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
DM MANAGEMENT COMPANY
- --------------------------------------------------------------------------------
(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.
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[LOGO]
DM MANAGEMENT COMPANY
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
AND
PROXY STATEMENT
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
[LOGO]
April 12, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of DM
Management Company. The meeting will be held at the offices of Foley, Hoag &
Eliot LLP, One Post Office Square, 16(th) Floor, Boston, Massachusetts on
Tuesday, May 25, 1999, beginning at 11:00 A.M., local time.
As a stockholder, your vote is important. We encourage you to execute and
return your proxy promptly whether you plan to attend the meeting or not so that
we may have as many shares as possible represented at the meeting. Returning
your completed proxy will not prevent you from voting in person at the meeting
prior to the proxy's exercise if you wish to do so.
Thank you for your cooperation, continued support and interest in DM
Management Company.
Sincerely,
[LOGO]
Gordon R. Cooke
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DM MANAGEMENT COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1999
Notice is hereby given that the Annual Meeting of Stockholders of DM
Management Company (the "Company") will be held at the offices of Foley, Hoag &
Eliot LLP, One Post Office Square, 16(th) Floor, Boston, Massachusetts on
Tuesday, May 25, 1999, beginning at 11:00 A.M., local time for the following
purposes:
1. To fix the number of directors that shall constitute the whole Board
of Directors of the Company at six;
2. To consider and vote upon the election of two Class C Directors;
3. To amend the Certificate of Incorporation of the Company to change
the name of the Company to "The J. Jill Group, Inc."; and
4. To transact such further business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 29, 1999 as
the record date for the determination of the stockholders of the Company
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. Only stockholders of record on such date are entitled to notice of, and
to vote at, the Annual Meeting or any adjournment thereof.
By Order of the Board of Directors,
[LOGO]
David R. Pierson
SECRETARY
Boston, Massachusetts
April 8, 1999
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
DM MANAGEMENT COMPANY
25 RECREATION PARK DRIVE
HINGHAM, MASSACHUSETTS 02043
(781) 740-2718
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1999
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about April 12, 1999 in connection with the solicitation by
the Board of Directors of DM Management Company (the "Company") of proxies to be
used at the Annual Meeting of Stockholders of the Company, to be held on
Tuesday, May 25, 1999, and at any and all adjournments thereof (the "Annual
Meeting"). When proxies are returned properly executed, the shares represented
will be voted in accordance with the stockholders' directions. Stockholders are
encouraged to vote on the matters to be considered. However, if no choice has
been specified by a stockholder, the shares will be voted as recommended by
management. Any stockholder may revoke his proxy at any time before it has been
exercised by providing the Company with a later dated proxy, by notifying the
Company's Secretary in writing or by orally notifying the Company in person.
The Board of Directors of the Company (the "Board") has fixed the close of
business on March 29, 1999, as the record date for the determination of the
stockholders of the Company entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof. Only stockholders of record on such date
are entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. At the close of business on the record date, there were issued and
outstanding 9,776,165 shares of the Company's Common Stock, $.01 par value (the
"Common Stock"), entitled to cast 9,776,165 votes.
The By-Laws of the Company provide that the holders of a majority of the
shares of Common Stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at the
Annual Meeting. Shares of Common Stock represented by a properly signed and
returned proxy will be treated as present at the Annual Meeting for purposes of
determining a quorum. Abstentions and broker non-votes with respect to
particular proposals will not affect the determination of a quorum. Thus, shares
voted to abstain as to a particular matter, or as to which a nominee (such as a
broker holding shares in street name for a beneficial owner) has no voting
authority in respect of a particular matter, shall be deemed present for
purposes of determining a quorum. Any stockholder who attends the Annual Meeting
may not withhold his shares from the quorum count by declaring such shares
absent from the Annual Meeting.
Passage of the proposal to fix the number of directors constituting the
whole Board requires the approval of a majority of the votes properly cast.
Abstentions and broker non-votes as to this proposal do not count as votes for
or against the proposal. The Class C Directors will be elected by a plurality of
the votes properly cast. Abstentions and broker non-votes as to this election do
not count as votes for or against such election. Passage of the proposal to
amend the Certificate of Incorporation requires the affirmative vote of a
majority of the shares of Common Stock entitled to vote thereon. Abstentions and
broker non-votes will have the same effect as a vote against this proposal.
Votes will be tabulated by the Company's transfer agent, State Street Bank
and Trust Company.
PROPOSALS ONE AND TWO--
FIXING NUMBER OF DIRECTORS AND ELECTION OF DIRECTORS
The Company's By-Laws provide for a Board of Directors consisting of from
two to seven members. Within such limits, the number of directors constituting
the whole Board is determined by the stockholders at the annual meeting of
stockholders, and may be increased or decreased by the stockholders or the
directors from time to time. The Board is divided into three classes, labeled
Class A, Class B and Class C, each containing, insofar as possible, an equal
number of directors. Directors are elected to serve for three-year terms, and
until their respective successors are duly elected and qualified, with the term
of one of the three classes expiring each year at the Company's annual meeting
or special meeting in lieu thereof.
The number of directors constituting the whole Board is currently fixed at
six, and the Board currently consists of two Class A Directors, two Class B
Directors and two Class C Directors.
The terms of the Company's two Class C Directors, Gordon R. Cooke and Thomas
J. Litle, will expire at the Annual Meeting. The Company's current Class A
Directors are William E. Engbers and Samuel L. Shanaman. Their terms as
directors will expire at the Company's 2000 annual meeting of stockholders or
special meeting in lieu thereof. The Company's current Class B directors are
Walter J. Levison and Ruth M. Owades. Their terms as directors will expire at
the Company's 2001 annual meeting of stockholders or special meeting in lieu
thereof.
The Board has recommended that the number of directors constituting the
whole Board be fixed at six and has nominated Mr. Cooke and Mr. Litle for
election as Class C Directors, to serve until the Company's 2002 annual meeting
of stockholders or special meeting in lieu thereof, and until their successors
are duly elected and qualified.
The nominees have agreed to serve as Directors if elected, and the Company
has no reason to believe that they will be unable to serve. In the event that
any of them is unable or declines to serve as director at the time of the Annual
Meeting, proxies may be voted for such other nominee as is then designated by
the Board.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO FIX THE NUMBER OF
DIRECTORS AT SIX AND FOR THE ELECTION OF MR. COOKE AND MR. LITLE AS CLASS C
DIRECTORS.
2
PROPOSAL THREE
AMENDING THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation currently provides that the
Company's name is "DM Management Company." After considering a variety of
factors, including the rapid growth of the J. JILL concept, its significant
current and expected future contribution to the Company's overall business and
the importance of aligning customer and investor identification of the Company
with the J. JILL concept, the Board of Directors has determined that it is in
the best interests of the Company to amend the Certificate of Incorporation to
change the Company's name to "The J. Jill Group, Inc."
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY TO "THE J. JILL
GROUP, INC."
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each director
and nominee for election as a director and each executive officer of the
Company:
NAME AGE POSITION
- ----------------------------------- --- ----------------------------------------------------------------------
Gordon R. Cooke*................... 53 President, Chief Executive Officer and Chairman of the Board of
Directors; Director
Dennis J. Adomaitis................ 48 President--J. JILL Retail
Kevin E. Burns..................... 47 Senior Vice President/General Manager
Olga L. Conley..................... 41 Chief Financial Officer, Senior Vice President--Finance and Treasurer
Jane B. Dunning.................... 47 Vice President of Merchandising--NICOLE SUMMERS
John J. Hayes...................... 43 Executive Vice President of Marketing
Patricia C. Lee.................... 35 President--J. JILL Merchandising
Peter J. Tulp...................... 45 Vice President/Controller
William E. Engbers(1)(2)........... 56 Director
Walter J. Levison(1)(2)............ 80 Director
Thomas J. Litle*(2)................ 58 Director
Ruth M. Owades(1).................. 50 Director
Samuel L. Shanaman................. 57 Director
- ------------------------
* Nominee for re-election as a Director.
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
GORDON R. COOKE has been President and Chief Executive Officer of the
Company and a director since joining the Company in December 1995 and Chairman
of the Board of Directors since August 1997. Mr. Cooke served as President of
Time-Warner Interactive Merchandising, a division of Time Warner Inc., a media
conglomerate, from November 1993 until December 1995. Mr. Cooke is a director of
Geerlings & Wade, Inc.
DENNIS J. ADOMAITIS has been President--J. JILL Retail since joining the
Company. Prior to joining the Company, Mr. Adomaitis served in a variety of
positions at Time Warner Inc., including Executive Vice President and Senior
Vice President of the Warner Bros. Studio Stores International Division and
Senior Vice President--Operations of the Warner Bros. Studio Stores Division.
3
KEVIN E. BURNS has been Senior Vice President/General Manager since joining
the Company in November 1997. From December 1994 until October 1997 he served as
Director of Customer Logistics for Ryder Integrated Logistics, Inc., a provider
of third party integrated transportation and distribution/ logistics services
and a subsidiary of Ryder Systems, Inc. From November 1993 Until December 1994
he was General Manager of DSC Logistics, Inc., a private company providing third
party warehousing and distribution services.
OLGA L. CONLEY has been Chief Financial Officer since August 1997, Senior
Vice President--Finance since May, 1998 and Treasurer since August 1993. She
also served as Vice President of Finance from June, 1996 until May, 1998.
JANE B. DUNNING has been Vice President of Merchandising--NICOLE SUMMERS
since joining the Company in December 1998. Ms. Dunning served from October 1998
until December 1998 as Merchandising Manager for Women's Casual Wear, and from
March 1998 until October 1998 as Product Line Manager for Women's Outerwear, at
L.L. Bean, Inc., a clothing and outdoor equipment retailer. From August 1995
until February 1998 she was a Merchandising Manager for Product Development of
the Direct Sales Division of Nordstrom, Inc., a clothing retailer. Before that
she was a Product Manager for Egghead, Inc., a computer software and peripherals
retailer.
JOHN J. HAYES has served as Executive Vice President of Marketing since
joining the Company in May 1996. From September 1990 until May 1996, Mr. Hayes
served as Vice President, Marketing and Catalog Production, of Bloomingdale's By
Mail, a division of Federated Department Stores, Inc.
PATRICIA C. LEE has been President--J. JILL Merchandising since March 1999.
She also served as Executive Vice President--J. JILL from May 1998 until March
1999, as Vice President--J. JILL from December 1996 until May 1998 and as
Director of Merchandising from November 1994 until December 1996.
PETER J. TULP joined the Company in August 1997 as Corporate Controller and
has been Vice President/ Controller since May 1998. From July 1994 until August
1997 Mr. Tulp was Group Controller of Mercer Management Consulting, Inc., an
international general management consulting firm. From August 1993 until June
1994 he was Assistant Corporate Controller of Bolt Beranek and Newman, Inc., an
international computer software and communications company.
WILLIAM E. ENGBERS has been a director of the Company since July 1990. He is
a venture capital consultant and was Director, Venture Capital of Allstate
Insurance Company from June 1989 until January 1999. Mr. Engbers is a director
of La Jolla Pharmaceutical Company.
WALTER J. LEVISON has been a director of the Company since March 1992. Since
October 1982, Mr. Levison has been a general partner of the Aegis Venture Funds,
a group of venture capital funds based in the Boston, Massachusetts area. He is
also a director of Davox Corporation.
THOMAS J. LITLE has been a director of the Company since May 1997. Since
1995 Mr. Litle has been the Chairman of LitleNet LLC, a company which he founded
and which provides direct commerce connection and information sharing services
to the direct marketing industry. From 1985 to 1995, he was Chairman and Chief
Executive Officer of Litle & Company, which provided information sharing,
payment processing and electronic network services for the direct marketing
industry. Mr. Litle is a director of SkyMall, Inc.
RUTH M. OWADES has been a director of the Company since May 1997. Since
1988, Ms. Owades has been President and Chief Executive Officer of Calyx &
Corolla, Inc., a catalog business which she founded and which offers consumers
fresh-cut flowers and plants. Ms. Owades is a director of Providian Financial
Corporation, a consumer lender.
SAMUEL L. SHANAMAN has been a director of the Company since July 1990. From
June 1990 until March 1998 he held a number of positions with the Company,
including President and Chief Executive
4
Officer, Chief Financial Officer, Treasurer, Chief Operating Officer, Executive
Vice President and Vice President--Finance.
The Company's executive officers are elected by the directors and hold
office until the first directors' meeting after the next annual meeting of
stockholders or special meeting in lieu thereof, and thereafter until their
successors are chosen and qualified, unless a shorter term is specified in the
vote appointing them, or until they sooner die, resign, are removed or become
disqualified.
COMMITTEES AND MEETINGS OF THE BOARD
During the fiscal year ended December 26, 1998 ("fiscal 1998"), the Board
met four times and acted twice by unanimous written consent. No incumbent
director attended fewer than 75% of the aggregate of the total number of
meetings held by the Board and Committees of the Board on which he or she
served.
The Board currently has two committees. The Audit Committee (currently
composed of Messrs. Engbers, Levison and Litle) reviews the internal accounting
procedures of the Company and consults with and reviews the services provided by
the Company's independent auditors. The Audit Committee met once during fiscal
1998. The Compensation Committee (currently composed of Messrs. Engbers and
Levison and Ms. Owades) makes general policy decisions relating to compensation
and benefits for the Company's employees, including decisions with respect to
compensation for the Company's executive officers, and administers the Company's
stock option and employee stock purchase plans. The Compensation Committee met
five times during fiscal 1998 and acted three times by unanimous written
consent.
5
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
DIRECTORS' COMPENSATION
Each member of the Board of Directors who is not an employee of the Company
or any parent or subsidiary of the Company (an "Outside Director") receives an
annual retainer ($10,000 in 1998 and $15,000 in 1999) and a fee of $1,000 for
each meeting of the Board of Directors attended. Directors who are employees of
the Company are not paid any separate fees for serving as directors.
Under the Company's Amended and Restated 1993 Incentive and Nonqualified
Stock Option Plan (the "1993 Stock Option Plan"), each Outside Director is
automatically granted an option to purchase 20,000 shares of Common Stock upon
first joining the Board of Directors. Such option is immediately vested in full
unless otherwise determined by the Compensation Committee of the Board of
Directors prior to grant. In addition, in connection with each annual meeting of
stockholders each Outside Director who has served for at least six months before
the meeting and continues to serve at the meeting is automatically granted an
option to purchase 7,500 shares of Common Stock. Such option is immediately
vested in full. All options automatically granted to Outside Directors under the
1993 Stock Option Plan have exercise prices equal to the closing price of the
Common Stock on the date of grant as reported by the Nasdaq National Market and
expire on the seventh anniversary of the date of grant.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation for services rendered in all capacities to the Company for fiscal
1998, the fiscal year ended December 27, 1997 ("fiscal 1997"), the twelve months
ended December 28, 1996 (the "Twelve Month Period") and the fiscal year ended
June 29, 1996 ("fiscal 1996") of the Chief Executive Officer of the Company and
the four other most highly paid executive officers of the Company.
6
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ AWARDS
OTHER ---------------
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY(2) BONUS(3) COMPENSATION(4) UNDERLYING COMPENSATION(6)
PRINCIPAL POSITION PERIOD(1) ($) ($) ($) OPTIONS(5)(#) ($)
- ---------------------- ------------------------ ----------- ----------- ---------------- --------------- ----------------
Gordon R. Cooke....... Fiscal 1998 $ 439,903 $ 437,500 $ * 150,000 $ 123,768
President, Chief Fiscal 1997 338,952 397,506 80,800 150,000 2,020
Executive Officer Twelve Month Period 300,020 225,006 144,908 112,500 585
and Fiscal 1996 150,010 135,000 49,500 262,500 120
Chairman of the
Board
of Directors
John J. Hayes......... Fiscal 1998 218,176 110,500 * 50,000 3,108
Executive Vice Fiscal 1997 187,017 74,998 * 52,500 2,020
President Twelve Month Period 127,591 26,249 * 105,000 60
of Marketing Fiscal 1996 18,172 0 * 105,000 0
Patricia C. Lee....... Fiscal 1998 189,332 118,500 * 100,000 3,108
President--J. JILL Fiscal 1997 119,239 58,001 * 60,000 2,020
Merchandising Twelve Month Period 83,677 4,000 * 39,000 355
Fiscal 1996 78,036 0 * 0 120
Olga L. Conley........ Fiscal 1998 158,173 87,500 * 50,000 3,108
Chief Financial Fiscal 1997 118,080 48,001 * 37,500 2,020
Officer, Twelve Month Period 88,500 15,000 * 57,000 364
Senior Vice Fiscal 1996 80,096 0 * 27,000 120
President--
Finance and
Treasurer
Kevin E. Burns........ Fiscal 1998 157,789 79,500 * 0 2,949
Senior Vice Fiscal 1997 25,962 30,000 * 112,500 588
President/ Twelve Month Period -- -- -- -- --
General Manager Fiscal 1996 -- -- -- -- --
- ------------------------------
(1) Amounts reported for the Twelve Month Period include amounts for the last
six months of fiscal 1996, which are also included in amounts reported for
fiscal 1996.
(2) Amounts reported for each period include amounts deferred by the named
individuals pursuant to the Company's 401(k) Plan and Trust. Amounts shown
do not include amounts expended by the Company pursuant to plans (including
group disability, life and health) that do not discriminate in scope, terms
or operation in favor of officers and directors and are generally available
to all salaried employees.
(3) Amounts reported for each period include amounts earned with respect to that
period but paid in the subsequent period.
(4) In accordance with the rules of the Securities and Exchange Commission,
perquisites and other benefits, securities and property that, in the
aggregate, do not equal or exceed the lesser of either $50,000 or 10 percent
of the total annual salary and bonus reported for the named executive
officer for the period in question do not need to be reported, and in such
cases an asterisk appears in the table. Amounts reported for Mr. Cooke
include $80,700 for fiscal 1997 and $72,000 for the Twelve Month Period for
living expenses and $72,800 for the Twelve Month Period and $49,500 for
fiscal 1996 for relocation expenses.
(5) The Company did not grant any restricted stock awards or stock appreciation
rights or make any long-term incentive plan payouts to any of the executive
officers during any of the reported periods. The number of securities
underlying all options reported in this column has been adjusted to reflect
the Company's 3-for-2 stock split in the form of a stock dividend paid on
June 30, 1998.
(6) The amounts reported include the following insurance premiums paid by the
Company with respect to term life insurance for the benefit of the named
individuals during fiscal 1998, fiscal 1997, the Twelve Month Period and
fiscal 1996, respectively: Mr. Cooke, $108, $120, $110 and $120; Mr. Hayes,
$108, $120, $60 and $0; Ms. Lee, $108, $120, $120 and $120; Ms. Conley,
$108, $120, $120 and $120; and Mr. Burns, $108, $20, $0 and $0. The amounts
reported also include the following Company
7
matching contributions pursuant to the Company's 401(k) Plan and Trust for
fiscal 1998, fiscal 1997, the Twelve Month Period and fiscal 1996,
respectively, for the benefit of the named individuals: Mr. Cooke, $3,000,
$1,900, $475 and $0; Mr. Hayes, $3,000, $1,900, $0 and $0; Ms. Lee $3,000,
$1,900, $235 and $0; Ms. Conley, $3,000, $1,900, $244 and $0; and Mr. Burns,
$2,841, $568, $0 and $0. The amount reported for Mr. Cooke for fiscal 1998
also includes $8,050 paid by the Company with respect to the term life
portion of a "split-dollar" life insurance policy naming Mr. Cooke as
beneficiary and $112,610 paid by the Company representing the remainder of
the policy premium.
OPTION GRANTS
The following table sets forth certain information regarding stock options
granted during fiscal 1998 by the Company to the individuals named in the
Summary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF TOTAL OPTIONS EXERCISE APPRECIATION FOR
SHARES UNDER- GRANTED TO PRICE PER OPTION TERM (2)
LYING OPTIONS EMPLOYEES IN SHARE EXPIRATION ------------------------
NAME GRANTED(#)(1) FISCAL 1998 ($/SH) DATE 10%($) 5%($)
- -------------------------------------- ------------- --------------- ---------- ----------- ---------- ------------
Gordon R. Cooke....................... 150,000(3) 26.9% $ 10.4583 01/05/05 $ 638,639 $ 1,488,300
John J. Hayes......................... 37,500(4) 6.7% 20.8333 05/28/05 318,047 741,185
12,500(5) 2.2% 10.125 09/24/05 51,524 120,072
Patricia C. Lee....................... 75,000(4) 13.5% 20.8333 05/28/05 636,094 1,482,370
25,000(5) 4.5% 10.125 09/24/05 103,047 240,144
Olga L. Conley........................ 37,500(4) 6.7% 20.8333 05/28/05 318,047 741,185
12,500(5) 2.2% 10.125 09/24/05 51,524 120,072
Kevin E. Burns........................ 0 -- -- -- -- --
- ------------------------
(1) All of these options were granted under the 1993 Stock Option Plan. These
options are exercisable during the holder's lifetime only by the holder, and
by the holder only while the holder is an employee of the Company, and for
certain limited periods of time thereafter in the event of retirement, death
or termination of employment other than for cause. In addition, in the event
of death of the option holder while an employee of the Company and before
expiration of the option, these options vest in full. These options also are
subject to accelerated vesting in the event that a "Qualified Sale" occurs
and immediately prior to the closing of such Qualified Sale the holder is an
employee of the Company. Immediately prior to such closing each such option
shall become exercisable as to the number of shares subject to the option,
up to 100%, equal to two times the number of shares as to which the option
otherwise would have been exercisable immediately prior to such closing.
"Qualified Sale" means the sale of all or substantially all of the assets or
issued and outstanding capital stock of the Company or a merger or
consolidation involving the Company in which stockholders of the Company
immediately before such merger or consolidation do not own immediately after
such merger of consolidation capital stock or other equity interests of the
surviving corporation or entity representing more than 50% in voting power
of the capital stock or other equity interests of such surviving corporation
or entity outstanding immediately after such merger or consolidation. The
number of shares underlying options granted reported in this column has been
adjusted to reflect the Company's 3-for-2 stock split in the form of a stock
dividend paid on June 30, 1998.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed rates of share price appreciation set by the
Securities and Exchange Commission of five percent and ten percent
compounded annually
8
from the date the respective options were granted to their expiration date.
The gains shown are net of the option exercise price, but do not include
deductions for taxes or other expenses associated with the exercise. Actual
gains, if any, are dependent on the performance of the Common Stock and the
date on which the option is exercised. There can be no assurance that the
amounts reflected will be achieved.
(3) This option vested as to 25% of the shares which may be purchased thereunder
on January 5, 1999 and as to an additional one forty-eighth ( 1/48) of the
shares on the 5th day of each month thereafter through January, 2002.
(4) This option vests as to 20% of the shares which may be purchased thereunder
on May 28, 1999 and as to an additional one sixtieth ( 1/60) of the shares
on the 28(th) day of each month thereafter through May, 2003.
(5) This option vests as to 25% of the shares which may be purchased thereunder
on September 24, 1999 and as to an additional one forty-eighth ( 1/48) of
the shares on the 24(th) day of each month thereafter through September,
2002.
9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information concerning the number and
value of stock options exercised by each of the individuals named in the Summary
Compensation Table during fiscal 1998 and of unexercised stock options held by
each of such individuals on December 26, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT HELD AT
SHARES DECEMBER 26, 1998(#) DECEMBER 26, 1998($)(3)
ACQUIRED ON VALUE -------------------------- ---------------------------
EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ------------- ----------- ------------- ------------ -------------
Gordon R. Cooke.................... 45,000 $ 1,043,438 213,250 293,750 $ 2,684,628 $ 2,370,185
John J. Hayes...................... 20,000 250,834 50,000 137,500 511,458 909,896
Patricia C. Lee.................... 14,625 134,930 19,525 166,675 151,489 718,822
Olga L. Conley..................... 18,000 104,835 37,250 107,250 384,635 609,427
Kevin E. Burns..................... 0 0 24,374 88,126 88,356 319,457
- ------------------------
(1) The number of shares acquired on exercise reported in this column has been
adjusted to reflect the Company's 3-for-2 stock split in the form of a stock
dividend, paid on June 30, 1998.
(2) Value is based on the last sales price of the Common Stock on the exercise
date, as reported by The Nasdaq Stock Market, less the applicable option
exercise price.
(3) Value is based on the last sales price of the Common Stock before the end of
fiscal 1998 ($14.375 per share on December 26, 1998), as reported by The
Nasdaq Stock Market, less the applicable option exercise price.
CERTAIN EMPLOYMENT AND SEVERANCE ARRANGEMENTS
In connection with the hiring of Gordon R. Cooke as President and Chief
Executive Officer of the Company in December 1995, Mr. Cooke and the Company
entered into an employment agreement which, among other things, provides that if
Mr. Cooke's employment is terminated by the Company other than for just cause
(as defined in the agreement), the Company will make severance payments to Mr.
Cooke in an aggregate amount equal to Mr. Cooke's annual base salary at the time
of termination, payable at the same time and in the same amounts as such base
salary would have been paid.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed of
independent, non-employee directors. The Committee currently consists of Messrs.
Engbers and Levison and Ms. Owades, who were the only members of the Committee
during fiscal 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
During fiscal 1998 the Company's compensation package for its executive
officers had three principal components: (1) base salary, (2) bonus, and (3)
stock options. The Company's executive officers were also eligible to
participate in other employee benefit plans on substantially the same terms as
other senior management employees and other employees who met applicable
eligibility criteria, subject to any legal limitations on the amounts that may
be contributed or the benefits that may be payable under these Company plans.
10
Base salary levels for the Company's executive officers are intended to be
fair and competitive in the Company's industry. Base salaries for executive
officers are reviewed annually, and any adjustments are based on such factors as
individual performance, change in responsibilities and market-based comparisons
with other comparable companies.
Under the Company's bonus plan for fiscal 1998, bonuses for the Company's
executive officers were based on a percentage of base salary and conditioned on
the Company's ability to achieve its financial plan. Assigned bonus percentages
varied depending on the Compensation Committee's view of the importance of the
executive officer's contribution to the Company's ability to achieve its
financial plan. The Compensation Committee was also authorized under the fiscal
1998 bonus plan to award additional bonuses in its discretion based upon such
performance factors as it determined to be appropriate.
Stock option awards are intended to provide the Company's executive officers
with longer term incentives that align their interests with those of the
Company's stockholders more generally. The Compensation Committee granted
additional stock options to most of the Company's current executive officers
during fiscal 1998.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Cooke's base salary during fiscal 1998 was at the rate of $375,000 per
annum until June 28, 1998 and $500,000 per annum thereafter. Mr. Cooke received
bonuses for fiscal 1998 under the Company's 1998 Incentive Compensation Plan
totaling $437,500 as follows: (a) a bonus of $187,500 (100% of his base salary
for the Spring 1998 season) as a result of the Company's having exceeded its
operating income goal for the Spring 1998 season and (b) a bonus of $250,000
(100% of his base salary for the Fall 1998 season) as a result of the Company's
having exceeded its operating income goal for the Fall 1998 season. The Company
also paid or reimbursed Mr. Cooke for certain living expenses through June 28,
1998. During fiscal 1998 Mr. Cooke was granted an option to purchase 150,000
shares of Common Stock at $10.4583. The Company also paid $120,660 in premiums
with respect to a $5,000,000 "split-dollar" life insurance policy for the
benefit of Mr. Cooke.
In setting Mr. Cooke's compensation for fiscal 1998, the Compensation
Committee considered the compensation payable to the chief executive officers at
other public companies in the Company's industry and the Company's outstanding
performance under Mr. Cooke's leadership. As in the past, a significant portion
of Mr. Cooke's cash compensation consisted of bonuses under the Company's
incentive compensation plan, payment of which was dependent upon the Company's
achieving its seasonal operating income goals.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
William E. Engbers
Walter J. Levison (CHAIRMAN)
Ruth M. Owades
11
PERFORMANCE GRAPH
The following Performance Graph compares the performance of the Company's
cumulative stockholder return with that of two broad market indexes, the Nasdaq
Stock Market Index for U.S. Companies and the Russell 2000 Index, and two peer
groups of companies selected on a line-of-business basis. One of these peer
groups (the "old peer group") is the peer group that was used in the performance
graph contained in the proxy statement for the annual meeting of stockholders
held in May 1998 and consists of Blair Corporation, Damark International Inc.,
Geerlings & Wade, Inc., Hanover Direct, Inc., Lands' End, Inc., Lillian Vernon
Corp., The Right Start, Inc., Spiegel, Inc. and Williams-Sonoma Incorporated.
The other peer group (the "new peer group") consists of Blair Corporation,
Brylane Inc., Coldwater Creek Inc., dELiA's Inc., Geerlings & Wade, Inc.,
Genesis Direct, Inc., Hanover Direct, Inc., Lands' End, Inc., Lillian Vernon
Corp., Spiegel, Inc., and Williams-Sonoma Incorporated. The change in the peer
group reflects the addition of new direct marketing companies and the deletion
of companies no longer active in the direct marketing industry. The return for
each issuer in the peer groups is weighted according to the issuer's stock
market capitalization.
The cumulative stockholder return for shares of the Company's Common Stock
is calculated assuming $100 was invested on November 2, 1993, the date on which
the Company's Common Stock commenced trading on The Nasdaq Stock Market. The
cumulative stockholder returns for the market indexes and the peer groups are
calculated assuming $100 was invested on October 31, 1993. The Company paid no
cash dividends during the periods shown. The performance of the market indexes
and the peer groups is shown on a total return (dividends reinvested) basis.
COMPARISON OF 62 MONTH CUMULATIVE TOTAL RETURN*
AMONG DM MANAGEMENT COMPANY, THE RUSSEL 2000 INDEX
THE NASDAQ STOCK MARKET (U.S.) INDEX
A NEW PEER GROUP AND AN OLD PEER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DM MANAGEMENT NEW PEER OLD PEER RUSSELL NASDAQ STOCK
COMPANY GROUP GROUP 2000 MARKET (U.S.)
11/2/93 $100 $100 $100 $100 $100
6/94 $100 $91 $88 $93 $91
6/95 $37 $73 $71 $112 $122
6/96 $49 $71 $72 $139 $156
12/96 $37 $66 $66 $147 $170
12/97 $156 $78 $77 $180 $208
12/98 $285 $82 $98 $179 $292
* $100 INVESTED ON 11/2/93 IN STOCK OR ON 10/31/93 IN INDEX--INCLUDING
REINVESMENT OF DIVIDENDS.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on March 29, 1999, there were issued and
outstanding 9,776,165 shares of Common Stock entitled to cast 9,776,165 votes.
On March 29, 1999, the closing price of the Company's Common Stock as reported
by The Nasdaq Stock Market was $16.625 per share.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of March 29, 1999 by (i) each person
known by the Company to own beneficially more than five percent of the Common
Stock as of such date, (ii) each current director and nominee for director of
the Company, (iii) each of the persons named in the Summary Compensation Table
and (iv) all current executive officers and directors of the Company as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Shares of common stock issuable by the
Company pursuant to options which may be exercised within 60 days after March
29, 1999 are deemed to be beneficially owned and outstanding for purposes of
calculating the number of shares and the percentage beneficially owned by the
applicable person. However, these shares are not deemed to be beneficially owned
and outstanding for purposes of computing the percentage beneficially owned by
any other person or entity.
SHARES BENEFICIALLY
OWNED(1)
-----------------------
NAME NUMBER PERCENT
- ----------------------------------------------------------------------------------------- ---------- -----------
Amvescap PLC and affiliates(2)........................................................... 1,041,350 10.7%
1315 Peachtree Street, N.E.
Atlanta, GA 30309
Pilgrim Baxter & Associates, Ltd.(3)..................................................... 964,200 9.9%
825 Duportail Road
Wayne, PA 19087
Kevin E. Burns(4)........................................................................ 35,894 *
Olga L. Conley(5)........................................................................ 64,692 *
Gordon R. Cooke(6)....................................................................... 329,695 3.3%
William E. Engbers(7).................................................................... 15,150 *
John J. Hayes(8)......................................................................... 117,131 1.2%
Patricia C. Lee(9)....................................................................... 66,299 *
Walter J. Levison(10).................................................................... 51,306 *
Thomas J. Litle(11)...................................................................... 43,500 *
Ruth M. Owades(12)....................................................................... 43,500 *
Samuel L. Shanaman(13)................................................................... 233,906 2.4%
All current directors and executive officers as group (13 persons)(14)................... 1,015,923 9.8%
- ------------------------
* Less than one percent.
(1) The persons named in this table have sole voting and investment power with
respect to the shares listed, except as otherwise indicated. The inclusion
herein of shares listed as beneficially owned does not constitute an
admission of beneficial ownership.
(2) The Company has received a copy of a report on Schedule 13G, with a
signature dated February 8, 1999, filed by AMVESCAP PLC, AVZ, Inc., Aim
Management Group, Inc., AMVESCAP Group Services, Inc., INVESCO, Inc.,
INVESCO North American Holdings, Inc., INVESCO Capital
13
Management, Inc., INVESCO Funds Group, Inc., INVESCO Management & Research,
Inc., INVESCO Realty Advisors, Inc., INVESCO (NY) Asset Management, Inc.,
INVESCO MIM Management Limited and INVESCO Asset Management Limited. The
report stated that the reporting persons hold the securities covered by the
report on behalf of other persons who have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of,
such securities, and that the interest of any such persons does not exceed
5% of the Common Stock of the Company. The report also states that each of
the reporting persons held shared voting and dispositive power with respect
to such securities.
(3) The Company has received a copy of a report on Schedule 13G, with a
signature dated February 9, 1999, filed by Pilgrim Baxter & Associates, Ltd.
("Pilgrim"). The report states that Pilgrim has sole voting and dispositive
power with respect to such securities.
(4) Includes 8,750 shares issuable upon the exercise of an outstanding stock
option currently exercisable or exercisable within sixty days following
March 29, 1999.
(5) Includes 44,000 shares issuable upon the exercise of outstanding stock
options currently exercisable or exercisable within sixty days following
March 29, 1999.
(6) Includes 263,771 shares issuable upon the exercise of outstanding stock
options currently exercisable or exercisable within sixty days following
March 29, 1999. Also includes 600 shares held by Mr. Cooke's daughters.
(7) Includes 150 shares held by Mr. Engbers' wife. Mr. Engbers disclaims
beneficial ownership of the shares held by his wife. Also includes 7,500
shares issuable upon the exercise of an outstanding stock option held by Mr.
Engbers currently exercisable or exercisable within sixty days following
March 29, 1999.
(8) Includes 60,625 shares issuable upon the exercise of outstanding stock
options currently exercisable or exercisable within sixty days following
March 29, 1999.
(9) Includes 43,572 shares issuable upon the exercise of outstanding stock
options currently exercisable or exercisable within sixty days following
March 29, 1999.
(10) Includes 33,000 shares issuable upon the exercise of outstanding stock
options currently exercisable or exercisable within sixty days following
March 29, 1999
(11) Represents shares issuable upon the exercise of outstanding stock options
currently exercisable or exercisable within sixty days of March 29, 1999.
(12) Represents shares issuable upon the exercise of outstanding stock options
currently exercisable or exercisable within sixty days of March 29, 1999.
(13) Includes 7,500 shares issuable upon the exercise of an outstanding stock
option currently exercisable or exercisable within sixty days following
March 29, 1999.
(14) Includes shares listed in notes 4 to 13. Also includes 15,000 shares
issuable to executive officers not named in this table upon the exercise of
outstanding stock options currently exercisable or exercisable within sixty
days of March 29, 1999.
14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater-than-10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon review of Forms 3 and 4 and amendments thereto furnished
to the Company during fiscal 1998 and Form 5 and amendments thereto furnished to
the Company with respect to fiscal 1998, or written representations that Form 5
was not required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-10%
stockholders were fulfilled in a timely manner except as previously reported.
INFORMATION CONCERNING AUDITORS
The accounting firm of PricewaterhouseCoopers L.L.P., which has served as
the Company's principal independent accountants continuously since the Company's
formation, was selected by the Board to continue in that capacity for fiscal
1999. A representative of PricewaterhouseCoopers L.L.P. is expected to be
present at the Annual Meeting. This representative will have the opportunity to
make a statement if such representative desires to do so and will be available
to respond to appropriate questions presented at the Annual Meeting.
SOLICITATION
No compensation will be paid by any person in connection with the
solicitation of proxies. Brokers, banks and other nominees will be reimbursed
for their out-of-pocket expenses and other reasonable clerical expenses incurred
in obtaining instructions from beneficial owners of the Common Stock. In
addition to the solicitation by mail, special solicitation of proxies may, in
certain instances, be made personally or by telephone by directors, officers and
certain employees of the Company. It is expected that the expense of such
special solicitation will be nominal. All expenses incurred in connection with
this solicitation will be borne by the Company.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy statement and
form of proxy for the annual meeting scheduled to be held in May 2000,
stockholder proposals must comply with SEC Rule 14a-8 and any other applicable
rules and must be delivered to the Company's principal executive offices at
least 120 days prior to the anniversary date of mailing of this Proxy Statement.
This Proxy Statement was mailed on or about April 12, 1999, so the date by which
proposals are required to be received under Rule 14a-8 will be December 15,
1999.
In addition, the By-Laws of the Company provide that for business to be
properly brought before any annual meeting of stockholders by any stockholder or
for the nomination by a stockholder of a candidate for election to the Board of
Directors, the stockholder must give timely notice thereof in writing to the
Secretary of the Company not less than 60 days before the date of the annual
meeting; provided, however, that if an annual meeting of stockholders is to be
held on a date prior to the date for the annual meeting specified in the
By-Laws, and if less than 70 days' notice or prior public disclosure of the date
of such annual meeting is given or made, notice by the stockholder to be timely
must be so delivered or received not later than the close of business on the
10th day following the earlier of the date on which notice of the date of such
annual meeting was mailed or the day on which public disclosure was made of the
date of such annual meeting. If next year's annual meeting is held on the date
specified in the By-laws, the deadline for submission of notice will be March
12, 2000, and any proposal or nomination submitted after March 12, 2000 will be
untimely. The By-Laws contain a number of other substantive and procedural
requirements
15
which should be reviewed by any interested stockholder. Any proposals should be
mailed to: Secretary, DM Management Company, 25 Recreation Park Drive, Hingham,
Massachusetts 02043.
MISCELLANEOUS
The Board does not intend to present to the Annual Meeting any business
other than the proposals listed herein, and the Board was not aware, a
reasonable time before mailing this Proxy Statement to stockholders, of any
other business which may be properly presented for action at the Annual Meeting.
If any other business should come before the Annual Meeting, the persons present
will have discretionary authority to vote the shares they own or represent by
proxy in accordance with their judgment.
AVAILABLE INFORMATION
Stockholders of record on March 29, 1999 will receive a Proxy Statement and
the Company's 1998 Annual Report, which contains detailed financial information
concerning the Company. The Company will mail, without charge, a copy of the
Company's Annual Report on Form 10-K (excluding exhibits) to any stockholder
entitled to receive this Proxy Statement who requests it in writing. Please
submit any such written request to Olga L. Conley, Chief Financial Officer, DM
Management Company, 25 Recreation Park Drive, Hingham, Massachusetts 02043.
16
DM MANAGEMENT COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DM MANAGEMENT COMPANY
A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 1999
The undersigned stockholder of DM Management Company (the "Company"),
revoking all prior proxies, hereby appoints Gordon R. Cooke and Olga L.
Conley, or either of them acting singly, proxies, with full power of
substitution, to vote all shares of capital stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the offices of Foley, Hoag & Eliot, LLP, One Post Office Square, 16th
Floor, Boston, Massachusetts on Tuesday, May 25, 1999, beginning at 11:00
a.m. local time, and at any adjournments thereof, upon matters set forth in
the Notice of Annual Meeting dated April 8, 1999 and the related Proxy
Statement, copies of which have been received by the undersigned, and in
their discretion upon any other business that may properly come before the
meeting or any adjournment thereof. Attendance of the undersigned at the
meeting or any adjourned session thereof will not be deemed to revoke this
proxy unless the undersigned shall affirmatively indicate the intention to
vote the shares represented hereby in person prior to the exercise of this
proxy.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN WITH RESPECT TO ONE OR MORE OF THE PROPOSALS SET FORTH ON
THE REVERSE SIDE OF THIS CARD, WILL BE VOTED FOR SUCH PROPOSAL OR PROPOSALS.
- ------------------------------------------------------------------------------
/PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED /
/ ENVELOPE. /
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
/ Please sign exactly as your name(s) appear(s) on stock certificate. If /
/ stockholder is a corporation, please sign in full corporate name by /
/ president or other authorized officer, and, if a partnership, please /
/ sign full partnership name by an authorized person. /
- ------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- -------------------------------
- ------------------------------------- -------------------------------
- ------------------------------------- -------------------------------
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------------- FOR AGAINST ABSTAIN
DM MANAGEMENT COMPANY 1. To fix the number of directors that shall / / / / / /
- ------------------------------------------------- constitute the whole Board of Directors
of the Company at six.
Mark box at right if an address change or / /
comment has been noted on the reverse side
of this card.
2. To elect the following nominees as FOR ALL WITH- FOR ALL
Class C Directors of the Company. NOMINEES HOLD EXCEPT
RECORD DATE SHARES: GORDON R. COOKE / / / / / /
THOMAS J. LITLE
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME OF
THE NOMINEE. YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE.
FOR AGAINST ABSTAIN
3. To amend the Company's Certificate of / / / / / /
Incorporation to change the name of the
Company to "The J. Jill Group, Inc."
Please be sure to sign ------------------------
and date this Proxy. / DATE
- ---------------------------------------------------------
/ /
/ / Please promptly date and sign this proxy and mail it in the enclosed
/ / envelope to ensure representation of your shares. No postage need be
/ / affixed if mailing in the United States.
- ------Stockholder sign here------Co-owner sign here------
DETACH CARD DETACH CARD
DM MANAGEMENT COMPANY
Dear Stockholder,
Please take note of the important information enclosed with this Proxy
Ballot. There are a number of issues related to the management and operation
of your Company that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted, then sign the card, detach it and return it in the enclosed postage
paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held May 25, 1999.
Sincerely,
DM Management Company