SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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HAGGAR CORPORATION
(Name of Registrant as Specified in its Charter)
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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:
(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 Corp.
11511 Luna Road
Dallas, Texas 75234
January 26, 2004
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Haggar Corp. (the "Company") to be held on Thursday, March 11, 2004, at 2:00
p.m. (local time), in the Haggar Corp. Conference Center, 11511 Luna Road,
Dallas, Texas 75234. Please find enclosed a notice to stockholders, a Proxy
Statement describing the business to be transacted at the meeting, a proxy for
use in voting at the meeting and an annual report for the Company.
At the annual meeting, you will be asked (i) to elect three Class II
directors of the Company; (ii) to ratify the selection of
PricewaterhouseCoopers LLP as the independent accountants for the Company for
the fiscal year ending September 30, 2004; and (iii) to act upon such other
business as may properly come before the annual meeting or any adjournment(s)
or postponement(s) thereof.
We hope that you will be able to attend the annual meeting, and we urge
you to read the enclosed Proxy Statement before you decide to vote. Whether or
not you plan to attend, please complete, sign, date and return the enclosed
proxy as promptly as possible. It is important that your shares be represented
at the meeting.
Very truly yours,
/s/ J. M. HAGGAR, III
J. M. Haggar, III
Chairman and Chief Executive Officer
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YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the annual meeting in
person. However, to ensure your representation at the meeting, you are urged to
complete, sign, date and return, in the enclosed postage paid envelope, the
enclosed proxy as promptly as possible. Any stockholder attending the meeting
may vote in person even if he or she has returned a proxy.
Many of the Company's stockholders hold their shares in "street-name" in
the name of a brokerage firm or bank. If you hold your shares in "street-name,"
please note that only your brokerage firm or bank can sign a proxy on your
behalf, and only upon receipt of your specific instructions. The Board of
Directors urges you to contact the person responsible for your account today,
and instruct them to execute a proxy in favor of the proposals described in
this Proxy Statement.
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Haggar Corp.
11511 Luna Road
Dallas, Texas 75234
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 11, 2004
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To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Stockholders (the
"Annual Meeting") of Haggar Corp. (the "Company") will be held in the Haggar
Corp. Conference Center, 11511 Luna Road, Dallas, Texas 75234, on Thursday, the
11th day of March, 2004, at 2:00 p.m. (local time), for the following purposes:
1. To elect three Class II directors to serve until the expiration of
their terms and until their successors are duly elected and qualified
or until their earlier death, resignation or removal from office;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending September 30,
2004; and
3. To transact such other business as may properly come before the
meeting or any adjournment(s) or postponement(s) thereof.
Stockholders of record at the close of business on Tuesday, January 20,
2004 (the "Record Date"), are entitled to receive notice of, and to vote at,
the Annual Meeting and any adjournment(s) or postponement(s) thereof. Only
holders of record of the Company's common stock, par value $0.10 per share, at
the close of business on the Record Date are entitled to notice of, and to vote
at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting in person.
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.
By Order of the Board of Directors,
/s/ DAVID M. TEHLE
David M. Tehle
Secretary
Dated: January 26, 2004
Haggar Corp.
11511 Luna Road
Dallas, Texas 75234
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 11, 2004
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INTRODUCTION
This Proxy Statement is furnished to holders of common stock, par value
$0.10 per share ("Common Stock"), of Haggar Corp., a Nevada corporation (the
"Company"), in connection with the solicitation of the accompanying proxy on
behalf of the Board of Directors of the Company (the "Board") for use at the
2004 annual meeting of the Company's stockholders (the "Annual Meeting") and at
any adjournment(s) or postponement(s) thereof. The Annual Meeting will be held
in the Haggar Corp. Conference Center, 11511 Luna Road, Dallas, Texas, on
Thursday, March 11, 2004, at 2:00 p.m. (local time), for the purposes set forth
in the accompanying Notice of Annual Meeting of Stockholders (the "Notice").
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 the Board's
nominees as directors and in favor of the ratification of
PricewaterhouseCoopers LLP as the Company's independent accountants for fiscal
2004.
Many of the Company's stockholders hold their shares in "street-name" in
the name of a brokerage firm or bank. If you hold your shares in "street-name,"
please note that only your brokerage firm or bank can sign a proxy on your
behalf, and only upon receipt of your specific instructions. The Board urges
you to contact the person responsible for your account today, and instruct them
to execute a proxy in favor of the Board's nominees.
If you hold your shares in more than one type of account or if your shares
are registered differently, you may receive more than one proxy. Please sign
and return all proxies that you receive.
This Proxy Statement and the accompanying proxy are first being mailed to
stockholders on or about January 26, 2004.
REVOCABILITY OF PROXIES
If you attend the Annual Meeting, you may vote in person. If you are not
present at the Annual Meeting, your shares can be voted only if you have
returned a properly signed proxy or are represented by another proxy. 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 will 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 revoke the
proxy.
METHOD AND COSTS OF SOLICITATION
This solicitation of proxies is made by and on behalf of the Board and
will be conducted primarily by mail. In addition to the use of mail, the
directors and certain executive officers of the Company may solicit the return
of proxies by telephone, facsimile, other electronic media or through personal
contact. Such directors and executive officers will not be additionally
compensated but will be reimbursed for out-of-pocket expenses. The
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Company may also request, and reimburse the reasonable fees and expenses of,
banking institutions, brokerage firms, custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of Common Stock that
those companies hold of record. The costs of the solicitation, including
reimbursement of such forwarding expenses, will be paid by the Company.
The principal executive offices of the Company are located at 11511 Luna
Road, Dallas, Texas 75234. The Company's mailing address is the same as that of
its principal executive offices.
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 Tuesday,
January 20, 2004 (the "Record Date"). On the Record Date, there were 6,679,101
shares of Common Stock outstanding. Each share of Common Stock is entitled to
one vote on all matters to be acted upon at the Annual Meeting. The only
outstanding voting securities of the Company are shares of Common Stock. 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 Annual 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. To approve any other matter to be presented at the
Annual Meeting, the number of votes cast in favor of the matter must exceed the
number of votes cast in opposition to the matter.
If a quorum is not present at the Annual Meeting, the holders of a
majority of the Common Stock entitled to vote who are present or represented by
proxy at the Annual Meeting have the power to adjourn the Annual Meeting from
time to time without notice, other than an announcement at the Annual Meeting
of the time and place of the adjourned meeting, until a quorum is present. In
addition, under the Company's bylaws the chairman of the Annual Meeting has the
power to adjourn the Annual Meeting for any reason from time to time without
notice, other than an announcement at the Annual Meeting of the time and place
of the adjourned meeting, provided that a new record date is not set. At any
such adjourned meeting at which a quorum is present, any business may be
transacted that may have been transacted at the Annual Meeting.
Abstentions and broker non-votes will count in determining if a quorum is
present at the Annual Meeting. A broker non-vote occurs if a broker or other
nominee attending the meeting in person or submitting a proxy does not have
discretionary authority to vote on a particular item and has not received
voting instructions with respect to that item. Abstentions and broker non-votes
will have no effect on the election of directors and will not be counted as a
vote cast in favor of or in opposition to the ratification of the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants.
PROPOSAL ONE--ELECTION OF CLASS II DIRECTORS
The Board is divided into three classes presently consisting of two Class
I directors, three Class II directors and three Class III directors. The term
of office of the Class II directors expires at the Annual Meeting. The Board
has proposed J.M. Haggar, III, Richard W. Heath and James Neal Thomas as
nominees for election at the Annual Meeting as the three Class II directors. If
elected, the nominees will serve for three-year terms and until their
successors are duly elected and qualified or until their earlier death,
resignation or removal from office. Set forth below is certain information
concerning the nominees:
Name of Nominee Age
--------------- ---
J.M. Haggar, III ..................... 52
Richard W. Heath ..................... 62
James Neal Thomas .................... 58
J.M. Haggar, III has served as Chairman of the Board since 1994 and Chief
Executive Officer of the Company since 1990. He has been a director of the
Company since 1983. He also served as President of the Company from 1990 to
1994 and as President of the Menswear Division from 1985 to 1990. Mr. Haggar
joined the Company on a part-time basis in 1969 and on a full-time basis in
1973. During the course of his career with the Company, Mr. Haggar has
participated in virtually every aspect of the business, including three years
in the
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Manufacturing Division, two years as the Dallas Service Center Manager, one
year in the Sales Division and six years in the Marketing and Merchandising
Division.
Richard W. Heath has served as a director of the Company since 1991. Mr.
Heath served as the President and Chief Executive Officer of BeautiControl
Cosmetics, Inc., a direct seller of cosmetic, nutritional and skin care
products, from 1981 to January 2003. In 2000, Mr. Heath also served as Senior
Vice President of Beauty and Nutritional Products for Tupperware Corporation in
connection with Tupperware's acquisition of BeautiControl. From September 2002
to January 2003, Mr. Heath also served as Group President Tupperware Latin
America and BeautiControl. He has over 30 years of experience in the direct
sales industry. Mr. Heath currently serves as a lifetime member of the Board of
Directors of The Episcopal School of Dallas. Mr. Heath has formerly served as a
member of The Dallas Methodist Hospitals Foundation Board of Trustees, a member
of the Executive Board of the Edwin L. Cox School of Business at Southern
Methodist University, a member of the Dallas County Advisory Board of the
Salvation Army, Vice Chairman of the Board of Directors of The Episcopal School
of Dallas, Commissioner of the Texas Parks and Wildlife Commission, a member of
the Harvard University Divinity School Dean's Council and a member of the
National Advisory Council for the Center for the Study of Values in Public
Life.
James Neal Thomas has served as a director of the Company since 2003. He
served as a Senior Audit Partner with Ernst & Young, an independent, public
accounting firm, prior to his retirement in 2000 after 32 years with Ernst &
Young. As a Senior Audit Partner, Mr. Thomas worked extensively with audit
committees of the boards of directors of public companies on matters of
corporate governance and audit committee responsibilities and duties.
Representative clients of Mr. Thomas included Wal-Mart Stores, Inc., Comp USA,
The Williams Companies, Inc., Pioneer Natural Resources Company, Williams
Telecommunications Corp. and Tyson Foods, Inc.
Required Vote and Recommendation
A plurality of the votes cast at the Annual Meeting is required to elect
each nominee. Accordingly, abstentions and broker non-votes will have no effect
on the election of directors. Shares represented by proxies will be voted for
the election of the nominees named above unless authority to do so is withheld.
The Board has no reason to believe that any nominee will be unable or unwilling
to serve if elected. If any nominee should be unable to serve, shares
represented by proxies may be voted for a substitute nominee recommended by the
Board.
The Board recommends that you vote "FOR" each of the Board's nominees.
PROPOSAL TWO--RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board has selected PricewaterhouseCoopers LLP
as the independent accountants to audit the consolidated financial statements
of the Company for the fiscal year ending September 30, 2004. The Board has
determined that it would be desirable to request that the stockholders ratify
such selection. PricewaterhouseCoopers LLP served as the Company's independent
accountants for the fiscal year ended September 30, 2003, and has reported on
the Company's consolidated financial statements for that year. Representatives
of PricewaterhouseCoopers 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 Audit Committee has the responsibility for selecting the Company's
independent 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 Audit Committee
will take into consideration in future deliberations. If the selection of
PricewaterhouseCoopers LLP is not ratified at the Annual Meeting, the Audit
Committee will consider the engagement of other independent accountants. The
Audit Committee may terminate the engagement of PricewaterhouseCoopers LLP as
the Company's independent accountants without the approval of the Company's
stockholders whenever the Audit Committee deems termination necessary or
appropriate.
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Required Vote and Recommendation
Ratification of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending September 30, 2004, requires that the
number of votes cast in favor of the ratification exceed the number of votes
cast in opposition to the ratification. Absentions and broker non-votes will
not be counted as votes cast in favor of or in opposition to the ratification
of PricewaterhouseCoopers LLP. Shares represented by proxies will be voted for
the ratification of PricewaterhouseCoopers LLP as the Company's independent
accountants for the fiscal year ending September 30, 2004, unless authority to
do so is withheld.
The Board recommends a vote "FOR" the ratification of the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending September 30, 2004.
DIRECTORS
Set forth below is certain information concerning the directors of the
Company. Biographical information on Messrs. Haggar, Heath and Thomas is set
forth previously in this Proxy Statement. See "Proposal One--Election of Class
II Directors."
Director's
Term
Name of Director Age Title Ending
- ---------------- --- ----- ----------
J.M. Haggar, III ...... 52 Chairman of the Board, Chief Executive 2004
Officer and Class II Director
Frank D. Bracken ...... 63 President, Chief Operating Officer and 2005
Class III Director
Rae F. Evans .......... 55 Class I Director 2006
Donald E. Godwin ...... 56 Class I Director 2006
Richard W. Heath ...... 62 Class II Director 2004
Thomas G. Kahn ........ 61 Class III Director 2005
James Neal Thomas ..... 58 Class II Director 2004
John C. Tolleson ...... 55 Class III Director 2005
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.
Rae F. Evans has served as a director of the Company since 1994. Since
January 1, 2003, she has served as President and Chief Executive Officer of
Evans Capitol Group, a firm specializing in Washington public policy and
corporate strategies. Ms. Evans formerly served as President of Evans & Black,
Inc., beginning in 1999, and, prior to that time, as the President of Rae Evans
& Associates, beginning in 1995, both of which are predecessors of Evans
Capitol Group. Ms. Evans, prior to establishing her firm, held senior
government relations positions at both Hallmark Cards, Inc. and CBS Inc. She is
a past President of the Business-Government Relations Council, a business group
of senior government affairs representatives of Fortune 500 companies. Ms.
Evans is a member of the Board of Directors of the Ladies Professional Golf
Association.
Donald E. Godwin has served as a director of the Company since May 2002.
He is the Chairman and Chief Executive Officer of Godwin Gruber, LLP, a
Dallas-based law firm founded by Mr. Godwin and others in 1980. Mr. Godwin is
board certified by the Texas Board of Legal Specialization in Civil Trial Law
and is a member of the American Board of Trial Advocates. He is also a Master
Member of the William "Mac" Taylor, Jr. American Inn of Court, outside counsel
to the Dallas Symphony Association and the Episcopal School of Dallas, a member
of the Dallas Opera Board of Trustees and a member of the Executive Board of
the SMU Dedman School of Law. Mr. Godwin is a past chairman of the Antitrust
and Trade Regulation Section of the Dallas Bar Association.
Thomas G. Kahn has served as a director of the Company since 2003. Mr.
Kahn was elected to the Board in connection with the settlement of a proxy
contest. He has served as President of Kahn Brothers & Co., Inc.
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since 1995. Kahn Brothers conducts a registered brokerage business and
registered investment advisory business with assets under management of
approximately $700 million. Kahn Brothers has been a New York Stock Exchange
Member Firm since 1978. Mr. Kahn is a member of the New York Society of
Security Analysts and a Chartered Financial Analyst. He serves as a director of
Warwick Community Bancorp, a bank holding company, and the Jewish Braille
Institute of America, and as director and treasurer of both the New York City
Job and Career Center and the Jewish Guild for the Blind.
John C. Tolleson has served as a director of the Company since 1998. Since
1997, he has been the Chairman of The Tolleson Group and Managing Director of
Arena Capital Partners, both private investment firms. Mr. Tolleson founded
First USA, Inc. in 1985 and served as its Chairman and Chief Executive Officer
until its merger with Banc One Corporation in 1997. Mr. Tolleson is also a
member of the Board of Trustees of Southern Methodist University and
Southwestern Medical Foundation. In addition, he is a member of the Edwin L.
Cox School of Business Executive Board and the Dallas County Advisory Board of
the Salvation Army and is a member of the boards of directors of The Willis M.
Tate Distinguished Lecture Series and SMU's John Godwin Tower Center for
Political Studies.
Corporate Governance; Board Committees; and Meetings
The Board has determined that each of Messrs. Heath, Kahn, Thomas and
Tolleson and Ms. Evans meet the current independence requirements of the Nasdaq
Stock Market, Inc. Standing committees of the Board include the Executive
Committee, Audit Committee, Compensation Committee and Nominating & Governance
Committee.
The Executive Committee is composed of Messrs. Heath (chairman), Haggar
and Tolleson. Pursuant to the Company's bylaws, between meetings of the Board
the Executive Committee has the full power and authority of the Board in the
management of the business and affairs of the Company, except to the extent
limited by Nevada law. The Executive Committee did not meet during fiscal 2003.
The Audit Committee is composed of Messrs. Thomas (chairman), Heath, Kahn
and Tolleson. The role and other responsibilities of the Audit Committee are
set forth in the charter of the Audit Committee. In January 2004, the Board
approved the amendment and restatement of the Audit Committee Charter to read
as set forth in Appendix A attached to this Proxy Statement. A current copy of
the Audit Committee's charter is also available to stockholders on the
Company's website, www.haggar.com. The Audit Committee reviews and reassesses
the adequacy of its charter annually and recommends any proposed changes to the
Board for approval. The purposes of the Audit Committee are:
o to oversee the quality and integrity of the financial statements and
other financial information the Company provides to any governmental
body or the public;
o to oversee the independent accountants' qualifications and
independence;
o to oversee the performance of the Company's internal auditors;
o to oversee the performance of the Company's independent accountants;
o to oversee the Company's accounting and financial reporting processes
and the audits of the Company's financial statements;
o to oversee the Company's systems of internal controls regarding
finance, accounting, and ethics compliance that management and the
Board have established;
o to establish procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls, and other auditing
matters and for the confidential, anonymous submission by Company
employees of concerns regarding questionable accounting or auditing
matters;
o to provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board, always emphasizing that the independent
accountants are accountable to the Audit Committee; and
o to perform such other duties as are directed by the Board.
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The Board has determined that each of Messrs. Thomas, Heath, Kahn and Tolleson
meet the current independence and experience requirements of the Nasdaq Stock
Market, Inc. and applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"). The Board has determined that Mr. Thomas
satisfies the requirements for an "audit committee financial expert" and has
designated Mr. Thomas as the Company's audit committee financial expert. The
Audit Committee held five meetings during fiscal 2003. Various matters were
also approved during fiscal 2003 by unanimous written consent of the Audit
Committee.
The Compensation Committee is composed of Mr. Heath (chairman) and Ms.
Evans. The Board has determined that each of Mr. Heath and Ms. Evans meet the
current independence requirements of the Nasdaq Stock Market, Inc. and
applicable rules and regulations of the SEC. The purposes of the Compensation
Committee are:
o to review, evaluate, and approve the agreements, plans, policies and
programs of the Company to compensate the officers and directors of
the Company;
o to otherwise discharge the Board's responsibilities relating to
compensation of the Company's officers and directors; and
o to perform such other functions as the Board may assign to the
Compensation Committee from time to time.
The Compensation Committee also administers the Haggar Corp. Supplemental
Executive Retirement Plan (the "SERP"), the Company's 1992 Long-Term Incentive
Plan, which terminated on October 21, 2002 (the "1992 LTIP"), and the Company's
2003 Long-Term Incentive Plan (the "2003 LTIP"). The Compensation Committee
held three meetings during fiscal 2003. Various matters were also approved
during fiscal 2003 by unanimous written consent of the Compensation Committee.
The Nominating & Governance Committee (the "Nominating Committee") is
composed of Messrs. Tolleson (chairman) and Heath. The Board has determined
that Messrs. Tolleson and Heath meet the current independence requirements of
the Nasdaq Stock Market, Inc. and applicable rules and regulations of the SEC.
The purposes of the Nominating Committee are:
o to assist the Board by identifying individuals qualified to become
Board members, and to select, or recommend that the Board select, the
director nominees for election at the annual meetings of stockholders
or for appointment to fill vacancies;
o to recommend to the Board director nominees for each committee of the
Board;
o to advise the Board about the appropriate composition of the Board and
its committees;
o to advise the Board about and recommend to the Board appropriate
corporate governance practices and to assist the Board in implementing
those practices;
o to lead the Board in its annual review of the performance of the Board
and its committees;
o to assist the Board by developing a CEO succession plan; and
o to perform such other functions as the Board may assign to the
Nominating Committee from time to time.
In January 2004, the Board approved the amendment and restatement of the
Nominating & Governance Committee Charter to read as set forth in Appendix B
attached to this Proxy Statement. A current copy of the Nominating Committee's
charter is also available to stockholders on the Company's website,
www.haggar.com.
The Nominating Committee held seven meetings during fiscal 2003. Various
matters were also approved during fiscal 2003 by unanimous written consent of
the Nominating Committee.
The Board held eighteen meetings during fiscal 2003. Each director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board held during the period in which he/she was a director and (ii) the
total number of meetings held by all committees of the Board on which such
director served during the period that he/she served. Various matters were also
approved during fiscal 2003 by unanimous written consent of the Board.
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The Company encourages all incumbent directors and director nominees to
attend each annual meeting of stockholders. All incumbent directors and
director nominees attended the Company's last annual meeting of stockholders
held on April 2, 2003.
Although the Company has not to date developed formal processes by which
stockholders may communicate directly with directors, it believes that the
informal process, in which any communication sent to the Board either generally
or in care of the Chief Executive Officer, corporate Secretary, or another
corporate officer is forwarded to all members of the Board, has served the
Board's and the Company's stockholders' needs. There is no screening process,
and all stockholder communications that are received by officers for the
Board's attention are forwarded to the Board. In view of recently adopted SEC
disclosure requirements related to this issue, the Nominating Committee may
consider development of more specific procedures. Until any other procedures
are developed and posted on the Company's corporate website, any communication
to the Board should be mailed to the Board, in care of the Company's corporate
Secretary, at the Company's headquarters in Dallas, Texas. The mailing envelope
must contain a clear notation indicating that the enclosed letter is a
"Stockholder-Board Communication" or "Stockholder-Director Communication." All
such letters must identify the author as a stockholder and clearly state
whether the intended recipients are all members of the Board or just certain
specified individual directors. The Secretary will make copies of all such
letters and circulate them to the appropriate director or directors.
Nominating Procedures
As described above, the Company has a standing nominating committee. The
Nominating Committee's charter is attached to this Proxy Statement as Appendix
B and is also posted on the Company's website, www.haggar.com.
The Nominating Committee considers many factors when considering
candidates for the Board and strives for the Board to be comprised of directors
with a variety of experience and backgrounds who have high-level managerial
experience in a complex organization and who represent the balanced interest of
stockholders as a whole rather than those of special interest groups. Other
important factors in Board composition include diversity, skill, specialized
expertise, level of education and/or business experience, broad-based business
acumen, and experience and understanding of strategy and policy-setting.
Depending upon the current needs of the Board, certain factors may be weighed
more or less heavily by the Nominating Committee.
In considering candidates for the Board, the Nominating Committee
considers the entirety of each candidate's credentials and does not have any
specific minimum qualifications that must be met by a Nominating Committee
recommended nominee. However, the Nominating Committee does believe that all
members of the Board should have the highest character and integrity; a
reputation for working constructively with others; sufficient time to devote to
Board matters; and no conflict of interest that would interfere with
performance as a director.
The Nominating Committee considers candidates for the Board from any
reasonable source, including stockholder recommendations. The Nominating
Committee does not evaluate candidates differently based on who has made the
proposal. The Nominating Committee has the authority under its charter to hire
and pay a fee to consultants or search firms to assist in the process of
identifying and evaluating candidates. No such consultants or search firms have
been used to date and, accordingly, no fees have been paid to consultants or
search firms in the past fiscal year.
Stockholders may recommend candidates for consideration by the Nominating
Committee by writing to the Company's corporate Secretary at the Company's
headquarters in Dallas, Texas, giving the candidate's name, contact
information, biographical data and qualifications. A written statement from the
candidate consenting to be named as a candidate and, if nominated and elected,
to serve as a director should accompany any such recommendation. Stockholders
who wish to nominate a director for election at an annual meeting of the
stockholders of the Company must comply with the Company's bylaws regarding
stockholder proposals and nominations. See "Stockholder Proposals for Next
Annual Meeting" contained herein.
7
Director Compensation
Non-employee directors receive $25,000 annually, plus $1,000 for each Board
meeting or committee meeting attended. In addition, each committee chair
receives $2,500 annually except for the Audit Committee chair who receives
$5,000 annually. Upon election to the Board, each non-employee director will
receive 3,000 shares of restricted stock from the 2003 LTIP. In non-election
years, the non-employee directors will receive 3,000 stock options from the 2003
LTIP. Both the 2003 LTIP restricted shares and stock options have a three year
vesting period. Directors who are also employees of the Company receive no
additional compensation for their service on the Board and its committees.
Term of Office
The Company's articles of incorporation provide that the Board must be
divided into three classes, designated Class I, Class II and Class III.
Directors serve for staggered terms of three years each. Mr. Godwin and Ms.
Evans currently serve as Class I directors, whose terms expire at the annual
meeting of stockholders in 2006. Messrs. Haggar, Heath and Thomas currently
serve as Class II directors, whose terms expire at the Annual Meeting, and
Messrs. Bracken, Kahn and Tolleson currently serve as Class III directors,
whose terms expire at the annual meeting of stockholders in 2005.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers of
the Company:
Name Age Title
- ---- --- -----
J. M. Haggar, III ..... 52 Chairman of the Board, Chief Executive Officer and Class II Director
Frank D. Bracken ...... 63 President, Chief Operating Officer and Class III Director
David M. Tehle ........ 47 Executive Vice President and Chief Financial Officer
Alan C. Burks ......... 49 Executive Vice President and Chief Marketing Officer
David G. Roy .......... 49 Executive Vice President of Operations
The executive officers named above were elected by the Board to serve in
such capacities until their respective successors have been duly elected and
qualified, or until their earlier death, resignation or removal from office.
Biographical information on Messrs. Haggar and Bracken is set forth previously
in this Proxy Statement. See "Proposal One--Election of Class II Directors" and
"Directors."
David M. Tehle has served the Company as Executive Vice President since
2000 and Chief Financial Officer since joining the Company in 1997. Prior to
joining the Company, Mr. Tehle served as Vice President of Finance for a
division of The Stanley Works, an international tool manufacturer, 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 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.
Alan C. Burks has served the Company as Executive Vice President and Chief
Marketing Officer since 2000. He had previously served as Senior Vice President
of Marketing since joining the Company in 1993. Prior to joining the Company,
Mr. Burks had a distinguished career in the advertising industry where he
worked for agencies such as Ogilvy and DDB Needham beginning in 1976. His
account management experience included Frito-Lay, the Ben Hogan Company, Dial
Corp. and the Company.
David G. Roy has served the Company since 1996 in various positions,
including Vice President of Technical Services and Senior Vice President of
Operations. In 2000, Mr. Roy was promoted to Executive Vice President of
Operations for the Company. Prior to joining the Company, Mr. Roy spent twenty
years at VF Corporation, an international apparel manufacturer. He held
leadership positions throughout VF's Manufacturing, Distribution and
Engineering Departments for Wrangler, Jantzen and Red Kap, where he served as
Vice President until 1996.
8
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information for the fiscal years
ended September 30, 2003, 2002 and 2001 concerning compensation of the
Company's chief executive officer and each of the other four most highly
compensated executive officers of the Company whose total annual salary and
bonus exceeded $100,000 for services rendered to the Company during fiscal
2003.
Annual Compensation Long-Term Compensation
------------------------------------ ----------------------
Other Annual
Fiscal Salary Bonus Compensation All Other Compensation
Name and Principal Position Year ($) ($)(1) ($)(2) ($)(3)
- --------------------------- ------ ------- ------- ------------ ----------------------
J.M. Haggar, III ...................... 2003 675,000 706,308 74,985 6,217
Chairman and Chief Executive Officer 2002 640,000 503,166 69,440 5,773
2001 640,000 330,544 69,161 5,519
Frank D. Bracken ...................... 2003 570,000 503,166 63,225 6,217
President and Chief Operating Officer 2002 540,000 439,272 63,681 5,773
2001 540,000 288,570 59,501 5,750
David M. Tehle ........................ 2003 281,000 202,341 27,245 6,217
Executive Vice President and Chief 2002 270,000 175,709 35,541 5,773
Financial Officer 2001 270,000 165,064 22,541 5,750
Alan C. Burks ......................... 2003 344,000 202,341 -- 6,217
Executive Vice President and Chief 2002 330,000 175,709 -- 5,773
Marketing Officer 2001 330,000 175,713 -- 5,750
David G. Roy .......................... 2003 250,000 181,338 19,685 5,575
Executive Vice President of Operations 2002 220,000 111,815 28,924 4,119
2001 220,000 138,971 15,401 4,546
- ------------
(1) Reflects the annual bonus earned during the fiscal year, as described in
the Compensation Committee Report on Executive Compensation contained
herein. In each case, the bonus was approved and paid during the following
fiscal year.
(2) Represents tax reimbursements for the fiscal year pursuant to the Haggar
Clothing Co. Bonus Savings Plan (the "Deferred Annuity Plan").
(3) Consists of the following:
(a) profit sharing contributions by the Company under the Haggar Clothing
Co. Profit Sharing and Savings Plan (the "401(k) Plan") for each of
Messrs. Haggar, Bracken, Tehle, Burks and Roy of $717, $673 and $650
for fiscal 2003, 2002 and 2001, respectively; and
(b) matching contributions by the Company under its 401(k) Plan of (i)
$5,500, $5,100 and $4,869 in fiscal 2003, 2002 and 2001, respectively,
for Mr. Haggar, (ii) $5,500, $5,100 and $5,100 in fiscal 2003, 2002
and 2001, respectively, for each of Messrs. Bracken, Tehle and Burks,
and (iii) $4,858, $3,446 and $3,896 in fiscal 2003, 2002 and 2001,
respectively, for Mr. Roy.
Option Grants in Last Fiscal Year
No stock option grants were made to the executive officers during fiscal
2003.
9
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides summary information with respect to stock
options held by the named executive officers as of September 30, 2003. The
value of the unexercised in-the-money-options is based on the price per share
of Common Stock of $15.45 as reported on the Nasdaq National Market at the
close of business on September 30, 2003, less the exercise price payable for
the shares.
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
September 30, 2003 (#) September 30, 2003 ($)
--------------------------- ---------------------------
Shares Acquired Value Realized
on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
--------------- -------------- ----------- ------------- ----------- -------------
J. M. Haggar, III ......... -- -- 229,093 -- 749,289 --
Frank D. Bracken .......... -- -- 220,002 -- 531,504 --
David M. Tehle ............ -- -- 40,000 -- 153,000 --
Alan C. Burks ............. 27,000 84,780 41,272 -- 41,480 --
David G. Roy .............. -- -- 37,000 -- 139,650 --
Equity Compensation Plan Information
The following table provides information as of September 30, 2003, about
common stock that may be issued upon the exercise of options under the
Company's 1992 LTIP and options, restricted shares and rights, either with or
without accompanying options, under the 2003 LTIP:
(c) Number of
Securities
Remaining
(a) Number of Available for
Securities to be (b) Weighted Future Issuance
Issued Upon Average Under Equity
Exercise of Exercise Price Compensation (d) Total of
Outstanding of Outstanding Plans (Excluding Securities Reflected
Options, Warrants Options, Warrants Securities Reflected in Columns
Plan Category and Rights and Rights(1) in Column (a)) (a) and (c)
- ------------- ----------------- ----------------- -------------------- --------------------
Equity Compensation Plans
Approved by Stockholders ............ 1,118,141(2) $ 12.51 575,000(4) 1,693,141
Equity Compensation Plans Not
Approved by Stockholders(3) ......... 59,488 $ 12.51 -- 59,488
----------- ------- --------- ---------
Total ................................ 1,177,629 $ 12.51 575,000 1,752,629
----------- ------- --------- ---------
- ------------
(1) These amounts represent the weighted average exercise price for the total
number of outstanding options.
(2) Issued under the 1992 LTIP.
(3) Securities included in this category are attributable solely to certain
increases in the number of shares of Common Stock authorized and reserved
for issuance under the 1992 LTIP that were not approved by the Company's
stockholders.
(4) On May 1, 2003, the Company adopted a new stockholder approved long-term
incentive plan, the 2003 LTIP, which authorizes the Company to issue up to
575,000 additional shares in connection with options granted to directors,
officers or employees of the Company. The 1992 LTIP expired on October 21,
2002. As a result, no securities are available for issuance under the 1992
LTIP.
10
Executive Employment Agreements
During fiscal 2001, the Company entered into an Executive Employment
Agreement with each of the executive officers. Each Executive Employment
Agreement became effective as of August 30, 2001. The Executive Employment
Agreements with Messrs. Haggar and Bracken provide for a three year term which
is automatically extended for an additional year on each anniversary of the
agreements such that the remaining term of each agreement as of August 30th of
each year is three years, unless thirty days prior written notice is given by
either party in advance of any one-year anniversary. The Executive Employment
Agreements with Messrs. Burks, Roy, and Tehle provide for a two year term which
is automatically extended for an additional year on each anniversary of the
agreements such that the remaining term of each agreement as of August 30th of
each year is two years, unless thirty days prior written notice is given by
either party in advance of any one-year anniversary.
Each Executive Employment Agreement provides that the initial base salary
for the executive is subject to increase during the term of the employment
agreement in the sole discretion of the Company in light of the executive's
performance, inflation, cost of living and other factors deemed relevant by the
Company. Each agreement also provides for bonus, car allowance and other
benefits available generally to other executives, as well as for the
reimbursement of certain expenses. Each agreement includes covenants of the
executive to maintain the confidentiality of Company information at all times,
not to solicit the employees or customers of the Company for two years
following termination of employment and not to compete with the Company during
the term of employment and for a specified period thereafter. In each case, the
post-employment period during which the executive may not compete with the
Company is either (a) the unexpired term of his employment contract, if the
executive has been terminated by the Company other than for cause, or (b) one
year, if a change of control termination has occurred or his employment has
terminated for any other reason.
Under each Executive Employment Agreement, if the executive is terminated
by the Company other than for cause he will be entitled to continue to receive
his base salary for the unexpired term of his employment contract, subject to
reduction for any other severance payments received from the Company and any
compensation received from a third party. However, the executive's right to
receive such salary continuation ceases in the event that he violates any of
his covenants of confidentiality, non-solicitation or non-competition. In the
event the executive is terminated by the Company other than for cause or
voluntarily resigns for good reason within 24 months following a change of
control, then the executive will be entitled to receive, in lieu of the salary
continuation otherwise provided, (i) a lump sum severance payment equal to 2.99
times the executive's "base amount" (as defined in Section 280G of the Internal
Revenue Code), (ii) full vesting of all stock options, restricted stock grants,
profit sharing awards and other benefits or incentive awards that are otherwise
subject to vesting schedules, (iii) continued benefits for himself and his
family for one year after such termination at least equal to those provided
under the Company's health and welfare benefit plans prior to the change of
control, plus (iv) an amount equal to the excise tax, interest or penalties
imposed on such severance payments or benefits under Section 4999 of the
Internal Revenue Code, if any.
Long-Term Incentive Plans
In order to attract and retain key executive and managerial employees, as
well as qualified individuals to serve as members of the Company's Board, and
to encourage equity ownership by management and further align management's
interest with that of the Company's other stockholders, in 1992 the Board
adopted the 1992 LTIP. On October 21, 2002, the 1992 LTIP terminated according
to its terms and no further options can be issued under such plan. The
Compensation Committee continues to oversee, administer and interpret all
outstanding options previously granted under the 1992 LTIP.
Stock options granted by the Compensation Committee under the 1992 LTIP
have option exercise prices not less than the fair market value of the
Company's Common Stock on the date of the grant. Because the exercise price of
these options is at least equal to the fair market value of the Company's
Common Stock on the date of grant, the options have value only if the stock
price appreciates from the value on the date the options were granted. This
design is intended to focus executives on the enhancement of stockholder value
over the long-term and to encourage equity ownership in the Company. In
addition, the 1992 LTIP provided that while the
11
Compensation Committee determined the vesting schedule of all options granted
under the 1992 LTIP, no option was exercisable more than ten years from the
date of grant. As of the Record Date, 864,169 shares of the Company's Common
Stock were issuable pursuant to outstanding awards under the 1992 LTIP.
On May 1, 2003, the Company adopted a new stockholder approved long-term
incentive plan, the 2003 LTIP, to replace the expired 1992 LTIP. The 2003 LTIP
authorizes the Company to issue up to 575,000 additional shares in connection
with options, restricted shares and rights, either with or without accompanying
options, for directors, officers or employees of the Company. The terms of
awards under the 2003 LTIP are similar to the terms of awards under the 1992
LTIP. No awards had been granted under the 2003 LTIP as of the Record Date.
Employee Stock Purchase Plan
The Company maintains an Employee Stock Purchase Plan through which
eligible employees may make payroll deductions that are used to purchase Common
Stock. The stock is purchased on the open market, and individual accounts are
maintained for each participant. The Company pays the fees associated with
stock purchases made through payroll deductions, but participants pay the fees
for stock sales. Dividends paid on the stock are reinvested in Common Stock.
Participants do not acquire Common Stock at a price that is less than its fair
market value.
Supplemental Executive Retirement Plan
The Company established the SERP in order to provide supplemental
retirement benefits and pre-retirement death benefits to select executive
officers. At normal retirement age, as defined under individual participation
agreements between eligible executives and the Company, each participant is
entitled to a life annuity benefit (if married, a joint and 50% survivor
annuity) equal to 65% of the participant's average total compensation (base
salary plus bonus) during the three fiscal years prior to termination, reduced
by one-third of the annuitized value of the participant's accumulated account
balance under the Deferred Annuity Plan. The benefits payable under the SERP
are subject to a vesting schedule. A participant becomes 50% vested in his
benefit five years prior to attaining normal retirement age, and continues to
vest in annual increments of 10% to become 100% vested at normal retirement
age. Upon a change of control, as defined in the SERP, a participant becomes
100% vested in his SERP benefit. If a participant dies before retirement, his
surviving spouse or other beneficiary is entitled to receive a death benefit
equal to $400,000 per year payable annually for 10 years. A participant whose
employment was terminated, or his beneficiary, may elect, subject to approval
by the Compensation Committee or as a matter of right at any time following one
year after a change of control, to receive the actuarial present value of the
benefit under the SERP in a single lump-sum payment, reduced by 10%.
The SERP is an unfunded compensation arrangement that is not subject to
the annual reporting and disclosure requirements of the Employee Retirement
Income Security Act of 1974. The Company has established a trust to pay
benefits under the SERP to which the Company is contributing cash to purchase
variable life insurance policies insuring each participant. The Company
contributed $261,000 and $679,500, respectively, to the trust for the payment
of 2003 premiums on variable life policies insuring Messrs. Haggar and Bracken,
respectively. There are presently no other participants in the SERP.
The normal retirement age for Mr. Haggar under his participation agreement
is 60, and the normal retirement age for Mr. Bracken under his participation
agreement is 65. The Company estimates that Mr. Haggar will be entitled to an
annual SERP benefit equal to approximately $790,000 at age 60, and Mr. Bracken
will be entitled to an annual SERP benefit equal to approximately $600,000 at
age 65. These estimates assume that 65% of the amount of the average base
salary plus bonus for each of Messrs. Haggar and Bracken during the three years
prior to his retirement is approximately $900,000 and $660,000, respectively,
and that one-third of the annuitized value of the participant's accumulated
account balance under the Deferred Annuity Plan for each of Messrs. Haggar and
Bracken at that time is approximately $110,000 and $60,000, respectively.
12
Split-Dollar Insurance Plan
The Company established the Haggar Corp. Split-Dollar Insurance Plan (the
"Split-Dollar Plan") to recognize the valued service of certain highly
compensated employees and officers of the Company. Under the Split-Dollar Plan,
the Company pays the premiums due on employee life insurance policies as an
additional employment benefit for such employees. However, such employees
reimburse the Company for the cost of the term portion of the premiums for this
insurance. Eligible employees who wish to participate in the Split-Dollar Plan
must enter into a split-dollar insurance agreement with the Company. Pursuant
to the split-dollar insurance agreements, the Company will be repaid for the
premiums it has paid, either out of the death benefit or the cash surrender
value of the policy. In order to secure the repayment to the Company of the
premiums paid, the owner of the insurance policy must assign the insurance
policy to the Company as collateral. In addition, the owner of the insurance
policy is prohibited from taking any actions which may jeopardize the Company's
right to be repaid the amounts it has paid toward premiums on the policy.
Except following a change of control, the Company has the sole right to
surrender the insurance policy and enforce its right to be repaid the amount of
the premiums paid on the policy from the cash surrender value of the policy
under the collateral assignment of the policy.
In fiscal 1999 and fiscal 2000, the Company entered into split-dollar life
insurance agreements with separate trusts established by each of Messrs.
Bracken and Haggar. Pursuant to these agreements, the Company is entitled to
the cumulative premiums it has paid on the policies less the Company's interest
in policy loans and related accrued interest on any policy loans. No policy
loans have been made to the Company under these policies. The beneficiaries of
the trusts established by Messrs. Haggar and Bracken are entitled to $5,620,500
and $1,075,500, respectively, reduced by the amount of the premiums paid by the
Company. The policies provide for annual premiums for Mr. Bracken and Mr.
Haggar of $75,500 (payable for five years) and $62,500 (payable for 17 years),
respectively. However, in light of changes in applicable law, the Company is no
longer paying the premiums related to these policies. During fiscal 2003, no
premiums were paid under these or any other split-dollar policies. As of the
end of fiscal 2003, the cumulative premiums paid by the Company on each policy
exceeded the total cash surrender value of each policy.
In December 2003, the Company restructured the split-dollar policies
described above. The Company no longer pays the premiums for the split-dollar
policies. The eligible employees have assumed responsibility for all premiums
under their respective split-dollar policy. The Company was repaid the cash
surrender values of the split-dollar policies which approximated the cumulative
premiums paid.
Deferred Annuity Plan
The Deferred Annuity Plan permits all full-time employees, including
officers, who are "highly compensated employees" under Internal Revenue Code
section 414(q) ($90,000 for 2003), to make voluntary contributions of current
compensation which cannot be contributed to the Company's 401(k) Plan to an
individually owned annuity. The maximum amount that any participant in the
Deferred Annuity Plan may contribute is established annually by the Board. The
Board may elect to pay an additional cash bonus to participants in the Deferred
Annuity Plan for the purpose of compensating such participants for federal
income taxes owed on the amounts contributed under the plan as well as on any
bonus. The Board awarded such bonuses to the executive officers in fiscal 2003
as set forth in the Summary Compensation Table above.
CHANGE IN INDEPENDENT ACCOUNTANTS
On April 1, 2002, the Audit Committee appointed PricewaterhouseCoopers LLP
as the Company's independent public accountants for the fiscal year ending
September 30, 2002, dismissing Arthur Andersen LLP, the independent accountants
previously engaged to audit the Company's financial statements. The decision to
change independent accountants was made by the Audit Committee.
The reports of Arthur Andersen on the Company's financial statements for
the fiscal year ended September 30, 2001, contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle. In addition, in connection with the
Company's audits for the fiscal year ended September 30, 2001, and through
April 1, 2002, there were no disagreements with Arthur
13
Andersen on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Arthur Andersen would have caused them to make
reference thereto in connection with their report on the financial statements
for such years. Furthermore, during fiscal 2001 and through April 1, 2002,
there were no reportable events, as defined in Regulation S-K Item
304(a)(1)(v).
During fiscal 2001 and through April 1, 2002, the Company did not consult
with PricewaterhouseCoopers LLP regarding (i) either: the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company's financial
statements, and neither a written report nor oral advice was provided to the
Company that PricewaterhouseCoopers LLP concluded was an important factor
considered by the Company in reaching a decision as to the accounting, auditing
or financial reporting issue; or (ii) any matter that was either the subject of
a disagreement with Arthur Andersen, as that term is defined in Regulation S-K
Item 304(a)(1)(iv) and the related instructions thereto, or a reportable event,
as defined in Regulation S-K Item 304(a)(1)(v).
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Board") is currently
composed of Richard W. Heath, John C. Tolleson, Thomas G. Kahn and James Neal
Thomas. The Board, in its business judgment, has determined that all members of
the Audit Committee meet the current independence and experience requirements
of the Nasdaq Stock Market, Inc., and applicable rules and regulations of the
Securities and Exchange Commission (the "SEC") and that Mr. Thomas satisfies
the requirements for an "audit committee financial expert" promulgated by the
SEC. The Audit Committee operates pursuant to an Audit Committee Charter that
was initially adopted by the Board on July 23, 2000, and subsequently amended
and restated, most recently in January 2004.
As set forth in the Second Amended and Restated Audit Committee Charter,
management of the Company is responsible for preparation in accordance with
generally accepted accounting principles, and the completeness and accuracy of,
the Company's financial statements. The independent accountants are responsible
for the planning and conduct of audits of the Company's financial statements
and reviews of the Company's quarterly financial statements prior to the filing
of each Quarterly Report on Form 10-Q. The Audit Committee assists the Board in
its oversight function and has the responsibilities and powers as set forth in
the Second Amended and Restated Audit Committee Charter.
In the performance of its oversight function, the Audit Committee has
reviewed and discussed with management and the independent accountants the
Company's audited financial statements for the fiscal year ended September 30,
2003. The Audit Committee has also discussed with the Company's independent
accountants matters required to be discussed by Statement on Auditing Standards
Nos. 61, 89 and 90. In addition, the Audit Committee has received the written
disclosures and the letter from the Company's independent accountants required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, as currently in effect. The Audit Committee has also
considered whether the independent accountants' provision of non-audit services
to the Company is compatible with maintaining the accountants' independence and
discussed with them their independence from the Company and its management.
Based upon the reviews, reports and discussions described in this report,
and subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the Audit Committee Charter, the Audit
Committee recommended to the Board that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2003, for filing with the Securities and
Exchange Commission.
This report has been submitted by the Audit Committee for fiscal 2003,
which consists of the following members:
James Neal Thomas, Chairman
Richard W. Heath
Thomas G. Kahn
John C. Tolleson
14
FEES PAID TO INDEPENDENT ACCOUNTANTS
The following table sets forth the fees paid to PricewaterhouseCoopers LLP
for services provided during fiscal years 2003 and 2002:
2003 2002
-------- --------
Audit Fees (1) .................. $251,800 $232,000
Audit-Related Fees (2) .......... 98,500 24,000
Tax Fees (3) .................... 398,000 --
All Other Fees (4) .............. -- --
-------- --------
Total ........................... $748,300 $256,000
======== ========
- ------------
(1) Represents fees for professional services provided in connection with the
audit of the Company's annual financial statements and review of the
Company's quarterly financial statements, advice on accounting matters that
arose during the audit and audit services provided in connection with the
filing of a Form S-8 in May 2003.
(2) Represents fees for professional services in connection with the audits of
the Company's employee benefit plans, advisory services related to the SERP
and 2003 LTIP, and advisory services related to compliance with the
Sarbanes-Oxley Act of 2002.
(3) Represents fees for professional services in connection with preparation of
the Company's federal and state tax returns and advisory services for other
tax compliance and consulting matters. The Company was not billed for any
PricewaterhouseCoopers LLP tax fees in fiscal 2002.
(4) During fiscal 2003 and 2002, PricewaterhouseCoopers LLP did not provide any
services to the Company other than those in the categories noted above.
Effective December 2002, the Audit Committee established a policy to
pre-approve all audit, audit-related, tax and other fees proposed to be
provided by the Company's independent auditor prior to engaging the auditor for
that purpose. Consideration and approval of such services generally occur at
the Audit Committee's regularly scheduled quarterly meetings. In situations
where it is impractical to wait until the next regularly scheduled quarterly
meeting, the Audit Committee has delegated the authority to approve the audit,
audit-related, tax and other fees to the Audit Committee chairperson up to a
certain pre-determined level as approved by the Audit Committee. Fees for any
of these audit, audit-related, tax and other projects approved pursuant to the
above-described delegation of authority require the reporting of any such
approvals to the full Audit Committee at the next regularly scheduled meeting.
In accordance with its pre-approval policy, the Audit Committee
pre-approved 100% of the audit fees, 86% of the audit-related fees and 100% of
tax fees for fiscal 2003. In total, the Audit Committee pre-approved 98% of the
total fees for fiscal 2003. None of the fiscal 2002 fees were pre-approved.
FINANCIAL CODE OF ETHICS
The Company's Chief Executive Officer, Chief Financial Officer, principal
accounting officer, controller and other persons performing similar functions
are required to comply with the Company's Financial Code of Ethics. The purpose
of the Company's Financial Code of Ethics is to deter wrongdoing and to
promote, among other things, honest and ethical conduct and to ensure to the
greatest possible extent that the Company's business is conducted in a
consistently legal and ethical manner. Employees may submit concerns or
complaints regarding ethical issues on a confidential basis by means of a
toll-free telephone call to an assigned voicemail box. All concerns and
complaints are investigated by the Office of the General Counsel.
The Company's Financial Code of Ethics is posted on the Company's website,
at www.haggar.com. The Company will also post on its website any amendment to,
or waiver from, a provision of the Financial Code of Ethics that applies to the
Company's Chief Executive Officer, Chief Financial Officer, principal
accounting
15
officer, controller or persons performing similar functions and that relates to
any of the following elements of the Financial Code of Ethics: honest and
ethical conduct; disclosure in reports or documents filed with the SEC and
other public communications; compliance with applicable laws, rules and
regulations; prompt internal reporting of code violations; and accountability
for adherence to the code.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Role of the Compensation Committee
The members of the Compensation Committee of the Board of Directors (the
"Board") are Rae F. Evans and Richard W. Heath, each of whom meet the current
independence requirements of the Nasdaq Stock Market, Inc. The Compensation
Committee reviews, evaluates and recommends to the Board the executive
compensation policies of the Company and the compensation of the Company's
Chief Executive Officer and other executive officers. In connection with these
responsibilities, the Compensation Committee has exclusive authority to
administer the Company's 1992 Long Term Incentive Plan (the "1992 LTIP"), which
terminated on October 21, 2002, and the 2003 Long Term Incentive Plan (the
"2003 LTIP"), which was adopted and approved by the Company's stockholders on
April 2, 2003. The Compensation Committee operates pursuant to a Compensation
Committee Charter, which was adopted in fiscal 2002 and amended and restated in
January 2004. The Compensation Committee held three meetings during the
Company's fiscal year ended September 30, 2003. At those meetings the
Compensation Committee reviewed the Company's compensation practices.
Executive Compensation Objectives
The primary objectives of the Compensation Committee are to ensure that
the compensation provided to the Company's executive officers reinforces the
Company's annual and long-term performance objectives, to reward and encourage
quality performance, and to assist the Company in attracting, retaining and
motivating executives with exceptional leadership abilities.
Consistent with this philosophy, the Compensation Committee believes that
it 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 and discretionary payments under the
Haggar Clothing Co. Bonus Savings Plan (the "Deferred Annuity Plan") and stock
options, restricted shares and rights, either with or without accompanying
options, under the 1992 LTIP, which terminated on October 21, 2002, and the
2003 LTIP. In addition, selected executive officers may also participate in the
Company's Supplemental Executive Retirement Plan (the "SERP"). Currently only
J. M. Haggar, III, the Company's Chief Executive Officer, and Frank Bracken,
the Company's President, participate in the SERP. The Chief Executive Officer
and the President were selected to participate in the SERP based on their
historical contributions and continued leadership of the Company. In addition,
the Company makes certain matching contributions and profit sharing
contributions to its 401(k) Plan on behalf of participants, which include the
executive officers.
Description of the Elements of Executive Compensation
The Compensation Committee does not exclusively use quantitative methods
or mathematical formulas in setting any element of compensation. In determining
each component of compensation, the Compensation Committee considers all
elements of an executive officer's total compensation package as well as other
objective and subjective criteria the Compensation Committee deems appropriate
with respect to each executive officer, including the recommendations of the
Company's Chief Executive Officer.
Base Salary. The Compensation Committee recommends to the Board base
salaries each year at a level intended to be within the competitive market
range of comparable companies. The Compensation Committee takes into
consideration the salary recommendations of the Chief Executive Officer and
conducts its own review of various factors, including those considered by the
Chief Executive Officer in his recommendations, before determining the
recommended base salaries for the Company's executive officers and Chief
Executive Officer. These factors include a comparison of the salaries earned by
the executive officers and the Chief Executive Officer to the salaries of
comparable individuals at several companies that the Company considers to be
its
16
primary competitors in the apparel industry. In addition to the competitive
market range, several other factors are considered in determining the
recommended base salary amounts, including the responsibilities assumed by the
executive, length of service, individual performance and internal equity
considerations. The Compensation Committee concluded that increases in base
salary for fiscal 2003 for the executive officers were necessary given all the
factors noted previously, with special consideration given to an updated salary
market analysis obtained and reviewed by the Compensation Committee.
Annual Cash Bonus. Executive officers and certain other employees of the
Company are eligible to receive discretionary annual cash bonuses following
each fiscal year in which the Company meets or exceeds annual goals recommended
by the Compensation Committee and approved by the Board or in which the
Company's performance and other subjective factors relating to individual
performance otherwise merit bonus awards. The Compensation Committee recommends
performance goals by examining the past performance of the Company and
identifying the Company's future objectives. The Chief Executive Officer makes
recommendations to the Compensation Committee regarding employee bonus amounts
based upon the Company's performance and his perception of the individual's
performance, level of responsibility and contribution to the Company. The
amount of each individual bonus awarded under the bonus plan is further based
on the total amount of funds available for distribution and each participant's
incentive base amount (provided that no participant's bonus may exceed twice
his incentive base amount). Eligibility to receive a bonus, an employee's
incentive base amount, and the amount of the bonus pool are recommended by the
Compensation Committee and approved by the Board.
The bonus performance goals set by the Board for fiscal 2003 related to
the operational and financial performance of the Company, including goals
related to net income, return on equity and inventory turnover improvements.
The Compensation Committee recommended that the Company's executive officers
receive a portion of their respective potential bonuses for fiscal 2003 after
evaluating the performance of the Company in light of these performance goals.
The amounts of these bonuses are set forth under "Executive Compensation--
Summary Compensation Table."
Discretionary Payments. The Company has established the Deferred Annuity
Plan pursuant to which each of the executive officers has elected to make
contributions to deferred annuity investment products on an after-tax basis
through payroll deductions or direct payment. Each year, the Board determines,
based on the Company's performance during the year, 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. Bonuses paid to executive officers
under the Deferred Annuity Plan are considered by the Compensation Committee in
connection with its evaluation of the total compensation of the Company's
executive officers.
Stock Option Grants. The Compensation Committee endorses the view that
equity ownership by management is beneficial in aligning managements' and
stockholders' interests in the enhancement of stockholder value. The
Compensation Committee believes that this strategy motivates executives to
remain focused on the overall long-term performance of the Company. In fiscal
2003, the Company adopted and the stockholders approved the 2003 LTIP,
replacing the 1992 LTIP which terminated according to its terms on October 21,
2002, to make available additional grants of stock options, restricted shares
and rights, either with or without accompanying options. As of the Record Date,
no options have been granted under the 2003 LTIP.
Supplemental Executive Retirement Plan. The SERP established by the
Company is intended to reward executive officers who have exhibited outstanding
performance over an extended tenure with the Company. As such, the SERP
provides an incentive for both consistently high performance and longevity with
the Company. The benefits of the SERP are taken into consideration in
connection with the Compensation Committee's evaluation of the overall package
of compensation and benefits provided to executive officers. Presently, the
Chief Executive Officer and the President are the only participants in the
SERP.
17
Chief Executive Officer Compensation
Mr. Haggar, the Chief Executive Officer, participates in the same
executive compensation program provided to the other executive officers and
senior management of the Company in addition to the SERP. The Compensation
Committee's approach to setting compensation for the Chief Executive Officer is
to be competitive with comparable apparel companies and to have a major portion
of the Chief Executive Officer's compensation dependent upon the Company's
operational and financial performance and Mr. Haggar's individual performance,
which are evaluated in connection with the award of annual cash bonuses
discussed above.
Mr. Haggar's employment agreement provides that his initial base salary is
subject to increase during the term of his employment agreement in the sole
discretion of the Company in light of his performance, inflation, cost of
living and other factors deemed relevant by the Company. Mr. Haggar is eligible
to receive an annual performance bonus and may participate in all other
perquisites and benefit plans available to other executive officers of the
Company.
For the fiscal year ended September 30, 2003, Mr. Haggar earned $1,456,293
in salary and bonuses as shown in "Executive Compensation--Summary Compensation
Table." Approximately 54% of this amount was earned in the form of an annual
bonus and a bonus under the Deferred Annuity Plan. In determining the amount of
the Chief Executive Officer's bonuses, the Compensation Committee considered
the same factors as were considered in awarding bonuses to other Company
employees. The Committee believes the Chief Executive Officer's total
compensation for fiscal 2003 was reasonable and appropriate given the
performance of the Company under his leadership and the ability of the Chief
Executive Officer to direct the Company's strategic resources effectively to
drive stockholder growth.
$1 Million Pay Deductibility Cap
Section 162(m) of the Internal Revenue Code generally imposes a $1 million
per person annual limit on the amount the Company may deduct as compensation
expense for its Chief Executive Officer and its four other highest paid
officers. To the extent readily determinable, and as one of the factors in
considering compensation matters, the Compensation Committee considers the
anticipated tax treatment to the Company and to its executives of various
payments and benefits. Some types of compensation payments and their
deductibility depends upon the timing of an executive's vesting or exercise of
previously granted rights. Further, interpretations of and changes in tax laws
and other factors beyond the Company's control also affect the deductibility of
compensation. For these and other reasons, the Compensation Committee will not
necessarily limit executive compensation to that amount deductible under
Section 162(m) of the Internal Revenue Code. Therefore, the Compensation
Committee, subject to the factors provided above, has the discretion to grant
awards which result in non-deductible compensation.
Conclusion
The Compensation Committee believes that the Company's executive
compensation program provides a competitive and motivational compensation
package to the Company's executive officers necessary to achieve the Company's
financial objectives and enhance stockholder value.
This report has been submitted by the Compensation Committee, which
consists of the following members:
Richard W. Heath, Chairman
Rae F. Evans
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Heath and Ms. Evans comprised the Compensation Committee during fiscal
2003. Neither Mr. Heath nor Ms. Evans has ever been an officer or employee of
the Company. None of the executive officers of the Company served as a member
of the compensation committee or board of directors of any other company during
fiscal 2003.
18
PERFORMANCE GRAPH
The line graph below compares the cumulative total stockholder return on
the Common Stock from September 30, 1998, through September 30, 2003, with the
return on the Standard & Poor's 500 Stock Index ("S & P 500") and the Standard
& Poor's Apparel and Accessories Index ("S & P Apparel & Accessories") for the
same period. In accordance with the disclosure rules of the SEC, the
measurement assumes a $100 initial investment in the Common Stock with all
dividends reinvested, and a $100 initial investment in the indexes.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG HAGGAR CORP., THE S & P 500 STOCK INDEX
AND THE S & P APPAREL & ACCESSORIES INDEX
[The following data was represented by a line chart in the printed material.]
------------------------------------------------------
9/98 9/99 9/00 9/01 9/02 9/03
------------------------------------------------------
HAGGAR CORP. ............................... 100.00 116.63 117.34 107.90 106.55 152.63
S & P 500 .................................. 100.00 127.81 144.78 106.24 84.48 105.09
S & P APPAREL, ACCESSORIES & LUXURY GOODS .. 100.00 81.77 81.87 90.14 113.56 127.94
Copyright(C) 2003, Standard & Poor's, a division of the McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Godwin, a director of the Company, is a partner of Godwin Gruber, LLP,
a law firm that has rendered various legal services to the Company and certain
of its subsidiaries during fiscal 2003. The Company paid to this law firm
approximately $460,000 during fiscal 2003. At September 30, 2003, there were
approximately $140,000 in unpaid fees due to such law firm from the Company.
The Company has retained this law firm during the current fiscal year to
provide various legal services. Godwin Gruber, LLP does not represent the
Company in connection with the solicitation of proxies for the election of the
Board's nominees as directors at the Annual Meeting.
19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT
The following table and the notes thereto set forth certain information
regarding the beneficial ownership of the Common Stock as of the Record Date,
by:
o each current director of the Company;
o the executive officers of the Company;
o all executive officers and directors of the Company as a group; and
o each other person known to the Company to own beneficially more than
five percent of the Common Stock outstanding on the Record Date.
Unless otherwise indicated, all stockholders set forth below have the same
principal business address as the Company.
The Company has determined beneficial ownership in accordance with the
rules of the SEC. The number of shares beneficially owned by a person includes
shares of Common Stock that are subject to stock options that are either
currently exercisable or exercisable within 60 days after the Record Date.
These shares are also deemed outstanding for the purpose of computing the
percentage of outstanding shares owned by the person. These shares are not
deemed outstanding, however, for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, to the Company's
knowledge, each stockholder has sole voting and dispositive power with respect
to the securities beneficially owned by that stockholder. On the Record Date,
there were 6,679,101 shares of Common Stock outstanding.
Number of Shares Percentage of Shares
Beneficially Owned Beneficially Owned
------------------ --------------------
J. M. Haggar, III (1) ................................ 661,659 9.7%
Frank D. Bracken (2) ................................. 196,096 2.9
David M. Tehle (3) ................................... 40,700 *
Alan C. Burks (4) .................................... 34,152 *
David G. Roy (5) ..................................... 37,100 *
Rae F. Evans (6) ..................................... 14,709 *
Donald E. Godwin (7) ................................. 2,550 *
Richard W. Heath (8) ................................. 20,600 *
Thomas G. Kahn (9) ................................... 887,069 13.3
James Neal Thomas .................................... 4,000 *
John C. Tolleson (10) ................................ 82,400 1.2
All executive officers and directors as a group 1,981,035 27.6
(11 persons) (11) ...................................
Barrow Hanley Mewhinney & Strauss, Inc. (12) ......... 555,840 8.3
Dimensional Fund Advisors, Inc. (13) ................. 385,425 5.8
Franklin Resources, Inc. (14) ........................ 420,000 6.3
Kahn Brothers & Co., Inc. (15) ....................... 833,969 12.5
- ------------
* Represents beneficial ownership of less than 1%.
(1) Includes 2,299 shares over which Mr. Haggar shares voting and dispositive
power with his wife, 39,213 shares over which he otherwise shares voting
and dispositive power as a trustee of various trusts, 16,743 shares over
which he shares voting and dispositive power as a director of a private
charitable foundation and 175,910 shares which may be acquired upon
exercise of stock options that are currently exercisable.
(2) Includes 170,910 shares which may be acquired upon exercise of stock
options that are currently exercisable.
20
(3) Includes 40,000 shares which may be acquired upon exercise of stock options
that are currently exercisable.
(4) Includes 33,090 shares which may be acquired upon exercise of stock options
that are currently exercisable.
(5) Includes 37,000 shares which may be acquired upon exercise of stock options
that are currently exercisable.
(6) Includes 9,709 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days following the Record Date.
(7) Includes 1,800 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days following the Record Date.
(8) Includes 5,000 shares over which Mr. Heath shares voting and dispositive
power with his wife and 15,600 shares which may be acquired upon exercise
of stock options that are exercisable currently or within 60 days following
the Record Date.
(9) Includes 500 shares over which Mr. Kahn shares voting and dispositive power
with his wife, 833,969 shares over which he shares voting and dispositive
power as an officer of Kahn Brothers & Co., Inc. (see note 15, below),
34,300 shares over which he shares voting and dispositive power as a
trustee of various trusts and 1,000 shares over which he shares voting and
dispositive power as a director of a private charitable foundation.
(10) Includes 17,400 shares that may be acquired upon exercise of stock options
exercisable currently or within 60 days following the Record Date.
(11) Includes 933,024 shares over which voting and dispositive power is shared
and 501,419 shares which may be acquired upon exercise of stock options
exercisable currently or within 60 days following the Record Date.
(12) Based on information contained in a Form 13F filed with the SEC on November
12, 2003, by Barrow Hanley Mewhinney & Strauss, Inc., whose address is 3232
McKinney Ave., Suite 1500, Dallas, Texas 75204.
(13) Based on information contained in a Form 13F filed with the SEC on
November 5, 2003, by Dimensional Fund Advisors, Inc., whose address is 1299
Ocean Avenue, 11th floor, Santa Monica, California 90401.
(14) Based on information contained in a Form 13F filed with the SEC on November
14, 2003, by Franklin Resources, Inc., whose address is One Franklin
Parkway, San Mateo, California 94403.
(15) Includes 773,969 shares owned by certain of its clients and over which Kahn
Brothers & Co., Inc. has shared voting and dispositive power. Based on
information contained in a Form 4 filed with the SEC on January 9, 2004, by
Thomas G. Kahn. The address of Kahn Brothers & Co., Inc. is 555 Madison
Avenue, 22nd Floor, New York, New York 10022.
OTHER BUSINESS
The Board 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company's executive officers and directors,
and beneficial owners of more than 10% of the Common Stock, are required to
file reports of ownership and reports of changes in ownership of the Common
Stock with the SEC. The SEC's rules require such person to furnish the Company
with copies of all Section 16(a) reports they file. Based on a review of these
reports and on written representations from the reporting persons that no other
reports were required, the Company believes that the applicable Section 16(a)
reporting requirements were complied with for all transactions which occurred
during the fiscal year ended September 30, 2003, except that Mr. Burks
21
failed to timely file five Form 4s in respect of four acquisitions under the
Company's employee stock purchase plan and one acquisition pursuant to the
dividend reinvestment feature of the Company's employee stock purchase plan.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Pursuant to Rule 14a-8 of the Exchange Act, to be included in the Board's
solicitation of proxies relating to the 2005 annual meeting of the Company's
stockholders, a stockholder proposal must be received by the Secretary of the
Company at the Company's principal executive offices no later than September
28, 2004.
Pursuant to the Company's bylaws, in order to nominate persons for
election to the Board at the 2005 annual meeting of the Company's stockholders,
or to bring other business constituting a proper matter for stockholder action
under applicable law before the 2005 annual meeting, a stockholder must deliver
written notice to the Secretary of the Company at the principal executive
offices of the Company not less than 90 days nor more than 120 days prior to
the first anniversary of the Annual Meeting; provided, however, that in the
event that the date of the 2005 annual meeting is more than 30 days before or
more than 70 days after such anniversary date, the notice must be delivered not
earlier than 120 days prior to the 2005 annual meeting and not later than the
later of (a) 90 days prior to such meeting or (b) the tenth day following the
day on which public announcement of the date of such meeting is first made by
the Company. If the Board, however, proposes to increase the number of
directors at the 2005 annual meeting and there is no public announcement by the
Company naming the nominees for the additional directorships at least 10 days
prior to the last date that a stockholder notice may be timely delivered
pursuant to the immediately preceding sentence, then a stockholder's notice
must be delivered to the Secretary of the Company at the principal executive
offices of the Company not later than 10 days following the date of such public
announcement. A stockholder's notice described in this paragraph must set forth
the information required by the Company's bylaws.
With respect to proxies submitted for the 2005 annual meeting of the
Company's stockholders, the Company's management will have discretionary
authority to vote on any matter of which the Company does not receive notice by
the date specified in the advance notice provisions of the Company's bylaws
described above, pursuant to Rule 14a-4(c)(1) promulgated under the Exchange
Act.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 accompanies this Proxy Statement. This Annual Report
on Form 10-K does not form any part of the materials for the solicitation of
proxies. Additional copies of the Annual Report on Form 10-K will be sent to
any stockholder without charge upon written request addressed to Haggar Corp.,
11511 Luna Road, Dallas, Texas 75234, Attention: Corporate Secretary.
By Order of the Board of Directors,
/s/ J. M. HAGGAR, III
J. M. Haggar, III
Chairman and Chief Executive Officer
January 26, 2004
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.
22
Appendix A
HAGGAR CORP.
SECOND AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
January 23, 2004
The Board of Directors of Haggar Corp. (the "Company") has established the
Audit Committee of the Board of Directors of the Company (the "Board").
Purposes
The purposes of the Audit Committee are to serve as an independent and
objective party:
o To oversee the quality and integrity of the financial statements and
other financial information the Company provides to any governmental
body or the public;
o To oversee the independent auditors' qualifications and independence;
o To oversee the performance of the Company's independent auditors;
o To oversee the performance of the Company's internal auditors;
o To oversee the Company's accounting and financial reporting processes
and the audits of the Company's financial statements;
o To oversee the Company's systems of internal controls regarding
finance, accounting, and ethics compliance that management and the
Board have established;
o To establish procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls, and other auditing
matters and for the confidential, anonymous submission by Company
employees of concerns regarding questionable accounting or auditing
matters;
o To provide an open avenue of communication among the independent
auditors, internal auditors, financial and senior management, and the
Board, always emphasizing that the independent auditors are
accountable to the Audit Committee; and
o To perform such other duties as are directed by the Board.
The Audit Committee shall prepare annually a report meeting the
requirements of any applicable regulations of the Securities and Exchange
Commission (the "SEC") to be included in the Company's proxy statement relating
to its annual meeting of stockholders.
Membership
The Audit Committee shall be comprised of three or more directors, as
determined by the Board or a nominating committee of the Board, none of whom
shall be an affiliate of the Company or any of its subsidiaries or an employee
or a person who receives any compensation from the Company or any of its
subsidiaries other than fees paid for service as a director.
The members of the Audit Committee shall be elected by the Board or a
nominating committee of the Board annually and shall serve until their
successors shall be duly elected and qualified. Unless the Board otherwise
determines in accordance with the listing standards of the Nasdaq Stock Market,
Inc. ("Nasdaq") and applicable rules and regulations of the SEC, each member
shall be "independent" as defined from time to time by the listing standards of
Nasdaq and by applicable rules and regulations of the SEC. If the Company's
securities are listed on any other exchange, the Audit Committee shall meet the
independence and experience requirements of such exchange. Accordingly, the
Board shall determine annually whether each member is free from any
relationship
A-1
that may interfere with his or her independence from management and the
Company. No member may accept, directly or indirectly, any consulting,
advisory, or other compensatory fees from the Company or any of its
subsidiaries other than director or committee fees. No member may have
participated in the preparation of the financial statements of the Company or
any current subsidiary of the Company at any time during the past three years.
No member shall serve on an audit committee of more than two public companies
unless the Board determines that such simultaneous service would not impair the
ability of such director to effectively serve on the Audit Committee.
Each member shall be able to read and understand financial statements at
the time of his or her appointment. The Company shall appoint at least one
member who is "financially sophisticated" as defined under the applicable
Nasdaq listing standards and shall use its reasonable efforts to appoint at
least one member who qualifies as an "audit committee financial expert" as
defined from time to time by applicable rules and regulations of the SEC, but
in any event the Company shall comply with applicable Nasdaq listing standards.
An audit committee financial expert shall not be deemed an "expert" for
any purpose, including for purposes of Section 11 of the Securities Act of
1933. The designation of an Audit Committee member as an audit committee
financial expert does not impose any duties, obligations or liability on the
audit committee financial expert that are greater than those imposed on other
Audit Committee members, nor does it affect the duties, obligations or
liability of any other Audit Committee member.
Notwithstanding the foregoing membership requirements, no action of the
Audit Committee shall be invalid by reason of any such requirement not being
met at the time such action is taken.
Meetings and Structure
The Audit Committee shall meet as many times per year as the members deem
necessary, but in any event at least four times per year. The Audit Committee
should meet at least annually with management and the independent auditors in
separate executive sessions to discuss any matters that the Audit Committee or
each of these groups believe should be discussed privately.
The Board shall appoint one member of the Audit Committee as chairperson.
He or she shall be responsible for leadership of the Audit Committee and
reporting to the Board.
Accountability of the Independent Auditors
The independent auditors are accountable to and report directly to the
Audit Committee. The Audit Committee shall have the sole authority and
responsibility with respect to the selection, engagement, compensation,
oversight, evaluation and, where appropriate, dismissal of the Company's
independent auditors engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for the Company.
The Audit Committee shall annually select and engage the Company's independent
auditors retained to audit the financial statements of the Company. The Audit
Committee, or a member thereof, must pre-approve any service, whether an audit
or a non-audit service, provided to the Company by the Company's independent
auditors, including the plan and scope of any such service and related fees.
Committee Authority and Responsibilities
The Audit Committee shall have the authority to take all actions it deems
advisable to fulfill its responsibilities and duties.
The Audit Committee has the authority to retain, at the Company's expense,
professional advisors, including without limitation special legal counsel,
accounting experts, or other consultants, to advise the Audit Committee, which
may be the same as or different from the Company's primary legal counsel,
accounting experts and other consultants, as the Audit Committee deems
necessary or advisable in connection with the exercise of its powers and
responsibilities as set forth in this Audit Committee Charter, all on such
terms as the Audit Committee deems necessary or advisable.
A-2
The Audit Committee shall be responsible for the resolution of any
disagreements between the independent auditors and management regarding the
Company's accounting or financial reporting practices.
The Company shall provide for appropriate funding, as determined by the
Audit Committee, for payment of (i) compensation to the independent auditors
employed by the Company for the purpose of preparing or issuing an audit report
or related work or performing other audit, review or attest services; (ii)
compensation to any special legal counsel, accounting experts or other
consultants employed by the Audit Committee; and (iii) ordinary administrative
expenses of the Audit Committee.
In connection with the purposes, powers and responsibilities set forth
above, the Audit Committee shall also:
Independent Auditors
1. Annually review the performance, experience and qualifications of the
independent auditors' team and the quality control procedures of the
independent auditors and discharge the independent auditors when
circumstances warrant.
2. Review the Company's disclosures in the Company's periodic reports filed
with the SEC regarding any approved non-audit services provided or to be
provided by the independent auditors.
3. Periodically obtain and review a report from the independent auditors
regarding all relationships between the independent auditors and the
Company that may impact the independent auditors' independence, and discuss
such report with the independent auditors. The Audit Committee shall also
recommend any appropriate action to the Board in response to the written
report necessary to satisfy itself of the independence of the independent
auditors.
4. Ensure the rotation, at least every five years, of the lead audit partner
having responsibility for the audit and the concurring review partner
responsible for reviewing the audit in accordance with applicable Nasdaq
listing standards and applicable laws, rules and regulations.
5. Set, review and modify as appropriate, policies in accordance with the
Nasdaq listing standards and applicable laws, rules and regulations for
hiring employees or former employees of the Company's independent auditors.
Review
6. Review with management and the independent auditors the Company's quarterly
or annual financial information, including matters required to be reviewed
under applicable legal, regulatory or Nasdaq requirements, prior to the
release of earnings and prior to the filing of the Company's Quarterly
Report on Form 10-Q or Annual Report on Form 10-K, as the case may be.
7. Review and, as appropriate, discuss with management and the independent
auditors the Company's earnings releases, including the use of "pro forma"
or "adjusted" non-GAAP information, as well as financial information and
earnings guidance, if any, provided to analysts or rating agencies.
8. Upon completion of any annual audit, meet separately with the independent
auditors and management and review the Company's financial statements and
related notes, the results of their audit, any report or opinion rendered
in connection therewith, any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of work or
access to required information, any significant disagreements with
management concerning accounting or disclosure matters, any significant
adjustment proposed by the independent auditors and the adequacy and
integrity of the Company's internal accounting controls and the extent to
which major recommendations made by the independent auditors have been
implemented or resolved.
9. Regularly review with the Company's independent auditors any audit problems
or difficulties and management's response.
10. Review and consider with the independent auditors and management the
matters required to be discussed by Statement of Auditing Standards Nos.
61, 89 and 90. These discussions shall include consideration of the
A-3
quality of the Company's accounting principles and as applied in its
financial reporting, including review of estimates, reserves and accruals,
review of judgmental areas, review of audit adjustments whether or not
recorded, and such other inquiries as may be appropriate. These discussions
shall also include the review of reports from the independent auditors that
include (i) all critical accounting policies and practices used; (ii) all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, their
ramifications and the preferences of the independent auditors; and (iii)
other material written communications between the independent auditors and
management. Based on the foregoing review, make its recommendation to the
Board as to the inclusion of the Company's audited financial statements in
the Company's annual report on Form 10-K.
11. Review any disclosures provided by the Chief Executive Officer, the Chief
Financial Officer or the independent auditors to the Audit Committee
regarding significant deficiencies in the design or operation of internal
control over financial reporting which could adversely affect the Company's
ability to record, process, summarize, and report financial data.
12. Review with management and the independent auditors any significant
transactions that are not a normal part of the Company's operations and
changes, if any, in the Company's accounting principles or their
application.
13. Review and approve all related-party transactions.
Process Improvement
14. Consider and approve, if appropriate, major changes to the Company's
accounting principles and practices as suggested by the independent
auditors or management.
15. Regularly apprise the Board, through minutes and special presentations as
necessary, of significant developments in the course of performing the
Audit Committee's duties.
16. Conduct an annual evaluation with the Board regarding the performance of
the Audit Committee.
Ethical and Legal Compliance
17. Review any disclosures provided by the Chief Executive Officer or the Chief
Financial Officer to the Audit Committee regarding (i) significant
deficiencies or weaknesses in the design or operation of internal control
over financial reporting which could adversely affect the Company's ability
to record, process, summarize, and report financial data; and (ii) any
fraud, including that which involves management or other employees who have
a significant role in the Company's internal control over financial
reporting.
18. Review with the Company's in-house or outside legal counsel any legal
matter that could have a significant effect on the Company's financial
statements, including the status of pending litigation and other areas of
oversight to the legal and compliance area as may be appropriate.
19. Review with management and the independent auditors the Company's policies
and procedures regarding compliance with its internal policies as well as
applicable laws and regulations, including without limitation with respect
to maintaining books, records and accounts and a system of internal
accounting controls in accordance with Section 13(b)(2) of the Securities
Exchange Act of 1934.
General
20. Perform any other activities consistent with this Charter, the Company's
Articles of Incorporation and Bylaws, the rules of Nasdaq applicable to its
listed companies, and governing law as the Audit Committee or the Board
deems necessary or appropriate.
Review of Committee Charter
At least annually, the Audit Committee shall review and reassess the
adequacy of this Charter. The Audit Committee shall report the results of the
review to the Board and, if necessary, make recommendations to the Board to
amend this Charter.
A-4
Limitations
The Audit Committee has the responsibilities and powers set forth in this
Charter and management and the independent auditors for the Company are
accountable to the Audit Committee. Management, not the Audit Committee, is
responsible for the preparation in accordance with GAAP, and the completeness
and accuracy, of the Company's financial statements. The independent auditors,
not the Audit Committee, are responsible for the planning and conduct of audits
of the Company's financial statements and reviews of the Company's quarterly
financial statements prior to the filing of each quarterly report on Form 10-Q.
A-5
Appendix B
HAGGAR CORP.
AMENDED AND RESTATED
NOMINATING & GOVERNANCE COMMITTEE CHARTER
January 23, 2004
The Board of Directors of Haggar Corp. (the "Company") has established the
Nominating & Governance Committee of the Board of Directors of the Company (the
"Board").
Purposes
The purposes of the Nominating & Governance Committee are:
o To assist the Board by identifying individuals qualified to become
Board members, and to recommend to the Board the director nominees for
election at the annual meetings of stockholders or for appointment to
fill vacancies;
o To recommend to the Board director nominees for each committee of the
Board;
o To advise the Board about appropriate composition of the Board and its
committees;
o To advise the Board about and recommend to the Board appropriate
corporate governance practices and to assist the Board in implementing
those practices;
o To lead the Board in its annual review of the performance of the Board
and its committees;
o To assist the Board by developing a CEO succession plan; and
o To perform such other functions as the Board may assign to the
Nominating & Governance Committee from time to time.
Composition
The Nominating & Governance Committee shall consist of at least two
members, all of whom are members of the Board. One of the members shall serve
as the chairperson of the Nominating & Governance Committee. Each member of the
Nominating & Governance Committee shall satisfy the independence requirements
of the rules of the Nasdaq Stock Market, Inc.
The Board shall appoint the members of the Nominating & Governance
Committee. The chairperson of the Nominating & Governance Committee shall be
designated by the Board or, if no such designation is made, shall be selected
by the affirmative vote of the majority of the Nominating & Governance
Committee. The Board may remove or replace the chairperson and any other member
of the Nominating & Governance Committee at any time.
Authority and Responsibilities
The Nominating & Governance Committee is delegated all authority of the
Board as may be required or advisable to fulfill the purposes of the Nominating
& Governance Committee. The Nominating & Governance Committee may form and
delegate some or all of its authority to subcommittees when it deems
appropriate. Without limiting the generality of the preceding statements, the
Nominating & Governance Committee shall have authority, and is entrusted with
the responsibility, to do the following actions.
1. The Nominating & Governance Committee shall prepare and recommend to
the Board for adoption appropriate corporate governance guidelines and
modifications from time to time to those guidelines.
2. The Nominating & Governance Committee shall prepare and recommend to
the Board for adoption a CEO succession plan and modifications from
time to time to such plan.
B-1
3. The Nominating & Governance Committee shall actively seek individuals
qualified to become board members for recommendation to the Board. The
Nominating & Governance Committee's assessment as to the
qualifications of Board member candidates shall include consideration
of skills, experience, and diversity in the context of the needs of
the Board.
4. The Nominating & Governance Committee shall establish, review and
modify as appropriate policies and procedures for submission of
recommendations for director candidates by stockholders to the
Nominating & Governance Committee and evaluating nominees for director
recommended by stockholders.
5. The Nominating & Governance Committee shall seek to provide that the
majority of the members of the Board are independent directors and
that each committee of the Board contains exclusively or, if
appropriate, a majority of members that are independent to the extent
required by law, applicable listing standards, the Company's charter
or bylaws, or the Company's corporate governance guidelines.
6. The Nominating & Governance Committee shall determine whether or not
each director and each prospective director of the Company is
independent, disinterested, or a non-employee director under the
standards applicable to the committees on which such director is
serving or may serve. The Nominating & Governance Committee may survey
any and all of the directors and prospective directors to determine
any matter or circumstance that would cause the person not to qualify
as an independent, disinterested or non-employee director under
applicable standards. The Nominating & Governance Committee shall
report to the Board the existence of any such matter or circumstance.
7. Each year, the Nominating & Governance Committee shall:
o review the advisability or need for any changes in the number and
composition of the Board;
o review the advisability or need for any changes in the number,
charters or titles of committees of the Board;
o recommend to the Board the composition of each committee of the
Board and the individual director to serve as chairperson of each
committee;
o ensure that the chairperson of each committee report to the Board
about the committee's annual evaluation of its performance and
evaluation of its charter;
o receive comments from all directors and report to the Board with
an assessment of the Board's performance, to be discussed with
the full Board following the end of each fiscal year;
o review the advisability or need for any changes to the CEO
succession plan and present the CEO succession plan and proposed
changes to the Board for approval; and
o review and reassess the adequacy of the corporate governance
guidelines of the Company and recommend any proposed changes to
the Board for approval.
8. The Nominating & Governance Committee shall have the sole authority to
retain, amend the engagement with, and terminate any search firm to be
used to identify director candidates. The Nominating & Governance
Committee shall have sole authority to approve the search firm's fees
and other retention terms and shall have authority to cause the
Company to pay the fees and expenses of the search firm. The
Nominating & Governance Committee shall also have authority to obtain
advice and assistance from internal or external legal, accounting or
other advisors, to approve the fees and expenses of such outside
advisors, and to cause the Company to pay the fees and expenses of
such outside advisors.
9. The Nominating & Governance Committee shall oversee the evaluation of
the Board and management.
B-2
Procedures
10. Meetings. The Nominating & Governance Committee shall meet at the call
of its chairperson, two or more members of the Nominating & Governance
Committee, or the Chairman of the Board. Meetings may, at the
discretion of the Nominating & Governance Committee, include members
of the Company's management, independent consultants, and such other
persons as the Nominating & Governance Committee or its chairperson
may determine. The Nominating & Governance Committee may meet in
person, by telephone conference call, or in any other manner in which
the Board is permitted to meet under law or the Company's bylaws. The
Nominating & Governance Committee shall keep a written record of its
meetings and actions and shall file a copy of such record in the
corporate minutes of the Company.
11. Quorum and Approval. A majority of the members of the Nominating &
Governance Committee shall constitute a quorum. The Nominating &
Governance Committee shall act on the affirmative vote of a majority
of members present at a meeting at which a quorum is present. The
Nominating & Governance Committee may also act by unanimous written
consent in lieu of a meeting.
12. Rules. The Nominating & Governance Committee may determine additional
rules and procedures, including designation of a chairperson pro
tempore in the absence of the chairperson and designation of a
secretary of the Nominating & Governance Committee, at any meeting
thereof.
13. Reports. The Nominating & Governance Committee shall make regular
reports to the Board, directly or through the chairperson.
14. Review of Charter. Each year the Nominating & Governance Committee
shall review the need for changes in this Charter and recommend any
proposed changes to the Board for approval.
15. Performance Review. Each year the Nominating & Governance Committee
shall review and evaluate its own performance and shall submit itself
to the review and evaluation of the Board.
B-3
____________________________________________________________________________________________________________________________________
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN Please
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED Mark Here |_|
"FOR" PROPOSALS 1 and 2. for Address
Change or
Comments
SEE REVERSE SIDE
The two proposals on the ballot are:
FOR AGAINST ABSTAIN
1. Election of Directors. 2. Ratification of PricewaterhouseCoopers LLP as |_| |_| |_|
the Company's independent accountants.
FOR all nominees TO WITHHOLD
(Except as marked AUTHORITY
to the contrary) (for all nominees listed) I plan to attend the meeting |_|
|_| |_|
Nominees: 01 J. M. Haggar III, 02 Richard W. Heath, and
03 James Neal Thomas
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name in the
space provided below.)
____________________________________________________
Signature____________________________________________ Signature____________________________________________ Date___________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
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________________________________________________________________________________
Haggar Corp.
Proxy for Annual Meeting of Stockholders
March 11, 2004
This Proxy is Solicited on Behalf of Haggar Corp.'s Board of Directors
The undersigned hereby appoints J.M. Haggar, III, Frank D. Bracken and
David M. Tehle and each of them, Proxies for the undersigned, with full power of
substitution, to vote all shares of Haggar Corp. Common Stock which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Haggar Corp. to be held on Thursday, March 11, 2004, or at any adjournment
thereof, upon the matters set forth on the reverse side and described in the
accompanying Proxy Statement and upon such other business as may properly come
before the meeting or any adjournment thereof.
You are encouraged to specify your vote by marking the appropriate box ON
THE REVERSE SIDE but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendations, which are FOR the election of the
named nominees as directors and FOR the Ratification of PricewaterhouseCoopers
LLP as the Company's independent auditors. The Proxies cannot vote your shares
unless you sign and return this card. Any proxy may be revoked in writing at any
time prior to the voting thereof.
Any proxy, when properly granted, will be voted in the manner directed and
will authorize the Proxies to take action in their discretion upon other matters
that may properly come before the meeting. If no direction is made, your proxy
will be voted in accordance with the recommendations of the Board of Directors.
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
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