch was elected to the Company's Board of Directors in January
1996. Prior to his retirement in 1995, Mr. Buch was employed by K-Mart
Corporation for over 39 years, most recently as Vice President and General
Merchandise Manager.
Salomon Hanono was elected to the Company's Board of Directors in February
1993. From 1987 until February 2001, Mr. Hanono was employed by Carfel, Inc.
(now known as GFX), an importer and distributor of automotive parts, in various
executive positions. From February 2001 through December 2001, Mr. Hanono
served as Vice President of SPX Filtran, Inc. ("SPX") which had purchased
substantially all of Carfel's assets. Since January 2002, Mr. Hanono has been
serving as a consultant and in various executive capacities with GFX.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ALL OF THE NOMINEES
FOR ELECTION AS DIRECTORS.
Set forth below is certain information concerning the directors who are not
currently standing for election and the executive officers who are not
directors:
Term
Name Age Position with the Company Expires
---- --- ------------------------- -------
George Feldenkreis..... 66 Chairman of the Board and Chief Executive Officer 2004
Oscar Feldenkreis...... 42 President, Chief Operating Officer and Director 2003
Joseph Roisman......... 55 Executive Vice President N/A
Timothy B. Page........ 49 Chief Financial Officer N/A
Fanny Hanono........... 41 Secretary-Treasurer N/A
Gary Dix (1)........... 54 Director 2004
Leonard Miller (1)(2).. 72 Director 2004
Allan Zwerner.......... 57 President of Licensing and Director 2003
Joseph P. Lacher (1)(2) 56 Director 2003
5
- --------
(1)Member of Audit Committee.
(2)Member of Compensation Committee.
George Feldenkreis founded the Company in 1967, has been involved in all
aspects of its operations since that time and served as the Company's President
and a Director until February 1993, at which time he was elected Chairman of
the Board and Chief Executive Officer. He is a member of the Board of Directors
of the Greater Miami Jewish Federation and is a trustee of the University of
Miami.
Oscar Feldenkreis was elected Vice President and a Director in 1979 and
joined the Company on a full-time basis in 1980. Mr. Feldenkreis has been
involved in all aspects of the Company's operations since that time and was
elected President and Chief Operating Officer in February 1993. He is a member
of the Greater Miami Jewish Federation.
Joseph Roisman was appointed Executive Vice President in September 1995.
Previously, Mr. Roisman, who has been employed by the Company since 1988, held
the position of Vice President, Sales.
Timothy B. Page was appointed Chief Financial Officer in May 2001. From 1998
through 2001, Mr. Page was a private investor and entrepreneur in the
telecommunications and industrial gas and specialty chemical industries. From
1989 through 1997, Mr. Page was a director of Farah, Inc., an apparel company,
and served in various executive positions including Executive Vice President
and Chief Operational Officer.
Fanny Hanono was elected Secretary-Treasurer of the Company in September
1990. From September 1988 to August 1990, Mrs. Hanono served as the Company's
Assistant Secretary and Assistant Treasurer. From 1988 until February 2001, Ms.
Hanono was employed by Carfel, Inc. From February 2001 through December 2001,
Ms. Hanono served as a Vice President by SPX Filtran. Since January 2002, Ms.
Hanono has been serving as a consultant and in various executive capacities
with GFX.
Gary Dix was elected to the Company's Board of Directors in May 1993. Since
February 1994, Mr. Dix, a certified public accountant, has been a partner at
Mallah Furman & Company, P.A., an accounting firm in Miami, Florida. From 1979
to January 1994, Mr. Dix was a partner of Silver Dix & Hammer, P.A., another
Miami accounting firm.
Leonard Miller was elected to the Company's Board of Directors in May 1993.
Mr. Miller has been Vice President and Secretary of Pasadena Homes, Inc., a
home construction firm in Miami, Florida, since 1959.
Allan Zwerner was elected President of Licensing and a Director in April
1999. From September 1998 to April 1999, Mr. Zwerner was Senior Vice
President-General Merchandising Manager, Menswear at J. Crew Group, Inc. From
March 1982 to September 1998, Mr. Zwerner served in a number of executive
positions at Federated Department Stores, Inc. most recently serving as Senior
Vice President-General Merchandising Manager for Market and Product
Development, Men's and Children's Clothing.
Joseph P. Lacher was elected to the Company's Board of Directors in
September 1999. Since 1991, Mr. Lacher has been State President for Florida
operations of BellSouth Telecommunications, Inc. From 1967 to 1990, Mr. Lacher
served in various management capacities at AT&T corporate headquarters and at
Southern Bell. Mr. Lacher is a director of SunTrust of Miami, N.A. and a
trustee of the Florida International University Foundation.
George Feldenkreis is the father of Oscar Feldenkreis and Fanny Hanono and
the father-in-law of Salomon Hanono. There are no other family relationships
among the Company's directors and executive officers.
The Company's executive officers are elected annually by the Board of
Directors and serve at the discretion of the Board. The Company's directors
hold office until the third succeeding annual meeting of shareholders after
their respective election and until their successors have been duly elected and
qualified.
6
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10%
percent of the Company's Common Stock to file reports of beneficial ownership
and changes in ownership of the Company's Common Stock with the Commission.
Such persons are required to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
oral or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, with respect to the
fiscal year ended January 31, 2002 ("fiscal 2002"), all filing requirements
applicable to its directors, executive officers and greater than 10% percent
beneficial owners were complied with.
Meetings and Committees of the Board of Directors
During fiscal 2002, the Board of Directors held four formal meetings. During
fiscal 2002, no director attended fewer than 75% of the number of meetings of
the Board of Directors and each Committee of the Board of Directors of which he
was a member held during the period he served on the Board of Directors.
The only committees of the Board of Directors are the Audit Committee and
the Compensation Committee. The Board of Directors does not have a nominating
or similar committee.
The Audit Committee is presently comprised of Gary Dix, Joseph P. Lacher and
Leonard Miller. The duties and responsibilities of the Audit Committee include
(a) recommending to the Board of Directors the appointment of the Company's
independent public accountants and any termination of engagement, (b) reviewing
the plan and scope of independent audits, (c) reviewing the Company's
significant accounting policies and internal controls, (d) having general
responsibility for all related auditing matters, and (e) reporting its
recommendations and findings to the full Board of Directors.
The Board of Directors has adopted a written charter for the Audit
Committee. The Audit Committee is composed of outside directors who are not
officers or employees of the Company or its subsidiaries. In the opinion of the
Board of Directors, all of the members of the Audit Committee are "independent"
as that term is defined in the NASD listing standards and these directors are
independent of management and free of any relationships that would interfere
with their exercise of independent judgement as members of the Audit Committee.
The Audit Committee met on two occasions during fiscal 2002.
The Compensation Committee is presently comprised of Leonard Miller and
Joseph P. Lacher. The Compensation Committee reviews and approves the
compensation of the Company's executive officers and administers the Company's
stock option plans and the Company's Incentive Compensation Plan (the
"Incentive Compensation Plan"). The Compensation Committee met on two occasions
during fiscal 2002.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following compensation table sets forth for the fiscal years ended
January 31, 2002, 2001 and 2000, the cash and certain other compensation earned
by the Chief Executive Officer ("CEO") and such other executive officers whose
annual salary and bonus exceeded $100,000 during fiscal 2002 (together with the
CEO, collectively, the "Named Executive Officers"):
Long-Term
Annual Compensation Compensation Awards
------------------------- --------------------
Securities
Underlying LTIP All Other
Fiscal Salary Bonus Option/SAR's Payouts Compensation
Name and Principal Position Year ($) ($) (#) ($)(1) ($)(2)
- --------------------------- ------ ------- ------- ------------ ------- ------------
George Feldenkreis........ 2002 500,000 250,000 0 0 21,945
Chairman and CEO 2001 500,000 250,000 -- -- 31,804
2000 400,000 250,000 250,000 -- 7,101
Oscar Feldenkreis......... 2002 600,000 -- 0 475,000 14,390
President and Chief 2001 600,000 -- -- 475,000 16,242
Operating Officer 2000 370,000 630,000 100,000 -- 18,051
Joseph Roisman............ 2002 175,000 17,000 0 0 9,615
Executive Vice President 2001 170,000 17,000 -- -- 6,000
2000 165,000 33,000 -- -- 9,215
Allan Zwerner............. 2002 378,525 143,800 0 0 15,110
President of Licensing 2001 363,125 52,500 -- -- 11,700
2000 270,577 70,000 25,000 -- --
Timothy B. Page........... 2002 117,692(3) 24,000 15,000 0 --
Chief Financial Officer
since May 2001
- --------
(1) The dollar amount represents payments made under the Company's Incentive
Compensation Plan.
(2) The dollar amount represents Company contributions for the Named Executive
Officers under the Company's 401(k) plan and Company payments for a car
allowance, a leased vehicle or life insurance.
(3) Salary from May 2001 through January 31, 2002.
8
Option Grants in Last Fiscal Year
The following table sets forth information concerning individual grants of
stock options of the Company made during fiscal 2002 to any of the Named
Executive Officers.
Potential Realizable
Value of Assumed
Annual Rates of
% of Total Stock Price
Options Appreciation for
Number of Securities Granted To Exercise Stock Option
Underlying Stock Employees or Base Terms(2)($)
Options Granted In Fiscal Price Expiration --------------------
Name (#)(1) Year ($/Sh) Date 5% 10%
---- -------------------- ---------- -------- ----------- ------- -------
George Feldenkreis. 0 -- -- -- -- --
Oscar Feldenkreis.. 0 -- -- -- -- --
Joseph Roisman..... 0 -- -- -- -- --
Timothy B. Page.... 15,000 21.0% $8.12 May 2, 2006 $33,651 $74,360
Allan Zwerner...... 0 -- -- -- -- --
- --------
(1) These awards were made pursuant to the Company's 1993 Stock Option Plan.
7,500 of Mr. Page's stock options vested in November 2001 and the remaining
7,500 options vest in November 2002.
(2) Based upon the exercise price, which was equal to the fair market value on
the date of grant, and annual appreciation at the assumed rates stated on
such price through the expiration date of the options. Amounts shown
represent hypothetical gains that could be achieved for the options if
exercised at the end of the term. These amounts have been determined on the
basis of assumed rates of appreciation mandated by the Commission and do
not represent the Company's estimate or projection of the future stock
price. Actual gains, if any, are contingent upon the continued employment
of the Named Executive Officer through the expiration date, as well as
being dependent upon the general performance of the Company's common stock.
The potential realizable values have not taken into account amounts
required to be paid for federal income taxes. The Company did not use an
alternative formula for a grant date valuation, an approach which would
state gains at present, and therefore lower, value.
Stock Options Held at End of Fiscal 2002
The following table indicates the total number and value of exercisable and
unexercisable stock options held by each of the Named Executive Officers as of
January 31, 2002. No stock options were exercised by any of the Named Executive
Officers in fiscal 2002.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year-End In-the-Money Options at
(#) Fiscal Year-End ($) (1)
-------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
George Feldenkreis...... 400,000 0 0 0
Oscar Feldenkreis....... 200,000 0 0 0
Joseph Roisman.......... 17,250 3,000 0 0
Timothy B. Page......... 7,500 7,500 0 0
Allan Zwerner........... 18,750 6,250 0 0
- --------
(1) Based on the Nasdaq National Market last sales price for the Company's
Common Stock on January 31, 2002 in the amount of $7.50 per share.
9
Compensation of Directors
During fiscal 2002, non-employee directors were compensated at the rate of
$5,000 per quarter up to a maximum of $20,000 per annum. Directors are
reimbursed for travel and lodging expenses in connection with their attendance
at meetings. Directors are also entitled to receive stock options under the
Company's stock option plans. During fiscal 2002, there were no option grants
to the Company's non-employee directors. As of the Record Date, the following
options granted to non-employee directors were outstanding:
Number Exercise
Name of Optionee of Shares Price($) Expiration Date
---------------- --------- -------- ---------------
Ronald L. Buch............... 10,000 5.19 January 4, 2011
10,000 8.81 April 22, 2009
5,000 15.75 May 7, 2008
Gary Dix..................... 10,000 5.19 January 4, 2011
10,000 8.81 April 22, 2009
5,000 15.75 May 7, 2008
11,250 8.00 June 2, 2005
Leonard Miller............... 10,000 5.19 January 4, 2011
10,000 8.81 April 22, 2009
5,000 15.75 May 7, 2008
11,250 8.00 June 2, 2005
Salomon Hanono............... 10,000 5.19 January 4, 2011
10,000 8.81 April 22, 2009
5,000 15.75 May 7, 2008
11,250 8.00 June 2, 2005
Joseph P. Lacher............. 10,000 5.19 January 4, 2011
Employment Agreements
The Company is party to an employment agreement with George Feldenkreis, the
Chairman of the Board of Directors and Chief Executive Officer, which currently
expires in May 2004. The employment agreement provides for an annual salary of
$500,000, subject to annual cost-of-living increases, and an annual bonus in
the form of a performance bonus to be determined by the Compensation Committee
up to a maximum of $250,000. The employment agreement also prohibits Mr.
Feldenkreis from directly or indirectly competing with the Company for one year
after termination of his employment for any reason except the Company's
termination of Mr. Feldenkreis without cause. Upon termination of the
employment agreement by reason of his death or disability, Mr. Feldenkreis or
his estate will receive a lump sum payment equal to one year's salary plus a
bonus as may be determined by the Compensation Committee in its discretion.
The Company is a party to an employment agreement with Oscar Feldenkreis,
the President and Chief Operating Officer, which currently expires in May 2004.
The employment agreement currently provides for an annual salary of $600,000,
subject to annual cost-of-living increases, and an annual bonus in the form of
a performance bonus, equal to 3.5% of pre-tax income with a minimum of $475,000
bonus and a maximum of $675,000 bonus. Oscar Feldenkreis' employment agreement
contains termination and non-competition provisions similar to those set forth
in George Feldenkreis' agreement.
The Company is party to an employment agreement with Timothy B. Page, the
Chief Financial Officer, expiring in May 2003. The employment agreement
currently provides for an annual salary of $225,000, and an annual bonus of up
to $36,000 for the fiscal year ending January 31, 2003. Fifty percent of Mr.
Page's bonus is guaranteed and the payment of the remainder of the bonus is
subject to a performance review. Mr. Page may not compete directly or
indirectly with the Company during his employment or for a period of one-year
following Mr. Page's departure from the Company, whether such departure was
initiated by Mr. Page or the Company with or without cause. Mr. Page also may
not directly or indirectly, without the express written permission of the
10
Company, employ anyone who is a consultant or employee of the Company at the
time of Mr. Page's departure from the Company.
The Company is party to an employment agreement with Allan Zwerner, the
President of Licensing, which expires in May 2002. The employment agreement
currently provides for an annual salary of $350,000, and an annual bonus, of up
to a maximum of $175,000, based on performance guidelines. The Company is
currently negotiating a renewal of Mr. Zwerner's employment agreement.
Compensation Committee Report on Executive Compensation
Under rules established by the Commission, the Company is required to
provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year. The
report of the Company's Compensation Committee is set forth below.
Compensation Philosophy
The three principal components of the Company's executive compensation are
salary, bonus and stock options. These components are designed to facilitate
fulfillment of the compensation objectives of the Company's Board of Directors
and the Compensation Committee, which objectives include (i) attracting and
retaining competent management, (ii) recognizing individual initiative and
achievement, (iii) rewarding management for short and long term
accomplishments, and (iv) aligning management compensation with the achievement
of the Company's goals and performance.
The Compensation Committee endorses the position that equity ownership by
management is beneficial in aligning management's and shareholders' interests
in the enhancement of shareholder value. This alignment is amplified by the
extensive holdings by management of the Company's Common Stock and stock
options. Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for managerial
talent, including a comparison of base salaries for comparable positions at
similar companies of comparable sales and capitalization. Annual salary
adjustments are determined by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive, and the
responsibilities assumed by the executive.
The Compensation Committee intends to review the Company's existing
management compensation programs on an ongoing basis and will (i) meet with the
chief executive officer to consider and set mutually agreeable performance
standards and goals for members of senior management and/or the Company, as
appropriate or as otherwise required pursuant to any such officer's employment
agreement and (ii) consider and, as appropriate, approve modifications to such
programs to ensure a proper fit with the philosophy of the Compensation
Committee and the agreed-upon standards and goals. The Compensation Committee
has not yet considered or approved the individual or corporate performance
goals or standards for the fiscal year ending January 31, 2003 with respect to
the Company's management incentive programs.
Chief Executive Officer Compensation
The principal factors considered by the Board of Directors in determining
fiscal 2002 salary and bonus for George Feldenkreis, the Chairman of the Board
of Directors and Chief Executive Officer of the Company, included an analysis
of the compensation of chief executive officers of public companies within the
Company's industry and public companies similar in size and capitalization to
the Company. The Compensation Committee also considered the Company's fiscal
2002 earnings, expectations for the fiscal year ending January 31, 2003 and
other performance measures in determining George Feldenkreis' compensation, but
there was no specific relationship or formula by which such compensation was
tied to Company performance. The Company also considered that, notwithstanding
the fact that his employment agreement does not require Mr. Feldenkreis to
devote more than 50% of his working time to the affairs of the Company, Mr.
Feldenkreis has devoted the vast majority of his working time to the affairs of
the Company.
11
Other Executive Officers' Compensation
Fiscal 2002 base salary and bonus for the Company's other executive
officers, to the extent each executive officer's compensation is not governed
by an employment agreement, were determined by the Compensation Committee. This
determination was made after a review and consideration of a number of factors,
including each executive's level of responsibility and commitment, level of
performance (with respect to specific areas of responsibility and on an overall
basis), past and present contribution to and achievement of Company goals and
performance during fiscal 2002, compensation levels at competitive publicly
held companies and the Company's historical compensation levels. Although
Company performance was one of the factors considered, the approval of the
Compensation Committee was based upon an overall review of the relevant
factors, and there was no specific relationship or formula by which
compensation was tied to Company performance.
Stock Options
The Company maintains stock option plans which are designed to attract and
retain directors, executive officers and other employees of the Company and to
reward them for delivering long-term value to the Company.
/s/ Leonard Miller
/s/ Joseph P. Lacher
Compensation Committee Interlocks and Insider Participation
None.
12
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total shareholder return on the
Nasdaq Stock Market-US Index and The S&P Apparel & Accessories Index commencing
on February 1, 1997 and ending January 31, 2002.
[CHART]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PERRY ELLIS INTERNATIONAL, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P APPAREL & ACCESORIES INDEX
PERRY ELLIS NASDAQ STOCK S & P APPAREL
INTERNATIONAL, INC. MARKET (U.S.) & ACCESSORIES
------------------- ------------- -------------
1/1997 $100.00 $100.00 $100.00
1/1998 109.21 117.99 98.48
1/1999 168.42 184.64 91.15
1/2000 120.06 288.57 62.92
1/2002 63.16 202.09 87.20
1/2002 78.95 141.89 98.91
January 31,
---------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
Perry Ellis........ $109.21 $168.42 $120.06 $ 63.16 $ 78.95
Nasdaq US.......... 117.99 184.64 288.57 202.09 141.89
S&P Textiles....... 98.48 91.15 62.92 87.20 98.91
- --------
* Assumes that $100 was invested on February 1, 1997 in the Company's Common
Stock or on February 1, 1997 in the Nasdaq Stock Market Index or The S&P
Apparel & Accessories Index, and that all dividends are reinvested.
13
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.
2. The Audit Committee has discussed with Deloitte & Touche LLP, the
Company's independent accountants, the matters required to be discussed by
Statement on Auditing Standards ("SAS") 61 (Communications with Audit
Committees).
3. The Audit Committee has received the written disclosures and the letter
from Deloitte & Touche LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and has discussed with
Deloitte & Touche LLP their independence.
4. Based on the review and discussion referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors of the
Company, and the Board of Directors has approved, that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2002, for filing with the Securities and Exchange
Commission.
/s/ Gary Dix
/s/ Joseph P. Lacher
/s/ Leonard Miller
AUDIT AND NON-AUDIT FEES
For the fiscal year ended January 31, 2002, fees for services provided by
Deloitte & Touche LLP were as follows:
A. Audit $221,060
B Financial Information Systems Design Implementation $ 0
C. All Other Fees, consisting of corporate tax consulting $66,115 and
other services $16,250 $ 82,365
CERTAIN TRANSACTIONS
Lease Agreements
The Company leases warehouse space in Miami, Florida from George Feldenkreis
on a month-to-month basis and jointly maintains offices with GFX in Beijing,
China and Taipei, Taiwan. Rent expense, including taxes, for these properties
amounted to $537,000, $316,257 and $265,000 for the years ended January 31,
2002, 2001 and 2000, respectively.
Licensing Agreements
The Company is party to licensing agreements (the "Isaco License
Agreements") with Isaco International, Inc. ("Isaco"), pursuant to which Isaco
was granted the exclusive license to use the Natural Issue and Perry Ellis
brand names in the United States and Puerto Rico to market a line of men's
underwear, hosiery and loungewear. The principal shareholder of Isaco is the
father-in-law of Oscar Feldenkreis, the Company's President and Chief Operating
Officer. Royalty income earned from the Isaco License Agreements amounted to
$1,230,000, $834,000 and $438,000 for the years ended January 31, 2002, 2001,
and 2000, respectively.
14
The Company believes that its arrangements with George Feldenkreis and Isaco
are on terms at least as favorable as the Company could secure from a
non-affiliated third party.
PROPOSAL TO APPROVE 2002 STOCK OPTION PLAN
In 1993, the Company adopted a Stock Option Plan, which was amended in 1998
and 1999 (as amended, the "1993 Plan") to increase the number of shares
reserved for issuance thereunder. The 1993 Plan authorizes the Company to grant
stock options to purchase up to an aggregate of 1,500,000 shares of Common
Stock. At present, the Company has granted stock options under the 1993 Plan to
purchase approximately 1,100,000 shares of Common Stock reserved for issuance
under the 1993 Plan. However, the 1993 Plan will terminate in 2003. In order to
continue to effectively attract and retain employees and directors, the Board
of Directors believes that the Company needs to continue to grant stock options
to purchase shares of Common Stock. As a result, on April 23, 2002, the Board
of Directors adopted the 2002 Stock Option Plan (the "2002 Plan"). Pursuant to
the 2002 Plan, the Company may grant options to purchase up to an aggregate of
1,000,000 shares of the Company's Common Stock to eligible persons. The
Company's ability to grant "incentive stock options" under the 2002 Plan is
subject to the approval of the shareholders at the Annual Meeting. The
Company's Board of Directors recommends that the 2002 Plan be adopted by the
shareholders.
Summary of the Plan
The following is a general description of the terms and provisions of the
2002 Plan and does not purport to be complete. All such statements are
qualified in their entirety by reference to the full text of the 2002 Plan,
which is filed herewith, as Annex A.
The purpose of the 2002 Plan is to provide the employees, directors,
independent contractors and consultants of the Company and its subsidiaries
with an added incentive to provide their services to the Company and its
subsidiaries and to induce them to exert their maximum efforts toward the
Company's success.
The 2002 Plan provides for the issuance of incentive stock options
("Incentive Stock Options") and nonqualified stock options ("Nonqualified Stock
Options"). An Incentive Stock Option is an option to purchase Common Stock that
meets the definition of "incentive stock option" set forth in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). A Nonqualified
Stock Option is a stock option to purchase Common Stock that meets certain
requirements in the 2002 Plan but does not meet the definition of an "incentive
stock option" set forth in Section 422 of the Code. Nonqualified Stock Options
and Incentive Stock Options are sometimes referred to herein as "Options."
The number of shares that may be issued pursuant to Options granted under
the 2002 Plan is up to an aggregate of 1,000,000 shares. If any Option granted
pursuant to the 2002 Plan terminates or expires for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part, the shares subject to the unexercised portion of such Option shall
again be available under the 2002 Plan. The shares acquired upon exercise of
Options granted under the 2002 Plan will be authorized and unissued shares of
Common Stock. The shareholders will not have any preemptive rights to purchase
or subscribe for the shares reserved for issuance under the 2002 Plan.
The 2002 Plan is administered by the compensation committee of the Board of
Directors (the "Committee"), comprised of at least two outside directors of the
Board of Directors or, if a Committee is not designated by the Board of
Directors, by the Board of Directors as a whole. The Committee has the right to
determine, among other things, the persons to whom Options are granted, the
number of shares of Common Stock subject to Options, the exercise price of
Options and the term thereof.
All employees of the Company and its subsidiaries, including officers,
directors, consultants and independent contractors to the Company, are eligible
to receive grants of Options under the 2002 Plan; however, no Incentive Stock
Option may be granted to non-employee directors, consultants, independent
contractors or
15
individuals who are not also employees of the Company or any of its
subsidiaries. Upon receiving a grant of Options, each holder of the Options
shall enter into an option agreement with the Company, which contains the terms
and conditions of the Options established by the Committee.
Terms and Conditions of Options
Option Price. For any Option granted under the 2002 Plan, the Option price
per share of Common Stock may be any price not less than par value per share as
determined by the Committee; however, the Option price per share of any
Incentive Stock Option may not be less than the Fair Market Value (defined
below) of the Common Stock on the date such Incentive Stock Option is granted.
As of the Record Date, the closing price of the Company's Common Stock as
reported by the Nasdaq National Market was $11.85 per share.
Under the 2002 Plan, the "Fair Market Value" is the closing price of shares
on the business day on or immediately preceding the date of grant; however, if
the shares are not publicly traded, then the fair market value will be as the
Committee shall in its sole and absolute discretion determine in a fair and
uniform manner.
Exercise of Options. Each Option is exercisable in such amounts, at such
intervals and upon such terms as the Committee may determine. In no event may
an Option be exercisable after 10 years from the date of grant. Unless
otherwise provided in an Option, each outstanding Option may, in the sole
discretion of the Committee, become immediately fully exercisable (1) if there
occurs any transaction (which shall include a series of transactions occurring
within 60 days or occurring pursuant to a plan), that has the result that
shareholders of the Company immediately before such transaction cease to own at
least 40 percent of the voting stock of the Company or of any entity that
results from the participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of corporate transaction;
(2) if the shareholders of the Company shall approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive (unless such plan is subsequently abandoned); or (3) if the
shareholders of the Company shall approve a plan for the sale, lease, exchange
or other disposition of all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned). The Committee may in its
sole discretion accelerate the date on which any Option may be exercised and
may accelerate the vesting of any shares subject to any Option.
Unless further limited by the Committee in any Option agreement, shares of
Common Stock purchased upon the exercise of Options must be paid for in cash,
by certified or official bank check, by money order, with already owned shares
of Common Stock, or a combination of the above. The Committee, in its sole
discretion, may accept a personal check in full or partial payment. If paid in
whole or in part with shares of already owned Common Stock, the value of the
shares surrendered is deemed to be their fair market value on the date the
Option is exercised. Proceeds from the sale of Common Stock pursuant to the
exercise of Options will be added to the general funds of the Company to be
used for general corporate purposes. Under the 2002 Plan, the Company may also
lend money to an optionee to exercise all or a portion of an Option granted
under the 2002 Plan. If the exercise price is paid in whole or in part with an
optionee's promissory note, such note shall (1) provide for full recourse to
the maker, (2) be collateralized by the pledge of shares purchased by the
optionee upon exercise of such Option, (3) bears interest at a rate of interest
no less than the rate of interest payable by the Company to its principal
lender, and (4) contain such other terms as the Committee in its sole
discretion shall require. An Option may also be exercised pursuant to a
"cashless" or "net issue" exercise.
Nontransferability. Incentive Stock Options granted under the 2002 Plan are
not transferable by an optionee other than by will or the laws of descent and
distribution. Nonqualified Stock Options granted under the 2002 Plan are not
transferable by an optionee other than (a) by will or the laws of descent and
distribution, (b) by gift to a family member, as that term is defined in the
2002 Plan, and (c) through a domestic relations order in settlement of marital
property rights. No Option shall be exercisable during the optionee's lifetime
by any person other than the optionee or certain transferees permitted under
the 2002 Plan.
16
Termination of Options. The expiration date of an Option is determined by
the Committee at the time of the grant and is set forth in the applicable stock
option agreement. In no event may an Option be exercisable after 10 years from
the date it is granted.
The 2002 Plan provides that if an optionee's employment is terminated for
any reason other than for cause, retirement, an improper termination, mental or
physical disability or death, then the unexercised portion of the optionee's
Options shall terminate three months after the such termination. If an
optionee's employment is terminated for cause or if there is an improper
termination of optionee's employment, the unexercised portion of the optionee's
Options shall terminate immediately upon such termination. If an optionee's
employment is terminated by reason of the optionee's mental or physical
disability or by reason of the optionee's death, the unexercised portion of the
optionee's Options shall terminate 12 months after the optionee's death.
The Committee in its sole discretion may by giving written notice cancel,
effective upon the date of the consummation of certain corporate transactions
that would result in an Option becoming fully exercisable, any Option that
remains unexercised on such date. Such notice shall be given a reasonable
period of time prior to the proposed date of such cancellation and may be given
either before or after shareholder approval of such corporate transaction.
Cancellation and Rescission of Awards. Unless the Option says otherwise,
during the time the optionee is employed by the Company and for a period of two
years from the date the optionee ceases being employed by the Company (the
"Restrictive Period"), the committee may cancel, rescind, suspend, withhold or
otherwise limit or restrict any unexpired, unpaid, or deferred Options for
certain "Detrimental Activity", including (1) the rendering of services to a
competitor of the Company, (2) the disclosure of any of the Company's
confidential information, (3) the failure or refusal to disclose promptly and
to assign to the Company all right, title and interest in any invention or idea
conceived by the optionee during employment by the Company, (4) activity that
results in termination of the optionee's employment for cause (as that term is
defined in the 2002 Plan), (5) a material violation of any written rules,
policies, procedures or guidelines of the Company, (6) any attempt to induce
another Company employee to be employed or perform services elsewhere or any
attempt to solicit the trade or business of any current or prospective
customer, supplier or partner of the Company, (7) being convicted of, or
entering a guilty plea with respect to a crime, or (8) any other conduct or act
determined by the Company to be injurious, detrimental or prejudicial to any
interest of the Company.
Upon exercising an Option, the optionee is required to certify that he or
she is in compliance with the terms of the 2002 Plan. If the optionee engages
in any Detrimental Activity described above within the Restrictive Period, the
exercise of an Option may be rescinded by the Company within the Restrictive
Period. In the event of rescission, the Optionee shall return any and all
shares obtained upon the exercise of Options if the shares are still held by
the optionee. If the optionee no longer holds the shares, the optionee shall
pay to the Company an amount equal to the Fair Market Value of the shares as of
the date of rescission less the exercise price paid for the shares. The Company
shall be entitled to set-off against the foregoing amount.
Amendment of 2002 Plan
Either the Board of Directors or the Committee may from time to time amend
this 2002 Plan or any Option without the consent or approval of the
shareholders of the Company. However, except to the extent provided in the
Termination of Options section above, no amendment or suspension of this 2002
Plan or any Option issued thereunder shall substantially impair any Option
previously granted to any optionee without the consent of such optionee.
Federal Income Tax Effects
The 2002 Plan is not qualified under the provisions of Section 401(a) of the
Code, nor is it subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
17
Incentive Stock Options. Incentive Stock Options are "incentive stock
options" as defined in Section 422 of the Code. Under the Code, an optionee
generally is not subject to ordinary income tax upon the grant or exercise of
an Incentive Stock Option. However, an employee who exercises an Incentive
Stock Option by delivering shares of Common Stock previously acquired pursuant
to the exercise of an Incentive Stock Option is treated as making a
disqualifying disposition (defined below) of such shares if the employee
delivers such shares before the expiration of the holding period applicable to
such shares. The applicable holding period is the longer of two years from the
date of grant or one year from the date of exercise. The effect of this
provision is to prevent "pyramiding" the exercise of an Incentive Stock Option
(i.e., the exercise of the Incentive Stock Option for one share and the use of
that share to make successive exercise of the Incentive Stock Option until it
is completely exercised) without the imposition of current income tax.
The amount by which the fair market value of the shares acquired at the time
of exercise of an Incentive Stock Option exceeds the purchase price of the
shares under such Option will be treated as an item of adjustment included in
the optionee's alternative minimum taxable income for purposes of the
alternative minimum tax. If, however, there is a disqualifying disposition in
the year in which the Option is exercised, the maximum amount of the item of
adjustment for such year is the gain on the disposition of the shares. If there
is disqualifying disposition in a year other than the year of exercise, the
dispositions will not result in an item of adjustment for such other year.
If, subsequent to the exercise of an Incentive Stock Option (whether paid
for in cash or in shares), the optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such Incentive Stock
Option was granted or, if later, (b) one year from the date of exercise, or the
required holding period, the difference (if any) between the amount realized
from the sale of such shares and their tax basis to the holder will be taxed as
long-term capital gain or loss. If the holder is subject to the alternative
minimum tax in the year of disposition, such holder's tax basis in his or her
shares will be increased for purposes of determining his alternative minimum
tax for such year, by the amount of the item of adjustment recognized with
respect to such shares in the year the Option was exercised.
In general, if, after exercising an Incentive Stock Option, an employee
disposes of the shares so acquired before the end of the required holding
period a disqualifying disposition, such optionee would be deemed in receipt of
ordinary income in the year of the disqualifying disposition, in an amount
equal to the excess of the fair market value of the shares at the date the
Incentive Stock Option was exercised over the exercise price. If the
disqualifying disposition is a sale or exchange which would permit a loss to be
recognized under the Code (were a loss in fact to be sustained), and the sales
proceeds are less than the fair market value of the shares on the date of
exercise, the optionee's ordinary income would be limited to the gain (if any)
from the sale. If the amount realized upon disposition exceeds the fair market
value of the shares on the date of exercise, the excess would be treated as
short-term or long-term capital gain, depending on whether the holding period
for such shares exceeded one year.
An income tax deduction is not allowed to the Company with respect to the
grant or exercise of an Incentive Stock Option or the disposition, after the
required holding period, of shares acquired upon exercise. In the event of a
disqualifying disposition, a federal income tax deduction should be allowed to
the Company in an amount equal to the ordinary income to be recognized by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies
its withholding obligation with respect to such income.
Nonqualified Stock Options. An optionee granted a Nonqualified stock option
under the 2002 Plan will generally recognize, at the date of exercise of such
Nonqualified stock option, ordinary income equal to the difference between the
exercise price and the fair market value of the shares of Common Stock subject
to the Nonqualified stock option. This taxable ordinary income will be subject
to federal income tax withholding. A federal income tax deduction should be
allowed to the Company in an amount equal to the ordinary income to be
recognized by the optionee, provided that such amount constitutes an ordinary
and necessary business expense to the Company and is reasonable, and the
Company satisfies its withholding obligation with respect to such income.
18
If an optionee exercises a Nonqualified stock option by delivering other
shares, the optionee should not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the optionee's tax basis. The optionee, however, should be taxed as described
above with respect to the exercise of the Nonqualified Stock Option as if he
had paid the exercise price in cash, and the Company likewise generally should
be entitled to an equivalent tax deduction. Provided a separate identifiable
stock certificate is issued therefor, the optionee's tax basis in that number
of shares received on such exercise which is equal to the number of shares
surrendered on such exercise should be equal to his tax basis in the shares
surrendered and his holding period for such number of shares received should
include his holding period for the shares surrendered. The optionee's tax basis
and holding period for the additional shares received on exercise of a
Nonqualified Stock Option paid for, in whole or in part, with shares should be
the same as if the optionee had exercised the Nonqualified Stock Option solely
for cash.
The discussion set forth above does not purport to be a complete analysis of
the potential tax consequences relevant to the optionees or to the Company, or
to describe tax consequences based on particular circumstances. It is based on
federal income tax law and interpretational authorities as of the date of this
Proxy Statement, which are subject to change at any time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, independent public accountants, has
served as the Company's independent public accountants since 1993. The Board of
Directors has selected Deloitte & Touche LLP as the Company's independent
public accountants for the current fiscal year ending January 31, 2003. One or
more representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
shareholders.
Vote Required for Approval
Shareholder approval is not required for the appointment of Deloitte &
Touche LLP, since the Board of Directors has the responsibility for selecting
auditors. However, the appointment is being submitted for approval at the
Annual Meeting. No determination has been made as to what action the Board of
Directors would take if shareholders do not approve the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
HOUSEHOLDING OF ANNUAL DISCLOSURE DOCUMENTS
As permitted by the Securities Exchange Act of 1934, only one copy of this
Proxy Statement is being delivered to shareholders residing at the same
address, unless such shareholders have notified the Company of their desire to
receive multiple copies of the Proxy Statement.
The Company will promptly deliver, upon oral or written request, a separate
copy of the Proxy Statement to any shareholder residing at an address to which
only one copy was mailed. Requests for additional copies should be directed to
the Vice President of Finance by phone at (305) 592-2830 or by mail to Vice
President--Finance, 3000 N.W. 107th Avenue, Miami, Florida 33172.
Shareholders residing at the same address and currently receiving only one
copy of the Proxy Statement may contact the Vice President of Finance by phone
at (305) 592-2830 or by mail to Vice President--Finance, 3000 N.W. 107th
Avenue, Miami, Florida 33172 to request multiple copies of the Proxy Statement
in the future.
19
Shareholders residing at the same address and currently receiving multiple
copies of the Proxy Statement may contact the Vice President of Finance by
phone at (305) 592-2830 by mail to Vice President--Finance, 3000 N.W. 107th
Avenue, Miami, Florida 33172 to request that only a single copy of the Proxy
Statement by mailed in the future.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies
as in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the Commission, a shareholder
intending to present a proposal to be included in the Company's proxy statement
for the Company's 2003 Annual Meeting of Shareholders must deliver a proposal
in writing to the Company's principal executive offices no later than January
14, 2003.
Shareholder proposals intended to be presented at, but not included in the
Company's proxy materials for, that meeting must be received by the Company no
later than March 29, 2003, at its principal executive offices; otherwise, such
proposals will be subject to the grant of discretionary authority contained in
the Company's form of proxy to vote on them.
By Order of the Board of Directors
Fanny Hanono,
Secretary
Miami, Florida
May 8, 2002
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ANNEX A
PERRY ELLIS INTERNATIONAL, INC.
2002 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Perry Ellis International, Inc. 2002 Stock
Option Plan (the "Plan") is to advance the interests of Perry Ellis
International, Inc., a Florida corporation (the "Company"), by providing an
additional incentive to attract, retain and motivate highly qualified and
competent persons who are important to the Company, and upon whose efforts and
judgments the success of the Company and its Subsidiaries is largely dependent,
including employees, consultants, independent contractors, Officers and
Directors, by authorizing the grant of options to purchase Common Stock of the
Company to persons who are eligible to participate hereunder, thereby
encouraging stock ownership in the Company by such persons, all upon and
subject to the terms and conditions of this Plan.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean a determination by the Company that any of the
following has occurred:
(i) that the Optionee has been willful, reckless or grossly negligent
in the performance of his or her duties as an employee of the Company;
(ii) that there has been a willful breach by the Optionee of any of
the material terms or provisions of any employment agreement between such
Optionee and the Company;
(iii) any conduct by the Optionee that either results in his or her
conviction of a felony under the laws of the United States of America or any
state thereof, or of an equivalent crime under the laws of any other
jurisdiction;
(iv) that the Optionee has committed one or more acts involving
fraud, embezzlement, misappropriation, theft, breach of fiduciary duty or
material dishonesty against the Company, its properties or personnel;
(v) any act by the Optionee that the Company determines to be in
willful or wanton disregard of the Company's best interests, or which results,
or is intended to result, directly or indirectly, in improper gain or personal
enrichment of the Optionee at the expense of the Company;
(vi) that there has been a willful, reckless or grossly negligent
failure by the Optionee to comply with any rules, regulations, policies or
procedures of the Company, or that the Optionee has engaged in any act,
behavior or conduct demonstrating a deliberate and material violation or
disregard of standards of behavior that the Company has a right to expect of
its employees; or
(vii) if the Optionee, while employed by the Company and for two
years thereafter, violates a confidentiality and/or noncompete agreement with
the Company, or fails to safeguard, divulges, communicates, uses to the
detriment of the Company or for the benefit of any person or persons, or
misuses in any way, any Confidential Information;
PROVIDED, HOWEVER, that, if the Optionee has entered into a written employment
agreement with the Company which remains effective and which expressly provides
for a termination of such Optionee's employment for "cause", the term "Cause"
as used herein shall have the meaning a s set forth in the Optionee's
employment agreement in lieu of the definition of "Cause" set forth in this
Section 2(b).
(c) "Change of Control" shall mean the acquisition by any person or
group (as that term is defined in the Securities Exchange Act), and the rules
promulgated pursuant to that act) in a single transaction or a series of
transactions of forty percent (40%) or more in voting power of the outstanding
stock of the Company and a change of the composition of the Board of Directors
so that, within two years after the acquisition took place, a majority of the
members of the Board of Directors of the Company, or of any
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corporation with which the Company may be consolidated or merged, are persons
who were not Directors or Officers of the Company or one of its Subsidiaries
immediately prior to the acquisition, or to the first of a series of
transactions which resulted in the acquisition of forty percent (40%) or more
in voting power of the outstanding stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the stock option or compensation committee
appointed by the Board or, if not appointed, the Board.
(f) "Common Stock" shall mean collectively, the Company's common stock,
par value $.01 per share.
(g) "Confidential Information" shall mean any and all information
pertaining to the Company's financial condition, clients, customers, prospects,
sources of prospects, customer lists, trademarks, trade names, service marks,
service names, "know-how," trade secrets, products, services, details of client
or consulting contracts, management agreements, pricing policies, operational
methods, site selection, results of operations, costs and methods of doing
business, owners and ownership structure, marketing practices, marketing plans
or strategies, product development techniques or plans, procurement and sales
activities, promotion and pricing techniques, credit and financial data
concerning customers and business acquisition plans, that is not generally
available to the public.
(h) "Director" shall mean a member of the Board.
(i) "Employee" shall mean any person, including Officers, Directors,
consultants and independent contractors who are either employed or engaged by
the Company or any parent or Subsidiary of the Company within the meaning of
Code Section 3401(c) or the regulations promulgated thereunder.
(j) "Fair Market Value" of a Share on any date of reference shall be the
Closing Price of a share of Common Stock on the business day on or immediately
preceding such date, unless the Committee in its sole discretion shall
determine otherwise in a fair manner. For this purpose, the "Closing Price" of
the Common Stock on any business day shall be (i) if the Common Stock is listed
or admitted for trading on any United States national securities exchange
(including the National Association of Securities Dealers Automated Quotation
System, NASDAQ), or if actual transactions are otherwise reported on a
consolidated transaction reporting system, the last reported sale price of the
Common Stock on such exchange or reporting system, as reported in any newspaper
of general circulation, or (ii) if clause (i) is not applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for the Common Stock on at
least five of the ten preceding days. If the information set forth in clauses
(i) through (ii) above is unavailable or inapplicable to the Company (e.g., if
the Company's Common Stock is not then publicly traded or quoted), then the
"Fair Market Value" of a Share shall be the fair market value (i.e., the price
at which a willing seller would sell a Share to a willing buyer when neither is
acting under compulsion and when both have reasonable knowledge of all relevant
facts) of a share of the Common Stock on the business day immediately preceding
such date as the Committee in its sole and absolute discretion shall determine
in a fair and uniform manner.
(k) "Family Member" shall mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Employee's household (other than a tenant or Employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Employee) control the management of assets, and any other
entity in which these persons (or the Employee) own more than 50% of the voting
interests.
(l) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
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(m) "Non-Employee Directors" shall have the meaning set forth in Rule
16b-3(b)(3)(i) (17 C.F.R. (S)240.16(b)-3(b)(3)(i)) under the Securities
Exchange Act.
(n) "Non-Statutory Stock Option" or "Nonqualified Stock Option" shall
mean an Option which is not an Incentive Stock Option.
(o) "Officer" shall mean the Company's chairman, chief executive
officer, president, principal financial officer, principal accounting officer
(or, if there is no such accounting officer, the controller), any
vice-president of the Company in charge of a principal business unit, division
or function (such as sales, administration or finance), any other officer who
performs a policy-making function, or any other person who performs similar
policy-making functions for the Company. Officers of Subsidiaries shall be
deemed Officers of the Company if they perform such policy-making functions for
the Company. As used in this paragraph, the phrase "policy-making function"
does not include policy-making functions that are not significant. Unless
specified otherwise in a resolution by the Board, an "executive officer"
pursuant to Item 401(b) of Regulation S-K (17 C.F.R. (S)229.401(b)) shall be
only such person designated as an "Officer" pursuant to the foregoing
provisions of this paragraph.
(p) "Option" (when capitalized) shall mean any stock option granted
under this Plan.
(q) "Optionee" shall mean a person to whom an Option is granted under
this Plan or any person who succeeds to the rights of such person under this
Plan by reason of the death of such person.
(r) "Plan" shall mean this 2002 Stock Option Plan of the Company, which
Plan shall be effective upon approval by the Board, subject to approval, within
12 months of the date thereof by holders of a majority of the Company's issued
and outstanding Common Stock of the Company.
(s) "Securities Act" shall mean the Securities Act of 1933, as amended.
(t) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(u) "Share" or "Shares" shall mean a share or shares, as the case may
be, of the Common Stock, as adjusted in accordance with Section 10 of this Plan.
(v) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to adjustment in accordance with Section 10
hereof, the Company may grant to Optionees from time to time Options to
purchase an aggregate of up to one million (1,000,000) Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. If any Option
granted under this Plan shall terminate, expire, or be canceled, forfeited or
surrendered as to any Shares, the Shares relating to such lapsed Option shall
be available for issuance pursuant to new Options subsequently granted under
this Plan. Upon the grant of any Option hereunder, the authorized and unissued
Shares to which such Option relates shall be reserved for issuance to permit
exercise under this Plan. Subject to the provisions of Section 14 hereof, an
Option granted hereunder shall be either an Incentive Stock Option or a
Non-Statutory Stock Option as determined by the Committee at the time of grant
of such Option and shall clearly state whether it is an Incentive Stock Option
or Non-Statutory Stock Option. All Options shall be granted within 10 years
from the effective date of this Plan.
4. LIMITATIONS. Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Code
Section 422(b) are exercisable for the first time by any individual during any
calendar year (under all stock option or similar plans of the Company and any
Subsidiary), exceeds $100,000.
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5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an Option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees
shall be those persons selected by the Committee from the class of all regular
Employees of the Company or its Subsidiaries, including Employee Directors and
Officers who are regular or former regular employees of the Company, Directors
who are not regular employees of the Company, as well as consultants to the
Company. Any person who files with the Committee, in a form satisfactory to the
Committee, a written waiver of eligibility to receive any Option under this
Plan shall not be eligible to receive any Option under this Plan for the
duration of such waiver.
(b) In granting Options, the Committee shall take into consideration the
contribution the person has made, or is expected to make, to the success of the
Company or its Subsidiaries and such other factors as the Committee shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from Officers and other personnel of the Company and
its Subsidiaries with regard to these matters. The Committee may from time to
time in granting Options under this Plan prescribe such terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) the exercise price or prices of the Option or any installments thereof,
(ii) prescribing the date or dates on which the Option becomes and/or remains
exercisable, (iii) providing that the Option vests or becomes exercisable in
installments over a period of time, and/or upon the attainment of certain
stated standards, specifications or goals, (iv) relating an Option to the
continued employment of the Optionee for a specified period of time, or (v)
conditions or termination events with respect to the exercisability of any
Option, provided that such terms and conditions are not more favorable to an
Optionee than those expressly permitted herein; provided, however, that to the
extent not canceled pursuant to Section 9(b) hereof, upon a Change in Control,
any Options that have not yet vested, may, in the sole discretion of the
Committee, vest upon such Change in Control.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither this Plan nor
any Option granted under this Plan shall confer upon any person any right to
employment or continuance of employment (or related salary and benefits) by the
Company or its Subsidiaries.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; PROVIDED, HOWEVER, that in no event shall the exercise price per Share
of any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted and, in the case of
an Incentive Stock Option granted to a 10% shareholder, the per Share exercise
price will not be less than 110% of the Fair Market Value in accordance with
Section 14 of this Plan. Re-granted Options, or Options which are canceled and
then re-granted covering such canceled Options, will, for purposes of this
Section 6, be deemed to have been granted on the date of the re-granting.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate Option price of the Shares as to
which the Option is exercised has been made, (iii) the Optionee has agreed to
be bound by the terms, provisions and conditions of any applicable
shareholders' agreement, and (iv) arrangements that are satisfactory to the
Committee in its sole discretion have been made for the Optionee's payment to
the Company of the amount that is necessary for the Company or the Subsidiary
employing the Optionee to withhold in accordance with applicable Federal or
state tax withholding requirements. Unless further limited by the Committee in
any Option, the exercise price of any Shares purchased pursuant to the exercise
of such Option shall be paid in cash, by certified or official bank check, by
money order, with Shares or by a combination of the above; PROVIDED, HOWEVER,
that the Committee in its sole discretion may accept a personal check in full
or partial payment of any Shares. If the exercise price is paid in whole or in
part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the date the Option is
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exercised. The Company in its sole discretion may, on an individual basis or
pursuant to a general program established by the Committee in connection with
this Plan, lend money to an Optionee to exercise all or a portion of the Option
granted hereunder. If the exercise price is paid in whole or part with the
Optionee's promissory note, such note shall (i) provide for full recourse to
the maker, (ii) be collateralized by the pledge of the Shares that the Optionee
purchases upon exercise of such Option, (iii) bear interest at a rate no less
than the rate of interest payable by the Company to its principal lender, and
(iv) contain such other terms as the Committee in its sole discretion shall
require. No Optionee shall be deemed to be a holder of any shares subject to an
Option unless and until a stock certificate or certificates for such shares are
issued to the person(s) under the terms of this Plan. No adjustments shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly provided in
Section 10 hereof. Additionally, any Option may be exercised pursuant to a
"cashless" or "net issue" exercise provision set forth in the Option agreement
evidencing such Option.
(b) No Optionee shall be deemed to be a holder of any Shares subject to
an Option unless and until a stock certificate or certificates for such Shares
are issued to such person(s) under the terms of this Plan. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the record date
is prior to the date such stock certificate is issued, except as expressly
provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in such
amounts, at such intervals, upon such events or occurrences and upon such other
terms and conditions as shall be provided in this Plan or in an individual
Option agreement evidencing such Option, except as otherwise provided in
Section 5(b) or this Section 8.
(a) The expiration date(s) of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date of grant of the Option.
(b) Unless otherwise expressly provided in any Option as approved by the
Committee, notwithstanding the exercise schedule set forth in any Option, each
outstanding Option, may, in the sole discretion of the Committee, become fully
exercisable upon the date of the occurrence of any Change of Control, but,
unless otherwise expressly provided in any Option, no earlier than six months
after the date of grant, and if and only if Optionee is in the employ of the
Company on such date.
(c) The Committee may in its sole discretion at any time accelerate the
date on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise expressly provided in any Option, the unexercised
portion of any Option shall automatically and without notice immediately
terminate and become forfeited, null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee's employment is
terminated for any reason other than by reason of (A) Cause, (B) the
termination of the Optionee's employment with the Company by such Optionee
following less than ninety (90) days' prior written notice to the Company of
such termination (an "Improper Termination"), (C) a mental or physical
disability (within the meaning of Section 22(e) of the Code) as determined by a
medical doctor satisfactory to the Committee, or (D) death;
(ii) immediately upon (A) the termination by the Company of the
Optionee's employment for Cause, or (B) an Improper Termination; or
(iii) one year after the date on which the Optionee's employment is
terminated by reason of a mental or physical disability (within the meaning of
Code Section 22(e)) as determined by a medical doctor satisfactory to the
Committee; or
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(iv) the later of (A) one year after the date of termination of the
Optionee's employment by reason of death of the Employee, or (B) three months
after the date on which the Optionee shall die if such death shall occur during
the one year period specified in Section 9(a)(iii) hereof.
(b) Notwithstanding the foregoing, if the Optionee's employment is
terminated by reason of a mental or physical disability (within the meaning of
Section 22(e) of the Code) as determined by a medical doctor satisfactory to
the Committee or the Optionee retires from employment by the Company or any
other entity, then the Option shall continue until the original expiration date.
(c) The Committee in its sole discretion may, by giving written notice
(the "Cancellation Notice"), cancel effective upon the date of the consummation
of any corporate transaction described in Section 10(d) hereof, any Option that
remains unexercised on such date. The Cancellation Notice shall be given a
reasonable period of time prior to the proposed date of such cancellation and
may be given either before or after approval of such corporate transaction.
(d) Upon Optionee's termination of employment as described in this
Section 9, or otherwise, any Option (or portion thereof) not previously vested
or not yet exercisable pursuant to Section 8 of this Plan or the vesting
schedule set forth in the Option Agreement evidencing the Option shall be
immediately canceled.
10. ADJUSTMENT OF SHARES.
(a) If at any time while this Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the number of
issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split, combination or
exchange of Shares (other than any such exchange or issuance of Shares through
which Shares are issued to effect an acquisition of another business or entity
or the Company's purchase of Shares to exercise a "call" purchase option), then
and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under this Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being
so optioned;
(ii) appropriate adjustment shall be made in the number of Shares and
the exercise price per Share thereof then subject to any outstanding Option, so
that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price; and
(iii) such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
Option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Section 10(d) hereof, or otherwise.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into or exchangeable for shares of its capital stock of any class, either in
connection with a direct or underwritten sale or upon the exercise of rights or
warrants to subscribe therefor or purchase such Shares, or upon conversion of
shares of obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to the number of or exercise price of Shares then subject to
outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, reclassifications, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business; (ii) any merger or
consolidation of the Company or to
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which the Company is a party; (iii) any issuance by the Company of debt
securities, or preferred or preference stock that would rank senior to or above
the Shares subject to outstanding Options; (iv) any purchase or issuance by the
Company of Shares or other classes of common stock or common equity securities;
(v) the dissolution or liquidation of the Company; (vi) any sale, transfer,
encumbrance, pledge or assignment of all or any part of the assets or business
of the Company; or (vii) any other corporate act or proceeding, whether of a
similar character or otherwise.
(e) The Optionee shall receive written notice within a reasonable time
prior to the consummation of such action advising the Optionee of any of the
foregoing. The Committee may, in the exercise of its sole discretion, in such
instances declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option.
11. TRANSFERABILITY OF OPTIONS. Unless otherwise authorized by the Board,
no Incentive Stock Option granted hereunder shall be sold, pledged, assigned,
hypothecated, disposed or otherwise transferred by the Optionee other than by
will or the laws of descent and distribution. Nonqualified Stock Options
granted hereunder may not be sold, pledged, assigned, hypothecated, disposed or
otherwise transferred by the Optionee other than (a) by will or the laws of
descent and distribution (b) by gift to a Family Member, or (c) through a
domestic relations order in settlement of marital property rights. No Option
shall be exercisable during the Optionee's lifetime by any person other than
the Optionee or transferee permitted under this Section 11.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to
assure compliance with any such law or regulation including, but not limited
to, the following:
(i) a representation and warranty by the Optionee to the Company, at
the time any Option is exercised, that he is acquiring the Shares to be issued
to him for investment and not with a view to, or for sale in connection with,
the distribution of any such Shares; and
(ii) (A) an agreement and undertaking to comply with all of the
terms, restrictions and provisions set forth in any then applicable
shareholders' agreement relating to the Shares, including, without limitation,
any restrictions on transferability, any rights of first refusal, any option of
the Company to "call" or purchase such Shares under then applicable agreements,
and any option of the Company to rescind the issuance of the Shares; and
(B) any restrictive legend or legends, to be embossed or imprinted on
Share certificates, that are, in the discretion of the Committee, necessary or
appropriate to comply with the provisions of any securities law or other
restriction applicable to the issuance of the Shares.
13. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall initially be administered by the Board. As soon as
may be practicable, but no later than the date (if ever) the Common Stock is
listed or admitted for trading on any United States national securities
exchange, the Plan shall be administered by the Committee, which shall consist
of not less than two Non-Employee Directors. The Committee shall have all of
the powers of the Board with respect to this Plan. Any member of the Committee
may be removed at any time, with or without cause, by resolution of the Board
and any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee shall have the
authority, in its sole discretion, to: (i) grant Options, (ii) determine the
exercise price per Share at which Options may be exercised, (iii) determine the
Optionees to whom, and time or times at which, Options shall be granted, (iv)
determine the number of Shares to be represented by each Option, (v) determine
the terms, conditions and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option, (vi) defer (with the consent of the Optionee) or accelerate the
exercise date of any Option, and (vii) make all other determinations deemed
necessary or advisable for the administration of this Plan, including
repricing, canceling and regranting Options.
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(c) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of this Plan. The Committee's determinations and
its interpretation and construction of any provision of this Plan shall be
final, conclusive and binding upon all Optionees and any holders of any Options
granted under this Plan.
(d) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a meeting
of the Committee or (ii) without a meeting by the unanimous written approval of
the members of the Committee.
(e) No member of the Committee, or any Officer or Director of the
Company or its Subsidiaries, shall be personally liable for any act or omission
made in good faith in connection with this Plan.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of this Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Code) at the date of grant, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or of its Subsidiary) at the date of grant unless the exercise price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of 10 years from the date such Option is
granted.
15. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that all
Incentive Stock Options granted under this Plan will qualify as Incentive Stock
Options under Section 422 of the Code. If any provision of this Plan should be
held invalid for the granting of Incentive Stock Options or illegal for any
reason, such determination shall not affect the remaining provisions hereof,
and this Plan shall be construed and enforced as if such provision had never
been included in this Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of this Plan or affect the meaning or
interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall be
a reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time periods
specified for the giving of notices to the Company hereunder, as well as all
time periods for the expiration and termination of Options in accordance with
Section 9 hereof (or as otherwise set forth in an Option agreement).
16. CANCELLATION AND RESCISSION OF AWARDS.
(a) Unless the Option specifies otherwise, the Committee may cancel,
rescind, suspend, withhold or otherwise limit or restrict any unexpired,
unpaid, or deferred Options at any time if the Optionee is not in compliance
with all applicable provisions of this Plan and the individual Option agreement
evidencing such Option, or if the Optionee engages in any "Detrimental
Activity" (as defined in this Section 16). For purposes of this Section 16 and
during the time the Optionee is employed by the Company and for a period of two
years from the date the Optionee ceases being employed by the Company (the
"Restrictive Period"), without the Company's prior written consent, in each
instance, "Detrimental Activity" shall include: (i) the rendering of services
for any organization or engaging directly or indirectly in any business which
is or becomes competitive with the Company, or which organization or business,
or the rendering of services to such organization or business, is or becomes
otherwise prejudicial to or in conflict with the interests of the Company; (ii)
the disclosure to anyone outside the Company, or the use in other than the
Company's business, without prior written authorization from the Company, of
any confidential information or material,
A-8
as defined in any agreement between the Optionee and the Company regarding
confidential information and intellectual property either during or after
employment with the Company; (iii) the failure or refusal to disclose promptly
and to assign to the Company, pursuant to the Company's confidentiality
agreement with the Optionee, all right, title and interest in any invention or
idea, patentable or not, made or conceived by the Optionee during employment by
the Company, relating in any manner to the actual or anticipated business,
research or development work of the Company or the failure or refusal to do
anything reasonably necessary to enable the Company to secure a patent where
appropriate in the United States and in other countries; (iv) activity that
results in termination of the Optionee's employment for cause; (v) a material
violation of any written rules, policies, procedures or guidelines of the
Company; (vi) any attempt directly or indirectly to induce any employee of the
Company to be employed or perform services elsewhere or any attempt directly or
indirectly to solicit the trade or business of any current or prospective
customer, supplier or partner of the Company; (vii) the Optionee being
convicted of, or entering a guilty plea with respect to, a crime, whether or
not connected with the Company; or (viii) any other conduct or act determined
to be injurious, detrimental or prejudicial to any interest of the Company.
(b) Upon exercising an Option, the Optionee shall certify in a manner
reasonably acceptable to the Company that he or she is in compliance with the
terms and conditions of the Plan. In the event an Optionee fails to comply with
the provisions of paragraphs (a)(i)-(viii) of this Section 16 within the
Restrictive Period, the exercise of an Option may be rescinded by the Company
at any time within the Restrictive Period. In the event of any such rescission,
the Optionee shall return any and all Shares obtained upon the exercise of
Options if the Shares are still held by the Optionee. If the Optionee no longer
holds the Shares, the Optionee shall pay the Company an amount equal to the
Fair Market Value of the Shares as of the date of the rescission less the
exercise price paid for the Shares, in such manner and on such terms and
conditions as may reasonably be required by the Company. The Company shall be
entitled to set-off against the foregoing amount.
17. AMENDMENT AND DISCONTINUATION OF THIS PLAN. Either the Board or the
Committee may from time to time amend this Plan or any Option without the
consent or approval of the shareholders of the Company; PROVIDED, HOWEVER,
that, except to the extent provided in Section 9, no amendment or suspension of
this Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
18. TERMINATION DATE. This Plan shall terminate 10 years after the date of
adoption by the Board provided, however, that no such termination shall affect
the validity of Options granted hereunder in accordance with the terms of this
Plan, which Options expire after such termination date.
A-9
PERRY ELLIS INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS--JUNE 11, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PERRY ELLIS INTERNATIONAL, INC.
The undersigned hereby appoints George Feldenkreis and Oscar Feldenkreis as
Proxies, each with full power to appoint a substitute, to represent and to
vote, with all the powers the undersigned would have if personally present, all
the shares of Common Stock, $.01 par value per share, of Perry Ellis
International, Inc., a Florida corporation (the "Company") held of record by
the undersigned on May 1, 2002 at the Annual Meeting of Shareholders to be held
on June 11, 2002 or any adjournment or adjournments thereof.
Proposal 1.
[_]FOR ALL THE NOMINEES LISTED BELOW [_]WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
Ronald L. Buch Salomon Hanono
(INSTRUCTIONS: To withhold authority for any individual nominees, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
Proposal 2.Approval of proposal to adopt the 2002 Stock Option Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
Proposal 3.Ratification of selection of Deloitte & Touche LLP as independent
public accountants for the Company for the fiscal year ending
January 31, 2003.
FOR [_] AGAINST [_] ABSTAIN [_]
In their discretion, the Proxies are authorized to vote upon other business as
may come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2 and 3.
Dated: _____________ , 2002
----------------------------------
(Signature)
----------------------------------
(Signature)
PLEASE SIGN HERE
Please date this proxy and sign
your name exactly as it appears
hereon.
Where there is more than one
owner, each should sign. When
signing as an agent, attorney,
administrator, executor,
guardian, or trustee, please add
your title as such. If executed
by a corporation, the proxy
should be signed by a duly
authorized officer who should
indicate his office.
PLEASE DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.