SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of the Securities
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Check the appropriate box:
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[_] Soliciting Material Pursuant to (S)Section 240.14a-11(c) or (S)Section 240.14a-12
LANDS'LAND'S END, INC.
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(Name of Registrant as Specified In Its Charter)
LANDS' END, INC.- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)Statement, if other than the Registrant)
Payment of Filing Fee (check(Check the appropriate box):
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or 14a-6(j)Item 22(a)(2). of Schedule 14A.
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6(i)14a-6(i)(3).
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(3) Filing Party:
Lands' End, Inc.-------------------------------------------------------------------------
(4) Date Filed:
04/04/94-------------------------------------------------------------------------
Notes:
LOGO
NOTICE OF 19941995 ANNUAL MEETING
AND PROXY STATEMENT
April 18, 199417, 1995
Dear Shareholder:
The annual meeting of Lands' End, Inc. shareholders will be held at our
headquarters in Dodgeville, Wisconsin, on Wednesday, May 18, 1994,17, 1995, beginning at
10:00 a.m. C.D.T. (See map for directions.)
The directors and officers of your company join me in extending you a cordial
invitation to attend.
For those of you interested in seeing firsthand how we fill an order, tours
of our facilities will be available before the meeting. The first tour will
leave the activity center at 8:00 a.m. and the last one will leave promptly at
9:00 a.m.
The agenda for the meeting includes the election of two directors, the
approval of an increase in the number of authorized common shares the company
may issue, the approval of an amendment to the Company's Stock Option Plan and the
ratification of the appointment of independent public accountants. There also
will be a brief management presentation on the state of the business.
I hope you can be there, but whether you attend the meeting in person or not,
it's important that your shares be represented. To make sure they are, please
mark your votes on the enclosed proxy card, and sign, itdate and mail it in the
postage-
paidpostage-paid envelope. It will help us keep postage costs down if you take a
minute to do so now.
LOGO
Gary C. Comer
Chairman
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 199417, 1995
To Our Shareholders:
The annual meeting of shareholders of Lands' End, Inc. (the "Company") will
be held at the offices of the Company, One Lands' End Lane, Dodgeville,
Wisconsin 53595, on May 18, 1994,17, 1995, at 10:00 a.m. C.D.T. for the following
purposes:
1. To elect two members to the Board of Directors of the Company to serve
until the annual meeting of shareholders in 1997,1998 and until their
successors are duly elected and qualified.
2. To approve an amendment of Article Fourth of the Company's Certificate
of Incorporation to increase the number of authorized shares of Common
Stock from 30 million to 160 million.
3. To approve an amendment to the Company's Stock Option Plan.
4.3. To ratify the appointment of Arthur Andersen & Co.LLP as independent public
accountants for the Company for the fiscal year ending January 27, 1995.
5.February 2, 1996.
4. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 25, 1994,24, 1995, as
the record date for the meeting. All shareholders of record on that date are
entitled to notice of and to vote at the meeting.
Please complete and return the enclosed proxy in the envelope provided
whether or not you intend to be present at the meeting in person.
By order of the Board of Directors,
LOGO
Robert S. Osborne
Secretary
Dodgeville, Wisconsin
April 18, 199417, 1995
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE.
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Lands' End, Inc., a Delaware corporation (the "Company"),
of proxies to be voted at the 19941995 annual meeting of shareholders on Wednesday,
May 18, 1994,17, 1995, and at any adjournment thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy card are being mailed to shareholders on
or about April 18, 1994.17, 1995.
PROXIES
Properly signed and dated proxies received by the Company's Secretary prior
to or at the Annual Meeting will be voted as instructed thereon or, in the
ab-
senceabsence of such instructions, (a) FOR election to the Board of Directors of the
persons nominated by the Board, (b) FOR approval of the increase in the number
of authorized common shares the Company may issue, (c) FOR approval of the
amendment to the
Company's Stock Option Plan, (d)(c) FOR the ratification of the appointment of
Arthur Andersen & Co.LLP as independent public accountants for the Company, and (e)(d)
in accordance with the best judgment of the persons named in the proxy on any
other matters which may properly come before the meeting. Any proxy may be
revoked for any reason prior to voting by notifying the Secretary of the
Company in writing of such revocation or by voting by ballot at the meeting,
which will cancel any proxies previously submitted. The Company has appointed
an officer of Firstar Trust Company, transfer agent for the Company, to act as
an independent inspector at the Annual Meeting.
VOTING OF PROXIES AND SHARES OUTSTANDING
Holders of record at the close of business on March 25, 1994,24, 1995, of shares of
the Company's common stock, $.01 par value per share (the "Common Stock"), are
entitled to vote on all matters which may be properly presented at the Annual
Meeting. The number of shares of Common Stock of the Company outstanding on
March 25, 1994,24, 1995, the record date for the meeting, was 17,943,95934,725,616 all of one
class and each entitled to one vote, owned by 2,5423,065 shareholders of record. All
share numbers and share prices contained in this Proxy Statement have been
adjusted where necessary to reflect the Company's May 1994 two-for-one stock
split effected in the form of a stock dividend.
The holders of at least a majority of the shares of Common Stock must be
present in person or by proxy at the Annual Meeting in order for the Annual
Meeting to be held. Directors will be elected by a plurality of the votes cast
for the election of directors. The affirmative vote of the holders of a
major-
itymajority of the shares of Common Stock present and entitled to vote at the
Annual Meeting is required for approval of each of the other actions proposed
to be taken at the Annual Meeting. On each such proposed action, pursuant to
Delaware law, abstentions are treated as present and entitled to vote and thus
have the effect of a vote against a proposed action. A broker non-vote (where a
broker submits a proxy but does not have authority to vote a customer's shares
on one or more matters) on a proposed action is considered not entitled to vote
on that action and thus is not counted in determining whether an action
requiring approval of a majority of the shares present and entitled to vote at
the Annual Meeting has been approved.
2
ELECTION OF DIRECTORS
TheIn January 1995, the Board of Directors is composeddecreased from seven to six the
number of seven directors.directors which constitute the full Board. The directors are di-
vidednow
divided into three classes two of which are composed of two directors each, and
one of which is comprised of three directors.each. One class is elected
each year for a three year term. The two nominees for election as directors to
serve un-
tiluntil the annual meeting of shareholders in 19971998 and until their
respective suc-
cessorssuccessors are duly elected and qualified, are Richard C. AndersonJohn N. Latter and
Howard G.
Krane.Michael J. Smith. The Board of Directors recommends that shareholders vote
"FOR" the elec-
tionelection of Messrs. AndersonLatter and Krane.Smith.
2
The following tabulation sets forth, as of March 25, 1994,24, 1995, certain
informa-
tioninformation about each nominee for election to the Company's Board of Directors
and each continuing director.
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DIRECTOR NOMINEES FOR A TERM TO EXPIRE IN 1997
RICHARD C. ANDERSON Age: 64
Vice Chairman of the Company since 1984. Mr. Anderson served as Chief Execu-
tive Officer of the Company from 1990 through January 1993. In addition, Mr.
Anderson served as President and Chief Operating Officer from 1989 until 1992.
Mr. Anderson has been a director of the Company since 1979. From 1977 to 1984,
Mr. Anderson was a senior executive of Needham, Harper & Steers, serving as Ex-
ecutive Vice President in charge of programming and media from 1981 until 1984.
HOWARD G. KRANE Age: 60
Director of the Company since 1986. Mr. Krane's professional corporation is a
partner of Kirkland & Ellis, with which he has practiced law since 1957.
Kirkland & Ellis renders legal services to the Company. Mr. Krane is also
Chairman of the Board of Trustees of the University of Chicago.
3
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DIRECTORS WHOSE TERM EXPIRES IN 1995
DAVID F. DYER Age: 44
Mr. Dyer entered the employ of the Company in 1989 as Managing Director of
Home Furnishings, became Executive Vice President of Merchandising in 1990, and
was named Vice Chairman, Merchandising in 1992. In February 1993, Mr. Dyer was
named Vice Chairman, Merchandising and Sales. He has been a director of the
Company since 1991. From 1972 until 1989, he was employed at Burdine's, a spe-
cialty retail chain, most recently as Senior Vice President of Marketing and
General Merchandising Manager of Women's Apparel, Accessories and Cosmetics.
WILLIAM T. END Age: 46
Chief Executive Officer of the Company since February 1993. In 1991, Mr. End
entered the employ of the Company as Executive Vice President of Marketing and
Corporate Planning, and has been a director of the Company since 1991. In 1992,
Mr. End was named President and Chief Operating Officer of the Company. From
1975 until 1990, Mr. End was employed at L.L. Bean, Inc., a specialty catalog
firm, most recently as Executive Vice President and Senior Vice President of
Marketing.1998
JOHN N. LATTER Age: 68
Mr. Latter has been a directorAGE: 69
Director of the Company since 1978. Since 1980, Mr. Latter has been
independently employed as a financial consultant.
- --------------------------------------------------------------------------------MICHAEL J. SMITH AGE: 34
President and Chief Executive Officer of the Company since December 1994.
In 1983, Mr. Smith entered the employ of the Company as a Market Research
Analyst. In 1985, he became Circulation Manager of Planning and in 1988, he
was promoted to Manager of Merchandise Planning and Research. In 1990, Mr.
Smith was named Managing Director of Coming Home and in 1991, he was
elected Vice President of that business. Mr. Smith has been serving as a
director of the Company since his appointment to his current positions in
December 1994.
DIRECTORS WHOSE TERM EXPIRES IN 1996
GARY C. COMER Age: 66AGE: 67
Founder of the Company and Chairman of the Board of Directors. Mr. Comer
was President of the Company from 1963 until 1989, and served as Chief
Executive Officer from 1963 until 1990. He has been a director of the
Company since 1963. Prior to 1963, Mr. Comer was employed for ten years as
a copywriter at Young & Rubicam.
DAVID B. HELLER Age: 63AGE: 64
Director of the Company since 1986. Since 1974, Mr. Heller has been
President of Advisory Research, Inc., an investment advisory firm which infirm.
DIRECTORS WHOSE TERM EXPIRES IN 1997
RICHARD C. ANDERSON AGE: 65
Vice Chairman of the pastCompany since 1984. Mr. Anderson served as Chief
Executive Officer of the Company from 1990 through January 1993. In
addition, Mr. Anderson served as President and Chief Operating Officer from
1989 until 1992. He has acted as investment adviser to the Company's Profit Sharing Trust. He is alsobeen a director of Lake Shore Bancorp, Inc.
4the Company since 1979. From
1977 to 1984, Mr. Anderson was a senior executive of Needham, Harper &
Steers, serving as Executive Vice President in charge of programming and
media from 1981 until 1984. Mr. Anderson serves as a director of the
Company's majority-owned subsidiary, The Territory Ahead. He has also
provided creative consulting services to the Company and has been
compensated for his services in each capacity. See "Meetings and
Compensation of Directors; Committees of the Board."
HOWARD G. KRANE AGE: 61
Director of the Company since 1986. Mr. Krane's professional corporation is
a partner of Kirkland & Ellis, with which he has practiced law since 1957.
Kirkland & Ellis renders legal services to the Company. Mr. Krane is also
Chairman of the Board of Trustees of the University of Chicago.
3
MEETINGS AND COMPENSATION OF DIRECTORS; COMMITTEES OF THE BOARD
The Board of Directors held seventwelve formal meetings during the fiscal year
ended January 28, 1994.27, 1995. All directors attended at least 75% of the total number
of meetings of the Board and Committees of which they were members. Directors
who are not salaried officers or employees of the Company receive an annual
re-
tainerretainer of $25,000 (other than the Company's founder, who receives no such
com-
pensation)compensation). Richard C. Anderson receives an additional $15,000 annual
retainer from the Company for serving as a director of the Company's majority-
owned subsidiary, The Territory Ahead. Mr. Anderson also received total cash
compensation of $38,230 from the Company in consideration for his providing
creative consulting services to the Company during fiscal year 1995. Directors
who are salaried officers or employees of the Company earn no additional
compensation for their services as directors.
The Board has three standing committees: The Audit Committee, the
Compensa-
tionCompensation Committee and the Performance Compensation Committee. The Board
does not have a nominating committee. The functions of the standing committees
are de-
scribeddescribed briefly below:
AUDIT COMMITTEE
The members of the Audit Committee are John N. Latter (chairman) and David B.
Heller. The functions of the Audit Committee are to recommend the appointment
of the Company's independent public accountants, to review and approve the
scope of the yearly audit and proposed budget for audit fees, to review the
re-
sultsresults of the annual audit, to review the Company's internal controls and the
audit functions of the Company's financialinternal audit staff, and to report to the Board of
Directors on the activities and findings of the Audit Committee and make
recommenda-
tionsrecommendations to the Board of Directors based on such findings. The Company's
indepen-
dentinternal audit staff and its independent public accountants have direct access
to the Audit Committee to discuss auditing and any other accounting matters.
The Audit Committee held onetwo formal meetingmeetings during fiscal year 1994.1995.
COMPENSATION COMMITTEE
The members of the Compensation Committee are Howard G. Krane (chairman),
Gary C. Comer, (chairman), David B. Heller Howard G. Krane and John N. Latter. The Compensation Committee
moni-
torsmonitors the Company's overall compensation policies and specifically reviews
and approves all compensation to be paid to the Company's chief executive officer,Chief Executive
Officer, to the threefour other most highly compensated executive officers and to
any other officer whose annual com-
pensationcompensation is $300,000 or more. Functions ofmore (except to the
extent that such responsibility is specifically vested in the Performance
Compensation Committee). The Compensation Committee include
administeringadministers the 1989 Restricted
Stock Plan and the Additional Incentive Bonus
Plan, and establishingestablishes the terms of any benefits granted thereunder. The
Com-
pensationCompensation Committee held foursix formal meetings during fiscal year 1994.1995.
None of the members of the Compensation Committee is or has been, for a
pe-
riodperiod of at least one year prior to appointment, eligible to receive a benefit
under any plans of the Company entitling participants to acquire Common Stock,
stock options or stock appreciation rights.
PERFORMANCE COMPENSATION COMMITTEE
The members of the Performance Compensation Committee are David B. Heller
(chairman) and John N. Latter. The Performance Compensation Committee
adminis-
tersadministers the Stock Option Plan and establishes the terms of any benefits
granted thereunder. The Performance Compensation Committee 5
also administers the
Company's non-stock based compensation plans which are in-
tendedintended to provide
"performance-based compensation" (as defined in the federal Omnibus Budget
Reconciliation Act of 1993 ("OBRA")) including, but not limited to,
establishing objective performance goals and measures and certifying that such
performance goals and other material terms are satisfied. The Performance
Compensation Committee is comprised solely of directors who are not (i) current
employees of the Company (or any related entity),
4
(ii) former employees of the Company (or any related entity) receiving
compensation for prior services (other than certain pension benefits), (iii)
former officers of the Company (or any related entity), or (iv) consultants or
individuals who are otherwise re-
ceivingreceiving compensation for personal services in
any capacity other than as a di-
rector.director. The Performance Compensation Committee
held onefour formal meetingmeetings during fiscal year 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary C. Comer, who currently serves on the Compensation Committee, is the
Company's founder and Chairman of the Board. Mr. Comer was President of the
Company from 1963 until 1989, and served as Chief Executive Officer from 1963
until 1990. Mr. Comer is retired from active employment at the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy
Lands' End believes that its employees are its most valuable asset. The
Company's goal is to recruit, motivate, reward, and retain the best hourly and
salaried work force in the direct marketing industry. The Company has developed
and implemented its compensation plans, including those for executive officers,
with that goal in mind.
The Board of Directors and its compensation-related committees believe that
the Company has derived significant benefits over the years from the fact that
its founder and senior executive officers have had substantial amounts of stock
ownership in the Company and developed a strongly collegial management culture.
The principal executive compensation philosophy used to recruit, motivate and
retain the Company's executives has been to create the possibility for
significant equity ownership and to base additional incentive compensation on
specific financial performance goals, consisting of percentage increases in net
sales and the level of pretax earnings expressed as a percentage of net sales.
Committee Structure
The Compensation Committee consists of Gary C. Comer and three outside
directors, David B. Heller, Howard G. Krane and John N. Latter, who have never
been employees of the Company. No member of the Compensation Committee is
eligible to receive awards under any of the compensation plans which it
administers. The Compensation Committee receives and considers recommendations
from time to time from officers of the Company and from independent
professional compensation consultants.
The Performance Compensation Committee consists of Mr. Heller as chairman,
and Mr. Latter, each of whom is believed to meet the eligibility requirements
specified in OBRA. Accordingly, it is anticipated that compensation paid under
these plans, including gains realized upon the exercise of nonqualified stock
options, will remain deductible by the Company for federal income tax purposes.
Compensation Criteria
In 1994, the Compensation Committee and the Board engaged a nationally
recognized compensation consulting firm to assist the Compensation Committee
and the Board in developing an overall perspective on base, incentive and long-
term compensation and benefit practices in the specialty retail business.
Representatives of this consulting firm have met formally with the Compensation
Committee (sometimes with other Board members in attendance) on a regular basis
and have had numerous other informal discussions with members of the
Compensation Committee and the Board.
The Compensation Committee relates total compensation levels for the
Company's senior executives to the compensation paid to executives of a peer
group of companies (the "comparator group"). The comparator group is comprised
of companies that tend to have national and international business operations
and similar
5
sales volumes, market capitalizations, employment levels, and lines of
business. The Compensation Committee reviews and approves the selection of
companies used for compensation comparison purposes. The companies chosen for
the comparator group used for compensation purposes generally are not the same
companies which comprise the published industry index in the Performance Graph
included in this Proxy Statement. The Compensation Committee believes that the
Company's most direct competitors for executive talent are not necessarily all
of the companies that would be included in the published industry index
established for comparing shareholder returns.
Although comparator group survey data has been used in developing the
Company's overall compensation perspective, the Compensation Committee and the
Board have also considered other factors which, in their subjective judgment,
affect the comparability and usefulness of such data to the Company. These
factors include the Company's leading position as a direct merchant, the
evolving nature of its business as the Company makes investments in developing
new catalog formats and expands internationally, and elements of its corporate
culture, including the historical importance of executive stock ownership and
the use of sales growth and profitability measures for incentive compensation.
The Compensation Committee and the Board have determined that it is desirable
for the Company to maintain a competitive package of base, incentive and long-
term compensation and that, at senior executive levels, the package should be
strongly weighted toward long-term, stock-based compensation, thereby aligning
management interests with those of the Company's shareholders. These
determinations are reflected in the Company's current compensation practices.
Section 162(m) of the Internal Revenue Code (adopted pursuant to OBRA)
imposes an annual limit of $1 million on the deductibility of compensation
payments to a company's chief executive officer and the four other most highly
compensated executive officers for whom proxy statement disclosure is required
and who are employed at the end of such company's taxable year ("Covered
Employees"). "Performance-based compensation" (as defined in OBRA) is excluded
from this limit. It is the Company's intention to preserve the deductibility of
compensation paid to its Covered Employees, to the extent feasible and
consistent with the Company's overall compensation philosophy.
Contemplated Omnibus Long-Term Incentive Plan
The Compensation Committee and the Performance Compensation Committee, in
consultation with their professional compensation advisers, are beginning to
consider the adoption of a comprehensive omnibus long-term incentive plan that
would provide for, among other things, the grant of stock options, stock
appreciation rights and restricted stock. It is expected that such a plan would
be adopted by the Compensation Committee and the Performance Compensation
Committee during the course of the coming year and would be presented to the
Company's shareholders for approval in next year's proxy statement. If such a
plan were to be adopted and approved, it is expected that the Stock Option Plan
and the Restricted Stock Plan would be superseded by the new plan at such time.
Recent Changes in Senior Management
Fiscal year 1995 presented a number of significant changes in the composition
of the Company's senior executive officers. In August 1994, David F. Dyer
resigned as Vice Chairman, Merchandising and Sales. In October 1994, Stephen A.
Orum was promoted to Executive Vice President and Chief Operating Officer in
addition to continuing his responsibilities as Chief Financial Officer. In
December 1994, William T. End resigned as President and Chief Executive
Officer, and Michael J. Smith was promoted to those positions. Finally, in
January 1995, Mindy C. Meads was promoted to Senior Vice President,
Merchandising.
Components of Compensation
Base Salary. In determining salary adjustments, the Compensation Committee
considers the size and responsibility of the individual's position, the
individual's overall performance and the base salaries paid by competitors for
comparable positions. The base salary level for the Company's Chief Executive
Officer is
6
currently somewhat below the median for the Company's comparator group. The
average base salary level for the Company's other Named Executive Officers is
currently at the approximate median for the Company's comparator group.
Salaried Incentive Bonus Plan. The Salaried Incentive Bonus Plan establishes
bonus eligibility amounts ranging from 10% to 100% of base salary for
individual participants. Participants earn bonuses equal to their bonus
eligibility amounts, multiplied by a factor which depends on overall corporate
results measured by a matrix of (i) growth in net sales and (ii) pretax income
expressed as a percentage of net sales for the fiscal year of participation,
with a one percent change in pretax income expressed as a percentage of net
sales being weighted much more heavily in the matrix than a one percent change
in growth in net sales. No bonuses are payable if net sales increase by 7% or
less in a year or if pretax income expressed as a percentage of net sales is 5%
or less. The matrix is subject to further review and adjustment from time to
time by the Performance Compensation Committee. For fiscal year 1995, net sales
grew by 14% and pretax income expressed as a percentage of net sales was 6.0%,
which resulted in a bonus for each individual participant equal to 78.75% of
such participant's bonus eligibility amount. For most of the Company's salaried
employees, the bonus eligibility amounts have historically been 10% of base
salary. For the Company's Named Executive Officers, the bonus eligibility
amounts have historically been 40-100% of base salary.
Stock Options. In fiscal year 1995, the Company did not award any stock
option grants. However, in February 1995 (i.e., the first month of fiscal year
1996), the Company awarded stock option grants to a number of employees,
including grants to Michael J. Smith, Mindy C. Meads, Stephen A. Orum and
Francis P. Schaecher in the amounts of 110,000 shares, 60,000 shares, 60,000
shares and 30,000 shares, respectively. These grants are consistent with the
Company's previously announced goal of providing significant stock-based
incentive compensation for senior executives so as to incent management to
increase shareholder value over time.
CHIEF EXECUTIVE OFFICER COMPENSATION
William T. End served as the Company's President and Chief Executive Officer
throughout most of fiscal year 1995. Until October 1994, Mr. End also served as
the Company's Chief Operating Officer, at which time Stephen A. Orum assumed
such responsibilities. In December 1994, William T. End resigned as President
and Chief Executive Officer, and Michael J. Smith was promoted to those
positions.
Mr. End's annual base salary was $402,000 during the term of his service in
fiscal year 1995. Mr. Smith's annual base salary has been set at $300,000,
which the Compensation Committee and the Board believe to be appropriate given
comparator group practice for this position as well as Mr. Smith's previous
compensation history. During fiscal year 1995, Mr. End also received a bonus of
$316,545 under the Salaried Incentive Bonus Plan. Until his promotion in
December 1994, Mr. Smith was Vice President of Coming Home and, in that
capacity, he received a bonus of $44,936 under the Salaried Incentive Bonus
Plan.
The Performance Compensation Committee did not award any stock option grants
in fiscal year 1995. The Performance Compensation Committee did award stock
option grants in December 1993 (including a 200,000 share stock option grant to
Mr. End). In February 1995, the Performance Compensation Committee awarded Mr.
Smith options to purchase 110,000 shares of the Company's Common Stock at
$16.50 per share (the closing market price per share of the Common Stock on the
date of grant). The options are exercisable for ten years and vest at the rate
of 10% in year one, 15% in year two, 20% in year three, 25% in year four and
30% in year five. The specific number and vesting rate of the options awarded
was based principally on subjective judgment factors, including the review of
overall compensation practices described above and the then current level of
Mr. Smith's beneficial ownership of stock in the Company.
Submitted by the Compensation Committeeof
the Board of Directors
Howard G. Krane, Chairman
Gary C. Comer
David B. Heller
John N. Latter
7
SUMMARY COMPENSATION TABLE
Set forth below is certain information concerning the compensation for each
of the Named Executive Officers for the fiscal year ended January 27, 1995:
LONG-TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------------
RESTRICTED
OTHER ANNUAL STOCK STOCK ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($) ($)(1) (#) ($)(2)
------------------ ------ ------- ------- ------------ ---------- ------- ------------
Michael J. Smith(3)..... 1995 142,654 44,936 -0- -0- -0- 8,604
President and Chief
Executive Officer
William T. End(3)....... 1995 401,962 316,545 -0- -0- -0- 876,824
Former President and 1994 351,730 319,980 -0- -0- 200,000 74,102
Chief Executive Officer 1993 300,000 156,000 -0- -0- -0- 12,362
Mindy C. Meads(4)....... 1995 258,039 116,282 -0- -0- -0- 19,507
Senior Vice President,
Merchandising
Stephen A. Orum(5)...... 1995 203,192 96,008 -0- -0- -0- 14,631
Executive Vice 1994 180,038 50,259 -0- -0- 38,600 50,280
President, Chief 1993 156,273 30,004 -0- 53,250 -0- 9,352
Operating Officer and
Chief Financial Officer
Francis P. Schaecher.... 1995 186,000 87,885 -0- -0- -0- 16,783
Senior Vice President, 1994 175,605 148,182 -0- -0- 8,600 54,059
Operations 1993 153,750 78,900 -0- -0- -0- 10,838
David F. Dyer(6)........ 1995 273,462 -0- -0- -0- -0- 11,668
Former Vice Chairman, 1994 351,730 319,980 -0- -0- 200,000 74,102
Merchandising and Sales 1993 300,000 156,000 -0- -0- -0- 12,362
- --------
(1) Dividends, if any, on shares of restricted stock are paid at the same time
and at the same rate as dividends on the Company's unrestricted Common
Stock. The aggregate number and value (based on the closing price of the
Company's Common Stock ($16.25) on the New York Stock Exchange on January
27, 1995) of each Named Executive Officer's restricted stock holdings as
of such date are as follows: Mr. Smith, 2,600 shares, $42,250; Mr. End, 0
shares, $0; Ms. Meads, 3,200 shares, $52,000; Mr. Orum, 3,200 shares,
$52,000; Mr. Schaecher, 0 shares, $0; and Mr. Dyer, 0 shares, $0.
(2) For fiscal year 1995, these amounts represent the Company's contributions
to the Retirement Plan and the Company's contributions to the Deferred
Compensation and Excess Benefit Plan, in the following amounts: Mr. Smith,
$8,604, $0, respectively; Mr. End, $8,132, $32,142, respectively; Ms.
Meads, $8,163, $11,344, respectively; Mr. Orum, $8,358, $6,273,
respectively; Mr. Schaecher, $8,135, $8,648, respectively; and Mr. Dyer,
$3,605, $8,063, respectively. In addition, with respect to Mr. End, this
amount includes the following payments and benefits paid, payable or
accrued to Mr. End in connection with his resignation from employment with
the Company: (i) $603,000 in severance payments, (ii) $225,000 in payments
in connection with the exercise of stock options and (iii) $8,550 in
employee welfare benefits. For additional information, see "Termination of
Employment Arrangements."
(3) On December 2, 1994, William T. End resigned as President and Chief
Executive Officer. Michael J. Smith was appointed as President and Chief
Executive Officer effective December 2, 1994.
(4) Ms. Meads was appointed a Senior Vice President of the Company on January
12, 1995.
(5) Mr. Orum was named as Executive Vice President and Chief Operating Officer
of the Company on October 24, 1994, in addition to continuing his previous
function as the Company's Chief Financial Officer.
(6) Mr. Dyer resigned from his employ with the Company effective September 2,
1994.
8
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
Set forth below is certain information relating to options to acquire Common
Stock exercised by each Named Executive Officer during the fiscal year ended
January 27, 1995, and options to acquire Common Stock held by each Named
Executive Officer as of such date.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES STOCK OPTIONS STOCK OPTIONS AT
ACQUIRED VALUE AT FY-END (#) FY-END ($)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
---- ----------- --------- ------------- ----------------
Michael J. Smith.......... 4,000 25,500 560/18,240 0/32,000
William T. End............ 160,000 1,348,125 20,000/0 0/0
Mindy C. Meads............ -0- -0- 13,280/13,120 42,720/28,480
Stephen A. Orum........... -0- -0- 19,720/38,880 54,720/76,480
Francis P. Schaecher...... -0- -0- 81,720/26,880 790,000/197,500
David F. Dyer............. 120,000 1,470,000 0/0 0/0
- --------
(1) Upon exercise of an option, an individual does not receive cash equal to
the amount contained in the Value Realized column of this table. Instead,
the amounts contained in the Value Realized column reflect the increase in
the price of the Company's Common Stock from the option award date to the
option exercise date. No cash is realized until the shares received upon
exercise of an option are sold.
(2) Calculated based upon the closing price of the Company's Common Stock
($16.25) on the New York Stock Exchange on January 27, 1995.
TERMINATION OF EMPLOYMENT ARRANGEMENT
In connection with William T. End's resignation as an officer and director
of the Company on December 2, 1994, the Company and Mr. End entered into an
agreement pursuant to which Mr. End received the consideration described
below. Through January 31, 1995 (the date on which Mr. End ceased to be an
employee of the Company), Mr. End continued to receive salary payments at his
then current annual rate in accordance with the Company's normal payroll
policies and continued to participate in the Company's Profit-Sharing, 401(k)
and Deferred Compensation and Excess Benefit Plans. In addition, Mr. End fully
participated in the Company's Salaried Incentive Bonus Plan with respect to
fiscal year 1995. Through July 31, 1996, Mr. End is entitled to receive
severance payments at an annual rate equal to his annual rate of salary in
effect on the date of his resignation, payable in accordance with the
Company's normal payroll policies. Mr. End is also entitled to participate in
the Company's medical, dental, disability insurance and similar employee
welfare benefit plans, at the Company's expense, through July 31, 1996,
provided that such participation shall terminate earlier in the event that Mr.
End accepts employment with another company that provides benefit plans
covering similar matters.
On January 5, 1995, Mr. End exercised all 150,000 of his remaining vested
and unexercised "in-the-money" stock options at a strike price of $6.375 per
share. Following such exercise, the Company purchased from Mr. End all of the
Company's Common Stock issued to Mr. End pursuant to such option exercise, at
a purchase price per share of $14.625, which is equal to the closing price per
share of the Company's Common Stock on the New York Stock Exchange on the
trading day immediately preceding such purchase (the "Market Price").
Following such purchase of stock from Mr. End, the Company paid to Mr. End,
$225,000 as severance compensation, which amount is equal to the product of
multiplying (i) the number of such options times (ii) the difference between
the Market Price and the closing price per share of the Company's Common Stock
($16.125) on the New York Stock Exchange on December 2, 1994.
9
PERFORMANCE GRAPH
The following graph presents the cumulative total shareholder return of the
Company, the Standard & Poor's MidCap 400 Index and the Value Line Retail Index
for a five year period. Cumulative total shareholder return is defined as share
price appreciation assuming reinvestment of dividends. The Company's Common
Stock is included in both the Standard & Poor's MidCap 400 Index and the Value
Line Retail Index. In addition to the Company, 51 retailers (including catalog
companies) comprise the Value Line Retail Index. The dollar amounts shown on
the following graph assume that $100 was invested on February 1, 1990 in
Company Common Stock, stocks constituting the Standard & Poor's MidCap 400
Index and stocks constituting the Value Line Retail Index with all dividends
being reinvested. The January 31st dates shown on the following graph do not
correspond exactly with the last day of the Company's fiscal year in calendar
years 1993, 1994 and 1995.
COMPARISON OF FIVE-YEAR TOTAL RETURN
AMONG LANDS' END, INC., S&P MIDCAP 400 INDEX AND VALUE LINE RETAIL INDEX
[GRAPH APPEARS HERE]
VALUE OF $100 INVESTED ON FEBRUARY 1,
1990 AT
---------------------------------------
1/31/91 1/31/92 1/31/93 1/31/94 1/31/95
------- ------- ------- ------- -------
Lands' End, Inc......................... $106 $197 $162 $304 $201
S&P MidCap 400 Index.................... 112 158 176 203 193
Value Line Retail Index................. 108 155 164 167 138
10
PRINCIPAL SHAREHOLDERS
The following table shows certain information concerning the number of
shares of the Company's Common Stock beneficially owned, directly or
indirectly, by each director and nominee for director of the Company, the
chief executive of-
ficerChief Executive Officer and each of the threefour other most highly compensated
executive officers of the Company (the "Named Executive Officers"), and the
directors and executive officers as a group. The following table also sets
forth information concerning each person known to the Company as of March 25, 1994,24,
1995, to be the "beneficial owner" (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of more than 5% of the Company's Common
Stock. Unless otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them. Except as described in the notes below, all information in the
table and the accompanying footnotes is given as of March 25, 1994,24, 1995, and has
been supplied by each of the persons included in the table.
PERCENT
OF
BENEFICIAL OWNERS AMOUNT OF CLASS
----------------- ------ ----------------- --------
Gary C. Comer (1) 9,124,900 50.85Comer(1)..................................... 18,149,800 52.27
Capital Research and Management Company (2) 966,800 5.39Company(2)........... 2,010,000 5.79
Richard C. Anderson (3) 642,005 3.58
David F. Dyer (4) 73,000 *
William T. End (5) 62,000 *Anderson(3)............................... 1,284,010 3.70
David B. Heller 4,000Heller...................................... 8,000 *
Howard G. Krane (6) 10,000Krane(4)................................... 20,000 *
John N. Latter 80,000Latter....................................... 160,000 *
Mindy C. Meads(5).................................... 17,280 *
Stephen A. Orum (7) 12,200Orum(6)................................... 36,120 *
Francis P. Schaecher (8) 80,000Schaecher(7).............................. 181,720 *
Michael J. Smith(8).................................. 7,760 *
All directors and executive officers as a group (9
persons)(9) 10,088,105 55.73......................................... 19,864,690 57.00
- --------
*Less than 1%.
6
(1) Mr. Comer's address is Citicorp Plaza, Suite 620, 8420 W. Bryn Mawr
Avenue, Chicago, Illinois 60631.
(2) As disclosed on its Schedule 13G filed with the Securities and Exchange
Commission, Capital Research and Management Company, 333 South Hope
Street, Los Angeles, California 90071, a registered investment adviser and
an operating subsidiary of The Capital Group Companies, Inc., as of
December 31, 1993,1994, exercised investment discretion with respect to
966,8002,010,000 shares which were owned by various institutional investors.
Capital Research and Management Company has no power to direct the vote of
such shares.
(3) Share amount shown includes 54,000108,000 shares of the Company's Common Stock
owned by Mr. Anderson's wife as to which he disclaims beneficial
ownership.
(4) Share amount shown includes exercisable options for
60,000 shares of Company Common Stock granted to Mr. Dyer
on November 27, 1990 under the Stock Option Plan.
(5) Share amount shown includes exercisable options for
60,000 shares of Company Common Stock granted to Mr. End
on November 27, 1990 under the Stock Option Plan.
(6) Share amount shown includes 1,0002,000 shares of the Company's Common Stock
owned by Mr. Krane's wife as to which he disclaims beneficial ownership.
(7)(5) Share amount shown includes exercisable options for 13,280 shares of
Company Common Stock granted to Ms. Meads on December 9, 1991 and December
10, 1993 under the Stock Option Plan.
(6) Share amount shown includes (i) exercisable options for 4,00019,720 shares of
Company Common Stock granted to Mr. Orum on December 9, 1991, April 6,
1993 and December 10, 1993 under the Stock Option Plan and (ii) options
for 3,0006,000 shares of Company Common Stock granted to Mr. Orum on April 6,
1993 under the Stock Option Plan, which options will become exercisable
within 60 days.
(8)(7) Share amount shown includes exercisable options for 30,00081,720 shares of
Company Common Stock granted to Mr. Schaecher on November 27, 1990 and
December 10, 1993 under the Stock Option Plan.
(8) Share amount shown includes (i) exercisable options for 560 shares of
Company Common Stock granted to Mr. Smith on December 10, 1993 under the
Stock Option Plan and (ii) options for 4,000 shares of Company Common
Stock granted to Mr. Smith on April 6, 1993 under the Stock Option Plan,
which options will become exercisable within 60 days.
(9) Share amount shown includes exercisable options and options which will
become exercisable within 60 days for 157,000125,280 shares of Company Common
Stock granted to certain executive officers under the Stock Option Plan which are currently
exercisable or will become exercisable within 60 days.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Set forth below is certain information concerning the compensation for each
of the Named Executive Officers for the fiscal year ended January 28, 1994:
LONG TERM
COMPENSATION
------------------
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------------
OTHER RESTRICTED
NAME AND ANNUAL STOCK STOCK ALL
PRINCIPAL FISCAL SALARY BONUS COMPEN- AWARDS OPTIONS OTHER COMPEN-
POSITION YEAR ($) ($) SATION ($) ($)(1) (#) SATION ($)(2)
--------- ------ ------- ------- ---------- ---------- ------- -------------
William T. 1994 351,730 319,980 -0- -0- 100,000 74,102
End 1993 300,000 156,000 -0- -0- -0- 12,362
President, 1992 300,000 113,438 -0- -0- 100,000 -0-
CEO and
Chief
Operating
Officer
David F. Dyer 1994 351,730 319,980 -0- -0- 100,000 74,102
Vice 1993 300,000 156,000 -0- -0- -0- 12,362
Chairman, 1992 288,077 111,053 -0- -0- 100,000 6,667
Merchandising
and Sales
Francis P. 1994 175,605 148,182 -0- -0- 4,300 54,059
Schaecher 1993 153,750 78,900 -0- -0- -0- 10,838
Senior Vice 1992 129,231 52,565 -0- -0- -0- 3,865
President
Operations
Stephen A. 1994 180,038 50,529 -0- -0- 19,300 50,280
Orum 1993 156,273 30,004 -0- 53,250 -0- 9,352
Senior Vice 1992 95,192 15,131 -0- -0- 10,000 -0-
President
and Chief
Financial
Officer
- --------
(1) Dividends on shares of restricted stock are paid at the same time and at
the same rate as dividends on the Company's unrestricted Common Stock. The
aggregate number and value (based on the closing price of the Company's
Common Stock ($48.00) on the New York Stock Exchange on January 28, 1994)
of each Named Executive Officer's restricted stock holdings as of such date
are as follows: Mr. End, 0 shares, $0; Mr. Dyer, 8,000 shares, $384,000;
Mr. Schaecher, 0 shares, $0; and Mr. Orum, 1,800 shares, $86,400.
(2) For fiscal year 1994, these amounts represent the Company's contributions
to the Retirement Plan, the Company's contributions to the Deferred
Compensation and Excess Benefit Plan and the Company's one-time payments in
connection with the termination of the Company's automobile perquisite
arrangements, in the following amounts: Mr. End, $14,081, $25,021, $35,000,
respectively; Mr. Dyer, $14,081, $25,021, $35,000, respectively; Mr.
Schaecher, $13,989, $5,070, $35,000, respectively; and Mr. Orum, $13,277,
$2,003, $35,000, respectively.
8
STOCK OPTION GRANTS IN FISCAL YEAR 1994
Set forth below is certain information relating to options to acquire Common
Stock granted to each Named Executive Officer during the fiscal year ended
January 28, 1994, and the grant-date present value of each option grant.
PERCENT OF GRANT DATE
TOTAL STOCK VALUE
STOCK OPTIONS ----------
OPTIONS GRANTED TO GRANT DATE
GRANTED EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME (#) FISCAL YEAR PRICE ($/SH) DATE VALUE(3)
---- ------- ------------ ------------ ---------- ----------
William T. End...... 100,000(1) 31.39% $41.50 12/31/03 $2,562,000
David F. Dyer....... 100,000(1) 31.39 41.50 12/31/03 2,562,000
Francis P.
Schaecher.......... 4,300(2) 1.35 41.50 12/31/03 110,166
Stephen A. Orum..... 15,000(2) 4.71 28.50 12/31/03 256,350
4,300(2) 1.35 41.50 12/31/03 110,166
- --------
(1) Options are exercisable starting on the first anniversary of the grant
date, with 10% of the shares covered thereby becoming exercisable at that
time, an additional 10% of the option shares becoming exercisable on each
of the second, third and fourth anniversaries of the grant date and the
remaining 60% of the option shares becoming exercisable on the fifth
anniversary of the grant date. The options granted included a condition
that 25,000 of the Company shares covered by each respective option are
granted subject to shareholder approval of the amendment to the Stock
Option Plan, which increases the number of Company shares available for
issuance thereunder. See "Approval of Amendment to the Stock Option Plan."
(2) Options are exercisable starting on the first anniversary of the grant
date, with 20% of the shares covered thereby becoming exercisable at that
time, and an additional 20% of the option shares becoming exercisable on
each of the second, third, fourth, and fifth anniversaries of the grant
date.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
stock options. The actual value, if any, a Named Executive Officer may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised, so that there is no assurance
the value realized by a Named Executive Officer will be at or near the
value estimated by the Black-Scholes model. The estimated present values
under that model are based on the following inputs:
4/06/93 12/10/93
-------- --------
Stock Price (Fair Market Value) at Grant................... $28.50 $41.50
Exercise Price............................................. 28.50 41.50
Expected Option Term....................................... 10 Years 10 Years
Risk-Free Interest Rate.................................... 6.19% 6.18%
Stock Price Volatility..................................... 0.448 0.448
Dividend Yield............................................. 0.70% 0.48%
The model assumes: (a) a Risk-Free Interest Rate that represents the
interest rate on a U.S. Treasury Bond with a maturity date corresponding to
that of the Expected Option Term; (b) Stock Price Volatility is calculated
using daily stock prices over the five year period next preceding the date
of grant; and (c) Dividend Yield is calculated using the annual dividend
rate in effect at the date of grant. Notwithstanding the fact that these
options are non-transferrable, no discount for lack of marketability was
taken.
9
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
Set forth below is certain information relating to options to acquire Common
Stock exercised by each Named Executive Officer during the fiscal year ended
January 28, 1994, and options to acquire Common Stock held by each Named Exec-
utive Officer as of such date.
NUMBER OF
SHARES UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED STOCK OPTIONS IN-THE-MONEY STOCK
ON VALUE AT FY-END (#) OPTIONS AT FY-END
EXERCISE REALIZED EXERCISABLE/ ($) EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE(2)
---- -------- -------- ------------- --------------------
William T. End(1)........ -0- -0- 60,000/240,000 $2,115,000/4,322,500
David F. Dyer(1)......... -0- -0- 60,000/240,000 2,115,000/4,322,500
Francis P. Schaecher..... -0- -0- 30,000/24,300 1,057,500/732,950
Stephen A. Orum.......... -0- -0- 4,000/25,300 90,500/456,200
- --------
(1) The grants of options to Messrs. End and Dyer in fiscal year 1994 included
a condition that 25,000 of the Company shares covered by each respective
option are granted subject to shareholder approval of the amendment to the
Stock Option Plan, which increases the number of Company shares available
for issuance thereunder. See "Approval of Amendment to the Stock Option
Plan."
(2) Calculated based upon the closing price of the Company's Common Stock
($48.00) on the New York Stock Exchange on January 28, 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Gary C. Comer, who currently serves on the Compensation Committee, is the
Company's founder and Chairman of the Board. Mr. Comer was President of the
Company from 1963 until 1989, and served as Chief Executive Officer from 1963
until 1990. None of the other members of the Compensation Committee has ever
been an officer or employee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy
Lands' End believes that its employees are its most valuable asset. The
Company's goal is to recruit, motivate, reward and retain the best hourly and
salaried work force in the direct marketing industry. The Company has devel-
oped and implemented its compensation plans, including those for executive of-
ficers, with that goal in mind.
The Board of Directors and its compensation-related committees believe that
the Company has derived significant benefits over the years from the fact that
its founder and senior executive officers had very substantial amounts of
stock ownership in the Company and developed a strongly collegial management
culture. Over the past several years, the Company has planned for management
succession by recruiting new senior executives, including William T. End, Da-
vid F. Dyer and Stephen A. Orum, from other companies. The principal executive
compensation philosophy used to recruit, motivate and retain these new execu-
tives, as well as executives already with the Company, has been to create the
possibility for significant equity
10
ownership and to base additional incentive compensation on specific financial
performance goals, consisting of percentage increases in net sales and the
level of pretax earnings expressed as a percentage of net sales.
Committee Structure
Until December 1993, the Compensation Committee of the Board of Directors ad-
ministered all of the Company's key management compensation plans: the 1989 Re-
stricted Stock Plan, the Stock Option Plan, the Salaried Incentive Bonus Plan
and the Additional Incentive Bonus Plan.
The Compensation Committee consists of
Gary C. Comer, the Company's founder and Chairman of the Board, who is retired
from active employment at the Company, and three outside directors, Howard G.
Krane, David B. Heller and John N. Latter, who have never been employees of the
Company. No member of the Compensation Committee is eligible to receive awards
under any of the compensation plans which it administers. The Compensation Com-
mittee receives and considers recommendations from time to time from officers
of the Company and from independent professional compensation consultants.
In December 1993, the Board of Directors considered the possible future im-
pact of the federal Omnibus Budget Reconciliation Act of 1993 ("OBRA"), which
would limit the Company's ability to deduct, for corporate federal income tax
purposes, payments of executive compensation in excess of $1,000,000 to any one
individual in any one year. No executive officer of the Company currently has
cash compensation in an amount that would be subject to the OBRA deduction lim-
its. However, future gains realized upon the exercise of nonqualified stock op-
tions or the receipt of other performance-based compensation would be included
in the amount subject to deduction limits unless such options and other compen-
sation are granted under plans administered exclusively by individuals who meet
certain eligibility requirements specified in OBRA.
In light of OBRA, the Board of Directors considered it appropriate to estab-
lish a new Board committee, named the Performance Compensation Committee, to
administer the Stock Option Plan, the Salaried Incentive Bonus Plan and certain
other performance-based compensation programs. The Performance Compensation
Committee consists of Mr. Heller, as chairman, and Mr. Latter, each of whom is
believed to meet the eligibility requirements specified in OBRA. Accordingly,
it is anticipated that compensation paid under the Stock Option Plan, including
gains realized upon the exercise of nonqualified stock options, will remain de-
ductible by the Company for federal income tax purposes.
The larger Compensation Committee continues to monitor the Company's overall
compensation policies and to review and approve compensation (other*Less than under
plans administered by the Performance Compensation Committee) for the chief ex-
ecutive officer and certain other officers.
Compensation Criteria
In fiscal year 1993, the Compensation Committee engaged a nationally recog-
nized compensation consulting firm to advise the Committee and the Board re-
garding a variety of compensation matters. During fiscal year 1994, a represen-
tative of this consulting1%.
11
firm met formally with the Compensation Committee (sometimes with other Board
members in attendance) on two occasions and had numerous other informal discus-
sions with members of the Committee. The Performance Compensation Committee has
also reviewed the advice provided by this consulting firm.
During the past year, the Compensation Committee undertook a comprehensive
review of the performance factors used in determining bonuses earned under the
Salaried Incentive Bonus Plan and the Additional Incentive Bonus Plan. In con-
nection with that review, the Committee also considered broader issues and
sought to develop an overall perspective on compensation matters.
The compensation consulting firm engaged by the Company assisted the Compen-
sation Committee and the Board in developing an overall perspective on base,
incentive and long-term compensation and benefit practices in the specialty re-
tail business. Although survey data was used in developing this perspective,
the Committee and the Board also considered other factors which, in their sub-
jective judgment, affected the comparability and usefulness of such data to the
Company. These factors included the Company's leading position as a direct mer-
chant, the evolving nature of its business as the Company makes investments in
developing new catalog formats and expands internationally, and elements of its
corporate culture, including the historical importance of executive stock own-
ership and the use of sales growth and profitability measures for incentive
compensation. In general, the Compensation Committee and the Board determined
that it was desirable for the Company to maintain a competitive package of
base, incentive and long-term compensation and that, at senior executive lev-
els, the package should be strongly weighted toward long-term, stock-based com-
pensation, thereby aligning management interests with those of the Company's
shareholders.
As a result of the work initially performed by the Compensation Committee and
completed by the Performance Compensation Committee in December 1993, several
important decisions were reached regarding incentive compensation. First, as a
transition matter, the thresholds of pretax income as a percentage of net sales
for bonuses under the Salaried Incentive Bonus Plan and the Additional Incen-
tive Bonus Plan for fiscal year 1994 were set at the same levels as in previous
years, but excluded the impact of certain "investment spending" for new busi-
nesses and international expansion. Second, commencing with respect to fiscal
year 1995, no further payments will be made under the Additional Incentive Bo-
nus Plan. Third, commencing with respect to fiscal year 1995, a new matrix of
sales growth and profitability has been established for the Salaried Incentive
Bonus Plan and no exclusions will be made for investment spending. This matrix
will now take into account the Company's percentage growth in net sales, as
well as the Company's pretax income expressed as a percentage of net sales.
Components of Fiscal Year 1994 Compensation
Base Salary. The base salary levels for each of the Company's Named Executive
Officers were increased by approximately 14% to 17% over the prior fiscal year.
Three of the
12
four Named Executive Officers took on additional duties in connection with
their promotions, which were effective in February 1993. The Compensation Com-
mittee considered these increases necessary and appropriate given the Company's
strong desire to motivate, reward and retain these individuals.
Salaried Incentive Bonus Plan. For fiscal years 1988 through and including
1994, the Salaried Incentive Bonus Plan provided salaried employees with bo-
nuses for each year in which pretax income exceeded 5% of net sales. Salaried
employees who participated and the level of their participation as a percentage
of salary were determined by the Board of Directors. For most of the Company's
salaried employees, the level of participation as a percentage of salary has
historically been 10%. For the Company's executive officers, the level of par-
ticipation as a percentage of salary has historically been 40-70%. Each partic-
ipant's bonus has been a function of two factors: (i) the participant's per-
centage level of participation, and (ii) the extent to which the Company's pre-
tax income exceeded 5% of net sales. Bonuses paid to the Company's four Named
Executive Officers pursuant to the Salaried Incentive Bonus Plan for fiscal
year 1994 totaled $346,484, compared to $345,304 paid to the Company's five
Named Executive Officers in fiscal year 1993. This increase in the average bo-
nus paid per Named Executive Officer is based on improved financial performance
in which the Company's pretax income amounted to 8.0% of net sales compared to
7.4% in the prior year.
For fiscal year 1995 and thereafter, the Salaried Incentive Bonus Plan estab-
lishes bonus eligibility amounts ranging from 10% to 100% of base salary for
individual participants. Participants earn bonuses equal to their bonus eligi-
bility amounts, multiplied by a factor which depends on overall corporate re-
sults measured by a matrix of (i) growth in net sales and (ii) pretax income
expressed as a percentage of net sales for the fiscal year of participation. No
bonuses are payable if net sales increase by less than 7% in a year or if pre-
tax earnings are less than 5% of net sales. The matrix is subject to further
review and adjustment from time to time by the Performance Compensation Commit-
tee.
Additional Incentive Bonus Plan. The purpose of the Additional Incentive Bo-
nus Plan has been to provide key officers of the Company with additional incen-
tive to increase their efforts on the Company's behalf and to remain in or en-
ter into the employ of the Company. The Additional Incentive Bonus Plan pro-
vided participants with bonuses in the form of cash, Company Common Stock or a
combination thereof in the event the Company earned pretax income in excess of
6% of net sales for the fiscal year of participation. The amount of each addi-
tional incentive bonus has been a function of two factors: (i) the partici-
pant's level of eligibility as determined by the Compensation Committee and
(ii) the extent to which the Company's pretax income exceeded 6% of net sales.
The Compensation Committee's determinations of persons eligible to participate
in the Additional Incentive Bonus Plan and the level of eligibility for such
participants has been based on subjective rather than objective factors.
In fiscal year 1994, the only participants in the Additional Incentive Bonus
Plan were Messrs. End, Dyer and Schaecher. They re-
13
ceived $196,875, $196,875 and $98,437, respectively, based on improved finan-
cial performance in which the Company's pretax income amounted to 8.0% of net
sales compared to 7.4% in the prior year.
As discussed above, the Compensation Committee has determined that commencing
with respect to fiscal year 1995, no further payments will be made under the
Additional Incentive Bonus Plan.
Stock Options. In fiscal year 1994, the Company made stock option grants to
Messrs. End, Dyer, Schaecher and Orum in the amounts of 100,000 shares, 100,000
shares, 4,300 shares and 19,300 shares, respectively. These grants are consis-
tent with the Company's announced goal of providing significant stock-based in-
centive compensation for senior executives so as to incent management to in-
crease shareholder value over time.
Chief Executive Officer Compensation
William T. End became the Company's chief executive officer effective at the
beginning of fiscal year 1994, while continuing to serve as the Company's Pres-
ident and chief operating officer. In light of his additional responsibilities,
Mr. End's annual base salary was increased from $300,000 to $350,000 at the be-
ginning of fiscal year 1994 and was further increased to $400,000 at the begin-
ning of fiscal year 1995. During fiscal year 1994, Mr. End also received bo-
nuses of $123,105 under the Salaried Incentive Bonus Plan and $196,875 under
the Additional Incentive Bonus Plan.
Consistent with the goal of providing significant stock-based incentive com-
pensation for senior executives, the Performance Compensation Committee also
awarded to Mr. End options to purchase 100,000 shares of the Company's common
stock at $41.50 per share (the market price per share of the common stock on
the date of grant in December 1993). The options are exercisable for ten years
and vest at the rate of 10% per year for four years, with the balance of 60%
vesting on the fifth anniversary of the grant. The specific number and vesting
rate of the options awarded was based principally on subjective judgment fac-
tors, including the review of overall compensation practices described above
and the existing level of Mr. End's beneficial ownership of stock in the Compa-
ny. Because insufficient options were available under the Stock Option Plan to
cover all of the options awarded to Mr. End, the grant of 25,000 of the options
was made subject to shareholder approval of an amendment to increase the number
of options which may be granted under the Plan. See "Approval of Amendment to
the Stock Option Plan."
Submitted by the Compensation Committee of the Board of Directors
Gary C. Comer, Chairman
David B. Heller
Howard G. Krane
John N. Latter
14
PERFORMANCE GRAPH
The following graph presents the cumulative total shareholder return of the
Company, the Standard & Poor's 400 Index, and the Value Line Retail Index for
a five year period. Cumulative total shareholder return is defined as share
price appreciation assuming reinvestment of dividends. The Company's Common
Stock is included in both the Standard & Poor's 400 Index and the Value Line
Retail Index. In addition to the Company, 54 retailers (including catalog com-
panies) comprise the Value Line Retail Index.
COMPARISON OF FIVE-YEAR TOTAL RETURN
AMONG LANDS' END, INC., VALUE LINE RETAIL INDEX AND S&P 400 INDEX
VALUE OF $100 INVESTED ON FEBRUARY 1,
1989 AT
---------------------------------------
1/31/90 1/31/91 1/31/92 1/29/93 1/28/94
------- ------- ------- ------- -------
Lands' End, Inc......................... $ 58 $ 61 $114 $ 94 $173
Value Line Retail Index................. 115 128 177 188 192
S&P 400 Index........................... 116 130 184 204 235
- --------
Note: Assumes $100 invested February 1, 1989 in Lands' End Stock, Value Line
Retail Index and S&P 400 Index (dividends reinvested)
15
APPROVAL OF AMENDMENT OF ARTICLE FOURTH
OF THE CERTIFICATE OF INCORPORATION
In February 1994, the Company's Board of Directors authorized an amendment of
Article Fourth of the Company's Certificate of Incorporation, subject to share-
holder approval, to increase the number of authorized shares of Common Stock
from 30 million to 160 million (the "Charter Amendment"). The Board of Direc-
tors believes that the availability of additional Common Stock will provide the
Company with the necessary flexibility to issue Common Stock if and when the
need arises. The Board of Directors currently anticipates issuing a portion of
the additional Common Stock authorized by the Charter Amendment in connection
with a two-for-one stock split (effected as a stock dividend) to be made in
fiscal year 1995, subject to market conditions and other factors. Stock splits
and stock dividends can tend to broaden the market for the Company's shares and
bring the price of the Company's shares within a range which is more suitable
for individual investors. Furthermore, the additional Common Stock may be is-
sued in connection with acquisitions of other companies and, should the Board
of Directors find it advisable to raise additional corporate funds for acquisi-
tions or other purposes, the additional Common Stock may be sold for cash.
The text of the proposed Charter Amendment is set forth below:
RESOLVED, that Article Fourth of the Company's Certificate of Incorpora-
tion be amended to read as follows:
ARTICLE FOURTH: The total number of shares of stock which the Corporation
has authority to issue is 165,000,000 shares, of which 5,000,000 shares
shall be designated Serial Preferred Stock, par value $.01 per share and
160,000,000 shares shall be Common Stock, par value $.01 per share.
The additional authorized shares of Common Stock will be available for issu-
ance at the discretion of the Board of Directors, without further action by
shareholders except to the extent required by applicable law or by the rules of
any stock exchange on which the Company's securities may then be listed. Ac-
cordingly, the Board of Directors may set the date and terms upon which those
shares will be issued, based upon conditions existing at the time of issuance.
The Board of Directors does not have any present agreements, commitments, un-
derstandings, or arrangements with respect to the issuance or sale of any of
the additional shares of Common Stock, or the currently authorized Preferred
Stock. Furthermore, no employee stock ownership plans or similar stock commit-
ments currently exist with respect to the future issuance of Common Stock or
Preferred Stock. Holders of Common Stock do not have preemptive rights to pur-
chase shares of the Company's Common Stock or Preferred Stock that are offered
for sale.
A majority of the Company's issued and outstanding Common Stock is held by
Mr. Gary C. Comer, the Company's Chairman. As a result, the proposed increase
in the number of authorized shares of Common Stock will not affect the control
of the Company. The Company has not instituted any plans or issued any securi-
ties designed to defer or prevent a change in control, and the Company is not
aware of any attempt to effect a change in control of the Company.
16
The Board of Directors recommends that the shareholders vote "FOR" the ap-
proval of this amendment of Article Fourth of the Certificate of Incorporation.
APPROVAL OF AMENDMENT TO THE STOCK OPTION PLAN
The Company seeks shareholder approval of thean amendment to the Stock Option
Plan (as herein amended,to extend the "Plan") to (i) authorize an additional 250,000
sharestermination date of Commonthe Stock for issuance thereunder and (ii) establish 200,000 asOption Plan from December 31,
1995 until December 31, 2000 (the "Plan Amendment"). The termination date of
the maximum number of shares with respect toStock Option Plan means the date on which no further options may be granted
to
any one employee during any one year (the "Plan Amendment"). At the time the
Plan was approved by shareholders, 1,000,000 shares were authorized for issu-
ance pursuant thereto. Options with respect to 998,600 shares originally autho-
rized under the PlanStock Option Plan; provided that all options which prior to the
termination date have not expired, terminated or been granted to date. Furthermore, optionsexercised or surrendered
may be exercised thereafter in accordance with re-
spect to an additional 25,000 shares were granted in December 1993 to each of
William T. End and David F. Dyer, subject to shareholder approval of the Plan
Amendment.their terms. The Board of
Directors recommends that the shareholders vote "FOR" the approval of this
amendment to the Stock Option Plan.
A total of 2,500,000 shares of Company Common Stock are authorized for
issuance pursuant to the Stock Option Plan. The Plan Amendment does not
increase such number of authorized shares. Stock options with respect to
1,510,500 shares authorized under the Stock Option Plan have been granted to
date.
Although the Company is currently seeking shareholder approval to extend the
termination date of the Stock Option Plan for five years, the Compensation
Committee and the Performance Compensation Committee, in consultation with
their professional compensation advisers, are beginning to consider the
adoption of a comprehensive omnibus long-term incentive plan that would provide
for, among other things, the grant of stock options. It is expected that such a
plan would be adopted by the Compensation Committee and the Performance
Compensation Committee during the course of the coming year and would be
presented to the Company's shareholders for approval in next year's proxy
statement. If such a plan were to be adopted and approved, it is expected that
the Stock Option Plan and the Restricted Stock Plan would be superseded by the
new plan at such time.
The following summary of the Stock Option Plan is qualified in its entirety
by the full text of the Stock Option Plan, a copy of which may be obtained by
shareholders of the Com-
panyCompany upon request directed to the Secretary of the
Company at One Lands' End Lane, Dodgeville, Wisconsin 53595. For additional
information regarding stock options granted to certain officers, see "Executive
Compensation" above.
GENERAL
The Company's Stock Option Plan has been maintained by the Company since
No-
vember 1990. Under the Stock Option Plan, officers and key employees designated by the
Per-
formancePerformance Compensation Committee are granted stock options to purchase shares
of the Company's Common Stock. Options are granted under the Stock Option Plan
atwith an exercise price equal to the fair mar-
ketmarket value per share of the
Company's Common Stock on the date of grant.
The purpose of the Stock Option Plan is to provide officers and key employees
of the Com-
panyCompany with additional incentive to increase their efforts on the
Company's be-
halfbehalf and to remain in or enter into the employ of the Company by
granting such employees incentive stock options (within the meaning of Section
422 of the In-
ternalInternal Revenue Code of 1986, as amended (the "Internal Revenue
Code")) and/or nonqualified stock options (all options granted under the Stock
Option Plan which are not incentive stock options) to purchase shares of the
Company's Common Stock. The Company believes that such grants will inspire the
continued efforts of thoseits officers and key employees and the continuity of their
employment with the Com-
pany.Company.
ADMINISTRATION OF THE STOCK OPTION PLAN
The Stock Option Plan is currently administered by the Performance
Compensation Committee of the Board of Directors (the "Committee"), which is composed of David B.
Heller (chairman) and John N. Latter, neither of whom is or has ever been an
employee or officer of the Company or any related entity and each of whom is
not currently receiving compensation for personal services to the Company in
any capacity other than as a director of the Company.. The members
of the Com-
mittee
17
Committee must be "disinterested persons" as that term is defined in
Rule 16b-3 of the Securities and Exchange Commission and "outside directors" as
that term is de-
fineddefined in Section 162(m) of the Internal Revenue Code. The
Committee has the full power to construe and interpret the Stock Option Plan,
to establish the terms of any options granted thereunder, and
12
to determine the individuals to whom options will be granted under the Stock
Option Plan. In selecting participants and in determining the type and amount
of their respective benefits, the Committee may consider such factors as it
deems pertinent. Currently, there are approximately 20 offi-
cers22 officers and key employees eligible to participateof the
Company participating in the Stock Option Plan.
SHARES RESERVEDAVAILABLE FOR ISSUANCE UNDER THE STOCK OPTION PLAN
Currently, thereThere is an aggregate of 1,000,000989,500 shares of the Company's Common Stock
reservedavailable for issuance upon exercise of options to be granted under the Stock
Option Plan, which shares may be authorized and unissued shares or treasury
shares. The Plan
Amendment provides for the reservation of an additional 250,000 shares for is-
suance upon exercise of options granted under the Plan. The closing price of the Company's Common Stock on the New York Stock
Exchange on April 12, 19946, 1995, was $49.375.$17.50.
MAXIMUM GRANT TO ANY ONE EMPLOYEE
The Stock Option Plan Amendment provides that any one employee may receive options with
respect to no more than 200,000400,000 shares of Company Common Stock in any one year.
OPTION TERMS
At the time the Committee approves the granting of an option to an officer or
key employee, the Committee must also designate (i) the date of grant of such
option (provided that such date may not be earlier than the date the option is
approved by the Committee), (ii) the option price per share of Company Common
Stock (provided that no option may have an option price per share of Company
Common Stock of less than 100 percent of the fair market value of a share of
Company Common Stock on the date of grant), (iii) the schedule and times at
which such options will vest and become exercisable (provided that no option
may be exercised later than December 31 of the year in which the tenth
anniver-
saryanniversary of the date of grant occurs), and (iv) whether the option will or
will not constitute an incentive stock option under Section 422 of the Internal
Revenue Code. The Stock Option Plan also authorizes the Committee to determine
the form of option price payment (cash, Company Common Stock or a combination
thereof), to issue replacement options to participants who voluntarily
surrender and cancel prior options with a price per share of Company Common
Stock equal to or greater than the price per share of the prior option, to
accelerate the vesting and exercisability of all or part of any option, and to
adjust the number and type of shares of Company Common Stock subject to the
Stock Option Plan or outstanding options in order to prevent a dilution or
enlargement of benefits as a result of a corpo-
ratecorporate transaction or event.
AnyExcept as otherwise determined by the Performance Compensation Committee in
connection with a specific option: (i) any unexercised option is exercisable
for 12 monthsone year following a participant's retirement (or until such earlier time
as the option would otherwise expire or terminate on its own terms). Vested, (ii)
vested but unexercised options may be exercised for 12 monthsone year following a
termination of employment on account of death and for 180 days following a
termi-
18
nationtermination of employment on account of disability (or until such earlier time
as the option would otherwise expire or terminate on its own terms). If and (iii)
if a partici-
pantparticipant ceases to be employed by the Company for reasons other than
his or her disability, death or retirement, the option terminates and no
portion of the terminated option will be exercisable after that date. Stock
options have historically been granted with post-employment exercise periods
consistent with those specifically described in the Stock Option Plan. However,
after seeking the advice of its compensation consulting firm, with respect to
the stock option grants made in February 1995, the Performance Compensation
Committee extended the post-employment exercise periods in the case of a
participant's retirement or disability to three years in each case. At the same
time, the Performance Compensation Committee determined that all future grants
of stock options, unless otherwise specified at the time of grant, would have
the same modified post-employment exercise periods.
No option granted under the Stock Option Plan is transferable otherwise than
by will or the laws of descent and distribution.
13
AMENDMENT AND TERMINATION OF THE STOCK OPTION PLAN
The Board of Directors may amend the Stock Option Plan at any time in its
sole discretion, but no amendment may, without the participant's consent,
impair his or her rights to any option previously granted under the Stock
Option Plan, or without shareholder approval (i) increase the maximum number of
shares of Company Common Stock which may be issued under the Stock Option Plan
(except to prevent a dilution or enlargement of benefits as a result of a
corporate transaction or event), (ii) extend the termination date of the Stock
Option Plan or any option granted under the Stock Option Plan, or (iii) en-
largeenlarge
the class of employees eligible to receive options under the Stock Option Plan.
The Board of Directors may terminate the Stock Option Plan at any time with
respect to shares of Company Common Stock for which options have not previously
been granted. Share-
holderShareholder approval may also be required if there are "material
changes" to the Stock Option Plan for purposes of Section 162(m) of the
Internal Revenue Code or to comply with new legislation. UnlessThe Stock Option Plan
currently provides that unless terminated earlier, terminated, the Stock Option Plan will
terminate at the close of business on December 31, 1995. The Plan Amendment
provides that unless terminated earlier, the Stock Option Plan will terminate
at the close of business on December 31, 2000.
FEDERAL INCOME TAX CONSEQUENCES
The following is intended only as a brief, general summary of the federal
in-
comeincome tax rules relevant to stock options granted under the Stock Option Plan,
and assumes (i) that any participant subject to Section 16(b) of the Securities
Exchange Act of 1934 (typically, officers and directors and major shareholders
of the Company) will not exercise any option granted under the Stock Option
Plan before the six month anniversary of the date of grant of such option and
(ii) that the exer-
ciseexercise of options and disposition of option shares occur during
the lifetime of the participant. This discussion is not intended to provide
guidance to partic-
ipants;participants; participants should consult their own personal tax
advisors.
Nonqualified Stock Options. The holder of a nonqualified stock option ("NQO")
does not recognize taxable income upon the grant of the NQO, nor is the Company
entitled, for income tax purposes, to a deduction. The participant recognizes
ordinary income (subject to withholding taxes) on the exercise of an NQO equal to the excess of the fair
market value of the shares received on exercise over the option exercise price.
The fair market value of the shares is measured on the exercise date.
The participant's gain is long-term or short-term depending
upon whether the shares were held for more than one year. The Company does not
receive a deduction for any capital gain recognized by the participant.
If the Company complies with applicable withholdingdocumentation requirements, it is
gen-
erallygenerally entitled to a deduction in computing its federal income taxes in an
amount equal to the ordinary income recognized by the participant on the
exer-
ciseexercise of the NQO.
19
If a participant sells shares acquired pursuant to the exercise of an NQO,
the participant will recognize capital gain or loss equal to the difference
be-
tweenbetween the selling price of the shares and their fair market value on the
exer-
ciseexercise date.
Incentive Stock Options. The holder of an incentive stock option ("ISO") does
not realize taxable income upon the grant or exercise of the ISO and the
Com-
panyCompany is not entitled to any deduction in respect of such grant or exercise.
As discussed below, however, a participant may be subject to the alternative
mini-
mumminimum tax on the exercise of an ISO.
The income tax treatment of any gain or loss realized upon a participant's
disposition of option shares depends on the timing of the disposition. If the
option shares have been held for at least one year and if at least two years
have elapsed since the date of grant of the ISO (the "Required Holding
Peri-
ods"Periods"), then the participant recognizes (i) long-term capital gain to the
extent that the selling price exceeds the option price or (ii) capital loss to
the ex-
tentextent that the option price exceeds the selling price. In either case, no
deduc-
tiondeduction is allowed to the Company.
If a participant disposes of option shares before the expiration of the
Re-
quiredRequired Holding Periods (a "disqualifying disposition"), then (i) if the
selling price exceeds the fair market value of the option shares on the date
the ISO was exercised, the excess of such fair market value over the option
price is taxable to the
14
participant as ordinary income and the excess of the selling price over such
fair market value is taxable to the participant as capital gain, (ii) if the
selling price exceeds the option price but does not exceed the fair market
value of the option shares on the date the ISO was exercised, the excess of the
selling price over the option price is taxable to the partic-
ipantparticipant as ordinary
income and (iii) if the selling price is less than the op-
tionoption price, the
difference is treated as capital loss to the participant. In each case, the
Company is entitled to a deduction equal to the amount of ordi-
naryordinary income (but
not capital gain) recognized by the participant on the dis-
qualifyingdisqualifying
disposition.
The amount by which the fair market value of shares of Company Common Stock
(determined as of the exercise date) received through the exercise of an ISO
exceeds the option exercise price is included in the participant's alternative
minimum taxable income and may subject the participant to alternative minimum
tax. Such alternative minimum tax may be payable even though the participant
receives no cash upon the exercise of his or her ISO with which to pay such
tax.
Exercise with Previously Owned Shares. The previous discussion assumes that
all shares of Company Common Stock acquired on the exercise of an NQO or ISO
are paid for in cash. If a participant pays for all or a portion of the option
exercise price with previously owned shares of Company Common Stock, the
par-
ticipantparticipant will generally (although not in all cases) recognize no gain or
loss on the previously owned shares surrendered. The participant's tax basis in
and holding period for the surrendered shares (for purposes of determining
capital gains and losses, but not for purposes of determining whether a
disqualifying disposition occurs and its consequences) will generally carry
over to an equal number of shares received.
20
LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Last year Congress recently enacted certain provisions into the Internal Revenue Code
under which compensation paid to certain executivesexecutive officers in excess of $1
million per year may not be deductible. The Company believes that compensation
income rec-
ognizedrecognized by its executivesexecutive officers pursuant to the Stock Option Plan
will be exempted from those pro-
visionsprovisions and that the Company will therefore not therefore
lose the benefit of any poten-
tialpotential tax deductions.
NEW PLAN BENEFITS
Options with respect to 25,000 shares of the Company's common stock were
granted to each of William T. End and David F. Dyer in December 1993, contin-
gent on the subsequent receipt of shareholder approval to increase the number
of options which may be granted under the Plan. As of the date of this Proxy
Statement, the Committee intends to grant additional stock options under the
Plan. However, the number of stock options to be granted under the Plan and the
identity of any particular employee to whom stock options are to be granted
cannot be determined as of this date. Please refer to "Executive Compensation"
as to all compensation plans in effect as of the date of this Proxy Statement
or in effect during the last three fiscal years with respect to each Named Ex-
ecutive Officer.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the shareholders ratify the appoint-
mentappointment of
Arthur Andersen & Co.LLP as independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending January
27, 1995. Arthur Andersen & Co. has audited the consolidated financial state-
ments of the Company each year since 1980.February 2, 1996.
A representative of Arthur Andersen & Co.LLP will be present at the meeting with the
opportunity to make a statement if such representative so desires, and will be
available to respond to appro-
priateappropriate questions raised orally at the meeting or
submitted in writing to the Company's Secretary before the meeting.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten-percent
share-
holdersshareholders are required by Securities and Exchange Commission regulation to
fur-
nishfurnish the Company with copies of all Section 16(a) forms they file.
To the best of the Company's knowledge, based solely on its review of the
copies of such forms received by it, or written representations from certain
reporting persons that no Section 16(a) forms were required for those persons,
except as described below, all Section 16(a) filing requirements applicable to
its officers, directors and
21
greater than ten percent beneficial owners were
complied with during the two fiscal years ended
January 28, 1994.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters that will be pre-
sented for action at the 1994 Annual Meeting. Should any additional matters
properly come before the meeting, properly signed and dated proxies will be
voted on those matters by the persons named therein in accordance with the best
judgment of such persons.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Company's By-Laws require that the Company be provided with written no-
tice with respect to the nomination of a person for election as a director or
the submission of any proposal at an annual meeting of shareholders. Any such
notice must include certain information concerning the nominating or proposing
shareholder, and the nominee or the proposal, and must be furnished to the Com-
pany not less than 10 business days prior to such meeting. A copy of the appli-
cable By-Law provision may be obtained, without charge, upon written request to
the Secretary of the Company at the address set forth below.
In addition, all shareholder proposals to be included in the Board of Direc-
tors' Proxy Statement and proxy for the 1995 Annual Meeting of shareholders (i)
must be received by the Secretary of the Company not later than December 19,
1994, and (ii) must satisfy the conditions established by the Securities and
Exchange Commission as necessary to entitle such proposal to be included in the
Proxy Statement and form of proxy.
COST OF PROXY SOLICITATION
The Company will pay the cost of preparing, printing and mailing proxy mate-
rials as well as the cost of soliciting proxies on behalf of the Board of Di-
rectors. In addition to using the mails, officers and other employees may so-
licit proxies in person and by telephone and telegraph.
REPORT TO SHAREHOLDERS
The Company has mailed this Proxy Statement to each shareholder entitled to
vote at the Annual Meeting. A copy of the Company's 1994 Annual Report was
mailed to each shareholder on or about April 4, 1994. Included in the 1994 An-
nual Report are the Company's consolidated financial statements for the fiscal
year ended January 28, 1994.
22
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 28, 1994, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE
OBTAINED WITHOUT CHARGE BY SENDING A WRITTEN REQUEST TO THE SECRETARY, LANDS'
END, INC., ONE LANDS' END LANE, DODGEVILLE, WISCONSIN 53595.
By order of the Board of Directors,
LOGO
Robert S. Osborne
Secretary
April 18, 1994
2315
LANDS' END 19941995 ANNUAL MEETING
[MAP SHOWING LOCATION OF ANNUAL MEETING APPEARS HERE]
PAGE WHERE
GRAPHIC APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
15 [PERFORMANCE GRAPH APPEARS HERE]
BACK COVER [MAP SHOWING LOCATION OF ANNUAL MEETING APPEARS HERE]LOGO
LANDS' END, INC.
ANNUAL MEETING OF SHAREHOLDERS--MAY 18, 199417, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary C. Comer, William T. EndMichael J. Smith and Robert S.
Osborne as Proxies, each with the power to appoint his substitute and hereby
authorizes each of them to represent and to vote, as designated below, all of
the shares of common stock of Lands' End, Inc. held of record by the
undersigned on March 25, 1994,24, 1995, at the annual meeting of shareholders to be held
on May 18,
1994,17, 1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS
NOMINEES: Richard C. AndersonJohn N. Latter and Howard G. KraneMichael J. Smith
[_] For all nominees EXCEPT those whose names are inserted on the line
below.
--------------------------------------------------------------------------
[_] Withhold authority to vote for all nominees.
2. PROPOSAL TO APPROVE AMENDMENT OF ARTICLE FOURTH OF CERTIFICATE OF
INCORPORATION
[_] FOR[_] AGAINST[_] ABSTAIN
3. PROPOSAL TO APPROVE AMENDMENT TO STOCK OPTION PLAN
[_] FOR[_] AGAINST[_]FOR [_] AGAINST [_] ABSTAIN
4.3. PROPOSAL TO APPROVE THE APPOINTMENT OF ARTHUR ANDERSEN & CO.LLP as the
independent public accountants of the company.Company.
[_] FOR[_] AGAINST[_]FOR [_] AGAINST [_] ABSTAIN
(Continued and to be Signed and Dated on other side)
5.- -------------------------------------------------------------------------------
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM 1,
FOR PROPOSAL 2 FOR PROPOSAL 3 AND FOR PROPOSAL 4.3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
Dated ____________________ 1994
--------------------------------_________________ 1995
-----------------------------
Signature
-------------------------------------------------------------
Please mark, sign, date Signature if held jointly
and return this proxy
card promptly using the
enclosed envelope.