SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11Section240.14a-11(c) or
Section
240.14a-12Section240.14a-12
THE WET SEAL, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(I)(3).No fee required.
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and 0-11.
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THE WET SEAL, INC.
64 FAIRBANKS
IRVINE,26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 9271892610
May 16, 19974, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Wet Seal, Inc. to be held at the Westin South Coast Plaza, 686 Anton Blvd.,
Costa Mesa, California 92626, at 10:00 a.m., on Tuesday,Wednesday, June 17, 1997.9, 1999.
During the Annual Meeting the matters described in the accompanying Proxy
Statement will be considered. In addition, there will be a report regarding the
progress of the Company and there will be an opportunity to ask questions of
general interest to you as a stockholder.
I hope you will be able to join us at the Annual Meeting. Whether or not you
expect to attend, you are urged to sign and return the enclosed proxy card in
the envelope provided in order to make certain that your shares will be
represented at the Annual Meeting.
Sincerely,
IRVING TEITELBAUM[LOGO]
Irving Teitelbaum
CHAIRMAN OF THE BOARD
THE WET SEAL, INC.
64 FAIRBANKS
IRVINE,26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 9271892610
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 19979, 1999
10:00 A.M.
---------------------------------------------
Notice is hereby given that the Annual Meeting (the "Annual Meeting") of
Stockholders of The Wet Seal, Inc. (the "Company") will be held at the Westin
South Coast Plaza, 686 Anton Blvd., Costa Mesa, California 92626, on Tuesday,Wednesday,
June 17, 19979, 1999 at 10:00 a.m. to consider and vote upon:
1. Election of a Board of Directors consisting of nine directors. The
attached Proxy Statement, which is part of the Notice, includes the names
of the nominees to be presented by the Board of Directors for election.
2. Approval of an amendment to the Company's Certificate of Incorporation
to divide the Board of Directors of the Company into
three classes.
3. Approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Preferred Stock, par value
$.01 per share, from 2,000,000 shares to 5,000,000 shares and the number
of authorized shares of Class A Common Stock, par value $.10 per share,
from 20,000,000 shares to 50,000,000 shares.
4. Approval of an amendment to the Company's Certificate of
Incorporation to require that at least seventy-five (75%) of the
Company's shares must approve or authorize any business combination
(as hereinafter defined) which has not been approved or authorized by
at least seventy-five (75%) of the then incumbent directors of the
Company.
5.3. Ratification and approval of the Company's 1996 Long-Term Incentive
Plan.
6.performance bonus award and incentive
bonus award to the Vice Chairman and Chief Executive Officer of the
Company to qualify such awards under Section 162(m) of the Internal
Revenue Code of 1986, as amended.
4. Ratification and approval of the performance bonus award and incentive
bonus award to the President and Chief Operating Officer of the Company
to qualify such awards under Section 162(m) of the Internal Revenue Code
of 1986, as amended.
5. Ratification of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year 1997.
7.1999.
6. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on May 2, 1997April 26, 1999 as
the record date for determination of stockholders entitled to notice of, and to
vote, at the Annual Meeting. A list of such stockholders will be available for
examination by any stockholder for any purpose germane to the Annual Meeting,
during normal business hours, at the office of the Company for a period of ten
days prior to the Annual Meeting.
To assure that your shares will be represented at the Annual Meeting, please
sign and promptly return the accompanying proxy card in the enclosed envelope.
You may revoke your proxy at any time before it is voted.
BY ORDER OF THE BOARD OF DIRECTORS,
STEPHEN GROSSBy Order of the Board of Directors,
[SIGNATURE]
Stephen Gross
SECRETARY
Dated: May 16, 19974, 1999
THE WET SEAL, INC.
64 FAIRBANKS
IRVINE,26972 BURBANK
FOOTHILL RANCH, CALIFORNIA 9271892610
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PROXY STATEMENT
JUNE 17, 19979, 1999
------------------------
This Proxy Statement is furnished by the Board of Directors of The Wet Seal,
Inc., a Delaware Corporation (the "Company"), in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be held
at the Westin South Coast Plaza, 686 Anton Blvd., Costa Mesa, California on
Tuesday,Wednesday, June 17, 19979, 1999 beginning at 10:00 a.m. and at any adjournments thereof.
The Annual Meeting has been called to consider and vote upon the election of
nine directors; the division of the Company's Board of Directors into three
classes; an increase in the number of authorized shares of the Company's
Preferred Stock and Class A Common Stock; the requirement that at least
seventy-five (75%) of the Company's shares must approve or authorize certain
business combinations; to ratify and approve the Company's 1996 Long-Term
Incentive Plan;performance
bonus award and incentive bonus award to the Vice Chairman and Chief Executive
Officer of the Company and to the President and Chief Operating Officer of the
Company and to qualify such awards under Section 162(m) of the Internal Revenue
Code of 1986, as amended; to ratify the Board of Directors' nomination of
Deloitte & Touche LLP as the Company's independent auditors; and to consider any
other business as may properly come before the Annual Meeting. This Proxy
Statement and the accompanying proxy are being sent to stockholders of record on
or about May 16, 1997.4, 1999.
VOTING BY STOCKHOLDERS
Only holders of record of the Company's common stock, at the close of
business on May 2, 1997,April 26, 1999, are entitled to receive notice of, and to vote at,
the Annual Meeting. On that date, there were 10,628,87410,733,386 shares of the Company's
Class A Common Stock, $.10 par value, and 2,912,665 shares of the Company's
Class B Common Stock, $.10 par value, issued outstanding and outstanding. Of the 10,733,386
shares of Class A Common Stock, 1,327,000 shares are currently held as Treasury
Stock and thus not entitled to vote. Class A Common Stock is entitled to one
vote per share and, while both the Class A and Class B vote together as a single
Class, the Class B Common Stock is entitled to two votes per share. However,
with respect to the vote to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Class A Common Stock, the holders of
Class A Common Stock shall vote as a separate class. According to the Company's
Restated Certificate of Incorporation, stockholders may not cumulate their
voting rights. Thus, the holders of a plurality of the shares voting at the
Annual Meeting will be able to elect all of the directors. The approval of item
2 will require the affirmative vote of the majority of the outstanding shares of
the Company entitled to vote thereon and, with respect to the increase in the
number of authorized shares of Class A Common Stock, the affirmative vote of the
majority of the outstanding shares of Class A Common Stock entitled to vote
thereon, voting together as a separate class. The ratification and approval of
items 23 through 65 will require the affirmative vote of holders of a majority of
the Common Stock entitled to vote thereon present in person or by proxy at the
Annual Meeting.
The shares represented by each properly executed unrevoked proxy received in
time for the Annual Meeting will be voted in accordance with the instructions
specified therein, or, in the absence of instructions, FOR items 1 through 6,5,
and will be voted in accordance with the discretion of the proxies upon all
other matters which may properly come before the Annual Meeting. Any proxy
received by the Company may be subsequently revoked by the stockholder any time
before it is voted at the meeting either by delivering a subsequent proxy or
other written notice of revocation to the Company at its above address or by
attending the meeting and voting in person. Pursuant to Delaware law,
abstentions are treated as present and entitled to vote and thus have the effect
of a vote against the matter. A broker non-vote on a matter is considered not
entitled to vote on that matter and thus is not counted in determining whether a
matter requiring approval of a majority of the shares present and entitled to
vote has been approved or whether a majority of the vote of the shares present
and entitled to vote has been cast.
1
ELECTION OF DIRECTORS
DIRECTORS
The Company's Bylaws give the Board the power to set the number of directors
at no less than three nor more than fifteen. The size of the Company's Board is
currently set at nine. The directors so elected will serve until the next Annual
Meeting of Stockholders. Nine directors are to be elected at the Annual Meeting
to be held on June 17, 1997.9, 1999. All of the nominees are currently directors of the
Company. The Board knows of no reason why any nominee for director would be
unable to serve as a director. In the event that any of them should become
unavailable prior to the Annual Meeting, the proxy will be voted for a
substitute nominee or nominees designated by the Board of Directors, or the
number of directors may be reduced accordingly.
The following table sets forth information regarding the nominees for
director:
NAME AND AGE PRINCIPAL OCCUPATION AND BACKGROUND
- ---------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------
George H. Benter, Jr.Jr................. Mr. George H. Benter, Jr. has been a director of the Company since 1990.
Age: 55 1990.56 Since May 1992, Mr. Benter has been President, Chief Operating Officer
and a director of City National Bank. From 1965 until April 1992, Mr.
Benter worked in various capacities with Security Pacific Corporation,
culminating in the position of Vice Chairman. Prior to that time he held
various positions with Security Pacific National Bank. He is also a
director of Whittaker Corporation.Corporation and The Seeley Company, a privately
held commercial real estate brokerage service company.
Kathy BronsteinBronstein...................... Ms. Kathy Bronstein was appointed the Company's Vice Chairman of the Board
Age: 45 Board47 in March 1994. Since March 1992, she has also served as the Company's
Chief Executive Officer. From March 1992 to March 1994, she was the
Company's President. From January 1985 through March 1992, Ms. Bronstein
was Executive Vice President and General Merchandise Manager and a
director of the Company. Ms. Bronstein's primary responsibilities
include formulating and directing the Company's expansion and overall
merchandising and marketing strategies.
Stephen Gross(1)..................... Mr. Stephen Gross has been the Secretary and a director of the Company
Age: 5153 since June 1984. Mr. Gross co-founded Suzy Shier Limited. Since 1967, he
has been a director and an officer of Suzy Shier Limited, having served
as President, Assistant Secretary and Treasurer since 1976. He has also
been the General Merchandise Manager of Suzy Shier Limited since 1974.
Mr. Gross also serves as President of Irwel Management Services Inc., a
management consulting firm established in 1975.
Walter F. LoebLoeb....................... Mr. Walter F. Loeb has been a director of the Company since May 1993. He
Age: 72 He74 is President of Loeb Associates Inc., a New York-based retail
consultancy company that has served a variety of domestic and
international companies since its founding in February 1990. Mr. Loeb is
also the publisher of "Loeb Retail Letter",Letter," a monthly analysis of the
retail industry. He currently is a director of Color Tile, Inc.,
Federal Realty Investment
Trust, Gymboree Corporation, Hudson's Bay Company, Mothers Work and InterTan,The
Warnaco Group, Inc.
2
NAME AND AGE PRINCIPAL OCCUPATION AND BACKGROUND
- ------------------------------------- --------------------------------------------------------------------------
Wilfred PoslunsPosluns...................... Mr. Wilfred Posluns has been a director of the Company since 1990. He is
Age: 65 is66 Managing Director of Cedarpoint Investments, Inc., a Toronto-based
venture capital company. Mr. Posluns was the Chairman of the Board of
Directors and Chief Executive Officer of Dylex Limited from July 1988 to
August 1995 and President from 1976 through 1990. He was a member of the
Board of Directors of Dylex Limited from 1966 to
2
NAME AND AGE PRINCIPAL OCCUPATION AND BACKGROUND
- ---------------------------------------------------------------------------------------------------------
Wilfred Posluns (con't.) August 1995. On January
11, 1995, Dylex Limited filed for court protection under the Companies'
Creditors Arrangement Act and emerged from protection under such Act in
1995. Mr. Posluns is a director of The John Forsyth Co. Inc., Israel Discount BankRadiology Corporation of Canada and Pacific
Linen. From 1973 until March 1992, Mr. Posluns was the Chairman of the
Board of Strathearn House Group Limited, a company of which, pursuant
to a voting trust agreement, he had joint control of 48% of the voting
shares. In February 1992, a receiver was appointed for Strathearn
House Group Limited and voluntary proceedings in reorganization were
initiated under Canadian laws.America.
Gerald RandolphRandolph...................... Mr. Gerald Randolph has been a director of the Company since July 1989.
Age: 78 1989.80 Mr. Randolph is a chartered accountant in Canada. He has been engaged in
an outside professional capacity by Suzy Shier Limited from its
inception in 1967, having served as its independent auditor, until July
1989 when he was appointed Chief Financial Officer and a director of
Suzy Shier Limited.
Alan SiegelSiegel.......................... Mr. Alan Siegel has been a director of the Company since 1990. Mr. Siegel
Age: 62 Siegel64 has been a partner in the law firm of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., which provides legal services to the Company, since August 1995. From 1987 to July 1995 he was
a partner in the law firm of Baker & McKenzie.
He is also a director of Thor Industries, Inc. and, Ermenegildo Zegna
Corporation.Corporation and Ascent Asset Management Advisory Services, Inc.
Irving Teitelbaum(1)................. Mr. Irving Teitelbaum has been Chairman of the Board and a director of the
Age: 58 the60 Company since June 1984. Mr. Teitelbaum is the co-founding President (in
1967) and current Chairman and Chief Executive Officer of Suzy Shier
Limited, a Canadian public company listed on the Toronto and Montreal
Stock Exchanges, retailing women's apparel and lingerie in over 400460
stores in Canada and the United Kingdom. Mr. Teitelbaum is
also Chairman of La Senza PLC, a U.K. public company listed on the AIM
market of the London Stock Exchange, retailing lingerie in over 38
stores in the United Kingdom.Canada. Mr. Teitelbaum also serves as President of First
Canada Management Corp., a management consulting firm.
Edmond ThomasThomas........................ Mr. Edmond Thomas was appointed the Company's President in March 1994.
Age: 4345 Since June 1992, he has also served as the Company's Chief Operating
Officer. His responsibilities include overseeing store operations, real
estate, finance, management information systems, marketing, store
construction, and the central distribution center.center and catalog. Mr. Thomas
became a director of the Company in August 1992. Prior to joining the
Company, from May 1991 through June 1992, Mr. Thomas was President and
Chief Operating Officer and a director of Domain, Inc., a Boston-based
upscale home furnishings retailer. From November 1988 to May 1991, Mr.
Thomas was President and Chief Financial Officer of Foxmoor Specialty
Stores Corporation, a retail women's apparel chain ("Foxmoor"). From
May 1985 to November 1988, Mr. Thomas held various positions with
Foxmoor, including Corporate Controller and Executive Vice President,
during which time his responsibilities included finance, management
information systems, distribution, real estate, store operations and
store construction.
- ------------------------
(1) Mr. Teitelbaum and Mr. Gross are brothers-in-law.
3
EXECUTIVE OFFICERS
The executive officers of the Company who are not also directors are set
forth below:
NAME AND AGE PRINCIPAL OCCUPATION AND BACKGROUND
- --------------------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------
Barbara Bachman
Age: 49........................... Ms. Barbara Bachman has been the Company's Vice President of Store
Age: 47 Operations since December 1994. In November 1998, Ms. Bachman was
promoted to Senior Vice President of Store Operations. From 1982 to 1994,
Ms. Bachmanshe served as Vice President of Stores Operations with Contempo Casuals.
She previously held various other positions with Contempo Casuals,
including Regional Director of Stores from 1979 to 1982, District Manager
from 1977 to 1979, and Store Manager from 1976 to 1977.
Cecilia Gasgonia
Age: 38........................... Ms. Cecilia Gasgonia has been the Director of Merchandise Planning
Age: 36 since
joining the Company in February 1994. She was appointed Vice President of
Merchandise Planning and Distribution in June 1995. From 1987 to January
1994, Ms. Gasgonia was Director of Merchandise Planning with Clothestime,
a junior retail chain.
Sharon Hughes
Age: 39........................... Ms. Sharon Hughes has been employed by the Company since May 1990.
Age: 37 Since
March 1994, she has served as the Vice President of Merchandising. From
May 1990 to March 1994 she served as a Merchandise Manager. From 1983 to
April 1990, Ms. Hughes was employed by Saturday's, a chain of clothing
stores, in various capacities, the most recent of which was General
Merchandise Manager.
Ann Cadier Kim
Age: 41........................... Ms. Ann Cadier Kim has been employed by the Company since January Age: 40 1986. In
March 1994, she was appointed Vice President of Finance. In November
1998, she was appointed Senior Vice President of Finance. Since December
1993 she has served as the Company's Chief Financial Officer. From
January 1986 to November 1993, Ms. Cadier Kim was the Company's
Controller. From September 1982 to August 1985, she was employed by
Touche Ross & Co., as an audit senior. Ms. Cadier Kim was the
Company's Controller. From September 1982 to August 1985, she was
employed by Touche Ross & Co., as an audit senior. Ms. Cadier Kim is a
certified public accountant.
Ron Shaban Mr. Ron Shaban has been employed by the Company since September 1993
Age: 52 as Director of Management Information Systems. In June 1995, he was
appointed Vice President of Management Information Systems. From
September 1991 to September 1993, Mr. Shaban was Director of
Management Information Systems with Rag Shops, Inc. From February 1988
to September 1991, he was Director of Management Information Systems
with G & G Shops, Inc., a division of Petrie Stores.
Cheryl Rudich Ms. Cheryl Rudich has been the Director of Marketing since joining the
Age: 36 Company in February 1994. She was appointed Vice President of
Marketing in August 1996. From 1985 to January 1994, Ms. Rudich was
Creative Director with The Mednick Group in Los Angeles.certified
public accountant.
4
The Board of Directors met or took action by written consent fiveeight times in
the fiscal year ended February 1, 1997.January 30, 1999. Each of the directors attended at least
75% of the Board of Directors meetings and their respective committee meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee consisting of Irving Teitelbaum,
Kathy Bronstein and Edmond Thomas. The Executive Committee was formed in April
1990. Its primary responsibility is to oversee the execution of lease
commitments made by the Company between meetings of the Board of Directors.
The Company has an Audit Committee consisting of Gerald Randolph (Chairman),
George H. Benter, Jr. and Wilfred Posluns. The Audit Committee is responsible
for reviewing, as it shall deem
4
appropriate, and recommending to the Board of Directors internal accounting and
finance controls for the Company and accounting principles and auditing
practices and procedures to be employed in the preparation and review of the
Company's financial statements. The Audit Committee is also responsible for
recommending to the Board of Directors independent public accountants to audit
the annual financial statements of the Company and scope of the audit to be
undertaken by the accountants.
The Company has no nominating committee. Nominations are proposed by the
Executive Committee of the Board.
The Company has a Compensation Committee consisting of Irving Teitelbaum,
Wilfred Posluns and Stephen Gross.George H. Benter, Jr. The Compensation Committee is
responsible for establishing general compensation policies and specific
compensation levels for the Company's executive officers. Effective April 1999,
the Compensation Committee has created an Incentive Compensation Subcommittee
consisting of Wilfred Posluns and George H. Benter, Jr. to address all issues
before the Compensation Committee that require decisions by directors who
qualify as outside directors under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and as non-employee directors under Section 16(b) of the
Securities Exchange Act of 1934, as amended. See "Report of the Compensation
Committee on Executive Compensation".Compensation."
The Company has an Option Committee consisting of Walter F. Loeb and George
H. Benter, Jr. The Option Committee is responsible for granting stock options to
executive officers and other key employees whose contributions are considered
important to the long-term success of the Company pursuant to the Company's
long-term incentive plans.
During the fiscal year ended February 1, 1997January 30, 1999, the Executive Committee met
or took action by written consent teneight times, the Compensation Committee met or
took action by written consent one time, the Audit Committee met or took action
by written consent three times and the Option Committee met or took action by
written consent threefour times.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation (cash and non cash) for the
Chief Executive Officer and the four other most highly compensated executive
officers ("named executive officers") who earned in excess of $100,000 per annum
during any of the Company's last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS
------------------------------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
----------------------------------------- STOCK--------------------------------------------------------------- RESTRICTED UNDERLYING
NAME AND FISCAL OTHER ANNUAL AWARDS STOCK OPTIONS LTIP ALL OTHERSTOCK
PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) COMPENASTION($COMPENSATION($)(1) ($AWARDS($)(2) (#) PAYOUTS($) COMPENSATION($)OPTIONS(#)
- -------------------- ------ --------- --------- -------------------------------------------- ----------- ----------- ---------- ------------- ----------------------------------- --------------- ------------
Kathy Bronstein 1996 633,171 917,560(3)Bronstein........... 1998 742,159 1,477,097(3) -- 42,303 -- --63,612 --
Vice Chairman and 1995 433,135 348,180(4)1997 682,418 1,271,375(4) -- 20,680 -- -- --59,982 120,000
Chief Executive 1994 284,6071996 633,171 917,560(5) -- 42,303 --
Officer
Edmond Thomas............. 1998 592,878 844,055(3) -- 200,00051,369 --
President and Chief 1997 563,627 726,500(4) -- 49,806 120,000
Operating Officer 1996 566,853 524,320(5) -- 37,010 --
Barbara Bachman........... 1998 187,731 40,000(3) -- 17,042 10,000
Senior Vice President 1997 176,423 40,000(4) -- 16,381 10,000
of Store Operations 1996 166,211 20,000(5) -- 12,276 --
Sharon Hughes............. 1998 179,808 25,000(3) -- 14,346 --
Vice President of 1997 181,730 90,813(4) -- 17,614 10,000
Merchandising 1996 138,768 20,000(5) -- 9,700 --
Ann Cadier Kim............ 1998 165,000 40,000(3) -- 14,346 10,000
Senior Vice President 1997 150,000 30,000(4) -- 13,210 10,000
of Finance 1996 140,951 20,000(5) -- 9,881 --
NAME AND LTIP ALL OTHER
PRINCIPAL POSITION PAYOUTS($) COMPENSATION($)
- -------------------------- --------------- -----------------
Kathy Bronstein........... -- 53,465(6)
Vice Chairman and -- 222,555(7)
Chief Executive -- --
Officer
Edmond Thomas 1996 566,853 524,320(3)Thomas............. -- 37,010 -- -- --33,517(6)
President and 1995 362,272 198,960(4)Chief -- 18,800 -- -- --
Chief49,062(7)
Operating Officer 1994 250,000 -- -- -- 200,000 -- --
Barbara Bachman 1996 166,211Bachman........... -- --
12,276Senior Vice President -- --
of Store Operations -- --
Sharon Hughes............. -- --
Vice President of 1995 152,654 5,000 -- 6,204 -- --
--
Store Operations 1994(5) 24,231 10,000 -- -- 10,000Merchandising -- --
Ann Cadier Kim 1996 140,951Kim............ -- --
9,881Senior Vice President -- --
--
Vice President of 1995 109,389 10,000 -- 5,266 10,000 -- --
Finance 1994(6) 92,819 -- -- -- 10,000 -- --
Sharon Hughes 1996 138,768 -- -- 9,700 -- -- --
Vice President of 1995 127,610 -- -- 5,170 -- -- --
Merchandising 1994 110,000 -- -- -- 10,000 -- --
- ------------------------------------------------------
(1) While the named executive officers enjoy certain perquisites, for fiscal
years 1994, 19951998, 1997 and 1996 these did not exceed the lesser of $50,000 or 10%
of each officer's salary and bonus.
(2) The Company has a stock bonus plan whereby certain employees of the Company
receive Class A Common Stock in proportion to their salary. The amount of
the award is also dependent on the Company's earnings before tax and the
stock price on the date of grant. The bonus shares vest at a rate of 33.33%
per year on each anniversary of the grant date, and a participant's right to
non issued shares is subject to forfeiture if the participant's employment
is terminated. Dividends are not paid on stock grant awards until such time
as the stock is vested and issued to the executive. SharesAggregate shares granted
under the plan held by executives at February 1, 1997to the named executive officers as of January 30, 1999 are as
follows: Ms. Bronstein--4,906;Bronstein-- 8,555; Mr. Thomas--5,803;Thomas--8,795; Ms. Bachman--1,451;Bachman--2,439; Ms.
Hughes--3,947; and Ms. Cadier Kim--2,599; and Ms. Hughes--2,991.Kim--3,412. The aggregate market value at
February 1,
1997January 30, 1999 of these shares is as follows: Ms. Bronstein--$98,733;321,882; Mr.
Thomas--$116,785;330,912; Ms. Bachman--$29,201;91,676; Ms. Hughes--$148,506; and Ms. Cadier
Kim--$52,305 and Ms.
Hughes-- $60,194.128,377.
(3) Bonus amounts earned in fiscal 1998 were paid to the executives in fiscal
1999.
(4) Bonus amounts earned in fiscal 1997 were paid to the executives in fiscal
1998.
(5) Bonus amounts earned in fiscal 1996 were paid to the executives in fiscal
1997.
(4) Bonus amounts earned(6) Amount represents pay in lieu of vacation for fiscal 1995 were paid1998.
(7) Amount represents pay in lieu of vacation for fiscal 1997 and prior fiscal
years back to original date of hire for Ms. Bronstein, fiscal 1985, and for
Mr. Thomas, fiscal 1992.
6
OPTION GRANTS
The following table sets forth information regarding options granted in 1998
to each of the named executive officers pursuant to the executives in fiscal
1996.
(5)Company's 1996 Long-Term
Incentive Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES PERCENTAGE OF STOCK PRICE
UNDERLYING TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE ($ EXPIRATION --------------------
NAME (SHARES)(1) FISCAL YEAR 1998 PER SHARE) DATE 5%($) 10%($)
- ------------------------------------------ ----------- ----------------- ------------- ----------- --------- ---------
Kathy Bronstein........................... -- -- -- -- -- --
Edmond Thomas............................. -- -- -- -- -- --
Barbara Bachman........................... 10,000 8% 19.31 11/18/08 121,440 307,752
Sharon Hughes............................. -- -- -- -- -- --
Ann Cadier Kim............................ 10,000 8% 19.31 11/18/08 121,440 307,752
- ------------------------
(1) The options granted to Ms. Bachman was appointed Vice President of Store Operations in December
1994.
(6)and Ms. Cadier Kim was appointed Vice Presidentvest at the rate of
Finance in March 1994.
OPTION GRANTS
There were no options granted in fiscal 1996.
620% per year for the next five years.
(2) Potential realizable value is based on the assumption that the stock price
of the Common Stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price performance.
7
OPTION EXERCISE AND FISCAL YEAR-END VALUES
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND OPTION VALUES AT FEBRUARY 1, 1997JANUARY 30, 1999
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEYAT "IN-THE-MONEY" OPTIONS AT
SHARES AT FEBRUARY 1, 1997(#) FEBRUARY 1, 1997($JANUARY 30, 1999(#) JANUARY 30, 1999($)(1)
ACQUIRED ON VALUE ---------------------------- -------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------- ------------- ----------- --------------------- ------------- ------------- --------------------- -------------
Kathy Bronstein.......................... 120,000 1,710,000 -- 120,000 -- 1,920,000
Edmond Thomas............................ 120,000 1,967,300 -- 120,000 -- 1,920,000
Barbara Bachman..........................Bronstein.................. -- -- 80,000 160,000 2,680,000 3,455,000
Edmond Thomas.................... -- -- 80,000 160,000 2,680,000 3,455,000
Barbara Bachman.................. 4,000 123,000 6,000 61,500 92,25020,000 173,750 417,900
Sharon Hughes.................... -- -- 2,500 10,000 59,000 236,000
Ann Cadier Kim........................... 5,000 79,250 1,000 14,000 12,125 193,000
Sharon Hughes............................ 3,500 36,750 500Kim................... 2,000 47,750 6,000 8,000 96,00024,000 160,750 537,650
- ------------------------
(1) Represents the market value of shares underlying "in-the-money" options on
February 1, 1997January 30, 1999 less the option exercise price. Options are "in-the-money"
at the fiscal year end if the fair market value of the underlying securities
on such date exceeds the exercise or base price of the option.
RETIREMENT PLAN
Irving Teitelbaum, Kathy Bronstein and Edmond Thomas are participants in The
Wet Seal, Inc. Supplemental Executive Retirement Plan ("SERP"), an unfunded,
nonqualified retirement plan. According to the terms of the SERP, a
participant's "Annual Accrued Benefit" shall be $250,000 which may be increased
upward, if applicable, based on the "Pre-Tax Profit Percentage" (as defined in
the SERP) for the three full fiscal years of the Company preceding the date the
participant's service with the Company is terminated, as follows:
ANNUAL ACCRUED
3-YEAR AVERAGE PRE-TAX PROFIT PERCENTAGE BENEFIT
- ----------------------------------------------------------------------- ---------------------
if 4.25% or greater but less than 4.75%................................ $ 300,000
if 4.75% or greater but less than 5.25%................................ $ 350,000
if 5.25% or greater but less than 5.75%................................ $ 400,000
if 5.75% or greater but less than 7.00%................................ $ 450,000
if 7.00% or greater.................................................... $ 500,000
A participant is entitled to receive benefits under the SERP upon his or her
Normal Retirement Date (the first day of the month following the date the
participant's service with the Company as an officer or executive has
terminated, and which occurs at or after the date the participant has attained
22.5 years of service with the Company). A participant may receive an early
retirement benefit equal to his or her Annual Accrued Benefit reduced by 1/2 of
1% per month for the number of months his or her retirement precedes his or her
Normal Retirement Date. The normal form of benefit is a straight life annuity,
ending in the month in which the participant dies. The Annual Accrued Benefit is
payable in 12 equal monthly installments a year. The participant may choose to
receive the benefit in the form of a 50% joint and survivor annuity. Benefits
under the SERP are forfeitable upon a termination of employment for Cause (as
defined in the SERP). Benefits under the SERP are provided by the Company on a
noncontributory basis.
DIRECTOR COMPENSATION
All directors who are not directly affiliated with the Company as well as
one director who is affiliated receive a fee of $5,000 for each board meeting
attended, with a minimum yearly fee of $20,000. All
8
directors are reimbursed for expenses connected with attendance at the meetings
of the Board of Directors. An additional fee of $1,000 is paid to non-employee
directors for each Audit committee meeting attended.
All directors who are not directly affiliated with the Company as well as
one director who is affiliated were granted stock options of 5,000 shares each
in fiscal 1997 pursuant to the Company's 1996 Long-Term Incentive Plan. Two
directors who are affiliated with the Company were granted stock options of
100,000 shares each in fiscal 1997 pursuant to the Company's 1996 Long-Term
Incentive Plan. The options vest at the rate of 20% per year for the next five
years.
All directors, except one, who are not directly affiliated with the Company
as well as one director who is affiliated were granted stock options of 10,000
shares each in fiscal 1994 pursuant to the Company's 1994 Long-Term Incentive
Plan. One independent director was granted 15,000 options in fiscal 1996. The
options vest at the rate of 20% per year for the next five years.
EMPLOYMENT AGREEMENTS
KATHY BRONSTEIN
Kathy Bronstein has served as the Chief Executive Officer of the Company
since March 1992. On December 30, 1988, in her former position of Executive Vice
President and General Merchandise Manager, Ms. Bronstein entered into an
employment agreement with the Company. Under this agreement, as amended, Ms.
Bronstein is entitled to a base salary of $550,000 per annum, adjusted annually
by a performance bonus of 0.5% ( 1/2 of 1%) of the pre-tax profits of the
Company for the preceding fiscal year to the extent this amount exceeds the
aggregate cash dividends Ms. Bronstein is eligible to receive on her holdings of
the Company's capital stock referable to the same fiscal year. This adjustment
is not cumulative and is in lieu of any salary review or cost of living
adjustments. Ms. Bronstein also receives an incentive bonus of 3.5% of the
pre-tax profits of the Company (as defined in the agreement) for each fiscal
year.
In January 1995, Ms. Bronstein's employment agreement was amended to provide
automatic extensions to the term of her employment agreement as well as
termination benefits upon the occurrence of certain trigger events. In the event
of a trigger event, the employment agreement is terminated and Ms. Bronstein is
entitled to receive an immediate payment approximately equal to three years of
Ms. Bronllstein'sBronstein's current base salary and bonus during the last three fiscal
years. Trigger events include a "change in control" andAND either (i) Ms.
Bronstein's election to resign within 90 days of a material change in Ms.
Bronstein's rights and duties or (ii) Ms. Bronstein's termination by the Company
without cause. A "change in control" means (i) the disposition or conversion by
a Class B stockholder (other than 7
Ms. Bronstein) of a majority of that
stockholder's Class B shares or (ii) the acquisition of more than 50% of the
voting power in a Class B stockholder or the ability to control the disposition
or voting of a Class B stockholder's shares andAND a majority of the Board of
Directors of the Company ceases to be those in office two years prior to the
change in control ("Continuing Directors") or those elected by a majority of
other Continuing Directors. In addition, upon a change in control (regardless of
the termination of the employment agreement), Ms. Bronstein's stock options
become immediately exercisable. In the event that the total payments made to Ms.
Bronstein upon the occurrence of a trigger event result in "excess parachute
payments" under the Internal Revenue Code of 1986, as amended, the Company would
be obligated to pay the excise tax due on such amount and any income tax
obligations arising from reimbursement of any such excise taxes.
Ms. Bronstein's agreement expires on January 30, 2002.2004. The agreement
automatically extends for an additional year on the first day of each subsequent
fiscal year for up to five years.year. These automatic extensions may be terminated by either party at any
time upon prior written notice. She has agreed not to compete with the Company
during the term of her employment and for a period of two (2) years thereafter.
She is provided with a car by the Company.
9
In April 1999, Ms. Bronstein's employment agreement was further amended to
provide that, commencing with fiscal year 1999, if stockholder approval is not
obtained with respect to the Bonus Awards granted to Ms. Bronstein under her
employment agreement then the performance bonus adjustment and the incentive
bonus (or portion thereof) will not be paid to Ms. Bronstein to the extent that
the aggregate remuneration (including but not limited to the base salary,
performance bonus adjustment and incentive bonus) otherwise payable under the
employment agreement exceeds $1,000,000. (See Proposal #3.)
The Company has obtained "key man" life insurance in the amount of $5.0$3.0
million payable to the Company in the event of Ms. Bronstein's death while
employed by the Company.
EDMOND THOMAS
Edmond Thomas has served as the Company's President and Chief Operating
Officer since March 17, 1994. On June 22, 1992, in his former position of
Executive Vice President and Chief Operating Officer, he entered into an
employment agreement with the Company. Under this agreement, as amended, Mr.
Thomas is entitled to a base salary of $500,000$550,000 per annum plus an annual
performance bonus adjustment of .25%.50% ( 1/42 of 1%) of the pre-tax profits of the
Company for the preceding fiscal year to the extent this amount exceeds the
aggregate cash dividends Mr. Thomas is eligible to receive on his holdings of
the Company's capital stock referable to the same fiscal year. This adjustment
is non cumulative and is in lieu of any salary review or cost of living
adjustments. Mr. Thomas also receives an incentive bonus of 2% of the pre-tax
profits of the Company (as defined in the agreement) for each fiscal year.
In January 1995, Mr. Thomas' employment agreement was amended to provide
automatic extensions to the term of his employment agreement as well as
termination benefits upon the occurrence of certain trigger events. In the event
of a trigger event, the employment agreement is terminated and Mr. Thomas is
entitled to receive an immediate payment approximately equal to three years of
Mr. Thomas' current base salary and bonus during the last three fiscal years.
Trigger events include a "change in control" andAND either (i) Mr. Thomas' election
to resign within 90 days of a material change in Mr. Thomas' rights and duties
or (ii) Mr. Thomas' termination by the Company without cause. A "change in
control" means (i) the disposition or conversion by a Class B stockholder (other
than Ms. Bronstein) of a majority of that stockholder's Class B shares or (ii)
the acquisition of more than 50% of the voting power in a Class B stockholder or
the ability to control the disposition or voting of a Class B stockholder's
shares andAND a majority of the Board of Directors of the Company ceases to be
those in office two years prior to the change in control ("Continuing
Directors") or those elected by a majority of other Continuing Directors. In
addition, upon a change in control (regardless of the termination of the
employment agreement), Mr. Thomas' stock options become immediately exercisable.
In the event that the total payments made to Mr. Thomas upon the occurrence of a
trigger event result in "excess parachute payments" under the Internal Revenue
Code of 1986, as amended, the Company would be obligated to pay the excise tax
due on such amount and any income tax obligations arising from reimbursement of
any such excise taxes.
Mr. Thomas' agreement expires on January 30, 2002.2004. The agreement
automatically extends for an additional year on the first day of each subsequent
fiscal year for up to five years.year. These automatic extensions may be terminated by either party at any
time upon prior written notice. He has agreed not to compete with the 8
Company
during the term of his employment and for a period of two (2) years thereafter.
He is provided with a car by the Company.
In April 1999, Mr. Thomas' employment agreement was further amended to
provide that, commencing with fiscal year 1999, if stockholder approval is not
obtained with respect to the Bonus Awards granted to Mr. Thomas under his
employment agreement then the performance bonus adjustment and the incentive
bonus (or portion thereof) will not be paid to Mr. Thomas to the extent that the
aggregate remuneration (including but not limited to the base salary,
performance bonus adjustment and incentive bonus) otherwise payable under the
employment agreement exceeds $1,000,000. (See Proposal #4.)
10
The Company has obtained "key man" life insurance in the amount of $5.0
million payable to the Company in the event of Mr. Thomas' death while employed
by the Company.
BUSINESS RELATIONSHIPS
MANAGEMENT SERVICES
In fiscal year ended January 30, 1999, a fee of $375,000, and in each of the
fiscal years ended January 31, 1998 and February 1, 1997, February 3, 1996 and
January 28, 1995, a fee of $250,000 was
paid to First Canada Management, Inc., a company controlled by Irving
Teitelbaum, for the services of Irving Teitelbaum, Chairman of the Board of the
Company, and Stephen Gross, Corporate Secretary of the Company, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Irving Teitelbaum, Wilfred Posluns and Stephen GrossGeorge H. Benter, Jr. serve as
members of the Compensation Committee. Mr. Teitelbaum also serves as Chairman of
the Board of
the Company and Mr. Gross also serves as the Secretary of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The primary duties of the Compensation Committee include: (i) reviewing the
compensation levels of the Company's primary executive officers and certain
other members of senior management, (ii) consulting with and making
recommendations to the Company's Option Committee regarding the Company's
overall policy of granting options and awards under the Company's long-term
incentive plans, (iii) monitoring the performance of senior management, and (iv)
related matters. A decision to employ any person with an annual compensation of
$150,000 or more (or any increase in annual compensation to $150,000 or more)
must be approved by the Compensation Committee. The Compensation Committee is
comprised entirely of non-employee Directors.
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are based upon the recognition
that The Wet Seal, Inc. competes in a creative industry in which it is critical
to stay current with rapidly changing trends and styles. Competition is intense
for talented executives who can successfully guide a company in this type of
competitive environment. Therefore, the Company's compensation programs are
designed to provide total compensation packages that will both attract talented
individuals to the Company as well as provide rewards based upon the Company's
long-term success.
With these principles in mind, the Compensation Committee has set forth the
following guidelines:
1. Provide base salaries which are competitive in the retail clothing
industry to attract and retain talented individuals;
2. Provide annual bonuses that are tied to the Company's short-term
performance to align the interests of the Company's executives with those of
its stockholders; and
3. Provide long-term incentive benefits which will reward long-term
commitment to the Company.
COMPENSATION OF EXECUTIVE OFFICERS
Base salaries for executive officers are established with a view to the
responsibilities of the position and the experience of the individual. Salary
levels are also fixed with reference to comparable companies in 9
retail and
related trades. The salaries of key executive officers and the incentive plans
in which they participate are reviewed annually by the Compensation Committee in
light of the Committee's assessment of individual performance, contribution to
the Company and level of responsibility.
11
The Chief Executive Officer (the "CEO") and the President and Chief
Operating Officer are eligible pursuant to their employment agreements (provided
the approval of the stockholders is obtained as described below--see Proposals
#3 and #4) to receive annual cash bonuses of 3.5% and 2%, respectively, of the
Company's pre-tax profit. The Compensation Committee believes that tying annual
cash bonuses to the Company's profitability aligns the interests of management
with stockholders and encourages intensive efforts to attain and increase
profitability. The CEO and the President and Chief Operating Officer of the
Company earned cash bonuses in fiscal 19961998 in the amounts of $917,560$1,477,097 and
$524,320,$844,055, respectively, which were paid in fiscal 1997.1999.
The Company also maintains an employee stock bonus plan in which the top 25
to 30
executives of the Company are eligible to participate. Awards under this plan to
executives are calculated by multiplying the Company's fiscal year-end pre-tax
profit as a percentage of sales by the executive's base salary and dividing such
amount by the price of the Company's Class A Common Stock as of the end of the
fiscal year. Grants under the stock bonus plan vest over a period of three
years.
Stock options are granted to executive officers and other key employees
whose contributions are considered important to the long-term success of the
Company pursuant to the Company's long-term incentive plans. Stock options have
historically been granted by the Option Committee on a case-by-case basis based
upon the Board's evaluation of an individual's past contributions and potential
future contributions to the Company. In granting stock options, the Option
Committee takes into consideration the anticipated long-term contributions of an
individual to the potential growth and success of the Company, as well as the
number of options previously granted to the individual.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Since March 1992, Kathy Bronstein has served as CEO of the Company. Ms.
Bronstein received a base salary of $375,000 in fiscal 1995. In December 1995,
Ms. Bronstein's employment agreement was amended to increase her base salary to
$550,000. The Compensation Committee deemed this increase appropriate in light
of the Company's recent performance and the successful acquisition of the
Contempo Casuals chain, which substantially increased the size of the Company.
As the Company continues to adapt to a changed environment in the women's retail
apparel industry, the Compensation Committee believes that Ms. Bronstein's
experience and capabilities will be critical in enabling the Company to remain
competitive and profitable. Ms. Bronstein is eligible to receive a
non-cumulative annual adjustment (in lieu of a cost of living adjustment) to her
base salary of 0.5% of the pre-tax profits of the Company for the preceding
fiscal year to the extent this amount exceeds the aggregate cash dividends Ms.
Bronstein is eligible to receive on her holdings of Company common stock for the
same fiscal year.year (provided the approval of the stockholders is obtained as
described below--see Proposal #3). Ms. Bronstein received such an adjustment in
fiscal 1996.1998. See "Executive Compensation and Other Information-- EmploymentInformation--Employment
Agreements." Ms. Bronstein is also eligible to receive an annual cash bonus
pursuant to her employment agreement of 3.5% of the pre-tax profits of the
Company for each fiscal year.year (provided the approval of the stockholders is
obtained as described below--see Proposal #3). Under this formula, Ms. Bronstein
earned a cash bonus in fiscal 19961998 in the amount of $917,560,$1,477,097, which was paid
in fiscal 1997.1999.
LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, enacted as
part of the Revenue Reconciliation Act of 1993, limits the deductibility of
compensation paid to certain executive officers of the Company beginning with
the Company's taxable year 1994. To qualify for deductibility under Section
162(m), compensation in excess of $1 million per year paid to the Chief
Executive Officer and the four other most highly compensated executive officers
at the end of such fiscal year generally must be either (1) paid pursuant to a
written binding contract in effect on February 17, 1993 or (2)
"performance-based" compensation as determined under Section 162(m). In order to
be considered "performance-based" for this purpose, compensation must be paid
solely on account of the attainment of one or more
12
pre-established performance goals established by a committee of two or more
"outside directors," pursuant to an arrangement that has been disclosed to and
approved by stockholders. Also, in order for an arrangement to give rise to
fully deductible "performance-based" compensation, the terms of the arrangement
must preclude the exercise of any discretion in the administration of the plan
that would have the effect of increasing compensation paid thereunder.
POLICY WITH RESPECT TO QUALIFYING COMPENSATION DEDUCTIBILITY
The Company's policy with respect to the deductibility limit of Section
162(m) of the Code generally is to preserve the federal income tax deductibility
of compensation paid when it is appropriate and is in the best interest of the
Company and its stockholders. However, the Company reserves the right to
authorize the payment of non-deductible compensation if it deems that it is
appropriate.
The Compensation Committee
Irving Teitelbaum
Wilfred Posluns
Stephen Gross
10George H. Benter, Jr.
13
STOCK PRICE PERFORMANCE GRAPH
The Performance Graph compares the cumulative stockholder return on the
Company's common stock with the return on the Total Return Index for the Nasdaq
Stock Market (US) and the Nasdaq Retail Trade Stocks. The Performance Graph
assumes $100 invested on January 31, 199228, 1994 in the stock of The Wet Seal, Inc.,
the Nasdaq Stock Market (US) and the Nasdaq Retail Trade Stocks. It also assumes
that all dividends are reinvested.
PERFORMANCE GRAPH
FOR THE WET SEAL COMMON STOCK
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
THE WET NASDAQ STOCK NASDAQ RETAIL
SEAL, INC. MARKET (US) TRADE STOCKS
January 31, 1992*DOLLARS The Wet Seal, Inc. Market (US) Trade Stocks
1/28/94* 100 100 100
January 29, 1993* 60 1131/27/95* 123 96 90
January 28, 1994* 28 129 96
January 27, 1995* 34 125 86
February 2, 1996* 63 177 97
January 31, 1997* 171 230 1192/2/96* 227 137 101
1/31/97* 619 178 124
1/30/98* 942 210 144
1/29/99* 1158 328 176
JANUARY
31, JANUARY 29,
JANUARY 28, JANUARY 27, FEBRUARY 2, JANUARY 31, 1992* 1993*JANUARY 30,
1994* 1995* 1996* 1997* ------- ----------- ----------- ----------- ----------- -----------1998*
--------------- --------------- --------------- --------------- ---------------
The Wet Seal, Inc............................Inc.................. 100 60 28 34 63 171123 227 619 942
Nasdaq Stock Market (US)................................ 100 113 129 125 177 23096 137 178 210
Nasdaq Retail Trade Stocks...................Stocks......... 100 90 96 86 97 119101 124 144
JANUARY 29,
1999*
-------------
The Wet Seal, Inc.................. 1,158
Nasdaq Stock Market (US)........... 328
Nasdaq Retail Trade Stocks......... 176
- ------------------------
* Date closest to the Company's fiscal year end.
The historical stock performance shown on the graph is not necessarily
indicative of future price performance.
1114
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of May 2, 1997,April 5, 1999, for (i) each person
known to the Company to have beneficial ownership of more than 5% of each class
of the Company's capital stock; (ii) each of the Company's directors; (iii) each
of the Company's executive officers designated in the Summary Compensation
Table; and (iv) all directors and officers of the Company as a group.
% % %
NUMBER BENEFICIAL BENEFICIAL BENEFICIAL
PERCENT
OF SHARES OWNERSHIP NUMBER OWNERSHIP OWNERSHIP OF VOTE OF
OF OF SHARES OF SHARES OF SHARES OF ALL CLASSES ALL CLASSES
NAME CLASS A OF CLASS A OF CLASS B OF CLASS B OF STOCK
OF STOCK
- ---------------------------------------- ---------- ------------ ---------------------------------------------------------- ----------- ---------------------------- ----------- ------------- -----------------
Los Angeles Express Fashions, Inc. (Suzy Shier
Ltd.Equities, Inc. Subsidiary) (1).............. -- -- 1,300,000 44.6% 9.6% 15.8%10.6%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
3254127 Canada, Inc. (GTHI Subsidiary) (1)............................. -- -- 815,573 28.0% 6.0% 9.9%6.6%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
3254143 Canada,Suzy Shier Equities, Inc. (Suzy Shier Ltd.
Subsidiary) (1) -- --............................. 104,000 1.1% 175,000 6.0% 1.3% 2.1%2.3%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
La Senza, Inc. (Suzy Shier LtdLtd. Subsidiary)
(1)......................... -- --......................................... 244,500 2.6% 155,000 5.3% 1.1% 1.9%3.2%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
Kathy Bronstein (2)..................... 50,935 *........................... 123,923 1.3% 467,092 16.0% 3.8% 6.0%4.8%
Ed Thomas (3)................................. 128,147 1.4% -- -- 1.0%
Barbara Bachman (4)........................... 42,6804,000 * -- -- *
*
Barbara BachmanSharon Hughes (4)..................... 5,280............................. 7,522 * -- -- *
*
Ann Cadier Kim (4)...................... 3,367............................ 8,447 * -- -- *
*
Sharon HughesGeorge Benter (4)....................... 4,542............................. 10,500 * -- -- *
*
George BenterStephen Gross (4)....................... 5,500............................. 20,000 * -- -- *
*
Walter F. Loeb (4)...................... 5,400............................ 10,400 * -- -- *
*
Gerald RandolphWilfred Posluns (4)..................... --........................... 6,000 * -- -- *
*
Alan SiegelGerald Randolph (4)......................... --........................... 2,000 * -- -- *
Alan Siegel (4)............................... 4,000 *
Craig Drill Capital, L.P. (5)........... 1,563,800 14.7% -- -- 11.5% 9.5%
Park Avenue*
Irving Teitelbaum (4)......................... 20,000 * -- -- *
FMR Corp. (5)................................. 1,280,700 13.6% -- -- 10.4%
82 Devonshire Street Boston, Massachusetts
02109
Lazard Freres & Co. LLC (6)................... 1,064,585 11.3% -- -- 8.6%
30 Rockefeller Plaza New York, New York
10055
Husic Capital Management (6)............ 901,900 8.5%10020
Amvescap PLC (7).............................. 609,900 6.5% -- -- 6.7% 5.5%
555 California St., Ste 2900
San Francisco, California 94104
Delaware Management Holdings,
Inc. (7)................................ 663,400 6.2% -- -- 4.9% 4.0%
2005 Market St.
Philadelphia, Pennsylvania 19103
INVESCO PLC (8)......................... 551,500 5.2% -- -- 4.1% 3.4%5.0%
11 Devonshire Square London, England EC2M
4YR
Freiss Associates, Inc. (8)................... 600,000 6.4% -- -- 4.9%
115 E. Snow King Jackson, Wyoming 83001
All directors and officers as a group (14(13
individuals)........................ 128,267 1.2%................................ 700,865 7.5% 2,912,665 100.0% 22.5% 36.2%29.3%
PERCENT
OF VOTE OF
ALL CLASSES
NAME OF STOCK
- ---------------------------------------------- -------------
Los Angeles Express Fashions, Inc. (Suzy Shier
Equities, Inc. Subsidiary) (1).............. 17.1%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
3254127 Canada, Inc. (GTHI Subsidiary) (1).... 10.7%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
Suzy Shier Equities, Inc. (Suzy Shier Ltd.
Subsidiary) (1)............................. 3.0%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
La Senza, Inc. (Suzy Shier Ltd. Subsidiary)
(1)......................................... 3.6%
1604 St. Regis Blvd. Dorval, Quebec, Canada
H9P1H6
Kathy Bronstein (2)........................... 6.9%
Ed Thomas (3)................................. *
Barbara Bachman (4)........................... *
Sharon Hughes (4)............................. *
Ann Cadier Kim (4)............................ *
George Benter (4)............................. *
Stephen Gross (4)............................. *
Walter F. Loeb (4)............................ *
Wilfred Posluns (4)........................... *
Gerald Randolph (4)........................... *
Alan Siegel (4)............................... *
Irving Teitelbaum (4)......................... *
FMR Corp. (5)................................. 8.4%
82 Devonshire Street Boston, Massachusetts
02109
Lazard Freres & Co. LLC (6)................... 7.0%
30 Rockefeller Plaza New York, New York
10020
Amvescap PLC (7).............................. 4.0%
11 Devonshire Square London, England EC2M
4YR
Freiss Associates, Inc. (8)................... 3.9%
115 E. Snow King Jackson, Wyoming 83001
All directors and officers as a group (13
individuals)................................ 42.9%
- ------------------------------------------------------
* Less than 1%
12
(1) Los Angeles Express Fashions, Inc., 3254127 Canada, Inc., 3254143 Canada,Suzy Shier
Equities, Inc. and La Senza, Inc. are directly or indirectly controlled by
Irving Teitelbaum, Chairman of the Board, and Stephen Gross, Secretary and a
director of the Company. These stockholders beneficially own shares which in
the aggregate represent approximately 29.7%34.7% of the total voting power with
respect to the Company.
(2) Ms. Bronstein has sole voting and dispositive power with respect to all of
the stated holdings of Class A and Class B Common Stock. Shares held include
options representing the immediate right to purchase 40,000120,000 shares of Class
A Common Stock. Ms. Bronstein also holds options to purchase an additional
80,000120,000 shares of Class A Common Stock which become exercisable over the
next twothree years.
(3) Mr. Thomas has sole voting and dispositive power with respect to all of the
stated holdings of Class A Common Stock. Shares held include options
representing the immediate right to purchase 40,000120,000 shares of Class A
Common Stock. Mr. Thomas also
15
holds options to purchase an additional 80,000120,000 shares of Class A Common
Stock which become exercisable over the next twothree years.
(4) Shares held include options representing the immediate right to purchase the
following shares of Class A Common Stock: Ms. Bachman--4,000;Hughes--4,500; Ms. Cadier
Kim--3,000; Ms. Hughes--2,500; andKim--7,000; Messrs. Benter and Loeb--4,000 each.Loeb--9,000 each; Mr. Gross--20,000; Mr.
Posluns--6,000; Mr. Randolph--1,000; Mr. Siegel--4,000 and Mr.
Teitelbaum--20,000.
(5) As reported in a Schedule 13D13G dated February 12, 1996, Craig Drill Capital,
L.P. has sole voting and dispositive power with respect to 1,563,800March 10, 1999, FMR Corp. beneficially
owns 1,280,700 shares of the Class A Common Stock of the Company. Mr. Craig A. Drill isFMR Corp.
has sole general partner of Craig Drill Capital, L.P.voting power with respect to 219,800 shares and sole dispositive
power with respect to 1,280,700 shares.
(6) As reported in a Schedule 13G dated February 4, 1997, Husic Capital
Management10, 1999, Lazard Freres & Co.
LLC ("Husic"Lazard") is a registered investment adviser. Frank J. Husic and
Co. ("FJH&Co.") isbeneficially owns 1,064,585 shares of the sole general partnerClass A Common
Stock of Husic. Frank J. Husic ("FJH")
is the Company. Lazard has sole shareholder of FJH&Co. Husic, FJH&Co., and FJH have shared voting power with respect to 692,000838,065
shares and sharedsole dispositive power with respect to 901,9001,064,585 shares. Husic may be deemed to be the direct
beneficial owner of an aggregate position of 901,900 shares of the Class A
common stock of Wet Seal, Inc. as a result of its discretionary authority to
buy, sell, and vote shares of such Common Stock for its investment advisory
clients.
(7) As reported in a Schedule 13G dated February 3, 1997, Delaware Management
Holdings, Inc.March 10, 1999, AMVESCAP PLC ("DMHI"AMV") is
the parent holding company of DelawareAVZ, Inc. ("AVZ"), AIM Management Company,Group, Inc.
("DMCI"AIM"), AMVESCAP Group Services, Inc. ("AGS"), INVESCO, Inc. ("II") and
INVESCO North American Holdings, Inc. ("IAH"). DMHI has soleAMV beneficially owns 609,900
shares of the Class A Common Stock of the Company. AMV, AVZ, AIM, AGS, II,
and IAH have shared voting power with respect to 17,850
shares and sole dispositive power with respect to 663,400609,900
shares.
(8) As reported in a Schedule 13G dated February 14, 1997, INVESCO PLC ("IP") is
the parent holding company of INVESCO North American Group, Ltd. ("IAG"),
INVESCO,January 25, 1999, Friess Associates,
Inc. ("II"Friess"), INVESCO North American Holdings, Inc. ("IAH"), beneficially owns 600,000 shares of the Class A Common Stock
of the Company. Friess has sole voting power and INVESCO Funds Group, Inc. ("IFG"). IP, IAG, II, IAH and IFG have shared
voting andsole dispositive power with
respect to 551,500600,000 shares.
1316
PROPOSALS
PROPOSAL # 1
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO DIVIDE THE BOARD OF
DIRECTORS INTO THREE CLASSES
The Company is proposing to amend its Certificate of Incorporation to divide
its Board of Directors into three classes to be designated Class I, Class II and
Class III. If the proposed amendment is adopted, the initial division of the
Board into classes will take place upon the filing of a Restated Certificate of
Incorporation containing the proposed amendment with the Secretary of State of
the State of Delaware.
Under the proposed amendment, each class of directors will consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board and approximately one-third of the members of the
Board will be elected at each annual meeting of stockholders. Assuming their
re-election as directors at the meeting, the initial Class I directors will be
Kathy Bronstein, Irving Teitelbaum and Edmond Thomas; the initial Class II
directors will be Stephen Gross, Wilfred Posluns and Gerald Randolph; and the
initial Class III directors will be George H. Benter, Jr., Walter F. Loeb and
Alan Siegel. If the persons, or others, constituting the Class I directors are
elected at the meeting in 1997, their term will consist of three years and will
expire in 2000. If the persons, or others, constituting the Class II directors
are elected in 1997, their term will consist of two years and will expire in
1999. If the Class III directors are elected in 1997, their term will consist of
one year and will expire in 1998. At each annual meeting of stockholders
beginning in 1998, the successors to the class of directors whose term expires
at that annual meeting shall be elected for a three-year term until their
successors are elected and qualified.
If the number of directors is changed, any increase or decrease in the
number of directors will be apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as possible, and any
additional directors of any class elected to fill a vacancy resulting from an
increase in such class will hold office for a term that coincides with the
remaining term of that class. Each director will hold office until the annual
meeting for the year in which his term expires and until his successor shall be
elected, subject, however, to his prior death, resignation, retirement or
removal from office. Any vacancy occurring in the Board for any reason other
than the removal of directors by stockholders without cause, will be filled by a
vote of the majority of the directors then in office, even if less than a
quorum, or by a sole remaining director. Vacancies occurring as a result of the
removal of directors by stockholders without cause will be filled by
stockholders. Any director elected to fill a vacancy will hold office for a term
that coincides with the term of the class to which such director was elected.
The proposed amendment provides that any and all directors may be removed
with or without cause by vote of at least seventy-five (75%) of the shares of
the Company entitled to vote generally for the election of directors, voting
together as a single class, each class having the number of votes per share
provided by the Company's Certificate of Incorporation. If the amendment is
adopted, the affirmative vote of the holders of at least seventy-five percent
(75%) of the Company's shares entitled to vote generally for the election of
directors, voting together as a single class, each class having the number of
votes per share as provided by the Certificate of Incorporation, will be
required to alter, amend or repeal the provisions added to the Certificate of
Incorporation pursuant to this proposal.
The proposed amendment, if adopted, will be advantageous to the Company and
its stockholders because providing that directors shall serve three-year terms
rather than one-year terms will enhance the likelihood of continuity and
stability in the composition of the Board and in the policies formulated by the
Board. This will in turn permit the Board to represent more effectively the
interests of all stockholders, including the taking of action in response to
demands or actions by a minority stockholder or group. Moreover, the proposed
amendment, if adopted, will ensure that a majority of the directors at any given
time will have had prior experience as directors of the Company.
14
There have been a number of attempts by various individuals and entities to
acquire significant minority positions in certain companies with the intent of
obtaining actual control of the companies by electing their own slate of
directors or of achieving some other goal, such as the repurchase of their
shares at a premium by threatening to obtain such control. These purchasers
often can elect a company's entire board of directors through a proxy contest or
otherwise, even though they do not own a majority of the company's outstanding
shares entitled to vote. The proposed amendment, if adopted, will likely
discourage such purchasers by preventing them from achieving control of the
Board quickly. Also, since neither the Delaware General Corporation Law, as
amended (the "DGCL"), nor the Company's Certificate of Incorporation or By-laws
require cumulative voting, a purchaser of a block of stock of the Company
constituting less than a majority of the Company's outstanding capital stock
will have no assurance of proportional representation on the Board. The effect
of the proposed amendment is that the Board could prevent any stockholder from
obtaining majority representation on the Board by enlarging the Board, if
possible, and filling the new directorships with its own nominees.
For the reasons outlined above, the adoption of the proposed amendment could
make more difficult or discourage the removal of the Company's management, which
removal some or a majority of holders of capital stock of the Company may deem
to be in their best interests. In addition, the adoption of the proposed
amendment could discourage or make more difficult or expensive, among other
transactions, a merger involving the Company, or a tender offer, open market
purchase program or other purchases of the capital stock of the Company in
circumstances that would give stockholders the opportunity to realize a premium
on the sale of their capital stock of the Company over the then-prevailing
market prices, which transactions some or a majority of such holders may deem to
be in their best interests.
The affirmative vote of a majority of the outstanding shares of the Company
is required to adopt the resolution to amend the Company's Certificate of
Incorporation in the manner described above. The Board unanimously recommends a
vote "FOR" approval of the resolution.
PROPOSAL # 2#2
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF THE COMPANY'S PREFERRED STOCK AND CLASS A COMMON STOCK
The Company is proposing to amend its Certificate of Incorporation to
increase the number of authorized shares of its Preferred Stock, par value $.01
per share, from 2,000,000 shares to 5,000,000 shares. No shares of the Company's
Preferred Stock are issued and outstanding. The Preferred Stock may be issued in
series and denominations and with terms and conditions as established by the
Company's Board of Directors.
In addition, the Company is proposing to amend its Certificate of
Incorporation to increase the number of authorized shares of its Class A Common
Stock, par value $.10 per share, from 20,000,000 shares to 50,000,000 shares.
The newly authorized shares of Class A Common Stock will be identical in all
respects to the issued and outstanding shares of Class A Common Stock. Of the
20,000,000 shares of Class A Common Stock the Company is presently authorized to
issue, 10,628,87410,733,386 shares are issued and outstanding. Of the 10,733,386 shares,
1,327,000 shares are currently held as Treasury Stock and thus not entitled to
vote.
As the Company may require that additional shares of its capital stock be
available for acquisitions and other corporate purposes, such as stock splits or
other recapitalizations, the Board of Directors has resolved to seek approval of
additional shares of capital stock by amendment of the Company's Certificate of
Incorporation. While there are no acquisitions pending which would involve the
issuance of such additional shares, the Company does from time to time consider
potential acquisitions, some or all of which may involve the issuance of shares
by the Company.
15
The affirmative vote of the majority of the outstanding shares of the
Company entitled to vote thereon and, with respect to the increase in the number
of authorized shares of Class A Common Stock, the affirmative vote of the
majority of the outstanding shares of Class A Common Stock entitled to vote
thereon, voting together as a separate class, is required to adopt the
resolution to amend the Company's Certificate of Incorporation to increase the
authorized capital stock in the manner described above. The Board of Directors
unanimously recommends a vote "FOR" approval of the resolution.
PROPOSAL # 3
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO REQUIRE
SUPER-MAJORITY STOCKHOLDER#3
APPROVAL OF BUSINESS COMBINATIONS
The Company is proposing to amend its CertificateTHE PERFORMANCE BONUS AWARD AND INCENTIVE BONUS AWARD FOR THE VICE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
On April 16, 1999, the Board of Incorporation to
require thatDirectors and the affirmative vote of at least seventy-five percent (75%)Incentive Compensation
Subcommittee approved the terms of the Company's shares must approve or authorize any "business combination" which has
not been approved or authorized by at least seventy-five percent (75%performance bonus award and incentive
bonus award ("Bonus Awards") offor the incumbent directors. Under this proposal, the term "business combination" is
broadly defined to mean: (a) any merger or consolidationVice Chairman and Chief Executive Officer
of the Company, or any
subsidiary of the Company with any other corporation which is required by lawsubject to be approved or authorizedapproval by the Company's stockholders; (b) any sale, lease or
exchangestockholders in accordance
with the provisions of all, or substantially all,Section 162(m) of the property and assetsInternal Revenue Code of 1986, as
amended. The Bonus Awards were awarded in connection with the Company
or any subsidiaryCompany's
employment agreement with Ms. Bronstein. Section 162(m) generally authorizes the
deduction of the Company; (c) any distribution to stockholderscompensation in excess of the
Company in partial or complete liquidation of the assets of the Company or any
subsidiary of the Company; (d) the issuance or transfer by the Company or any
subsidiary of the Company of any securities of the Company or any subsidiary
which is required by law to be approved or authorized by the stockholders of the
Company, or with respect to which stockholder approval or authorization would be
a prerequisite$1 million per taxable year payable to
the listingChief Executive Officer and the four other most highly compensated executive
officers only where such compensation is based on the Nasdaq Stock Market's National Market or
anyperformance and satisfy
certain other national securities exchange (each, an "Exchange") of the securities
to be issued or transferred;requirements and (e) any reclassification of securities or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its subsidiaries, which is requiredapproved by law to be approved or
authorized by the stockholders of the Company, or with respect to which
stockholder approval would be a prerequisite to the listing on an Exchange of
the securities to be issued or transferred. If the proposed amendment is
adopted, thestockholders.
The affirmative vote of the holders of at least seventy-five percent
(75%) of the Company's shares entitled to vote generally for the election of
directors, voting together as a single class, each class having the number of
votes per share as provided by the Certificate of Incorporation, will be
required to alter, amend or repeal the provisions added to the Certificate of
Incorporation pursuant to this proposal.
The adoption of the proposed amendment may make it more difficult for
hostile bidders to gain control of the Company through a merger, acquisition,
consolidation or other business combination. This increased difficulty, as well
as the cost and time delay involved with complying with the super-majority
voting provisions, may deter certain mergers, tender offers or other future
takeover attempts, including those which some or a majority of stockholders may
deem to be in their best interests or which would give stockholders the
opportunity to realize a premium on the sale of their capital stock of the
Company over then prevailing market prices.
The affirmative vote of a majority of the
outstanding shares of the Company present in person or by proxy and entitled to
vote at the Annual Meeting is required to adopt the resolution to amendapprove the
Company's CertificateBonus Awards granted to Ms. Bronstein. If the Bonus Awards are approved by the
stockholders and certain other requirements set forth in Section 162(m) of Incorporation in the
mannerCode are satisfied, the performance bonus and incentive bonus payments to Ms.
Bronstein as described above. Thebelow will qualify for deduction under Section 162(m) of
the Code.
17
Given Ms. Bronstein's substantial contribution to the Company and high level
of responsibility, and the view of the Board that Ms. Bronstein continue to be
highly motivated to enhance the financial performance of the Company, the Board
unanimously recommends a vote "FOR" approval of the resolution.
PROPOSAL # 4#4
APPROVAL OF THE COMPANY'S 1996 LONG-TERMPERFORMANCE BONUS AWARD AND INCENTIVE PLAN
TheBONUS AWARD FOR THE
PRESIDENT AND CHIEF OPERATING OFFICER
On April 16, 1999, the Board of Directors and the Incentive Compensation
Subcommittee approved the terms of the performance bonus award and incentive
bonus award ("Bonus Awards") for the President and Chief Operating Officer of
the Company, has adopted, subject to stockholder approval The Wet Seal, Inc.
1996 Long-Term Incentive Plan (the "Plan"). The Plan will be administered by the Option Committee and is intended to serve as a qualified performance-based
compensation program underCompany's stockholders in accordance
with the provisions of Section 162(m) of the Internal Revenue Code (the
"Code").of 1986, as
amended. The Bonus Awards were awarded in connection with the Company's
employment agreement with Mr. Thomas. Section 162(m) generally authorizes the
deduction of compensation in excess of $1 million per taxable year payable to
the Chief Executive Officer and the four other most highly compensated executive
officers only where such compensation is based on performance and satisfy
certain other requirements and is approved by stockholders.
The affirmative vote of the holders of at least a majority of the
outstanding shares of the Company present in person or by proxy and entitled to
vote at the Annual Meeting is required to adopt the resolution to approve the
Bonus Awards granted to Mr. Thomas. If the Bonus Awards are approved by the
stockholders and certain other requirements set forth in Section 162(m) of the
Code denies a deduction by an employer for
certain
16
compensation in excess of $1,000,000 per year paid by a publicly traded
corporationare satisfied, the performance bonus and incentive bonus payments to the chief executive officer and the four most highly compensated
executive officers other than the chief executive officer. Certain compensation,
including compensation based on performance goals, is excluded from this
deduction limit. Among the requirements for compensation toMr.
Thomas as described below will qualify for exclusion from the deduction limit is that the material terms pursuant to which
the compensation is to be paid, including the performance goals, be disclosed to
and approved by stockholders in a separate vote prior to the payment. The Plan
is therefore being submitted to the Company's stockholders for approval at the
Special Meeting.
PURPOSE AND ELIGIBILITY
The purpose of the Plan is to strengthen the Company by providing employees
and others added incentive for high levels of performance and for extraordinary
efforts to increase the earnings and long-term growth of the Company. The Plan
seeks to accomplish this purpose by enabling Participants to purchase or acquire
shares of the Company's Class A Common Stock ("Shares"), stock appreciation
rights or other equity-based rights, thereby increasing their proprietary
interest in the Company's success and encouraging them to remain in the employ
or service of the Company. The Plan contemplates the issuance of incentive stock
options within the meaning of Section 422 of the Code, as well as non-statutory
stock options, stock appreciation rights, restricted or nonrestricted awards of
shares, performance grants, certain limited rights issued in tandem with stock
options, or any combination of the foregoing ("Awards"). Employees, officers,
directors, consultants and independent contractors (including dealers,
distributors and other business entities or persons providing services) of the
Company and its subsidiaries ("Participants") are eligible for Awards under the
Plan. The approximate number of persons eligible to participate is 4,700. The
Company has authorized 700,000 Shares, [with an aggregate market value of
$14,087,500 as of February 1, 1997], for issuance under the Plan.
ADMINISTRATION
The Option Committee, in its sole discretion, has the authority, among other
things, to determine the terms of all Awards granted under the Plan, including
any purchase or exercise price for an Award; to determine which employees,
outside consultants and independent contractors will be granted Awards, and the
time or times at which Awards will be granted, exercised and become forfeitable;
to determine the number of Shares covered by an Award; to interpret the Plan;
and to make all other determinations deemed advisable for the administration of
the Plan.
OPTIONS
The Option Committee may from time to time grant incentive stock options
("Incentive Options") and non-statutory options ("Non-Qualified Options", and
together with Incentive Options, "Options") to any Participant. The terms of
Options granted under the Plan will be set out in agreements between the Company
and Participants which will contain such provisions as the Option Committee from
time to time deems appropriate, including the exercise price and expiration date
of such Options. Option agreements will specify whether or not an Option is an
Incentive Option.
In no event will the exercise price of an Incentive Option or Non-Qualified
Option be less than one hundred percent (100%) of the fair market value of the
Shares subject to such Option on the date of grant. The term of Incentive
Options cannot exceed ten years from the date of grant and generally cannot
extend beyond a Participant's employment or relationship with the Company. The
aggregate fair market value, determined as of the time the Incentive Option is
granted, of the Common Stock which may become exercisable for the first time by
any employee during any calendar year cannot exceed $100,000. No Incentive
Option will be granted to an employee, who, at the time of grant, owns (within
the meaning of Section 424(d) of the Code) stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, its parent or subsidiaries, unless the exercise price of the Incentive
Option is at least one hundred and ten percent (110%) of the fair market value,
at the time of
17
grant, of the Shares subject to the Option, and the Option by its terms is not
exercisable more than five years from the date of grant.
The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, will be determined by the Option
Committee and may consist of promissory notes, other Shares or such other
consideration and method of payment for the Shares as may be permitted under
applicable federal and state laws.
If a Participant ceases to be employed by, or ceases to have a relationship
with, the Company for any reason other than disability, cause, retirement or
death, such Participant's Options, to the extent exercisable at the time of
termination, may be exercised for a period of three months thereafter or the
date of expiration of the option by its terms, whichever is earlier. In the
event of a Participant's disability or death, such Participant's Options will
become fully vested and exercisable and will expire not later than one year
thereafter or the date of expiration of the option by its terms, whichever is
earlier. When a Participant retires, such Participant's Options will become
fully vested and exercisable and will expire not later than two years thereafter
or the date of expiration of the option by its terms, whichever is earlier. The
decision as to whether a termination is by reason of retirement will be made by
the Option Committee, whose decision will be final and conclusive. If a
Participant's employment or relationship with the Company is terminated for
cause, such Participant's Options will expire immediately; provided, however,
that the Option Committee may waive expiration and permit the Participant to
exercise Options, to the extent exercisable at the time of termination, for a
period of three months from the date of notice of such waiver.
STOCK APPRECIATION RIGHTS
The Option Committee from time to time may grant stock appreciation rights
("SARs") to any Participant either at the time of grant of an Option or
thereafter by amendment to an Option. The exercise of an Option will result in
an immediate cancellation of its corresponding SAR, and vice versa. SARs will
expire at the same time as the related Option expires, and will be exercisable
and transferable when, to the extent and on the condition that the related
Option is exercisable or transferable. No SAR may be exercised unless the fair
market value per Share on the date of exercise exceeds the exercise price of the
related Option. Upon the exercise of an SAR, a Participant will be entitled to
receive an amount equal to the difference between the fair market value per
Share on the date of exercise and the exercise price of the Option to which the
SAR corresponds. Such payment may be satisfied by the Company in cash, in
Shares, or in a combination thereof, as determined by the Option Committee.
All SARs will be exercised automatically, to the extent the corresponding
Option is then exercisable, (A) on the last business day prior to the expiration
date of the related Option at the end of its stated term or (B) following (i)
the death, disability or retirement of a Participant or (ii) the termination of
a Participant's employment or relationship with the Company for any reason other
than cause; provided the fair market value per Share of the underlying Shares on
that date exceeds the exercise price of the related Option.
LIMITED RIGHTS
The Option Committee may grant limited rights ("Limited Rights") with
respect to all or some of the Shares covered by an Option at the time the Option
is granted or by amendment to a previously granted Option. A Limited Right will
be exercisable (A) during the 60 day period commencing on any date after the
effective date of the Plan on which a person or group, whose beneficial
ownership of Shares exceeds the aggregate beneficial ownership of the officers
and directors of the Company (excluding Shares owned by a director or officer
who is the person or a member of the group), becomes the direct or indirect
beneficial owner of twenty percent (20%) or more of the Company's outstanding
Shares, and (B) if stated in the Limited Right grant, upon the occurrence of an
event pursuant to which the outstanding Shares of the Company are increased,
decreased, changed into, or exchanged for a different number or kind of
18
shares or securities, without receipt of consideration by the Company, through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the exercise
of a Limited Right, a Participant will be entitled to receive from the Company,
in cash, an amount equal to the difference between the fair market value per
Share of the Shares on the exercise and the grant dates. Upon the exercise or
termination of an Option, any related Limited Right shall terminate.
PERFORMANCE GRANTS
The Option Committee may award performance grants ("Performance Grants") to
Participants at any time, and it has sole discretion in determining the size and
composition of, the period over which performance is to be measured for, and the
performance goals and obligations for, Performance Grants. Performance Grants
under the Plan may include specific dollar-value target grants, performance
units and/ or performance shares. The value of each Performance Grant may be
fixed or it may be permitted to fluctuate based on performance factors selected
by the Option Committee. The earned portion of a Performance Grant may be paid
in restricted or nonrestricted shares, cash or a combination of both, as
determined in the sole discretion of the Option Committee.
A Participant must be an employee of the Company at the end of the
performance cycle in order to be entitled to payment of a Performance Grant
issued in respect of such cycle; provided, however, that a Participant may earn
a partial Performance Grant based upon the elapsed portion of the cycle and the
Company's performance during such portion of the cycle, if the Participant
ceases to be an employee of the Company as a result of his death, disability or
retirement. In the event of a change of control, a Participant will earn no less
than the portion of the Performance Grant that the participant would have earned
if the performance cycle had terminated as of the date of the change in control.
RESTRICTED AND NONRESTRICTED SHARE AWARDS
The Option Committee may at any time from time award Shares to such
Participants and in such amounts as it determines. Each award of Shares will
specify the applicable restrictions, if any, on such Shares, the duration of
such restrictions, and the time or times at which such restrictions shall lapse.
Restricted Shares may be issued at the time of award subject to forfeiture
in the event the applicable restrictions do not lapse, or upon lapse of such
restrictions. If Restricted Shares are issued at the time of award, the
Participant will be required to deposit certificates representing such
Restricted Shares with the Company during the period of any restriction and to
execute a blank stock power therefor. Except as otherwise provided by the Option
Committee, during the period of any restriction, the Participant will have all
rights and privileges of a stockholder with respect to Restricted Shares awarded
to him, including the right to receive dividends and to vote.
Unless otherwise provided by the Option Committee, all restrictions on
Restricted Shares will lapse upon termination of a Participant's employment or
relationship with the Company due to death, disability, retirement or a change
of control during a period of restriction. If a Participant's employment or
relationship with the Company is terminated for any other reason, all Restricted
Shares awarded to such Participant will be forfeited to the Company.
WITHHOLDING
With respect to any payments made to Participants under the Plan, the
Company will have the right to withhold any taxes required by law to be withheld
because of such payments.
19
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
If any change is made to the Shares by reason of an event pursuant to which
the outstanding Shares of the Company are increased, decreased or changed into,
or exchanged for a different number or kind of shares or securities, without
receipt of consideration by the Company, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise, appropriate adjustments will be made
by the Option Committee to the kind and maximum number of shares subject to the
Plan and the kind and number of Shares and price per Share of stock subject to
each outstanding Award.
LIMITATION ON BENEFITS
No option, SAR or Limited Right may be exercised, no share award will vest
and no Performance Grant will be paid to the extent such exercise, vesting or
payment will create an "excess parachute payment" as defined in Section 280G of
the Code.
TRANSFERABILITY OF AWARDS
No grant of Options, SARs, Limited Rights, Performance Grants or other
rights granted under the Plan is assignable or transferable except by will or
the laws of descent and distribution. During the lifetime of a Participant,
Awards are exercisable only by the Participant.
TERMINATION OR AMENDMENT
The Option Committee may at any time discontinue granting Awards under the
Plan or otherwise suspend, amend or terminate the Plan, and may, with the
consent of the optionee or grantee, make such modification of the terms and
conditions of an Award as it shall deem advisable. Amendments or modifications
to the Plan or any Award are deemed adopted as of the date of the action of the
Option Committee effecting such amendment or modification and are effective
immediately, unless otherwise provided therein, subject to approval thereof (i)
within twelve (12) months before or after the effective date by shareholders of
the Corporation voting in person or by proxy at a duly held shareholders'
meeting when required to maintain or satisfy the requirements of Section 422 of
the Code with respect to Incentive Options, or Section 162(m) of the
Code with
respectCode.
Given Mr. Thomas' substantial contribution to performance-based compensation, (ii) by an appropriate governmental
agency, or (iii) when required by a securities exchange or automated quotation
system. No Option may be granted during any suspension or after terminationthe Company and high level of
responsibility, and the view of the Plan.
PLAN BENEFITS
In as much as AwardsBoard that Mr. Thomas continue to all Participants underbe highly
motivated to enhance the Plan will be granted at
the sole discretionfinancial performance of the Option Committee, neitherCompany, the benefits which will be
received by or allocated to Participants under the Plan, nor the benefits which
would have been received by or allocated to Participants if the Plan had been in
effect during the last fiscal year, are determinable.
The Board
unanimously recommends a vote "FOR" approval of the 1996 Long-term
Incentive Plan.
FEDERAL INCOME TAXATION
STOCK OPTIONSresolution.
SUMMARY OF THE PERFORMANCE BONUS AND INCENTIVE BONUS AWARDS
The following is a brief discussiondescription of the Federal income tax consequencesBonus Awards is intended only as a summary
and is qualified in its entirety by reference to the text of option grants underMs. Bronstein's
employment agreement dated December 30, 1988, a copy of which was filed with the
Plan basedSecurities and Exchange Commission with the Company's Registration Statement
File No. 33-34895, and the amendment to such employment agreement filed herewith
and Mr. Thomas' employment agreement dated June 22, 1992, a copy of which was
filed with the Securities and Exchange Commission with the Company's Annual
Report on Form 10-K for the Code, as in effect asyear ended January 29, 1994, and the amendments to
such employment agreement filed herewith. Copies of the date
hereof.employment agreements
and amendments also may be obtained from the Company, without charge, upon
written or oral request to Investor Relations, c/o The Plan is not qualified under Section 401(a)Wet Seal, Inc., 26972
Burbank, Foothill Ranch, CA 92610.
The performance bonus award provides that, with respect to the 1999 fiscal
year, and each succeeding fiscal year during the term of the Code. This
discussion is not intendedemployment
agreement, each of Ms. Bronstein's and Mr. Thomas' (each, an "Executive") base
salary would be adjusted by a performance bonus equal to be exhaustive and does not describe the state or
local tax consequences.
20
No taxable income is realized by the Participant upon the grant or exercise0.5% ( 1/2 of an Incentive Option. If Shares are issued to a Participant pursuant to the
exercise of an Incentive option, and if no disqualifying disposition of such
Shares is made by the Participant within two years after the date of grant or
within one year after the transfer of such Shares to such Participant, then (1)
upon sale of such Shares, any amount realized in excess1%) of
the exercise price
will be taxed to such Participant as a long-term capital gain and any loss
sustained will be a long-term capital loss, and (2) no deduction will be allowed
topre-tax profits of the Company for Federal income tax purposes. If the Shares acquired upon the
exercise of an Incentive Option is disposed of priorpreceding fiscal year to the expirationextent
this amount exceeds the aggregate cash dividends such Executive is eligible to
receive on her or his holdings of either
holding period described above, generally (1) the Participant will realize
ordinary income in the year of disposition in an amount equalCompany's capital stock referable to the
excess (if
any)same fiscal year. This bonus is not cumulative and is in lieu of any salary
review or cost of living adjustments.
The performance bonus, if any, for any fiscal year will be paid in cash
after the close of each fiscal year if such bonus is less than $25,000; if such
bonus is more than $25,000 it will be paid in equal monthly installments over
the balance of the fair market value of such Shares at exercise (or,succeeding fiscal year, but only if less, the amount realized on the disposition of such Shares) over the exercise price paidpre-tax profits
criteria for such Shares,fiscal year have been achieved, as calculated in accordance
with the Company's audited books and (2)records and certified in writing by the
CompanyIncentive Compensation Subcommittee. In determining pre-tax profits,
18
calculations will be based on generally accepted accounting principles, applied
on a consistent basis with prior years.
The incentive bonus award provides that, with respect to the 1999 fiscal
year, and each succeeding fiscal year during the term of the employment
agreement, the Executive will be entitled to deductreceive an incentive bonus equal to
a percentage of the Company's pre-tax profits. The percentage applicable to Ms.
Bronstein is 3.5% and the percentage applicable to Mr. Thomas is 2%.
The incentive bonus, if any, for any fiscal year will be paid in cash not
later than the last day of the third month following the close of such amount for
Federal income tax purposesfiscal
year, but only if the amount represents an ordinarypre-tax profits criteria for such fiscal year have been
achieved, as calculated in accordance with the Company's audited books and
necessary
business expense. Any further gain (or loss) realizedrecords and certified in writing by the ParticipantIncentive Compensation Subcommittee. In
determining pre-tax profits, calculations will be taxed as short-term or long-term capital gain (or loss), as the case may be,based on generally accepted
accounting principles, applied on a consistent basis with prior years. (See
Executive Compensation and will not result in any deduction by the Company. Subject to certain exceptions
for disability or death, if an Incentive Option is exercised more than three
months following the termination of employment, the exercise of the Option will
generally be taxed as the exercise of a Non-Qualified Option.
With respect to Non-Qualified Options (1) no income is realized by the
Participant at the time the Option is granted; (2) generally, at exercise,
ordinary income is realized by the Participant in an amount equal to the
difference between the exercise price paid for the Shares and the fair market
value of the Shares, if unrestricted, on the date of exercise, and the Company
is generally entitled to a tax deduction in the same amount subject to
applicable tax withholding requirements; and (3) at sale appreciation (or
depreciation) after the date as of which amounts are includable in income is
treated as either short-term or long-term capital gain (or loss) depending on
how long the Shares have been held.
STOCK APPRECIATION RIGHTS
There will be no Federal income tax consequences to either the employee or
the Company upon the grant of an SAR. However, the employee generally will
recognize ordinary income upon the exercise of an SAR in an amount equal to the
aggregate amount of cash and the fair market vale the Shares received upon
exercise. The Company will be entitled to a deduction equal to the amount
includable in the employee's income.
LIMITED RIGHTS
There will be no Federal income tax consequences to either the employee or
the Company upon the grant of an SAR. However, the employee generally will
recognize ordinary income upon the exercise of a Limited Right in an amount
equal to the aggregate amount of cash received upon exercise. The Company will
be entitled to a deduction equal to the amount includable in the employee's
income.
PERFORMANCE GRANTS
There will be no Federal income tax consequences to the employee or the
Company upon issuance of a Performance Grant. Employees will recognize taxable
income at the time when payment for the Performance Grant is received in an
amount equal to the aggregate amount of cash and the fair market value of Shares
acquired. The Company will be entitled to a deduction equal to the amount
includable in the associate's income.
RESTRICTED AND NONRESTRICTED SHARES
There will be no Federal income tax consequences to either the employee or
the Company upon the grant of Restricted Shares until expiration of the
restricted period and the satisfaction of any other
21
conditions applicable to the Restricted Shares. At that time, the employee will
recognize taxable income equal to the then fair market value of the Shares and
the Company will be entitled to a corresponding deduction. However, the employee
may elect, within thirty (30) days after the date of the grant, to recognize
ordinary income as of the date of grant and the Company will be entitled to a
corresponding deduction at that time.
Employees will recognize taxable income at the Nonrestricted Shares are
received. The Company will be entitled to a deduction equal to the amount
includable in the employee's income.
22
Other Information--Employment Agreements.)
PROPOSAL #5
ELECTION OF AUDITORS
The Board of Directors, after consideration of the recommendation of the
Audit Committee, has nominated the independent public accounting firm of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal year
1997.1999. Stockholders will be asked to ratify the nomination of the Board of
Directors. Deloitte & Touche LLP has served as the Company's auditors since
fiscal 1989. Representatives of Deloitte & Touche LLP are expected to be present
at the Annual Meeting and will be available to make a statement if they desire
and are expected to respond to appropriate inquiries from the stockholders.
Although ratification of the auditors by stockholders is not legally required,
the Company's Board of Directors believes such ratification to be in the best
interest of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING OBLIGATIONS OF OFFICERS, DIRECTORS AND 10% SHAREHOLDERSCOMPLIANCE
The federal securities laws require the filing of certain reports by
officers, directors and beneficial owners of more than 10% of the Company's
securities with the Securities and Exchange Commission and Nasdaq. Specific due
dates have been established and the Company is required to disclose in this
Proxy Statement any failure to file by these dates. Based solely on a review of
copies of the filings furnished to the Company, or written representations that
no Form 5's were required, the Company believes that during
fiscal 1996,1998, all filing requirements were satisfied by the Company's officers,
directors and ten percent (10%) stockholders, except as set forth below.
Cheryl RudichOne director, Mr. Gerald Randolph, did not file the required Form 34 on a
timely basis when she
becamein connection with an executive officerexercise of the Company.options during fiscal 1998.
OTHER MATTERS
The Board of Directors knows of no other business to come before the Annual
Meeting. However, if any other matters are properly brought before the Annual
Meeting, the persons named in the accompanying form of Proxy or their
substitutes will vote in their discretion on such matters.
The cost of this solicitation or proxies will be borne by the Company.
Arrangements may be made with brokerage houses, custodians, nominees and
fiduciaries to send proxies and materials to their principals and, upon request,
the Company will reimburse them for their expenses in so doing.
STOCKHOLDER PROPOSALS FOR PRESENTATION
AT 19982000 ANNUAL MEETING
If a Stockholder of the Company wishes to present a proposal for
consideration at the next Annual Meeting of Stockholders, the proposal must be
received at the executive offices of the Company no later than January 31, 1998,7, 2000,
to be considered for inclusion in the Company's Proxy Statement and form of
Proxy for that Annual Meeting.
2319
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- --------- ------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------- -----------
A PROPOSED AMENDMENTSAMENDMENT TO THE CERTIFICATE OF INCORPORATION OF THE WET SEAL, INC..................... --INC...................
B 1996 LONG-TERM INCENTIVE PLAN.................................................................... --SEVENTH AMENDMENT TO THE SERVICES AGREEMENT BETWEEN THE COMPANY AND KATHY BRONSTEIN (TO BE
FILED WITH DEFINITIVE PROXY)..................................................................
C FOURTH AMENDMENT TO THE SERVICES AGREEMENT BETWEEN THE COMPANY AND EDMOND THOMAS (TO BE FILED
WITH DEFINITIVE PROXY)........................................................................
D FIFTH AMENDMENT TO THE SERVICES AGREEMENT BETWEEN THE COMPANY AND EDMOND THOMAS (TO BE FILED
WITH DEFINITIVE PROXY)........................................................................
E SIXTH AMENDMENT TO THE SERVICES AGREEMENT BETWEEN THE COMPANY AND EDMOND THOMAS (TO BE FILED
WITH DEFINITIVE PROXY)........................................................................
EXHIBIT A
TEXT OF PROPOSED AMENDMENT TO THE CERTIFICATE
OF INCORPORATION OF THE WET SEAL, INC.
Set forth below is the proposed amendment to the Certificate of
Incorporation of the Company which is to be submitted for the approval of the
stockholders of the Company at the Annual Meeting to be held on June 9, 1999. If
such proposed amendment is approved by the stockholders of the Company, the
Board of Directors will cause an Amendment of the Certificate of Incorporation
containing the proposed amendment to be filed with the Secretary of State of the
State of Delaware and will adopt a conforming amendment to the Company's
By-laws.
1. ARTICLE IV, SECTION 4.1
Set forth below is the text of Article IV, Section 4.1 of the Company's
Certificate of Incorporation, as proposed to be amended if Proposal # 2 is
approved by the Company's stockholders:
"Section 4.1. NUMBER OF SHARES. The total number of shares which the
Corporation shall have authority to issue is SIXTY-FIVE MILLION
(65,000,000), consisting of "Common Stock" and "Preferred Stock" as follows:
(a) PREFERRED STOCK. The total number of shares of Preferred Stock
shall be FIVE MILLION (5,000,000), having a par value of one cent ($0.01)
per share, which may be issued from time to time in one or more series.
The board of directors is hereby authorized to fix, by resolution or
resolutions providing for the issue of any such series, the voting
powers, if any, and the designation, preferences and rights of the shares
in such series, and the qualifications, limitations or restrictions
thereof, including, but not limited to, the following:
(1) the number of shares constituting that series and the distinctive
designation thereof;
(2) the dividend rate on the shares of that series, whether dividends
shall be cumulative and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
(3) the voting rights, if any, of shares of that series in addition
to the voting rights provided by law, and the terms of such
voting rights;
(4) the terms and conditions of the conversion privileges, if any, of
shares of that series, including provision for adjustment of the
conversion rate in such events as the board of directors shall
determine;
(5) the terms and conditions of redemption, if shares of that series
shall be redeemable, including the date or dates upon or after
which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(6) the terms and amount of any sinking fund for the redemption or
purchase of shares of that series, if any;
(7) the rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights or priority, if any, of
payment of shares of that series; and
(8) any other relative rights, preferences and limitations of that
series.
Dividends on outstanding Preferred Stock shall be declared and paid, or
set apart for payment, before any dividend shall be declared and paid, or
set apart for payment, on the Common Stock with respect to the same dividend
period.
A-1
(b) COMMON STOCK. The total number of shares of Common Stock shall be
SIXTY MILLION (60,000,000), divided into two classes designated as Class A
Common Stock and Class B Common Stock, as follows: the total number of
authorized shares of Class A Common Stock shall be FIFTY MILLION
(50,000,000), and each share of Class A Common Stock shall have a par value
of ten cents ($0.10); and the total number of authorized shares of Class B
Common Stock shall be TEN MILLION (10,000,000), and each share of Class B
Common Stock shall have a par value of ten cents ($0.10)."
A-2
- Please Detach and Mail in the Envelope Provided -
- --------------------------------------------------------------------------------
PROXY THE WET SEAL, INC. PROXY--1997PROXY--1999 ANNUAL MEETING Solicited on behalf of the Board of Directors
for the Annual Meeting June 17, 1997PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING JUNE 9, 1999
The undersigned, a stockholder of The Wet Seal, Inc., a Delaware
corporation, appoints Kathy Bronstein and Edmond Thomas, or either of them,
his true and lawful agents and proxies, each with full power of substitution,
to vote all shares of stock that the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of theThe Wet Seal,
Inc. to be held at the Westin South Coast Plaza, 686 Anton Blvd., Costa Mesa,
California 92626 on June 17, 1997,9, 1999, at 10:00 a.m., and any adjournment thereof,
with respect to the following matters which are more fully explained in the
Proxy Statement of the Company dated May 16, 1997,4, 1999, receipt of which is
acknowledged by the undersigned:
NEW ADDRESS:
-------------------
Check here for
address change / / address change
NEW ADDRESS:___________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________--------------------------------
--------------------------------
--------------------------------
(Continued and to be signed and
dated on reverse side)
/X/ Please mark your votes as in this example.
1. Election of Directors
FOR WITHHOLD
ALL NOMINEES AUTHORITY
/ / / /
Nominees:
George H. Benter, Jr., Kathy Bronstein, Stephen Gross, Walter F. Loeb,
Wilfred Posluns, Gerald Randolph, Alan Siegel, Irving Teitelbaum,
Edmond Thomas
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.
2. To adopt an amendment to the Company's Certificate of Incorporation to
divide the Board of Directors of the Company into three classes.
/ / FOR / / AGAINST / / ABSTAIN
3. To adopt an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Preferred Stock, par value $.01
per share, from 2,000,000 shares to 5,000,000 shares and the authorized
number of Class A Common Stock, par value $.10 per share, from 20,000,000
shares to 50,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
4. To adopt an amendment to the Company's Certificate of Incorporation to
require that at least seventy-five percent (75%) of the Company's shares must
approve or authorize any business combination (as the term is defined in
Exhibit A to the proxy statement) which has not been approved or authorized
by at least seventy-five percent (75%) of the then incumbent directors of the
Company.
/ / FOR / / AGAINST / / ABSTAIN
5. To ratify and approve the Company's 1996 Long-Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
6. Ratification of the selection by the Board of Directors of Deloitte &
Touche LLP as Independent Auditors for the Company for the year ending
January 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
7. Such other matters as may properly come before the Annual Meeting. The
Board of Directors at present knows of no other matters to be brought before
the Annual Meeting.
/ / FOR / / AGAINST / / ABSTAIN
SIGNATURE(S) DATE
----------------------------------- ----------------------
NOTE:
- Please Detach and Mail in the Envelope Provided -
- --------------------------------------------------------------------------------
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD
ALL NOMINEES AUTHORITY FOR AGAINST ABSTAIN
1. Election of / / / / NOMINEES: 2. Approval of an amendment to the / / / / / /
Directors George H. Benter, Jr., Company's Certificate of
Kathy Bronstein, Stephen Incorporation to increase the number
Gross, Walter F. Loeb, of authorized shares of Preferred
Wilfred Posluns, Stock, par value $.01 per share, from
Gerald Randolph, Alan 2,000,000 shares to 5,000,000 shares
Siegel, Irving and the number of authorized shares
Teitelbaum, Edmond of Class A Common Stock, par value
Thomas $.10 per share, from 20,000,000
shares to 50,000,000 shares.
Instruction: To withhold authority to 3. Ratification and approval of the / / / / / /
vote for any individual nominee, write performance bonus award and incentive
that nominee's name on the space bonus award to the Vice Chairman and
provided below. Chief Executive Officer of the
Company to qualify such awards under
- --------------------------------------- Section 162(m) of the Internal
Revenue Code, of 1986, as amended.
4. Ratification and approval of the / / / / / /
performance bonus award and incentive
bonus award to the President and
Chief Operating Officer of the
Company to qualify such awards under
Section 162(m) of the Internal
Revenue Code, of 1986 as amended.
5. Ratification of the selection by / / / / / /
the Board of Directors of Deloitte &
Touche LLP as Independent Auditors
for the Company for the year ending
January 29, 2000.
6. Such other matters as may properly
come before the Annual Meeting. The
Board of Directors at present knows
of no other matters to be brought
before the Annual Meeting.
This proxy will be voted in accordance with the
instructions given. If no direction is made, the shares
represented by this proxy will be voted FOR proposals 1
through 5 and will be voted in accordance with the
SIGNATURE(S) DATE discretion of the proxies upon all other matters which
----------------------- ---------------- may come before the Annual Meeting.
Note: Please sign exactly as name appears hereon. Joint IMPORTANT: PLEASE VOTE, DATE, SIGN AND RETURN THE PROXY
owners should each sign. When signing as attorney, CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
executor, administrator, trustee or guardian, please
give full title as such.
This proxy will be voted in accordance with the instructions given. If no
direction is made, the shares represented by this proxy will be voted FOR
proposals 1 through 6 and will be voted in accordance with the discretion of
the proxies upon all other matters which may come before the Annual Meeting.
IMPORTANT: PLEASE VOTE, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED POSTAGE-PAID ENVELOPE.