SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PHILLIPS-VAN HEUSEN CORPORATION
(Name of Registrant as Specified in Its Charter)
PHILLIPS-VAN HEUSEN CORPORATION
(Name of Person Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK, PAR VALUE $1.00
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
PHILLIPS-VAN HEUSEN CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The Annual Meeting of Stockholders of PHILLIPS-VAN HEUSEN CORPORATION (the
'Company'), a Delaware corporation, will be held at the offices of Citibank,
N.A., 399 Park Avenue, Twelfth Floor Auditorium, New York, New York, on
Tuesday, June 18, 1996, at 10:00 A.M., for the following purposes:
(1) To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to establish one-year terms of
office for all members of the Company's Board of Directors in
lieu of its current classified system of directors (in which the
three classes of directors have staggered terms of office and the
directors in each class are elected for terms of three years);
(2) In the event of the approval of the foregoing proposal to amend
the Company's Certificate of Incorporation, to elect twelve
directors of the Company to serve for a term of one year, or, in
the event of the disapproval of such proposal, to elect four
directors of the Company to serve for a term of three years;
(3) To ratify the appointment of auditors for the Company to serve
until the next annual meeting of stockholders; and
(4) To consider and act upon such other matters as may properly come
before the meeting.
Only stockholders of record at the close of business on April 19, 1996 are
entitled to vote at the meeting.
Attendance at the meeting will be limited to holders of record of the
Company's Common Stock or their proxies, beneficial owners having evidence of
ownership, and guests of the Company. If you hold stock through a bank or
broker, a copy of an account statement from your bank or broker as of the
record date will suffice as evidence of ownership.
You are requested to fill in, date and sign the enclosed proxy, which is
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed envelope.
By order of the Board of Directors,
PAMELA N. HOOTKIN
Secretary
New York, New York
April 29, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
PHILLIPS-VAN HEUSEN CORPORATION
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 18, 1996
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PHILLIPS-VAN HEUSEN CORPORATION (the
'Company') to be used at the Annual Meeting of Stockholders of the Company
which will be held at the offices of Citibank, N.A., 399 Park Avenue, Twelfth
Floor Auditorium, New York, New York, on Tuesday, June 18, 1996, at 10:00 A.M.,
and at any adjournments thereof.
The principal executive offices of the Company are at 1290 Avenue of the
Americas, New York, New York 10104. The approximate date on which this Proxy
Statement and the enclosed form of proxy were first sent or given to
stockholders was April 29, 1996.
Stockholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the meeting or by presenting a later dated proxy. Unless so revoked,
the shares represented by proxies will be voted at the meeting. The shares
represented by the proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Stockholders
vote at the meeting by casting ballots (in person or by proxy) which are
tabulated by a person who is appointed by the Board of Directors before the
meeting to serve as inspector of election at the meeting and who has executed
and verified an oath of office. Abstentions and broker 'non-votes' are included
in the determination of the number of shares present at the meeting for quorum
purposes. Abstentions will have the same effect as negative votes, except that
abstentions will have no effect on the election of directors because directors
are elected by a plurality of the votes cast. Broker 'non-votes' will have the
same effect as negative votes on the proposal to amend the Company's
Certificate of Incorporation because that proposal requires the approval of 80%
of the outstanding shares. Broker 'non-votes' are not counted in the tabulations
of the votes cast on other proposals presented to stockholders because shares
held by a broker are not considered to be entitled to vote on matters as to
which broker authority is withheld. A broker 'non-vote' occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.
Stockholders of record at the close of business on April 19, 1996 will be
entitled to one vote for each share of the Company's common stock (the 'Common
Stock') then held. There were outstanding on such date 26,987,136 shares of
Common Stock. The Common Stock is the only outstanding class of voting stock of
the Company.
The rights to purchase shares of the Company's Series A Cumulative
Participating Preferred Stock, which automatically trade with the Common Stock,
do not vote. Such rights become exercisable, unless they theretofore have been
redeemed or have expired, 10 days after a person or affiliated or associated
group acquires 20% or more of the Common Stock in a transaction not previously
approved by the Company's Board of Directors or commences a tender offer for
30% or more of the Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information with respect to the
persons who are known to the Company to be the beneficial owners of more than
five percent of the Common Stock as of April 19, 1996. Except as otherwise
indicated, the persons listed below have advised the Company that they have
sole voting and investment power with respect to the shares listed as owned by
them.
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
- ------------------------------------------ ------------ ----------
Vaneton International, Inc.(1) ........... 2,835,794 10.5%
P.O. Box 3340
Road Town
Tortola, British Virgin Islands
The Crabbe Huson Special Fund, Inc.(2) ... 2,162,400 8.0
121 SW Morrison
Suite 1400
Portland, Oregon 97204
BAT Industries p.l.c.(3) ................. 1,653,900 6.1
Windsor House
50 Victoria Street
London SW1H ONL
England
Merrill Lynch & Co., Inc.(4) ............. 1,585,105 5.9
World Financial Center
250 Vesey Street
New York, New York 10281
The Capital Group Companies, Inc.(5) ..... 1,410,000 5.2
333 South Hope Street
Los Angeles, California 90071
The Phillips-Van Heusen Corporation
Associates Investment Plan(6) .......... 1,374,279 5.1
1290 Avenue of the Americas
New York, New York 10104
- ---------------
(1) Dr. Richard Lee, 6/F TAL Building, 49 Austin Road, Kowloon, Hong Kong,
may be deemed to beneficially own the 2,835,794 shares of Common Stock
owned of record by Vaneton International, Inc. Mr. Lee and Vaneton
International, Inc. have shared voting and dispositive power over such
shares. Information as to the shares of Common Stock beneficially
owned by Vaneton International, Inc. and Mr. Lee is as of March 22,
1995 and as set forth in a Schedule 13D filed with the Securities and
Exchange Commission.
(2) The Crabbe Huson Special Fund, Inc. ('CHSF'), 121 SW Morrison, Suite
1400, Portland, Oregon 97204, is a registered investment company
which, as of December 31, 1995, owned 1,674,100 shares (6.2%) of
Common Stock. The Crabbe Huson Group, Inc. ('CHG'), 121 SW Morrison,
Suite 1400, Portland, Oregon 97204, is a registered investment advisor
which, as of December 31, 1995, shares voting and dispositive power
with CHSF, for which it serves as investment advisor, with respect to
the 1,674,100 shares of Common Stock owned by CHSF and with respect to
488,300 shares (1.8%) of Common Stock owned by approximately twelve
investors for which it serves as investment advisor. CHSF and CHG may
be deemed to have formed a 'group' within the meaning of the Securities
Exchange Act of 1934 (the 'Exchange
(Footnotes continued on next page)
2
(Footnotes continued from previous page)
Act') and accordingly, the group beneficially owns the 2,162,400 shares
of Common Stock. Each of CHSF and CHG disclaims beneficial ownership of
all shares owned by the other. Information as to the shares of Common
Stock owned by CHSF and CHG is as of December 31, 1995 and as set forth
in a Schedule 13G filed with the Securities and Exchange Commission.
(3) BAT Industries p.l.c. ('BAT'), Windsor House, 50 Victoria Street,
London SW1H ONL, England, is the parent company of South Western
Nominees Limited, Windsor House, 50 Victoria Street, London SW1H ONL,
England, which is the parent company of Farmers Group, Inc.
('Farmers'), 4680 Wilshire Boulevard, Los Angeles, California 90010.
As such, BAT may be deemed to be the beneficial owner of the aggregate
of 1,653,900 shares of Common Stock which may be deemed to be
beneficially owned by Farmers.
Farmers is an insurance company and may be deemed to be the beneficial
owner of shares of Common Stock as a result of (i) acquisitions made
by various subsidiaries of Farmers, (ii) insurance exchanges for which
Farmers acts as attorney-in-fact and (iii) benefit plans for employees
of Farmers or its subsidiaries for which Farmers has investment
discretion. No such entity is the beneficial owner of more than 5% of
the Common Stock.
Information as to the shares of Common Stock beneficially owned by BAT
and Farmers is as of December 31, 1995 and as set forth in a Schedule
13G filed with the Securities and Exchange Commission.
(4) Merrill Lynch & Co., Inc. ('MLC'), World Financial Center, North
Tower, 250 Vesey Street, New York, New York 10281, is the parent
company of (i) Merrill Lynch Global Asset Management Limited
('MLGAM'), World Financial Center, North Tower, 250 Vesey Street, New
York, New York 10281, and (ii) Merrill Lynch Group, Inc. ('MLG'),
World Financial Center, North Tower, 250 Vesey Street, New York, New
York 10281. As such, MLC may be deemed to be the beneficial owner of
the aggregate of 1,585,105 shares of Common Stock which may be deemed
to be beneficially owned by MLGAM and MLG.
MLG may be deemed to be the beneficial owner of the 1,585,105 shares
of Common Stock by virtue of its control of its wholly-owned
subsidiary, Princeton Services, Inc. ('PSI'), 800 Scudders Mill Road,
Plainsboro, New Jersey 08536, and of Merrill Lynch Bank (Suisse) S.A.
('Bank Suisse') and various Merrill Lynch Trust Companies, each of
which is a wholly-owned subsidiary of MLG. PSI is the general partner
of Merrill Lynch Asset Management, L.P. ('MLAM'). MLAM, 800 Scudders
Mill Road, Plainsboro, New Jersey 08536, is a registered investment
advisor which may be deemed to be the beneficial owner of the
1,357,940 shares (5.0%) of Common Stock.
Each of MLC, MLGAM, MLG, PSI, Bank Suisse, the Merrill Lynch Trust
Companies and MLAM has disclaimed beneficial ownership of such shares.
Information as to the shares of Common Stock beneficially owned by
MLC, MLG, PSI and MLAM is as of December 31, 1995 and as set forth in
a Schedule 13G filed with the Securities and Exchange Commission.
(5) The Capital Group Companies, Inc. ('CGC') is the parent company of
Capital Research and Management Company ('CRMC'), 333 South Hope
Street, Los Angeles, California 90071. CRMC is a registered investment
adviser which, as of December 31, 1994, exercised investment discretion
with respect to the 1,410,000 shares of Common Stock, which were owned
by various institutional investors. CRMC and, therefore, CGC has no
power to direct the vote of such shares. CGC has disclaimed beneficial
ownership of such shares. Information as to the shares of
(Footnotes continued on next page)
3
(Footnotes continued from previous page)
Common Stock beneficially owned by CGC and CRMC is as of December 31,
1994 and as set forth in a Schedule 13G filed with the Securities and
Exchange Commission.
(6) Includes all shares held by the Master Trust relating to the Company's
Associates Investment Plan, its Associates Investment Plan (Crystal
Brands Division) and its Associates Investment Plan for Associates in
Puerto Rico. The Master Trust does not have dispositive power as to the
shares of Common Stock beneficially owned by it.
The following table presents certain information with respect to the
number of shares of Common Stock beneficially owned by each of the directors
and nominees for director of the Company, the chief executive officer, the four
most highly compensated executive officers of the Company other than the chief
executive officer, and all of the directors, nominees for director and
executive officers of the Company as a group as of April 19, 1996.
AMOUNT
BENEFICIALLY PERCENT OF
NAME OWNED(1) CLASS
- ---- ------------ ----------
Edward H. Cohen................................... 13,762 *
Estelle Ellis..................................... 14,762 *
Joseph B. Fuller.................................. 3,262 *
Bruce J. Klatsky.................................. 179,266 *
Maria Elena Lagomasino............................ 727 *
Harry N.S. Lee(2)................................. 1,000 *
Bruce Maggin...................................... 27,262 *
Ellis E. Meredith................................. 12,772 *
Steven L. Osterweis............................... 17,762 *
Walter T. Rossi................................... 17,166 *
William S. Scolnick............................... 8,262 *
Allen E. Sirkin................................... 30,611 *
Peter J. Solomon.................................. 31,762 *
Mark Weber........................................ 43,686 *
Irwin W. Winter................................... 56,303 *
All directors, nominees for director and executive
officers as a group (15 persons)................ 458,365 1.7%
- ---------------
* Less than 1% of class.
(1) The figures in the table are based on information furnished to the
Company by the directors, nominees for director and executive
officers. The figures do not include the shares held in the Master
Trust for the executive officers by virtue of their participation in
the Company's Associates Investment Plan. See the prior table for
information regarding the Associates Investment Plan. Except as
otherwise indicated, each of the directors, nominees and executive
officers has sole voting and investment power with respect to the
shares listed as owned by them.
(2) Harry N.S. Lee is a director of Vaneton International, Inc. which
beneficially owns 2,835,794 shares (10.5%) of Common Stock. See the
prior table for certain information regarding Vaneton International,
Inc.
The figures in the foregoing table include 190 shares held by Bruce J.
Klatsky's child and by Mr. Klatsky's wife as custodian for his child, as to
which Mr. Klatsky has disclaimed beneficial
4
ownership, 8,000 shares held by Bruce Maggin as custodian for his children, 300
shares held by Allen E. Sirkin with his wife as joint tenants, 200 shares held
by the Keogh Plan of Mr. Sirkin's wife, as to which Mr. Sirkin has disclaimed
beneficial ownership, 100 shares held by Mr. Sirkin's wife as custodian for one
of Mr. Sirkin's children, as to which Mr. Sirkin has disclaimed beneficial
ownership, and 12,000 shares held in certain trusts for the benefit of the
children of Peter J. Solomon, as to which Mr. Solomon has disclaimed beneficial
ownership.
The foregoing table also includes shares which the following directors and
executive officers have the right to acquire within sixty days upon the
exercise of options granted under the Company's stock option plans: Edward H.
Cohen, 7,762 shares; Estelle Ellis, 7,762 shares; Joseph B. Fuller,
2,762 shares; Bruce J. Klatsky, 130,408 shares; Maria Elena Lagomasino, 527
shares; Bruce Maggin, 7,762 shares; Ellis E. Meredith, 7,762 shares; Steven L.
Osterweis, 7,762 shares; Walter T. Rossi, 16,666 shares; William S. Scolnick,
7,762 shares; Allen E. Sirkin, 30,011 shares; Peter J. Solomon, 7,762 shares;
Mark Weber, 36,186 shares; Irwin W. Winter, 34,278 shares; and all directors,
nominees for director and executive officers as a group, including the
foregoing, 305,172 shares.
ELECTION OF DIRECTORS
The Board of Directors currently consists of 12 members and is divided
into three classes. One class of directors is elected by the stockholders at
each annual meeting to serve for a term of three years or until their
successors are elected and qualified. However, the Board of Directors has
submitted for stockholder approval a proposal to amend the Company's
Certificate of Incorporation to eliminate the classification of the Board of
Directors and the election of the classes of directors on a staggered basis and
to provide for the annual election of all members of the Board for a term of
one year or until their successors are elected and qualified. See 'Approval of
an Amendment to the Company's Certificate of Incorporation to Establish Annual
Terms for Members of the Board of Directors.'
At the meeting, the stockholders will, in the event of the approval of the
proposal to amend the Company's Certificate of Incorporation, elect 12 members
of the Board of Directors to serve until the 1997 Annual Meeting of
Stockholders and until their respective successors shall have been elected and
shall qualify or, in the event the proposal to amend the Company's Certificate
of Incorporation is not approved, elect four directors to serve for a term of
three years and until their respective successors shall have been elected and
shall qualify.
In order to effect the foregoing, the eight directors whose terms would
not normally expire at the meeting have tendered their resignations, effective
only upon the passing of the proposal to amend the Company's Certificate of
Incorporation. If the proposal to amend the Company's Certificate of
Incorporation receives the requisite approval at the meeting, it is proposed
that the twelve current directors of the Company be re-elected to serve on the
Company's Board of Directors, each for a term of one year and until their
respective successors shall have been elected and shall qualify. If the
proposal to amend the Company's Certificate of Incorporation does not receive
the requisite approval at the meeting, the eight directors whose terms would
not normally expire at the meeting will serve out the balance of their
respective three-year terms and it is proposed that the four directors whose
terms of office expire at the meeting be re-elected to serve on the Company's
Board of Directors, each for a term of three years and until their respective
successors shall have been elected and shall qualify.
The election of directors requires the affirmative vote of a plurality of
the shares of Common Stock present in person or by proxy at the meeting. At
this time, the Board of Directors knows of no reason why any nominee might be
unable to serve. There are no arrangements or understandings between any
director or nominee and any other person pursuant to which such person was
selected as a director or nominee.
5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE, IF THE PROPOSAL TO AMEND THE
COMPANY'S CERTIFICATE OF INCORPORATION IS APPROVED, FOR THE ELECTION OF THE 12
NOMINEES NAMED BELOW AND, IF THE PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION IS NOT APPROVED, FOR THE FOUR CLASS C NOMINEES NAMED BELOW.
PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES IN ALL EVENTS UNLESS OTHERWISE SPECIFIED IN THE PROXY.
The following individuals are the Company's directors whose terms of
office expire at the meeting in all events. All of these individuals have
previously been elected directors of the Company by the stockholders.
YEAR
BECAME A
PRINCIPAL OCCUPATION AGE DIRECTOR
--------------------------------- --- --------
CLASS C (TERM EXPIRES 1999)
Joseph B. Fuller.............. Director of Monitor Company, a 39 1991
management consulting firm
Bruce J. Klatsky.............. Chairman, President and Chief 47 1985
Executive Officer of the Company
Bruce Maggin.................. Executive Vice President, 53 1987
Multimedia Group, Capital
Cities/ABC, Inc.
Steven L. Osterweis........... Business consultant 83 1976
The following individuals are the Company's other directors whose terms of
office will expire at the annual meeting if the proposal to amend the Company's
Certificate of Incorporation is approved, but whose terms of office will
continue after the meeting and until the annual meeting of stockholders in the
year in which the directorships of their class terminate if the proposal to
amend the Company's Certificate of Incorporation does not receive the requisite
approval at the meeting. With the exception of Harry N.S. Lee, who was elected
by the directors on April 18, 1995, all of these individuals have previously
been elected directors of the Company by the stockholders.
YEAR
BECAME A
PRINCIPAL OCCUPATION AGE DIRECTOR
--------------------------------- --- --------
CLASS B (TERM EXPIRES 1998)
Edward H. Cohen............... Senior Partner of Rosenman & 57 1987
Colin LLP
Estelle Ellis................. President of Business Image, 76 1982
Inc., a creative marketing
company
Maria Elena Lagomasino........ Senior Vice President of The 47 1993
Chase Manhattan Bank, N.A.
William S. Scolnick........... Retired Executive Vice President 78 1962
of a division of the Company
CLASS A (TERM EXPIRES 1997)
Harry N.S. Lee................ Director of TAL Apparel Limited, 53 1995
an apparel manufacturer and
exporter based in Hong Kong
Ellis E. Meredith............. Chairman of Newsletters, Inc., a 68 1984
publisher of business newsletters
Peter J. Solomon.............. Chairman of Peter J. Solomon 57 1987
Company, Ltd., an investment
banking firm
Irwin W. Winter............... Executive Vice President and 62 1987
Chief Financial Officer of the
Company
6
Mr. Klatsky is also a director of MEM Company, Inc. Mr. Cohen is also a
director of Franklin Electronic Publishers, Inc. Mr. Solomon is also a director
of Centennial Cellular Corp., Century Communications Corporation, Culbro
Corporation, Monro Muffler Brake, Inc. and Office Depot, Inc.
Each of the directors or nominees for director has been engaged in the
principal occupation indicated in the foregoing table for more than the past
five years, except Mr. Klatsky who, while serving as President of the Company
for more than the past five years, was elected the Company's Chief Executive
Officer in June 1993 and Chairman of the Board in June 1994.
No family relationship exists between any director or executive officer of
the Company.
The Board of Directors of the Company has standing Audit and Compensation
Committees; it does not have a standing Nominating Committee. The Audit
Committee, composed of Messrs. Maggin, Osterweis and Scolnick, is charged with
recommending annually to the Board of Directors the independent auditors to be
retained by the Company, reviewing the audit plan with the auditors, reviewing
the results of the audit with the officers of the Company and its auditors and
reviewing with the officers and internal auditors of the Company the scope and
nature of the Company's internal audit function. The Audit Committee held three
meetings during the fiscal year ended January 28, 1996. The Compensation
Committee, composed of Messrs. Cohen, Maggin, Meredith and Osterweis, is charged
with setting the compensation of all executive officers, recommending new
incentive compensation plans and implementing changes and improvements to
existing incentive compensation plans, all subject to approval by the Board of
Directors. The Compensation Committee held three meetings during the fiscal
year ended January 28, 1996.
During the fiscal year ended January 28, 1996, there were five meetings of
the Board of Directors. All of the directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and the Committees of
the Board of Directors on which they serve, except for Mr. Solomon who attended
three of the five (60%) meetings of the Board of Directors.
The Company will consider for election to the Board of Directors a nominee
recommended by a stockholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the Board
of Directors, (ii) the principal occupations and employment of the proposed
nominee during the past five years, (iii) each directorship currently held by
the proposed nominee and (iv) a statement that the proposed nominee has
consented to the nomination. The recommendation should be addressed to the
Secretary of the Company.
Based upon a review of the filings furnished to the Company pursuant to
Rule 16a-3(e) promulgated under the Exchange Act and on representations from
its executive officers and directors, all filing requirements of Section 16(a)
of the Exchange Act were complied with during the fiscal year ended January 28,
1996, except that one report covering one transaction was filed late by Mr.
Winter.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to the Company's chief executive officer and its four
most highly compensated executive officers, other than the chief executive
officer, who were serving as executive officers at the end of the Company's
last fiscal year (together, the 'Named Executive Officers'), for services
rendered in all capacities to the Company and its subsidiaries for each of the
Company's last three fiscal years, ended
7
January 28, 1996, January 29, 1995 and January 30, 1994 (fiscal year 1995, 1994
and 1993, respectively).
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION AWARDS(2) ALL OTHER
---------------- ------------ COMPENSATION(1)
NAME AND FISCAL SALARY BONUS OPTIONS(3) ---------------
PRINCIPAL POSITION YEAR $ $ # $
- ---------------------------------------- ------ ------- ------- ------------ ---------------
Bruce J. Klatsky........................ 1995 816,666 -- 20,000 56,427
Chairman, 1994 750,000 -- 7,890 93,977
Phillips-Van Heusen Corporation 1993 750,000 835,000 215,520 2,281,983
Walter T. Rossi(4)...................... 1995 633,333 -- 15,000 24,093
Chairman, 1994 575,000 -- 5,260 21,095
The PVH Retail Group 1993 500,000 -- 8,620 10,733
Allen E. Sirkin(5)...................... 1995 633,333 -- 15,000 24,093
Chairman 1994 575,000 -- 5,260 25,627
The PVH Wholesale Group 1993 500,000 -- 8,620 45,572
Mark Weber(6)........................... 1995 491,666 -- 7,500 19,763
Vice President, 1994 462,500 -- 4,170 22,252
Phillips-Van Heusen 1993 425,000 -- 7,340 22,233
Corporation and Group
President, The Sportswear Group
Irwin W. Winter(7)...................... 1995 491,666 -- 15,000 19,843
Vice President, Finance, 1994 456,250 -- 5,000 17,533
Phillips-Van Heusen Corporation 1993 395,833 -- 8,280 16,467
No other annual compensation, restricted stock awards, stock appreciation
rights ('SARs') or long-term incentive plan ('LTIP') payouts (all as defined in
the proxy regulations of the Securities and Exchange Commission) were awarded
to, earned by, or paid to the Named Executive Officers during any of the
Company's last three fiscal years.
- ---------------
(1) All Other Compensation includes payments or contributions required by
the Company's Associates Investment Plan and Supplemental Savings
Plan, Corporate Medical Reimbursement Insurance Plan and Educational
Benefit Trust and payments made pursuant to an agreement between the
Company and Mr. Klatsky (the 'Klatsky Agreement').
Under the combination of the Company's Associates Investment Plan, its
Associates Investment Plan (Crystal Brands Division) and its
Associates Investment Plan for Associates in Puerto Rico, each
employee, including the Named Executive Officers, eligible to
participate may currently authorize his or her employer to withhold a
specified percentage of his or her compensation, up to 6% in the case
of certain management and highly compensated employees, including the
Named Executive Officers, and otherwise up to 15% (subject to certain
limitations). Under the Supplemental Savings Plan applicable to
certain management and highly compensated employees, each employee,
including the Named Executive Officers, eligible to participate may
currently authorize his or her employer to withhold a specified
percentage of his or her compensation, up to 15% after deductions for
contributions to the Company's Associates Investment Plans. The
Company or its subsidiaries will contribute an amount equal to 50% of
an employee's contribution up to a maximum of 3% of such employee's
total compensation.
The entire amount contributed by the Company will be invested in
Common Stock and the amount contributed by the employee will be
invested, in the employee's sole direction, in up to
(Footnotes continued on next page)
8
(Footnotes continued from previous page)
six investment funds (including up to 25% in additional Common Stock),
except that, in the case of the Supplemental Savings Plan, the
Company's contribution will be in the form of phantom shares of Common
Stock and the employee's contribution will earn interest at the same
rate as is paid on 10-year United States Treasury bonds, except for
certain employee contributions made prior to July 1, 1995 which were
invested in the form of phantom shares of Common Stock. A participant's
interest in the amounts arising out of employer contributions vests
after the earlier of five years, at age 65 or upon disability or death.
The Company has made contributions which are reflected under this
column in the amount of $24,500, $22,500 and $22,500 for Bruce J.
Klatsky, $19,000, $17,250 and $1,250 for Walter T. Rossi, $19,000,
$17,250 and $15,000 for Allen E. Sirkin, $14,670, $13,875 and $12,750
for Mark Weber, and $14,750, $13,688 and $10,875 for Irwin W. Winter,
in the fiscal years ended January 28, 1996, January 29, 1995 and
January 30, 1994, respectively.
The Company's Corporate Medical Reimbursement Insurance Plan covers
eligible employees for most medical charges up to a specified annual
maximum. During the fiscal years ended January 28, 1996, January 29,
1995 and January 30, 1994, respectively, the Company incurred the
following annual premiums for single or family coverage for the Named
Executive Officers which are reflected under this column: Bruce J.
Klatsky--$5,093, $8,377 and $9,483; Walter T. Rossi--$5,093, $3,845
and $9,483; Allen E. Sirkin--$5,093, $8,377 and $9,483; Mark
Weber--$5,093, $8,377 and $9,483; and Irwin W. Winter--$5,093, $3,845
and $5,592.
Under the Company's Educational Benefit Trust, children of eligible
employees received reimbursement of tuition and room and board charges
while attending an accredited college or vocational school. The plan
was terminated in 1986 except with respect to children who were then
covered by the plan. The education benefits received by children who
continue to be eligible to receive benefits under the plan and which
are reflected under this column totalled $26,834, $26,100 and $21,089,
for the fiscal years ended January 28, 1996, January 29, 1995 and
January 30, 1994, respectively. Such benefits were paid to the child
of Bruce J. Klatsky for the fiscal years ended January 28, 1996 and
January 29, 1995 and to the children of Allen E. Sirkin for the fiscal
year ended January 30, 1994.
Pursuant to the Klatsky Agreement, the Company transferred (subject to
certain restrictions) $2,250,000 of government securities to Mr.
Klatsky and reimbursed Mr. Klatsky for $37,000 in legal expenses
relating to the negotiation of said Agreement. See 'Employment
Contracts, Termination of Employment and Change-In-Control
Arrangements.'
(2) The stockholders approved the Company's Performance Restricted Stock
Plan (the 'Performance Restricted Stock Plan') at the 1995 Annual
Meeting of Stockholders. Under the Performance Restricted Stock Plan,
certain of the Company's senior executives are eligible to receive
restricted shares of the Common Stock if the Company achieves the
financial goals for a given fiscal year set by the Compensation
Committee at the beginning of such fiscal year. For the fiscal year
ended January 28, 1996, no awards were made under the Performance
Restricted Stock Plan because the Company failed to attain the goals
set by the Compensation Committee at the beginning of such fiscal
year. See 'Compensation Committee Report on Executive Compensation'
for a more detailed description of the Performance Restricted Stock
Plan.
(3) In response to changes in the tax laws as a result of the Omnibus
Budget Reconciliation Act of 1993 (the '1993 Tax Act'), on September
9, 1993, the Named Executive Officers agreed to cancel the options
which had been issued to them on June 1, 1993, in consideration of the
grant of new options for the same number of shares at a price equal to
the option price of the original
(Footnotes continued on next page)
9
(Footnotes continued from previous page)
options, which price was higher than the market price on such date.
Also in response to the 1993 Tax Act changes, at the Company's urging
and for its benefit, on December 1, 2 and 3, 1993, Mr. Klatsky
exercised the option granted to him on April 28, 1993 to purchase
100,000 shares, in consideration of the grant to him of a new option on
December 3, 1993
for 100,000 shares at the then fair market value of the Common Stock
for the balance of the term of his original option. Both the original
grants which were cancelled and the new grants are reflected in the
1993 option grants under this column.
(4) Mr. Rossi resigned as an executive officer of the Company on February
12, 1996.
(5) Mr. Sirkin was promoted to Vice Chairman of the Company on January 29,
1996.
(6) Mr. Weber was promoted to Vice Chairman of the Company on January 29,
1996.
(7) Mr. Winter was promoted to Executive Vice President and Chief
Financial Officer of the Company on January 29, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's 1987 Stock Option
Plan (the 'Option Plan') granted to the Named Executive Officers during the
fiscal year ended January 28, 1996. No stock appreciation rights have been
granted by the Company.
INDIVIDUAL GRANTS
----------------------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE ------------------------
GRANTED(1) IN FISCAL PRICE EXPIRATION 5% 10%
NAME # YEAR $/SH DATE $ $
- ---- ---------- ---------- -------- ---------- ----------- -----------
Bruce J. Klatsky......... 20,000 4.3 $ 14.75 6/13/05 185,524 470,154
Walter T. Rossi.......... 15,000 3.2 $ 14.75 6/13/05 139,143 352,615
Allen E. Sirkin.......... 15,000 3.2 $ 14.75 6/13/05 139,143 352,615
Mark Weber............... 7,500 1.6 $ 14.75 6/13/05 69,571 176,308
Irwin W. Winter.......... 15,000 3.2 $ 14.75 6/13/05 139,143 352,615
All stockholders(2)...... N/A N/A N/A N/A 247,480,621 627,164,161
- ---------------
(1) All options granted to the Named Executive Officers in the fiscal year
ended January 28, 1996 were granted on June 13, 1995. One third of the
outstanding options become exercisable on each of the third, fourth
and fifth anniversaries of the grant date.
(2) These figures were calculated assuming that the price of the
26,679,095 shares of Common Stock outstanding on June 13, 1995
increased from $14.75 per share at a compound rate of 5% and 10% per
year for ten years. The purpose of including this information is to
indicate the potential realizable value at the assumed annual rates of
stock price appreciation for the option term for all of the Company's
stockholders.
10
FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the value at
January 28, 1996 of unexercised stock options held by the Named Executive
Officers. No stock appreciation rights have been granted by the Company and no
stock options were exercised during the fiscal year ended January 28, 1996 by
the Named Executive Officers.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL OPTIONS IN-THE-MONEY AT
YEAR-END FISCAL YEAR-END(1)
------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME # $
- -------------------------- ------------------------- -------------------------
Bruce J. Klatsky.......... 27,460 138,598 32,352 0
Walter T. Rossi........... 16,666 32,904 0 0
Allen E. Sirkin........... 28,373 26,208 59,321 0
Mark Weber................ 35,039 16,487 112,244 0
Irwin W. Winter........... 32,557 25,861 59,927 0
- ---------------
(1) Fair market value of securities underlying the options minus the
exercise price of the options at exercise or fiscal year-end.
PENSION PLAN TABLE
The following table sets forth the aggregate estimated annual benefits
payable, upon retirement at age 65, to employees under the combination of the
pension plan for salaried employees and a supplemental defined benefit plan,
applicable to certain management and highly compensated employees (including
the Named Executive Officers), in various compensation and years-of-service
classifications, assuming that the Social Security maximum limit does not
change from its present level of $62,700.
YEARS OF SERVICE
REMUNERATION -------------------------------------------
$ 15 20 25 30 35
- ---------------- ------- ------- ------- ------- -------
175,000 34,989 46,110 57,051 67,884 78,669
275,000 57,489 76,110 94,551 112,884 131,169
375,000 79,989 106,110 132,051 157,884 183,669
475,000 102,489 136,110 169,551 202,884 236,169
575,000 124,989 166,110 207,051 247,884 288,669
675,000 147,489 196,110 244,551 292,884 341,169
775,000 169,989 226,110 282,051 337,884 393,669
The benefits under the Company's pension plans are generally based on a
participant's career average compensation (except that pre-1994 benefits are
based on pre-1994 high five-year average compensation and exclude bonuses).
Absent any election by a participant of an optional form of benefit, benefits
under the pension plans become payable at the time of retirement, normally at
age 65; such benefits under the pension plans for salaried employees are
payable monthly for the life of the participant and, in most cases, for the
life of such participant's surviving spouse and benefits under the supplemental
defined benefit plan are payable in a lump sum. Notwithstanding the method of
payment of benefits under the pension plans, the amounts shown in the above
table are shown in the actuarial equivalent amount of a life annuity. The
benefits listed above are not subject to any deduction for social security or
other offset amounts.
11
The credited years of service and covered compensation under the pension
plans, as of January 28, 1996, for each of the Named Executive Officers is set
forth in the following table.
CREDITED YEARS
NAME OF SERVICE
------------------------------ --------------
Bruce J. Klatsky.............. 23
Walter T. Rossi............... 2
Allen E. Sirkin............... 9
Mark Weber.................... 24
Irwin W. Winter............... 8
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries receives a fee of $10,000 for his or her services as a
director of the Company and $750 for each Board meeting attended. Each director
who is a member of the Audit Committee receives an additional fee of $2,500 and
each director who is a member of the Compensation Committee receives an
additional fee of $2,500. Pursuant to the Option Plan, each outside director is
entitled to receive, on an annual basis, a non-incentive option to purchase the
number of shares of Common Stock derived by dividing $50,000 by the fair market
value of a share of Common Stock on the date of grant. Pursuant to the Option
Plan, on June 13, 1995, each outside director was granted an option to purchase
3,389 shares of Common Stock.
The law firm of Rosenman & Colin LLP, of which Mr. Cohen is a senior
partner, was engaged as the Company's general outside counsel for the fiscal
year ended January 28, 1996 and will continue to be so engaged for the fiscal
year ending February 2, 1997.
Peter J. Solomon Company, Ltd., of which Mr. Solomon is Chairman, provides
investment banking services to the Company. During the fiscal year ended January
28, 1996, Peter J. Solomon Company, Ltd. was paid $2,019,102 for its services
in connection with the Company's acquisition of the Crystal Brands Apparel
Group.
Business Image, Inc., of which Ms. Ellis is President, provides marketing
and communications services to the Company, including the publication of a
corporate newsletter. During the fiscal year ended January 28, 1996, Business
Image, Inc. was paid $202,186 for its services to the Company.
Monitor Company, of which Mr. Fuller is a director, provided business
consulting services to the Company during the fiscal year ended January 28,
1996.
TAL Apparel Limited, of which Mr. Lee is a director, has been, and
continues to be, one of the principal manufacturers of the Company's apparel
products. During the fiscal year ended January 28, 1996, the Company purchased
approximately $45,000,000 of products from TAL Apparel Limited and certain
related companies.
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to the Klatsky Agreement, the Company transferred (subject to
certain restrictions) $2,250,000 of government securities to Bruce J. Klatsky,
the Company's Chairman and Chief Executive Officer. Under the Agreement,
$83,333 of such securities were released to Mr. Klatsky at the end of each
month commencing February 1994 and ending April 1996.
12
The Company has had in effect since 1987 a Special Severance Benefit Plan
providing benefits for 20 key employees of the Company and its subsidiaries,
including the Named Executive Officers. Upon the termination of employment by
any participant within two years after a change in control of the Company (as
defined in the Plan), the participant receives a lump sum payment in an amount
generally equal to three times the average annual total cash compensation paid
to or accrued for him or her during the two-year period preceding the date of
termination. In addition, the Company has agreed to indemnify each participant
in the Plan against any and all liabilities he or she may incur under Section
4999(a) of the Internal Revenue Code (relating to excise taxes on excess
parachute payments), including any income taxes and/or additional excise taxes
applicable to such indemnification payment. Mr. Klatsky is also entitled to the
payment under the Plan if (i) he is not continued as the Company's chief
executive officer and Chairman of the Board prior to his retirement as an
employee of the Company, (ii) the appointment by the directors of an officer or
the hiring by the directors of an employee with authority equal or superior to
the authority of Mr. Klatsky at any time prior to his retirement as an employee
of the Company, or (iii) the Company fails to maintain the terms and conditions
of Mr. Klatsky's employment, including a minimum level of compensation, as such
existed on April 28, 1993.
Certain other plans of the Company in which certain of the Named Executive
Officers participate provide for benefits upon the occurrence of a change in
control of the Company. The Company's Capital Accumulation Plan, under which
participants remaining in the employ of the Company until established target
dates earn specified dollar amounts, provides that if a participant's employment
with the Company is terminated following a change in control of the Company, the
full undiscounted value of the future payments to be made to the participant
under the Plan becomes immediately payable in a lump sum. Further, each
participant's rights are subject to non-competition and non-disclosure
restrictions which automatically terminate upon a change in control of the
Company. The Option Plan provides that upon a change in control of the Company,
all options which were previously granted under the Option Plan and which have
not expired or been otherwise cancelled become immediately exercisable in full
(regardless of whether such options have fully vested).
Each participant who receives shares of Common Stock under the Performance
Restricted Stock Plan will have such shares issued pursuant to a restricted
stock agreement. Each restricted stock agreement will provide that, except as
provided below, if such participant leaves the employ of the Company and its
subsidiaries prior to the last day of the third fiscal year following the fiscal
year with respect to which the shares subject thereto ('Restricted Shares') were
issued, he or she will forfeit such Restricted Shares, and will be required to
retransfer such Restricted Shares to the Company without any consideration. The
foregoing requirement to retransfer Restricted Shares to the Company will not
apply, and forfeiture thereof will not occur, if the participant's employment by
the Company and its subsidiaries terminates by reason of his or her death or
permanent disability, or on or after his or her 65th birthday, or on or after a
change in control of the Company. In addition, if a participant's employment
terminates during the three-year period by reason of his or her termination
without cause or after the later to occur of his or her 55th birthday and his or
her completion of 10 years of employment with the Company and its subsidiaries,
then, if and to the extent that the Compensation Committee, upon the
recommendation of the chief executive officer of the Company, so determines, the
restrictions on the transferability of his or her Restricted Shares will
terminate and the forfeiture will not occur.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended January
28, 1996 were Edward H. Cohen, Bruce Maggin, Ellis E. Meredith and Steven L.
Osterweis. From February 1987 until February 1988, Mr. Cohen was Vice President
and General Counsel of the Company. In addition, the law firm of Rosenman &
Colin LLP, of which Mr. Cohen is a senior partner, was engaged as the Company's
general
13
outside counsel in the fiscal year ended January 28, 1996 and will continue to
be so engaged for the fiscal year ending February 2, 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibility is to set the compensation of
all executive officers, recommend new incentive compensation plans and implement
changes and improvements to existing incentive compensation plans, all subject
to approval by the Board.
OVERALL POLICY. The Compensation Committee believes that the Company's
executive officers constitute a highly qualified management team who have
largely been responsible for the Company's success. The Compensation Committee
has structured the Company's compensation program (1) primarily to compensate
its executive officers on an annual basis with a stable, secure cash salary at a
sufficiently high level to retain and motivate these officers, (2) to link a
portion of its executive officers' compensation to long term increases in value
created for the Company's stockholders by the efforts of these officers and (3)
to be consistent with the Company's high ethical standards. The Company's
compensation program does not rely, to any significant extent, on fringe
benefits or perquisites.
The key elements of the Company's executive compensation package are base
salaries, stock options and performance based compensation. The Company
eliminated the annual bonus portion of executive compensation several years ago
for two reasons: (1) annual bonuses, which are generally dependent upon a
variety of factors often beyond the control of Company executives, were not, in
the Board's view, the most effective motivational tool and (2) the business
inter-relationships of the Company's various operating divisions made it more
logical, in the Board's view, to grant stock options to key management, so that
a benefit would accrue to them only if the entire Company did well, as reflected
in the appreciation of the price of the Common Stock. In lieu of using annual
bonuses, the Company adopted a policy of offering competitive base salaries,
together with annual stock option grants. In addition, the Company believes its
fringe benefit plans are generally competitive and that it has a reputation for
providing a reasonably high level of job security in an industry known for high
levels of executive turnover.
In April 1995, based upon its own research and the information provided by
its consultant, Towers Perrin, the Compensation Committee recommended that the
Board adopt the Performance Restricted Stock Plan in order to provide the
Company with an additional means of attracting, retaining and incentivizing its
top executives by placing the Company in an appropriate competitive position in
its industry and broader peer group. The companies that the Compensation
Committee examined in ascertaining comparable compensation levels included
certain of those appearing in the S&P 500 Retail Store Composite Index, the S&P
500 Textile (Apparel Manufacturers) Index and the S&P 500 Shoes Index, as well
as other public and private companies in those industries. In addition, Towers
Perrin, whose database contains a broad selection of Fortune 1000 companies in
and out of the apparel industry, provided the Compensation Committee with
information regarding competitive executive compensation levels. Although it is
particularly difficult to ascertain precise comparable compensation levels
because of differences in the components of compensation and required
disclosures, the Compensation Committee attempted to target its compensation
levels (including salaries, option grants and potential awards under the
Performance Restricted Stock Plan) in the 50th to 75th percentile of
compensation, which it believed were effectively being paid by the companies
that the Compensation Committee examined. Based upon the Compensation
Committee's recommendation, the Board adopted the Performance Restricted Stock
Plan, which was approved by the Company's stockholders at the 1995 Annual
Meeting of Stockholders.
The Compensation Committee annually reviews the Company's executive
compensation package, taking into account corporate performance, stock price
performance and total return to stockholders, as well as industry conditions,
recommendations of the Company's chief executive officer and compensation
awarded to executives in other companies, especially those involved in the
apparel, footwear and specialty retail industries. In establishing future
executive compensation packages, the Compensation Committee may
14
adopt additional long-term incentive and/or annual bonus plans to meet the needs
of changing employment markets and economic, accounting and tax conditions. In
determining the compensation of an individual executive, the Compensation
Committee intends to take into account the performance of the executive and the
full compensation package afforded by the Company to him or her, including
pension benefits, insurance and other benefits. The views of Bruce J. Klatsky,
as chief executive officer, are considered by the Compensation Committee in
their review of the performance and compensation of individual executives.
BASE SALARIES. Annual salaries are determined by evaluating the
performance of the Company and of each executive. In the case of executives with
responsibility for particular operations of the Company, the financial results
of those operations are also considered. In evaluating overall performance and
results of particular operations of the Company, the Compensation Committee
reviews the extent to which the Company or the particular operations achieved
budgeted estimates for sales, gross and after-tax margins and earnings per share
presented to and reviewed by the Board for the fiscal year, and the Company's
sales and earnings results compared to those of many public peer companies
(including companies that are part of the Line of Business Index). Where
appropriate, the Compensation Committee considers non-financial performance
measures, including market share increases, manufacturing and distribution
efficiency gains, improvements in product quality, improvements in relations
with customers and suppliers and a demonstrated commitment to the welfare and
dignity of the Company's associates. Also considered are years of service to the
Company. In addition, in determining the annual salaries for the past two fiscal
years of certain executive officers the Compensation Committee considered, and
in determining the annual salaries for the current fiscal year of all executive
officers the Compensation Committee will consider, information provided by
Towers Perrin regarding competitive executive compensation. Finally, the
Compensation Committee takes into account the relative salaries of the executive
officers and determines what it believes are appropriate compensation level
distinctions among the executive officers and between the executive officers, on
the one hand, and the Company's chief executive officer, on the other hand.
There is no specific relationship between achieving or failing to achieve the
budgeted estimates or the Company's relative results, and the annual salaries
determined by the Compensation Committee for any of the Named Executive
Officers. No specific weight is attributed to any of the factors considered by
the Compensation Committee; the Compensation Committee considers all factors and
makes a subjective determination, based upon the experience of its members and
the recommendations of the Company's chief executive officer, of appropriate
compensation levels.
In determining the base salary of Bruce J. Klatsky, as chief executive
officer for the fiscal year ended January 28, 1996, the Compensation Committee
took into account the salaries of chief executive officers of many public peer
companies (including companies that are part of the Line of Business Index) and
private peer companies known to the members of the Committee, the fact that Mr.
Klatsky's base salary had not been increased for the prior two fiscal years, the
Company's failure to meet its financial goals for the fiscal year ended January
29, 1995, the performance of the Common Stock over the prior several years and
the assessment by the Compensation Committee of Mr. Klatsky's individual
performance. In evaluating whether the Company achieved its financial goals, the
Compensation Committee reviewed the extent to which the Company achieved
budgeted estimates for sales, gross and after-tax margins and earnings per share
presented to and reviewed by the Board and the Company's sales and earnings
results compared to those of many public peer companies (including companies
that are part of the Line of Business Index). The Compensation Committee also
reviewed several compensation surveys in determining Mr. Klatsky's compensation
package.
LONG-TERM INCENTIVES. Under the Company's Option Plan, stock options are
granted to executives of the Company. Stock options are designed to align the
interests of executives with those of the stockholders. Stock options are
customarily granted at prices equal to fair market value at the date of grant.
Generally stock options may not be exercised until the third anniversary of the
date on which they are granted and grants of stock options do not become fully
exercisable until the fifth anniversary of the date on which they are granted.
The options generally remain exercisable during employment until the tenth
15
anniversary of the date of grant. This approach provides an incentive to the
executive to increase stockholder value over the long term, since the full
benefit of the options granted cannot be realized unless stock price
appreciation occurs over a number of years.
In view of changing tax laws and economic and employment conditions, the
Compensation Committee regularly examines other methods of incentive based
compensation and intends to implement, when appropriate, such methods in lieu of
or in addition to stock options.
Grants under the Option Plan were awarded in June 1995 to approximately 260
of the top executives of the Company. Each executive received a fixed number of
shares relative to his or her salary range and based on an option valuation
model as of the date of the grant. The options were granted in an amount such
that the value of the award, when combined with direct compensation and, for
participants in the Performance Restricted Stock Plan, the potential award that
executive might receive under the Performance Restricted Stock Plan, would
provide competitive total compensation relative to comparable positions at other
companies. The value of the options granted to the Named Executive Officers in
June 1995 were, on average, 31% of the direct compensation for the Named
Executive Officers for the fiscal year ended January 28, 1996.
PERFORMANCE BASED COMPENSATION. Within 90 days after the commencement of
each fiscal year, the Compensation Committee is required to determine the senior
executives of the Company and its subsidiaries who will be participants in the
Performance Restricted Stock Plan with respect to such fiscal year, the
Corporate EBIT Goal and the Corporate Executive Goal or the Divisional Goal to
which such participant will be subject with respect to such fiscal year. If the
Corporate EBIT Goal is attained with respect to a fiscal year, each participant
who is employed by the Company or a subsidiary on the last day of such fiscal
year will be entitled to an award (an 'Award'). In addition, where the Corporate
EBIT Goal is attained with respect to a fiscal year, each participant is
entitled to receive an additional Award based on achieving the Corporate
Executive Goal or his or her Divisional Goal, as the case may be.
Awards under the Performance Restricted Stock Plan are made in shares of
Common Stock. Each participant who receives shares of Common Stock will have
such shares issued pursuant to a restricted stock agreement. Each restricted
stock agreement provides, with certain exceptions, that if such participant
leaves the employ of the Company and its subsidiaries prior to the last day of
the third fiscal year following the fiscal year with respect to which the shares
subject thereto ('Restricted Shares') were issued, he or she will forfeit such
Restricted Shares, and will be required to retransfer such Restricted Shares to
the Company without any consideration.
The Corporate EBIT Goal determined by the Compensation Committee for the
fiscal year ended on January 28, 1996 was not achieved. Accordingly, no shares
of Common Stock were issued under the Performance Restricted Stock Plan with
respect to that fiscal year.
STOCK OWNERSHIP. To ensure that management's interests remain aligned with
stockholders' interests, the Company encourages key executives to retain shares
acquired pursuant to the exercise of stock options. In addition, employees of
the Company acquire Common Stock of the Company through the Company's Associates
Investment Plans. The fact that the majority of the Company's executive officers
have chosen to invest a large portion of the discretionary portion of their
Associates Investment Plan funds in Common Stock of the Company evidences their
deep commitment to and belief in the future success of the Company.
Compensation Committee
Edward H. Cohen Ellis E. Meredith
Bruce Maggin Steven L. Osterweis
16
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly
change in the cumulative total stockholder return on the Company's Common Stock
against the cumulative return of the S&P 500 Composite Index, and a line of
business index comprised of the S&P 500 Retail Store Composite Index, the S&P
500 Textile (Apparel Manufacturers) Index and the S&P 500 Shoes Index for the
five fiscal years ended January 28, 1996. The figures represented in the
performance graph assume the reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN
[LINE GRAPH]
LINES OF
PVH S&P 500 BUSINESS
1/91 100.00 100.00 100.00
1/92 228.05 122.65 145.51
1/93 318.79 135.61 163.52
1/94 390.69 152.99 138.77
1/95 175.07 153.83 138.95
1/96 118.00 213.15 160.19
- ---------------
Note: Line of Business Index is composed of a blended weighting of the S&P
500 Retail Store Composite Index (50%), the S&P 500 Textile (Apparel
Manufacturers) Index (33%) and the S&P 500 Shoes Index (17%) to
correspond generally to the Company's relative sales attributable to
its retail, wholesale apparel and wholesale footwear operations.
VALUE OF $100.00 INVESTED AFTER FIVE YEARS:
Phillips-Van Heusen Corporation Common Stock $118.00
S&P 500 Composite Index 213.15
Line of Business Index 160.19
17
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO ESTABLISH ANNUAL TERMS FOR
MEMBERS OF THE BOARD OF DIRECTORS
The Company's Certificate of Incorporation currently provides for the
classification of the Board of Directors into three classes. Under such
classification, at each annual meeting of stockholders, the successors to the
class of directors whose term expires at that meeting are elected for
three-year terms.
On April 16, 1996, the Board of Directors of the Company approved the
amendment of the Company's Certificate of Incorporation, subject to the
approval thereof by the stockholders, to eliminate the staggered three-year
terms for members of the Board of Directors and, instead, to provide for all of
the members of the Board of Directors to serve one-year terms until each
succeeding annual meeting of the Company's stockholders. The full text of the
provision in the Company's Certificate of Incorporation which provides for the
classification of directors and the full text of the amendment which provides
for the annual election of the entire Board are set forth in Appendix A hereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION WHICH WILL ESTABLISH ONE-YEAR TERMS FOR
THE MEMBERS OF THE BOARD OF DIRECTORS.
The classification of the Board of Directors was considered desirable in
order to permit the Board to plan for a reasonable period into the future
without the possibility of extreme changes in the composition of the Board and
the policies of the Company on a yearly basis. In addition, it was believed
that the classification of directors was the best way to ensure that a majority
of the directors had prior experience on the Board.
The Board now believes that the annual election of the entire Board is not
inconsistent with either the maintenance of continuity in management policies
or the retention of directors who have had prior experience on the Board, since
all or a majority of the Board could be reelected at successive annual
meetings. In addition, the Board believes that it is now generally considered
better corporate governance practice for all of the members of the Board of
Directors to stand for election each year, if nominated. The annual election of
the entire Board will reaffirm that the members of the Board are properly
serving the interests of the Company and its stockholders.
Pursuant to the Company's Certificate of Incorporation, the affirmative
vote of the holders of 80% of the outstanding Common Stock would be required to
amend the Company's Certificate of Incorporation to effect the proposed
amendment.
PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED FOR THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION UNLESS OTHERWISE
SPECIFIED IN THE PROXY.
SELECTION OF AUDITORS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Ernst & Young LLP, independent auditors, as auditors for the fiscal
year ending February 2, 1997. Although stockholder ratification of the Board of
Directors' action in this respect is not required, the Board of Directors
considers it desirable for stockholders to pass upon the selection of auditors
and, if the stockholders disapprove of the selection, intends to reconsider the
selection of auditors for the fiscal year ending February 1, 1998, since it
would be impracticable to replace the Company's auditors so late into the
Company's current fiscal year. The auditing and tax fee paid to Ernst & Young
LLP for the fiscal year ended January 29, 1995 was $1,307,400. The audit and
tax work for the fiscal year ended January 28, 1996 is not yet completed, but
it is estimated that the fee will be lower as additional tax services provided
in the fiscal year ended January 29, 1995 were not required in the fiscal year
ended January 28, 1996.
18
It is expected that representatives of Ernst & Young LLP will be present
at the meeting, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THE AUDITORS. PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION
WILL BE VOTED FOR THE APPOINTMENT OF THE AUDITORS UNLESS OTHERWISE SPECIFIED IN
THE PROXY.
MISCELLANEOUS
Any proposal of an eligible stockholder intended to be presented at the
next Annual Meeting of Stockholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting no
later than December 31, 1996.
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than that set forth in the accompanying Notice of
Annual Meeting of Stockholders. However, if other matters properly come before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to stockholders in connection with this solicitation. Solicitation may be
made by mail, telephone, telegraph and personal interview. The Company may
reimburse persons holding shares in their names or in the names of nominees for
their expense in sending proxies and proxy material to their principals. In
addition, Georgeson & Company, which is retained by the Company on a continuing
basis at an annual fee not to exceed $6,000, will aid in the solicitation of
proxies for the meeting.
Copies of the 1995 Annual Report to Stockholders are being mailed to the
stockholders simultaneously with this Proxy Statement. If you want to save the
Company the cost of mailing more than one Annual Report to the same address, at
your request to the Secretary of the Company, mailing of the duplicate copy to
the account or accounts you select will be discontinued.
THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED JANUARY 28, 1996 UPON WRITTEN REQUEST TO:
The Secretary
Phillips-Van Heusen Corporation
1290 Avenue of the Americas
New York, New York 10104
By order of the Board of Directors,
PAMELA N. HOOTKIN
Secretary
New York, New York
April 29, 1996
19
APPENDIX A
Set forth below is the present text of Article FIFTH of the Company's
Certificate of Incorporation:
'FIFTH: A. The Board of Directors shall consist of not less than 9
nor more than 21 members as determined from time to time by the Board of
Directors.
B. The Board of Directors shall be divided into three classes; the
term of office of those of the first class to expire at the annual meeting
of the stockholders next ensuing; of the second class at the annual
meeting of the stockholders one year thereafter; of the third class at the
annual meeting of the stockholders two years thereafter; and at each
annual meeting of the stockholders, directors shall be chosen for a full
term of three years to succeed those whose terms expire.
C. The affirmative vote of not less than 80% of the outstanding stock
of the Corporation entitled to vote thereon shall be required to authorize
any amendment to the Certificate of Incorporation of the Corporation which
shall alter, amend, change or repeal any of the provisions of part B of
this Article FIFTH.'
If the proposal to amend the Company's Certificate of Incorporation is
approved, the present Article FIFTH will be replaced by a new Article FIFTH of
the Company's Certificate of Incorporation which will read as follows:
'FIFTH: The Board of Directors shall consist of not less than 9 nor
more than 21 members as determined from time to time by the Board of
Directors.'
A-1
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PHILLIPS-VAN HEUSEN CORPORATION
1290 Avenue of the Americas
New York, New York 10104-0101
BRUCE J. KLATSKY and IRWIN W. WINTER, or either of them, with power of
substitution, are hereby authorized to represent the undersigned and to vote all
shares of the Common Stock of PHILLIPS-VAN HEUSEN CORPORATION held by the
undersigned at the Annual Meeting of Stockholders to be held in New York, New
York, on June 18, 1996, and any adjournments thereof, on the matters printed on
the reverse side.
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If this Proxy is executed but no
directions are given, this Proxy will be voted:
o FOR the amendment to the Company's Certificate of Incorporation;
o FOR the election of all of the nominees for director; and
o FOR the appointment of auditors.
(Continued, and to be dated and signed on the other side.)
PHILLIPS-VAN HEUSEN CORPORATION
P.O. BOX 11287
NEW YORK, N.Y. 10203-0287
The Board recommends a vote FOR proposals 1, 2A, 2B and 3 below:
1. Amendment to the Company's Certificate of Incorporation.
FOR AGAINST ABSTAIN
/x/ /x/ /x/
2A. If proposal 1. above is approved, election of the nominees for director
listed below.
FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS*
listed below /x/ for all nominees listed below /x/ /x/
Nominees: Edward H. Cohen, Estelle Ellis, Joseph B. Fuller, Bruce J.
Klatsky, Marie Elena Lagomasino, Harry N.S. Lee, Bruce Maggin, Ellis E.
Meredith, Steven L. Osterweis, William S. Scolnick, Peter J. Solomon, Irwin
W. Winter
(Instruction: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:)
*Exceptions ______________________________________________________________
2B. If proposal 1. above is not approved, election of the nominees for director
listed below:
FOR all nominees WITHHOLD AUTHORITY to vote EXCEPTIONS*
listed below /x/ for all nominees listed below /x/ /x/
Nominees: Joseph B. Fuller, Bruce J. Klatsky, Bruce Maggin, Steven L.
Osterweis
(Instruction: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below:)
*Exceptions ______________________________________________________________
3. Appointment of Auditors.
FOR AGAINST ABSTAIN
/x/ /x/ /x/
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
/x/ /x/ /x/
NOTE: The signature should agree with the name on your stock certificate. If
acting as executor, administrator, trustee, guardian, etc., you should so
indicate when signing. If the signer is a corporation, please sign the full
corporate name, by duly authorized officer. If shares are held jointly, each
stockholder named should sign.
Dated: ___________________________________________________________, 1996
________________________________________________________________________
Signature
________________________________________________________________________
Signature, if held jointly
To vote, fill in (X) with black or blue ink only. /x/
