SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12 HAGGAR CORP. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ----------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------- [HAGGAR LOGO] HAGGAR CORP. 6113 LEMMON AVENUE DALLAS, TEXAS 75209 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 10, 1999 To Our Stockholders: NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of Haggar Corp. (the "Company") will be held in the Sam Rayburn Room of the Adolphus Hotel, 1321 Commerce Street, Dallas, Texas, on the 10th day of February, 1999, at 2:00 p.m. (local time) for the following purposes: 1. To elect two Class III directors to serve until the expiration of their terms and until their successors are duly elected and qualified; 2. To ratify the appointment by the Board of Directors of Arthur Andersen LLP as independent certified public accountants of the Company for the fiscal year ending September 30, 1999; and 3. To transact such other business as may properly come before the meeting or any adjournments thereof. Stockholders of record at the close of business on December 30, 1998, are entitled to notice of and to vote at the Annual Meeting and any adjournments thereof. You are cordially invited to attend the Annual Meeting. By Order of the Board of Directors /s/ J. M. Haggar, III J. M. Haggar, III CHAIRMAN AND CHIEF EXECUTIVE OFFICER Dated: January 12, 1999 WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. HAGGAR CORP. 6113 LEMMON AVENUE DALLAS, TEXAS 75209 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 10, 1999 ------------------------ SOLICITATION AND REVOCABILITY OF PROXIES The accompanying proxy is solicited by the Board of Directors of Haggar Corp., a Nevada corporation ("Haggar" or the "Company"), to be voted at the 1999 Annual Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday, February 10, 1999, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the "Notice") and at any adjournment(s) thereof. When proxies in the accompanying form are properly executed and received, the shares represented thereby will be voted at the Annual Meeting in accordance with the directions noted thereon. If no direction is indicated on the proxy, the shares represented thereby will be voted for the election of directors and in favor of the other proposals set forth in the Notice. The enclosed proxy, even though executed and returned, may be revoked at any time prior to the voting of the proxy by giving written notice of revocation to the Secretary of the Company or by executing and delivering to the Secretary of the Company a proxy bearing a later date. However, no such revocation shall be effective until notice thereof has been received by the Company at or before the Annual Meeting. Mere attendance at the Annual Meeting will not of itself revoke the proxy. In addition to the solicitation of proxies by mail, the directors, officers and regular employees of the Company may solicit the return of proxies either by mail, telephone, telegraph, or through personal contact. Such officers and employees will not be additionally compensated but will be reimbursed for out- of-pocket expenses. The cost of preparing, printing, assembling, and mailing the Annual Report, the Notice, this Proxy Statement, and the enclosed proxy will be borne by Haggar. The principal executive offices of Haggar are located at 6113 Lemmon Avenue, Dallas, Texas 75209. Haggar's mailing address is the same as that of its principal executive offices. This Proxy Statement and accompanying proxy are first being mailed on or about January 12, 1999. Haggar's Annual Report covering the Company's fiscal year ended September 30, 1998, is enclosed herewith, but does not form any part of the materials for solicitation of proxies. PURPOSES OF THE MEETING At the Annual Meeting, the stockholders of Haggar will consider and vote on the following matters: 1. The election of two Class III directors to hold office until the expiration of their terms and until their successors are duly elected and qualified; 2. The ratification of the appointment by the Board of Directors of Arthur Andersen LLP as independent certified public accountants of the Company for the fiscal year ending September 30, 1999; and 1 3. The transaction of such other business that may properly come before the Annual Meeting or any adjournments thereof. QUORUM AND VOTING The record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting was the close of business on December 30, 1998 (the "Record Date"). On the Record Date, there were 7,638,693 shares of Common Stock of the Company, par value $0.10 per share, issued and outstanding, each of which is entitled to one vote on all matters to be acted upon at the Annual Meeting. There are no cumulative voting rights. The presence, in person or by proxy, of holders of a majority of the outstanding shares of Common Stock entitled to vote at the meeting is necessary to constitute a quorum to transact business. Assuming the presence of a quorum, directors will be elected by a plurality of the votes cast. The affirmative vote of the holders of a majority of the shares of Common Stock represented at the Annual Meeting will be required to approve all other matters to be presented at the Annual Meeting. Abstentions and broker non-votes will be counted toward determining whether a quorum is present at the Annual Meeting. Abstentions and broker non-votes will have no effect on the election of directors or the approval of any other matters. PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT The following table and the notes thereto set forth certain information regarding the beneficial ownership of the Company's Common Stock as of the Record Date by (i) each current director and nominee for director of the Company; (ii) the executive officers of the Company; (iii) all executive officers and current directors of the Company as a group; and (iv) each other person known to the Company to own beneficially more than five percent of the presently outstanding Common Stock. COMMON STOCK PERCENT OF CLASS OWNED OWNED BENEFICIALLY(1) BENEFICIALLY(1) ------------- ----------------- J. M. Haggar, III(2)..................................................... 682,990 8.7 Frank D. Bracken(3)...................................................... 183,738 2.4 David M. Tehle(4)........................................................ 4,034 * Richard W. Heath(5)...................................................... 16,000 * Norman E. Brinker(6)..................................................... 11,200 * Rae F. Evans(7).......................................................... 10,600 * John C. Tolleson......................................................... 65,000 * All Executive Officers and Directors (7 persons)(8)...................... 973,562 12.2 Franklin Resources, Inc.(9).............................................. 850,000 11.1 Barrow Hanley Mewhinney & Strauss, Inc.(10).............................. 673,000 8.8 Becker Capital Management, Inc.(11)...................................... 615,505 8.1 Kahn Brothers(12)........................................................ 596,335 7.8 Brinson Partners, Inc.(13)............................................... 558,900 7.3 - ------------------------ * Less than 1%. (1) Except as otherwise indicated, the persons named in the table have sole voting and dispositive power with respect to the shares of Common Stock shown as beneficially owned by them. (2) Includes 2,299 shares over which J. M. Haggar, III shares voting and dispositive power with his wife, 37,113 shares over which he otherwise shares voting and dispositive power as a trustee of various trusts, 50,143 shares over which he shares voting and dispositive power as a director of a private charitable foundation and 172,125 shares which may be acquired pursuant to stock options that are exercisable currently or within 60 days of the Record Date. 2 (3) Includes 10,000 shares over which Mr. Bracken shares voting and dispositive power with his wife and 163,944 shares which may be acquired pursuant to stock options that are exercisable currently. (4) Includes 3,334 shares which may be acquired upon exercise of stock option that are currently exercisable. (5) Includes 5,000 shares over which Mr. Heath shares voting and dispositive power with his wife and 11,000 shares which may be acquired pursuant to stock options exercisable currently or within 60 days of the Record Date. (6) Includes 10,200 shares which may be acquired pursuant to stock options exercisable currently or within 60 days of the Record Date. (7) Represents shares which may be acquired pursuant to stock options exercisable currently or within 60 days of the Record Date. (8) Includes 104,555 shares over which voting and dispositive power is shared and 371,203 shares which may be acquired pursuant to stock options which are exercisable currently or within 60 days of the Record Date. (9) Based on information provided by the Company's transfer agent as of September 30, 1998 for Franklin Resources, Inc. ("FRI"), its two principal shareholders Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principals") and its wholly-owned subsidiary Franklin Advisory Services, Inc. ("FAS"). The address of FRI and the Principals is 777 Mariners Island Boulevard, San Mateo, California 94404, and the address of FAS is One Parker Plaza, Sixteenth Floor, Ft. Lee, New Jersey 07024. (10) Based on information provided by the Company's transfer agent as of September 30, 1998 for Barrow Hanley Mewhinney & Strauss, Inc. whose address is 3232 McKinney Ave., 15th Floor, Dallas, Texas 75204. (11) Based on information provided by the Company's transfer agent as of September 30, 1998 for Becker Capital Management, Inc., whose address is 1211 SW 5th Ave., Suite 2185, Portland, Oregon 97204. (12) Based on information provided by the Company's transfer agent as of September 30, 1998 for Kahn Brothers, Inc., whose address is 55 Broadway, 9th floor, New York, New York 10006. (13) Based on information provided by the Company's transfer agent as of September 30, 1998 for Brinson Partners, Inc. ("BPI") and its three principal shareholders, Brinson Holdings, Inc. ("BHI"), SBC Holding (USA), Inc. ("SBCUSA"), and Swiss Bank Corporation ("SBC"). The address of BPI and BHI is 209 South LaSalle, Chicago, Illinois 60604, the address of SBCUSA is 222 Broadway, New York, New York 10038, and the address of SBC is Aeschenplatz 6 CH-4002, Basel, Switzerland. ELECTION OF DIRECTORS (ITEM 1) The Board of Directors of the Company is divided into three classes presently consisting of two Class I directors, two Class II directors and two Class III directors. The term of office of the Class III directors expires at the 1999 Annual Meeting. The Board of Directors has proposed Norman E. Brinker and John C. Tolleson as nominees for election as the two Class III directors to serve for three-year terms and until their successors are elected and qualified. A plurality of the votes cast at the meeting is required to elect each nominee. Shares represented by proxies will be voted for the election of the nominees named below unless authority to do so is withheld. Management has no reason to believe that any nominee will be unable to serve if elected. If any nominee should be unable to serve, the shares represented by a proxy may be voted for a substitute nominee to be designated by the Board of Directors. 3 THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE FOR CLASS III DIRECTOR. NAME AGE POSITIONS WITH COMPANY - --------------------------- --- -------------------------------------------------------------------- Norman E. Brinker.......... 67 Director John C. Tolleson........... 50 Director NORMAN E. BRINKER has served as a director of the Company since 1990. He is the Chairman of the Board of Brinker International, Inc., a company that owns casual-style restaurants, including Chili's Grill & Bar, Romano's Macaroni Grill, On The Border, Cozymel's, Maggiano's Little Italy and The Corner Bakery. Mr. Brinker also served as Chief Executive Officer of Brinker International, Inc. from 1983 until 1995. He was the founder of Steak & Ale Restaurants and is a former Chairman of Burger King Corporation and a former President of The Pillsbury Restaurant Group. JOHN C. TOLLESON was elected by the Board of Directors in April 1998 to fill a vacancy in the Class III directors. Mr. Tolleson has since 1995 served as the Chairman of the Board of Paymentech, Inc., a credit card authorization and processing company. Since 1997, he has also been the Chief Executive Officer of The Tolleson Group, a private investment firm. Mr. Tolleson founded First USA, Inc. in 1985 and served as Chairman and Chief Executive Officer until its merger with Banc One Corporation in 1997, creating the third largest U.S. bankcard issuer. He has served as a director of Banc One Corporation since 1997. Mr. Tolleson is also a director of Capstead Mortgage Corporation, Viad Corporation, Visa International, Inc. and Visa USA, Inc. EXECUTIVE OFFICERS AND DIRECTORS CONTINUING IN OFFICE Set forth below is information concerning the executive officers of the Company and the other directors of the Company whose terms will continue after the Annual Meeting: NAME AGE POSITIONS WITH COMPANY - --------------------------- --- -------------------------------------------------------------------- J.M. Haggar, III........... 47 Chairman of the Board, Chief Executive Officer and Director Frank D. Bracken........... 58 President, Chief Operating Officer and Director David M. Tehle............. 42 Senior Vice President and Chief Financial Officer Richard W. Heath........... 56 Director Rae F. Evans............... 50 Director J.M. HAGGAR, III has served as Chairman of the Board of the Company since 1994 and Chief Executive Officer since 1990. He has been a director of the Company since 1983. He also served as President of the Company from 1990 to 1994. Mr. Haggar joined the Company on a part-time basis in 1969 and on a full- time basis in 1973. Over the course of his career with the Company, Mr. Haggar has participated in virtually every aspect of the business, including three years in the Manufacturing Division, two years as the Dallas Service Center Manager, one year in the Sales Division, six years in the Marketing and Merchandising Division, and in 1985 was named President of the Menswear Division. Mr. Haggar also serves on the Boards of Directors of Chase Bank of Texas and BeautiControl Cosmetics, Inc. FRANK D. BRACKEN has served as a director of the Company since 1991. He was elected President and Chief Operating Officer of the Company in 1994. Mr. Bracken previously served as Executive Vice President of Marketing of the Company from 1991 to 1994. He joined the Company as a management trainee in 1963 and has served as a Regional Sales Manager, Western Sales Manager, National Sales Manager, Senior Vice President of Sales and Merchandising and Senior Vice President of Marketing. DAVID M. TEHLE joined the Company as Senior Vice President and Chief Financial Officer in 1997. Prior to joining Haggar, Mr. Tehle served as Vice President of Finance for a division of The Stanley Works from 1996 to 1997, where he was responsible for worldwide finance, strategic planning, accounting, credit and tax functions. From 1993 to 1996, he served as Vice President of Finance and Chief Financial Officer of 4 Hat Brands, Inc., the world's largest independent hat manufacturer. Before his tenure at Hat Brands, Mr. Tehle served as Vice President of Finance for Ryder Aviall, an aviation supply company and previously held various financial positions with Texas Instruments. RICHARD W. HEATH has served as a director of the Company since 1991. He has been President, Chief Executive Officer and a director of BeautiControl Cosmetics, Inc., a direct seller of cosmetic and skin care products, since its inception in 1981. He has over 28 years of experience in the direct sales industry. RAE F. EVANS has served as a director of the Company since 1994. She is President of Rae Evans & Associates, Inc., a firm specializing in Washington corporate strategies. Prior to founding Rae Evans & Associates, Inc. in 1995, Mrs. Evans had served as Vice President, National Affairs of Hallmark Cards, Inc. for 13 years. BOARD COMMITTEES AND MEETINGS Standing committees of the Board of Directors of the Company include the Executive Committee, Audit Committee, Compensation Committee and Nominating Committee. The Executive Committee is presently composed of J. M. Haggar, III (chairman) and Frank D. Bracken. Pursuant to the Bylaws of the Company, between meetings of the Board of Directors the Executive Committee has the full power and authority of the Board in the management of the business and affairs of the Corporation, except to the extent limited by statute. The Executive Committee meets periodically between meetings of the Board of Directors and held eight such meetings during fiscal 1998. The Audit Committee is presently composed of Norman E. Brinker (chairman), John C. Tolleson and Rae F. Evans. The Audit Committee provides the opportunity for direct communication between the independent certified public accountants, the internal accounting staff and the Board of Directors. The Audit Committee met twice during fiscal 1998 to review the scope and results of the fiscal 1998 audit, to review various matters with respect to internal financial controls and procedures, to consider the engagement of the Company's auditors for fiscal 1999 and to review the timing and planning of the 1999 audit. The Compensation Committee is presently composed of Richard W. Heath (chairman) and Rae F. Evans. The Compensation Committee provides recommendations to the Board of Directors regarding compensation for executive officers and senior management of the Company. The Compensation Committee also administers the Company's 1992 Long Term Incentive Plan, including the grant of stock options thereunder. The Compensation Committee met twice during fiscal 1998. The Nominating Committee is presently composed of J. M. Haggar, III (chairman), Norman E. Brinker and Richard W. Heath. The Nominating Committee investigates and recommends to the Board of Directors qualified nominees for election to the Board. The Nominating Committee will consider a nominee for director recommended by a stockholder of the Company if a written request naming the person to be placed in nomination, accompanied by a brief biographical description of the proposed nominee and his or her written consent to serve as a director if elected, is submitted and received by the Secretary of the Corporation not later than (i) 60 days following the end of the Corporation's fiscal year immediately preceding the annual meeting of the stockholders, or (ii) if a vacancy is to be filled at a special meeting of stockholders, five business days following the earlier of the public disclosure of such special meeting or the date notices thereof were mailed. The Nominating Committee met once during fiscal 1998. The Board of Directors held six meetings during the fiscal year ended September 30, 1998. Various matters were also approved during the last fiscal year by unanimous written consent of the Board of Directors. Each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees of the Board on which such director served. 5 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Richard W. Heath and Rae F. Evans comprised the Compensation Committee of the Company during fiscal 1998. Neither Mr. Heath nor Mrs. Evans has ever been an officer or employee of the Company. During fiscal 1998, J. M. Haggar, III served as a director of BeautiControl Cosmetics, Inc., for whom Mr. Heath serves as President and Chief Executive Officer. DIRECTOR COMPENSATION Non-employee members of the Board of Directors receive $15,000 annually plus $1,000 for each Board meeting or committee meeting attended. Non-employee directors also receive a grant of stock options covering 9,000 shares of Common Stock on their initial election to the Board and an additional grant of stock options covering 6,000 shares of Common Stock upon each re-election to the Board. Directors who are also employees of the Company receive no additional compensation for their service on the Board and its committees. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 The Company's executive officers, directors and beneficial owners of more than 10% of the Company's Common Stock are required to file reports of ownership and changes of ownership of the Common Stock with the Securities and Exchange Commission. Based solely upon information provided to the Company by individual directors, executive officers and beneficial owners, the Company believes that during the fiscal year ended September 30, 1998, all such reports were timely filed, except that a Form 4 reporting the purchase of shares by David M. Tehle was filed late. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain information concerning compensation of the Chief Executive Officer and the only two other executive officers of the Company for the fiscal years ended September 30, 1998, 1997 and 1996. LONG TERM COMPENSATION ANNUAL COMPENSATION ------------- ------------------------------------------------ SECURITIES OTHER ANNUAL UNDERLYING ALL OTHER NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION PRINCIPAL POSITION FISCAL YEAR ($) ($)(1) ($)(2) (#)(3) ($)(4) - -------------------------------------------- ----------- --------- --------- ------------- ------------- ------------- J. M. Haggar, III 1998 525,000 565,000 58,638 255,458 19,667 Chairman and Chief Executive Officer 1997 475,000 129,250 55,244 -- 8,106 1996 450,000 108,400 54,150 -- 7,752 Frank D. Bracken 1998 460,000 477,000 49,818 100,000 19,667 President and Chief Operating Officer 1997 420,000 105,750 47,222 147,277 8,106 1996 400,000 87,200 45,954 -- 7,752 David M. Tehle(5) 1998 200,000 195,000 12,180 15,000 15,767 Senior Vice President and Chief Financial 1997 47,561 11,750 -- 10,000 2,700 Officer - ------------------------ (1) Reflects bonus earned during the fiscal year pursuant to the Company's Management Incentive Bonus Plan described in the Compensation Committee Report contained herein. In each case, the bonus was approved and paid during the following fiscal year. 6 (2) Represents tax reimbursements for the fiscal year pursuant to the Company's Deferred Annuity Plan described in the Compensation Committee Report contained herein. (3) All awards were for the purchase of Common Stock of the Company pursuant to the 1992 Long Term Incentive Plan described in the Compensation Committee Report contained herein. The amount shown for Mr. Haggar in fiscal 1998 and Mr. Bracken in fiscal 1997 represents the net effect of the repricing of a portion of their previously granted stock options and the cancellation of the remainder. (4) Represents car allowances and the Company's contributions to its defined contribution profit sharing plan and Section401(k) retirement plan for the account of the executive officer. (5) Mr. Tehle joined the Company in July 1997. OPTION GRANTS IN LAST FISCAL YEAR The following table shows all individual grants of stock options to the three executive officers of the Company during the fiscal year ended September 30, 1998. POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK SECURITIES % OF TOTAL PRICE APPRECIATION OR UNDERLYING OPTIONS GRANTED OPTION TERM(3) OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION --------------------- NAME GRANTED(1) FISCAL YEAR PRICE ($/SH) DATE(2) 5% ($) 10% ($) - ------------------------------------- ----------- ----------------- ------------- ----------- --------- ---------- J.M. Haggar, III..................... 50,000 9.0 11.00 8/19/08 345,892 876,558 50,000 9.0 12.88 1/28/08 405,008 1,026,370 40,910(4) n/a 12.88 11/14/04 207,310 480,511 53,183(4) n/a 12.88 10/29/03 224,051 505,604 61,365(4) n/a 12.88 11/13/02 208,572 458,501 Frank D. Bracken..................... 50,000 9.0 11.00 8/19/08 345,892 876,558 50,000 9.0 15.88 11/14/07 499,342 1,265,432 David M. Tehle....................... 15,000 2.7 11.00 8/19/08 103,768 262,968 - ------------------------ (1) Options are to purchase shares of the Company's Common Stock. Newly granted options vest in three equal increments on the first through the third anniversaries of the grant, subject to acceleration of vesting upon death, disability or retirement. (2) All options are subject to earlier termination due to death, disability or termination of employment. (3) These calculations and the assumed annual appreciation rates are disclosed pursuant to rules of the Securities and Exchange Commission and are not intended to forecast future appreciation of the Common Stock. (4) Represent the net effect of the repricing of a portion of previously granted stock options and the cancellation of the remainder. Mr. Haggar's repriced options are fully vested. 7 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES Shown below is information with respect to the three executive officers of the Company regarding option exercises during the fiscal year ended September 30, 1998, and the number and value of unexercised options held as of September 30, 1998. VALUE OF UNEXERCISED SECURITIES UNDERLYING IN-THE-MONEY UNEXERCISED OPTIONS AT OPTIONS AT FISCAL FISCAL YEAR END (#) YEAR END ($)(1) SHARES ACQUIRED ON VALUE REALIZED -------------------------- ----------------- EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE --------------------- ----------------- ----------- ------------- ----------------- J. M. Haggar, III........... 0 0 172,125 83,333 0 Frank D. Bracken............ 0 0 163,944 83,333 0 David M. Tehle.............. 0 0 3,334 21,666 0 UNEXERCISABLE ------------------- J. M. Haggar, III........... 0 Frank D. Bracken............ 0 David M. Tehle.............. 0 - ------------------------ (1) Values stated are pre-tax and are based upon the closing price of $11.00 per share of the Company's Common Stock on Nasdaq National Market System on September 30, 1998, the last trading day of the fiscal year. TEN YEAR OPTION REPRICINGS During fiscal 1998, the Compensation Committee amended the terms of stock options granted prior to fiscal 1998 for J.M. Haggar, III under the Company's 1992 Long Term Incentive Plan. This amendment reduced the number of shares covered by the previously granted options and simultaneously reduced the exercise price of the remaining option shares. The Company previously repriced substantially all other outstanding stock options under the 1992 Long Term Incentive Plan in fiscal 1997. Shown below is information with respect to the repricing of stock options previously granted to any executive officer of the Company during the last ten fiscal years. LENGTH OF ORIGINAL SECURITIES EXERCISE OPTIONS MARKET PRICE OPTION TERM UNDERLYING PRICE AT TIME REPRICED AFTER OF STOCK AT NEW REMAINING AT DATE OF OPTIONS OF REPRICING CANCELLATION TIME OF EXERCISE REPRICING REPRICING REPRICED (#) ($) (#) REPRICING ($) PRICE ($) DATE ----------- ------------- ------------- --------------- ------------- ----------- ------------- J.M. Haggar III 1/21/98 75,000 16.50 61,365 12.88 12.88 4.8 years Chairman and CEO 1/21/98 65,000 18.25 53,183 12.88 12.88 5.8 years 1/21/98 50,000 21.50 40,910 12.88 12.88 6.8 years Frank D. Bracken 8/22/97 70,000 16.50 57,275 13.50 13.50 5.2 years President and COO 8/22/97 60,000 18.25 49,092 13.50 13.50 6.2 years 8/22/97 50,000 21.50 40,910 13.50 13.50 7.2 years 8 PERFORMANCE GRAPH The line graph below compares the cumulative total stockholder return on the Company's Common Stock from September 30, 1993, through September 30, 1998, with the return on the Standard & Poor's 500 Stock Index ("S&P 500") and the Standard & Poor's Textile and Apparel Manufacturers Index ("S&P Apparel") for the same period. In accordance with the disclosure rules of the Securities and Exchange Commission, the measurement assumes a $100 initial investment in the Company's stock with all dividends reinvested, and a $100 initial investment in the indexes. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC HAGGAR CORP. S&P 500 S&P TEXTILES (APPAREL) 9/93 $100.00 $100.00 $100.00 9/94 $150.13 $103.69 $109.85 9/95 $101.70 $134.53 $106.92 9/96 $80.25 $161.89 $145.17 9/97 $83.52 $227.37 $157.61 9/98 $62.67 $247.93 $106.96 9 COMPENSATION COMMITTEE REPORT INTRODUCTION The Compensation Committee, which is comprised of two non-employee directors of the Company, is responsible for structuring, evaluating and recommending to the Board of Directors the Company's executive compensation policies and the annual compensation of the executive officers and other senior management of the Company thereunder. In connection with such responsibilities, the Compensation Committee has exclusive authority to administer the Company's 1992 Long Term Incentive Plan, including the grant of stock options and other awards thereunder. All other actions of the Compensation Committee are subject to the approval of the Board of Directors. EXECUTIVE COMPENSATION OBJECTIVES The primary objectives of the Compensation Committee are to ensure that the compensation provided to the Company's executive officers and other senior management integrates with Haggar's annual and long-term performance objectives, to reward superior performance, and to assist the Company in attracting, retaining and motivating executives with exceptional leadership abilities. Consistent with this philosophy, the Compensation Committee has established a competitive and appropriate total compensation package for the executive officers and other senior management of the Company consisting primarily of base salary, annual bonus pursuant to a Management Incentive Plan, discretionary payments under a Deferred Annuity Plan and stock options pursuant to the 1992 Long Term Incentive Plan. The Compensation Committee does not presently anticipate that the compensation of any executive officer will materially exceed the cap on deductibility imposed by Section 162(m) of the Internal Revenue Code during fiscal 1999. ELEMENTS OF EXECUTIVE COMPENSATION BASE SALARY. The Compensation Committee recommends base salaries each year at a level intended to be within the competitive market range of comparable companies. In addition to the competitive market range, many factors are considered in determining base salaries, including the responsibilities assumed by the executive, length of service, individual performance and internal equity considerations. To ensure that the Company maintains its competitive position and retains the talent necessary to meet the challenges in the apparel industry, the Compensation Committee will continue to evaluate and analyze Haggar's base salaries and make appropriate adjustments. ANNUAL BONUS. The Board of Directors has approved a Management Incentive Plan pursuant to which certain members of senior management of the Company are eligible to receive a cash bonus following each fiscal year in which the Company meets or exceeds an annual net income goal established by the Board of Directors. The amount of individual bonuses is based on the performance of the Company, the total amount of funds available for distribution and each participant's incentive base amount (provided that no participant's bonus may exceed 200% of his incentive base amount). Eligibility to participate in the Management Incentive Plan and the amount of the bonus pool are determined by the Compensation Committee and approved by the Board of Directors. DISCRETIONARY PAYMENTS. The Company has established a Deferred Annuity Plan pursuant to which all salaried and sales personnel whose total salary, commissions and incentive base is $50,000 or more may make voluntary contributions to deferred annuity investment products on an after-tax basis through payroll deductions or direct payment. Each year, the Board of Directors determines whether to pay an additional cash bonus to any of the participants in the Deferred Annuity Plan for the purpose of compensating for federal income taxes owed on the annuity plan investment contribution and the bonus. Although the Compensation Committee does not administer the Deferred Annuity Plan, bonuses paid to executive officers thereunder are subject to review and approval by the Compensation Committee in connection with its evaluation of the total compensation of the Company's executive officers. 10 STOCK OPTIONS. Stock options are granted by the Compensation Committee under the Company's 1992 Long Term Incentive Plan. One of the Compensation Committee's priorities is for the executive officers and senior management of the Company to be significant stockholders so that their interests are aligned with the interests of Haggar's other stockholders. The Compensation Committee believes that this strategy motivates executives to remain focused on the overall long-term performance of the Company. Under the 1992 Long Term Incentive Plan, stock options are granted with an option exercise price not less than the fair market value of the Common Stock on the day of grant. Stock options are normally granted annually and, in support of the Compensation Committee's ownership objectives, are intended to be granted to the executive officers at levels at the high end of the competitive market range of comparable companies. Stock options granted during fiscal 1998 vest ratably over three years and remain exercisable for ten years from the date of grant, subject to the provisions of the 1992 Long Term Incentive Plan. During fiscal 1998, the Compensation Committee reviewed the exercise prices on options previously granted to J.M. Haggar, III under the 1992 Long Term Incentive Plan and determined that the exercise prices of his options were too high to provide the desired performance incentive. Therefore, on January 21, 1998, the Compensation Committee amended all of the previously issued and unexercised employee stock options for Mr. Haggar to provide an exercise price equal to the fair market value of the Common Stock on such date. However, as a condition of repricing these outstanding options, the Compensation Committee reduced the number of unexercised options held by Mr. Haggar. CHIEF EXECUTIVE OFFICER COMPENSATION The Chief Executive Officer participates in the same executive compensation program provided to the other executive officers and senior management of the Company as described above. The Compensation Committee's approach to setting compensation for the Chief Executive Officer is to be competitive with comparable companies and to have a major portion of his compensation depend on the achievement of performance criteria. The Chief Executive Officer's total cash compensation for fiscal 1998 was $1,168,305. Approximately 48.4% of this amount was earned under the annual Management Incentive Program. The Chief Executive Officer's base salary was increased during fiscal 1998 to $525,000, an approximately 10.6% increase from his former base salary. In light of the Company's continued promotion of new products and the leadership required to implement the Company's strategic objectives, the Compensation Committee believes that the Chief Executive Officer's total compensation for fiscal 1998 was reasonable and appropriate. CONCLUSION The Compensation Committee believes the mix of conservative salaries, cash incentives for short-term performance and the potential for equity-based rewards for long-term performance represents an appropriate balance of executive compensation. This balanced executive compensation program provides a competitive and motivational compensation package to the executive officer team necessary to continue to produce the results the Company strives to achieve. The Compensation Committee: Richard W. Heath Rae F. Evans 11 RATIFICATION OF SELECTION OF AUDITOR (ITEM 2) The Board of Directors has selected Arthur Andersen LLP as independent certified public accountants to audit the consolidated financial statements of the Company for the fiscal year ending September 30, 1999, and has determined that it would be desirable to request that the stockholders ratify such selection. The affirmative vote of a majority of the outstanding shares of Common Stock present at the Annual Meeting in person or by proxy is necessary for the ratification of the appointment by the Board of Directors of Arthur Andersen LLP as independent certified public accountants. Arthur Andersen LLP served as the Company's independent certified public accountants for the fiscal year ended September 30, 1998, and has reported on the Company's consolidated financial statements for such year. Representatives of Arthur Andersen 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 will be available to respond to appropriate questions from stockholders. The Board of Directors has the responsibility for selecting the Company's independent certified public accountants and stockholder ratification is not required. However, the selection is being submitted for ratification at the Annual Meeting with a view towards soliciting the stockholders' opinions, which the Board of Directors will take into consideration in future deliberations. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999. OTHER BUSINESS (ITEM 3) 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 the proxy as in their discretion they may deem appropriate, unless they are directed by the proxy to do otherwise. DATE FOR RECEIPT OF PROPOSALS Any proposal to be presented by a stockholder at the Company's 2000 Annual Meeting of Stockholders must be presented to the Secretary of the Company not later than September 14, 1999. By Order of the Board of Directors /s/ J. M. Haggar, III J. M. Haggar, III CHAIRMAN AND CHIEF EXECUTIVE OFFICER January 12, 1999 Dallas, Texas IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. 12