SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2) )
[x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14(a)-11(c) or Section
240.14a-12
Movado Group, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MOVADO GROUP, INC.
650 From Road
Paramus, New Jersey 07652
May 22, 2003
Dear Fellow Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of the
shareholders of Movado Group, Inc. to be held on Wednesday, June 18, 2003 at
10:00 a.m., Eastern Daylight Time, at the Company's executive offices in
Paramus, New Jersey. The official Notice of Meeting, Proxy Statement and form of
proxy are enclosed with this letter. The matters listed in the Notice of Meeting
are described in the enclosed Proxy Statement.
We hope you will be able to attend the meeting. We will report on the
Company's progress and respond to questions you may have about the Company's
business.
Whether or not you plan to attend, the vote of every shareholder is
important and your cooperation in completing, signing and returning your proxy
promptly will be appreciated.
We hope to see you at the Annual Meeting.
Sincerely,
Gedalio Grinberg Efraim Grinberg
Chairman of the Board of Directors President and Chief Executive Officer
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN
AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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MOVADO GROUP, INC.
650 FROM ROAD
PARAMUS, NEW JERSEY 07652
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 18, 2003
Notice is hereby given that the Annual Meeting of Shareholders of Movado Group,
Inc. will be held on Wednesday, June 18, 2003 at 10:00 a.m., Eastern Daylight
Time, at the Company's executive offices located at 650 From Road, Paramus, New
Jersey for the following purposes:
1. To elect seven directors to serve until the next Annual
Meeting and until their successors are elected and qualified;
and
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending
January 31, 2004; and
3. To transact such other business as may properly come before
the meeting or any postponement or adjournment thereof.
Holders of the Company's Common Stock and Class A Common Stock of record at the
close of business on May 9, 2003 are entitled to notice of and to vote at the
Annual Meeting of Shareholders or any postponements or adjournments thereof.
Dated: May 22, 2002 By order of The Board of Directors
Timothy F. Michno
Secretary and General Counsel
MOVADO GROUP, INC.
650 FROM ROAD
PARAMUS, NJ 07652
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This proxy statement and the accompanying proxy are being furnished to
the shareholders of Movado Group, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used for
voting at the Annual Meeting of Shareholders (the "Annual Meeting") to be held
on Wednesday, June 18, 2003 at 10:00 a.m., Eastern Daylight Time, at the
Company's executive offices located at 650 From Road, Paramus, New Jersey and at
any adjournments thereof. It is expected that this proxy statement and the form
of proxy will first be sent to shareholders on or about May 23, 2003.
At the Annual Meeting, the holders of the Company's Common Stock and
Class A Common Stock (together the "Capital Stock") will be asked to consider
and vote upon the following proposals:
1. To elect seven directors to serve until the next annual meeting
and until their successors are elected and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending
January 31, 2004; and
3. To transact such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof.
The Board of Directors knows of no other business to be presented at
the Annual Meeting. If any other business is properly presented, the persons
named in the enclosed proxy will have the power to vote all proxies received,
and not theretofore revoked, in accordance with the recommendations of the Board
of Directors. If the enclosed proxy is properly executed, returned to the
Company in time for the Annual Meeting and not revoked, your shares will be
voted in accordance with the instructions contained thereon. Where a signed
proxy is returned, but no specific instructions are indicated, your shares will
be voted FOR the nominees for Directors identified below; and FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for fiscal year 2004.
Abstentions will be treated as present for purposes of determining a
quorum for the Annual Meeting. Proxies returned by brokers as "non-votes" will
not be treated as present for purposes of determining the presence of a quorum.
Any shareholder who executes and returns a proxy may revoke it in
writing at any time before it is voted at the Annual Meeting by: (i) filing with
the Secretary of the Company, at the above address, written notice of such
revocation bearing a later date than the proxy or a subsequent proxy relating to
the same shares or (ii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy).
The solicitation of proxies in the enclosed form is made on behalf of
the Board of Directors. The entire cost of soliciting these proxies will be
borne by the Company. In addition to use of the mails, proxies may be solicited
personally or by telephone by officers, directors and employees of the Company,
who will receive no additional compensation for such activities. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of shares
held of record by such persons, who will be reimbursed for their reasonable
expenses incurred in such connection.
OUTSTANDING VOTING SECURITIES
The Board of Directors has fixed the close of business on May 9, 2003
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting (the "Record Date"). Only holders of record of
the Capital Stock at the close of business on the Record Date are entitled to
notice of and to vote at the Annual Meeting or any and all adjournments thereof.
On the Record Date there were 8,527,733 shares of Common Stock outstanding and
3,400,906 shares of Class A Common Stock outstanding. Each share of Common Stock
is entitled to one vote, and each share of Class A Common Stock is entitled to
10 votes. The holders of a majority in voting power of the outstanding shares of
Capital Stock entitled to vote at the Annual Meeting, present in person or
represented by proxy, constitute a quorum at the Annual Meeting. Directors are
elected by a plurality of the votes cast at the Annual Meeting. The approval of
the proposal to ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for fiscal 2004 requires the affirmative vote
of a majority of the votes cast at the Annual Meeting.
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Class A Common Stock and the Common Stock as of the
Record Date (except as otherwise noted in footnotes 3, 4, 6, 7 and 15) by (i)
each shareholder who is known by the Company to beneficially own in excess of 5%
of the outstanding shares of Class A Common Stock or of the outstanding shares
of Common Stock, (ii) each director, (iii) each Named Executive Officer (as
hereinafter defined) and (iv) all executive officers and directors as a group.
Unless otherwise noted, all shares are beneficially owned by the persons
indicated.
PERCENT OF OUTSTANDING
SHARES OF CAPITAL STOCK
-----------------------
SHARES OF
CLASS A SHARES OF
COMMON COMMON PERCENT OF
STOCK STOCK CLASS A TOTAL
BENEFICIALLY BENEFICIALLY COMMON COMMON VOTING
NAME OF BENEFICIAL OWNER OWNED OWNED STOCK STOCK POWER (1)
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Margaret Hayes Adame (2)................. - 6,875 - * *
David L. Babson & Co. Inc. (3)........... - 947,325 - 11.1% 2.2%
Bricoleur Capital Management LLC (4)..... - 639,520 - 7.5% 1.5%
Richard J. Cote (5)...................... - 428,858 - 5.0% 1.0%
Dimensional Fund Advisors Inc. (6)....... - 749,912 - 8.8% 1.8%
FMR Corp. (7)............................ - 975,900 - 11.4% 2.3%
Alexander Grinberg (8)................... 1,506,337 26,801 44.3% * 35.5%
Efraim Grinberg (9)...................... 845,110 632,995 24.8% 7.4% 21.4%
Gedalio Grinberg (10).................... 2,076,035 70,722 61.0% * 49.0%
Alan H. Howard (2)....................... - 5,937 - * *
Eugene J. Karpovich (11)................. - 14,571 - * *
Timothy F. Michno (12)................... - 13,797 - * *
Donald Oresman (2)....................... 1,960 5,000 * * *
Miriam Phalen (13)....................... 1,515,551 - 44.6% - 35.6%
Leonard L. Silverstein (2) (14).......... 456,470 51,323 13.4.% * 10.9%
Thomson Horstman & Bryant, Inc. (15).... - 530,086 - 6.2% 1.2%
All executive officers and directors as
a group (10) persons) (16)............... 2,923,105 1,175,432 86.0% 13.8% 71.5%
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* DENOTES LESS THAN ONE PERCENT
The address for Messrs. Cote, A. Grinberg, G. Grinberg. E. Grinberg, Howard,
Karpovich, Michno, Oresman and Silverstein and Ms. Hayes-Adame and Ms. Phalen is
c/o Movado Group, Inc., 650 From Road, Paramus, New Jersey 07652.
(1) In calculating the percent of total voting power, the voting power of
shares of Common Stock (one vote per share) and Class A Common Stock
(10 votes per share) has been aggregated.
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(2) The total shares of Common Stock reported as beneficially owned by each
of Ms. Hayes Adame and Messrs. Howard, Oresman and Silverstein includes
5,000 shares each has the right to acquire by the exercise of options
under the Company's 1996 Stock Incentive Plan.
(3) In a filing on Schedule 13G dated February 5, 2003 under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), David L. Babson &
Co. Inc. ("Babson") reported beneficial ownership of 947,325 shares of
Common Stock as to which it reported having sole dispositive power;
shared voting power as to 236,700 shares and sole voting power as to
710,625 shares. Babson also reported that all of the shares of Common
Stock that it beneficially owns were acquired in the ordinary course of
business and not for the purpose or with the effect of changing or
influencing control of the Company, or in connection with any
transaction having such purpose or effect. The address of Babson is One
Memorial Drive, Cambridge, MA 02142.
(4) In a filing on Schedule 13G dated February 12, 2003 under the Exchange
Act, Bricoleur Capital Management LLC ("Bricoleur") reported beneficial
ownership of 639,520 shares of Common Stock, as to which it has shared
voting and shared dispositive power. Bricoleur also reported that all
of the shares of Common Stock that it beneficially owns were acquired
in the ordinary course of business and not for the purpose or with the
effect of changing or influencing control of the Company, or in
connection with any transaction having such purpose or effect. The
address of Bricoleur is 12230 El Camino Real, Suite 100, San Diego, CA
92130.
(5) The total shares of Common Stock reported as beneficially owned by Mr.
Cote includes 298,000 shares which he has the right to acquire by the
exercise of options under the Company's 1996 Stock Incentive Plan and
1,100 shares held by a trust for the benefit of his children as to
which shares Mr. Cote has shared dispositive power with his spouse who
is the trustee with sole voting power.
(6) On February 3, 2003 in a filing on Schedule 13G under the Exchange Act,
Dimensional Fund Advisors, Inc. ("DFA") reported beneficial ownership
as of December 31, 2002 of 749,912 shares of Common Stock as to all of
which it has sole voting and investment power. DFA also reported that
all of the shares of Common Stock that it beneficially owns were
acquired in the ordinary course of business and not for the purpose or
with the effect of changing or influencing control of the Company, or
in connection with any transaction having such purpose or effect. The
address of DFA is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA
90401.
(7) FMR Corp., together with its wholly owned subsidiary, Fidelity
Management and Research Company ("Fidelity"), and Edward C. Johnson 3d
and Abigail P. Johnson in their capacity as a controlling group of FMR
Corp., in a joint filing on Schedule 13G dated February 14, 2003, under
the Exchange Act, each reported beneficial ownership as of December 31,
2002 of 975,900 shares of Common Stock as to which each such reporting
person reported having sole dispositive power and no voting power. Each
such reporting person also reported that all of the shares of Common
Stock which it beneficially owns were acquired in the ordinary course
of business and not for the purpose or with the effect of changing or
influencing control of the Company, or in connection with any
transaction having such purpose or effect. The address of each such
reporting person is 82 Devonshire Street, Boston, Massachusetts 02109.
(8) The total number of shares of Class A Common Stock beneficially owned
by Mr. A. Grinberg includes 1,337,895 shares owned by Grinberg Partners
L.P., a Delaware limited partnership, of which Mr. A. Grinberg is a
limited partner, and 34,132 shares owned by trusts for the benefit of
Mr. A. Grinberg's niece and nephew, of which trusts he is a co-trustee
with Mr. Mark Fishman. Mr. A. Grinberg has shared voting and investment
power with Grinberg Partners L.P., Grinberg Group Partners, a Delaware
general partnership (general partner of Grinberg Partners L.P.) and
Miriam Phalen over the 1,337,895 shares owned by Grinberg Partners
L.P., and shared voting and investment power with Mr. Fishman over the
34,132 shares owned by the trusts. The Common Stock owned by Mr. A.
Grinberg represents the number of shares he has the right to acquire by
the exercise of options under the Company's 1996 Stock Incentive Plan.
(9) The total number of shares of Class A Common Stock beneficially owned
by Mr. Efraim Grinberg includes an aggregate of 281,653 shares held by
several trusts for the benefit of Mr. E. Grinberg's siblings and
himself, of which trusts Mr. E. Grinberg is sole trustee. As sole
trustee, Mr. E. Grinberg has sole investment and voting power with
respect to the shares held by such trusts. In addition, the amount of
shares of Class A Common Stock reported for Mr. E. Grinberg includes an
aggregate of 431,470 shares of Class A Common Stock held by several
trusts for the benefit of Mr. E. Grinberg's siblings and himself, of
which trusts Mr. E. Grinberg is co-trustee with Mr. Leonard L.
Silverstein. As a co-trustee, Mr. E. Grinberg
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has shared investment and voting power with Mr. Silverstein with
respect to the shares of Class A Common Stock held by such trusts. The
total number of shares of Common Stock owned by Mr. E. Grinberg
includes 35,608 shares of Common Stock held under the Company's
Employee Savings and Investment Plan ("401(k) Plan"), the trustees of
which are Messrs. Gedalio Grinberg and E. Grinberg, both of whom have
shared investment and voting power as to such shares and 24,489 shares
of Common Stock held under the Company's Stock Bonus Plan, for which
Mr. E. Grinberg is a co-trustee and as to which shares he has shared
investment and voting power. Mr. E. Grinberg disclaims beneficial
ownership as to the 477,109 shares of Class A Common Stock held by the
trusts for the benefit of his siblings of which he is trustee or
co-trustee; the 35,608 shares of Common Stock held under the Company's
401(k) Plan and the 24,489 shares of Common Stock held under the
Company's Stock Bonus Plan except to the extent of his pecuniary
interest in the 35,608 shares held under the Company's 401(k) Plan. The
total number of shares of Common Stock owned by Mr. E. Grinberg also
includes 544,168 shares of Common Stock which he has the right to
acquire by the exercise of options under the Company's 1996 Incentive
Stock Plan.
(10) The total number of shares of Class A Common Stock beneficially owned
by Mr. G. Grinberg includes 25,000 shares of Class A Common Stock owned
by The Grinberg Family Foundation, a non-profit corporation of which
Mr. G. Grinberg, Sonia Grinberg and Leonard L. Silverstein are the
directors and officers and as to which shares these three individuals
have shared investment and voting power. Also included in the total
number of shares of Class A Common Stock beneficially owned by Mr. G.
Grinberg are 1,337,895 shares owned by Grinberg Partners L.P., a
Delaware limited partnership, of which Grinberg Group Partners, a
Delaware general partnership ("GGP"), is the general partner. As the
managing partner of GGP, Mr. G. Grinberg has shared power to direct the
voting and disposition of the shares owned by Grinberg Partners L.P.
The total number of shares of Common Stock beneficially owned by Mr. G.
Grinberg includes 35,608 shares of Common Stock held under the
Company's 401(k) Plan, the trustees for which are Messrs. G. Grinberg
and E. Grinberg, both of whom have shared investment and voting power
as to such shares and 24,489 shares of Common Stock held under the
Company's Stock Bonus Plan, for which Mr. G. Grinberg is a co-trustee
and as to which shares he has shared investment and voting power. Mr.
G. Grinberg disclaims beneficial ownership as to the 25,000 shares of
Class A Common Stock owned by The Grinberg Family Foundation; the
35,608 shares of Common Stock held under the Company's 401(k) Plan and
the 24,489 shares of Common Stock held under the Company's Stock Bonus
Plan except to the extent of his pecuniary interest in the 35,608
shares held under the Company's 401(k) Plan.
(11) The total number of shares of Common Stock reported as beneficially
owned by Mr. Karpovich includes 14,033 shares which he has the right to
acquire by the exercise of options under the Company's 1996 Stock
Incentive Plan.
(12) The total number of shares of Common Stock reported as beneficially
owned by Mr. Michno includes 13,788 shares which he has the right to
acquire by the exercise of options under the Company's 1996 Stock
Incentive Plan.
(13) The total number of shares of Class A Common Stock beneficially owned
by Ms. Miriam Phalen includes 1,337,895 shares owned by Grinberg
Partners L.P., a Delaware limited partnership of which Ms. Phalen is a
limited partner, and 34,139 shares owned by trusts for the benefit of
Ms. Phalen's children, of which trusts Ms. Phalen is the sole trustee.
Ms. Phalen has shared voting power with Grinberg Partners L.P.,
Grinberg Group Partners, a Delaware general partnership (general
partner of Grinberg Partners L.P.) and Alexander Grinberg over the
1,337,895 shares owned by Grinberg Partners L.P., and sole voting and
investment power over the 34,139 shares owned by the trusts.
(14) The total number of shares of Class A Common Stock beneficially owned
by Mr. Leonard L. Silverstein includes an aggregate of 431,470 shares
of Class A Common Stock held by several trusts for the benefit of Mr.
G. Grinberg's three children, of which trusts Mr. Silverstein is
co-trustee with Mr. E. Grinberg, with whom he has shared investment and
voting power as to the shares held by such trusts. The total number of
shares of Class A Common Stock reported for Mr. Silverstein also
includes 25,000 shares of Class A Common Stock owned by The Grinberg
Family Foundation, of which Mr. G. Grinberg, his wife and Mr.
Silverstein are the directors and officers and as to which shares these
three individuals have shared investment and voting power. The total
number of shares of Common Stock beneficially owned by Mr. Silverstein
includes 5,000 shares which he has the right to acquire by the exercise
of options under the Company's 1996 Stock Incentive Plan and 2,000
shares owned by the Leonard and Elaine Silverstein Family Foundation of
which Mr. Silverstein and his wife are the directors and officers and
as to which shares they have shared investment and voting power. The
remaining number of shares of Common Stock
4
beneficially owned by Mr. Silverstein are held by a trust of which Mr.
Silverstein is trustee and as to which shares he has sole investment
and voting power. Mr. Silverstein disclaims beneficial ownership of the
shares of Class A Common Stock held by the trusts of which he is
co-trustee with E. Grinberg, by The Grinberg Family Foundation and by
The Leonard and Elaine Silverstein Family Foundation.
(15) On January 8, 2003 in a filing on Schedule 13G under the Exchange Act,
Thomson, Horstmann & Bryant, Inc. with an address at Park 80 West,
Plaza Two, Saddle Brook, New Jersey 07663, reported beneficial
ownership of 530,086 shares of Common Stock on December 31, 2002 as to
all of which it reported having sole dispositive power, and sole voting
power over 246,987 shares. The reporting person also reported that all
of the shares of Common Stock which it beneficially owns were acquired
in the ordinary course of business and not for the purpose or with the
effect of changing or influencing control of the Company, or in
connection with any transaction having such purpose or effect.
(16) Excludes double counting of shares deemed to be beneficially owned by
more than one person. Unless otherwise indicated, the individuals named
have sole investment and voting power.
PROPOSAL 1 - ELECTION OF DIRECTORS
Directors hold office until the next annual meeting of shareholders and
until the election and qualification of their successors. The Company's By-laws
provide that the number of Directors constituting the Board may be changed by
action of the Board of Directors, so long as the number is not less than three.
The Board currently consists of seven directors. All of the nominees are members
of the present Board of Directors. If any nominee for election to the Board of
Directors of the Company should be unable to accept nomination or election as a
director, which is not expected, the proxies may be voted with discretionary
authority for a substitute or substitutes designated by the Board of Directors
or the number of Directors constituting the Board may be reduced in accordance
with the Company's By-Laws. Directors shall be elected by the holders of a
plurality of the voting power present in person or represented by proxy and
entitled to vote. Abstentions and broker "non-votes" shall not be counted for
purposes of the election of directors. THE BOARD OF DIRECTORS RECOMMENDS THE
ELECTION OF THE NOMINEES LISTED BELOW. THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES. PROXIES SOLICITED BY THE BOARD WILL BE SO
VOTED EXCEPT WHERE AUTHORITY HAS BEEN WITHHELD.
The following table lists information with respect to the nominees for
election as Directors of the Company.
NAME AGE POSITION
---- --- --------
Margaret Hayes Adame 63 Director
Richard J. Cote 48 Executive Vice President and Chief
Operating Officer; Director
Efraim Grinberg 45 President and Chief Executive Officer;
Director
Gedalio Grinberg 71 Chairman of the Board of Directors
Alan H. Howard 43 Director
Donald Oresman 77 Director
Leonard L. Silverstein 81 Director
There are no family relationships between any of the Company's
directors with the exception of Efraim Grinberg, who is the son of Gedalio
Grinberg. There are no arrangements between any director and any other person
pursuant to which any of them was elected a director.
Ms. Hayes Adame was elected to the Board of Directors of the Company in
September 1993. Ms. Hayes Adame is the President of the Fashion Group
International, Inc. which she joined in March 1993. From 1981 to
5
March 1993, Ms. Hayes Adame was a senior vice president and general merchandise
manager at Saks Fifth Avenue. She is also a member of the board of directors of
International Flavors & Fragrances, Inc.
Mr. Cote joined the Company in January 2000 as Executive Vice President
- Finance and Administration. On May 15, 2001 Mr. Cote's title was changed to
Executive Vice President - Chief Operating Officer. Prior to joining the
Company, Mr. Cote worked for Colgate-Palmolive, where, from 1998 to 2000 he was
Vice President and Chief Financial Officer for U.S. operations, and from 1993 to
1998, he was Vice President and Chief Financial Officer for Asia/Pacific
operations.
Mr. E. Grinberg joined the Company in June 1980 and served as the
Company's Vice President of Marketing from February 1985 until July 1986, at
which time he was elected to the position of Senior Vice President of Marketing.
In 1988, Mr. E. Grinberg was elected to the Board of Directors of the Company.
From June 1990 to October 1995, Mr. E. Grinberg served as the Company's
President and Chief Operating Officer and since October 1995 served as the
Company's President. On May 15, 2001 Mr. E. Grinberg was elected to the position
of President and Chief Executive Officer. Mr. E. Grinberg also serves on the
Board of Directors of Lincoln Center for the Performing Arts, Inc., the American
Watch Association and the Jeweler's Security Alliance.
Mr. G. Grinberg founded the Company in 1961 and is the Chairman of the
Board of Directors. Mr. G. Grinberg served as the Company's Chief Executive
Officer until May 15, 2001. He also serves on the Board of Trustees of the
American Ballet Theater.
Mr. Howard was elected to the Board of Directors of the Company in
September 1997. Mr. Howard is a Managing Director of Credit Suisse First Boston
LLC ("CSFB"). He has been with CSFB and its predecessor companies since 1986.
Prior to 1986, Mr. Howard worked with the James River Corporation and the Dixie
Products Group of American Can Company.
Mr. Oresman has served on the Board of Directors of the Company since
1981. He was Executive Vice President and General Counsel of Paramount
Communications, Inc., a publishing and entertainment company, from December 1983
until his retirement in March 1994. Prior to December 1983, Mr. Oresman was
engaged in the practice of law as a partner of Simpson Thacher & Bartlett where
he is now Of Counsel.
Mr. Silverstein has served on the Board of Directors of the Company
since 1975. He has been engaged in the practice of law at Silverstein and
Mullens, a division of Buchanan Ingersoll, in Washington, D.C., for over 40
years. Mr. Silverstein also serves as Vice President and Director of Tax
Management, Inc., a wholly owned subsidiary of BNA, Inc., and a director of
Chevy Chase Federal Savings Bank. He is a former Vice Chairman and currently an
active honorary trustee of the John F. Kennedy Center for the Performing Arts,
Past President of the Alliance Francaise of Washington, formerly President and
currently a director of the National Symphony Orchestra Association, Treasurer
of the Madison Council of the Library of Congress and President, French-American
Cultural Foundation.
INFORMATION REGARDING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
The Board of Directors held four meetings during fiscal 2003, at all
but one of which every director was in attendance. The Board of Directors has
two Committees, a Compensation Committee and an Audit Committee. Each committee
is comprised solely of non-employee directors, namely, Ms. Hayes Adame and
Messrs. Howard, Oresman and Silverstein.
The Compensation Committee of the Board of Directors reviews
remuneration levels for executive officers of the Company, reviews significant
employee benefit programs and establishes and administers executive compensation
programs, including bonus plans, stock option and other equity-based programs,
deferred compensation plans and any other cash or stock incentive programs. The
Compensation Committee held two meetings in fiscal 2003 which were attended by
all of the members of that committee. Mr. Oresman is the chairman of the
Compensation Committee.
The Audit Committee of the Board of Directors recommends to the Board
of Directors the independent public accountants to be selected to audit the
Company's annual financial statements and approves any special assignments given
to such accountants. The Audit Committee also reviews the planned scope of the
annual audit and the independent accountants' letter of comments and
management's responses thereto, any significant accounting changes made or
contemplated, the effectiveness and efficiency of the Company's internal
accounting staff and
6
generally is responsible for all the matters as described in the Audit
Committee's Charter. In addition, the Audit Committee meets periodically with
the Company's Internal Audit staff with respect to internal control issues
generally. The Audit Committee held five meetings in fiscal 2003 which were
attended by all the members of that committee. Mr. Howard is the chairman of the
Audit Committee.
DIRECTOR COMPENSATION
No executive officer of the Company receives any additional
compensation for serving the Company as a member of the Board of Directors or
any of its committees. In fiscal 2003, Directors who were not employees of the
Company received a fee of $3,000 for each Board meeting attended and $1,000 for
each committee meeting attended. In addition, non-employee Directors are
eligible to receive stock awards under the 1996 Stock Incentive Plan, as
amended. To date, Ms. Hayes Adame and Messrs., Howard, Oresman and Silverstein
have each been awarded options to purchase 8,000 shares of the Company's Common
Stock under that plan. Of these, options for the purchase of 2,000 shares were
immediately vested when granted in calendar 1998 and expire in calendar year
2003. The remaining options that have been granted to date to the four
non-employee directors vest in one-third increments on each of the first three
anniversaries following the grant date, expire after ten years and have an
exercise price equal to or greater than the fair market value of the Company's
Common Stock on the date of grant.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act of 1933 or the
Exchange Act the following report of the Audit Committee shall not be deemed to
be incorporated by reference into any such filing and shall not otherwise be
deemed filed under such acts.
The Audit Committee, which operates under a written charter adopted by
the Company's Board of Directors, consists of the following members of the
Board: Margaret Hayes Adame, Alan H. Howard, Donald Oresman and Leonard L.
Silverstein. Each member of the Audit Committee meets the independence and
experience requirements of the New York Stock Exchange as currently in effect.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended January 31, 2003 with the
Company's management. The Audit Committee has discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (Communications with Audit Committees) by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
The Audit Committee has also received the written disclosures and the
letter from PricewaterhouseCoopers LLP required by the Independence Standards
Board Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit Committee has discussed the independence of PricewaterhouseCoopers LLP
with that firm.
Based on the Audit Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 2003 for filing with the Securities and
Exchange Commission. The Committee and the Board also have recommended, subject
to shareholder approval, the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for fiscal 2004.
Members of the Audit Committee:
Margaret Hayes Adame
Alan H. Howard
Donald Oresman
Leonard L. Silverstein
7
FISCAL 2003 AUDIT FIRM FEE SUMMARY
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended January 31, 2003 and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-Q
for that fiscal year were $511,000.
Financial Information Systems Design and Implementation Fees
No fees were billed by PricewaterhouseCoopers LLP for professional
services rendered for information technology services relating to financial
information systems design and implementation for the fiscal year ended January
31, 2003.
All Other Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for services
rendered to the Company, other than the services describe above under "Audit
Fees" and "Financial Information Systems Design and Implementation Fees," for
the fiscal year ended January 31, 2003 were $158,000.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee,
has appointed PricewaterhouseCoopers LLP to be the Company's independent
accountants for the year ending January 31, 2004, subject to ratification of
such appointment by the Company's shareholders. PricewaterhouseCoopers LLP has
served as the Company's independent accountants since fiscal year 1977. If the
appointment of PricewaterhouseCoopers LLP is not approved by the shareholders,
or PricewaterhouseCoopers LLP ceases to act as the Company's independent
accountants, or the Board of Directors removes PricewaterhouseCoopers LLP as the
Company's independent accountants, the Board, upon the recommendation of the
Audit Committee, will appoint other independent accountants subject to
shareholder ratification.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting. Such representatives will have the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions. THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR SUCH
RATIFICATION. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company's executive officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities (the "10% Stockholders"), are required to file
reports of ownership and changes of ownership with the Securities and Exchange
Commission. Executive officers, directors and 10% Stockholders of the Company
are required by law to furnish the Company with copies of all forms so filed.
Based solely on review of copies of such forms received or written
representations that no other reports were required, the Company believes that,
during the last fiscal year, its executive officers, directors and 10%
Stockholders timely complied with all such filing requirements applicable to
them with respect to their beneficial ownership of Capital Stock, except that
Mr. Cote and Ms. Phalen each inadvertently made untimely filings of two reports
involving two transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has an agreement with Mr. Cote that provides for the
continuation of his then applicable annual base salary paid bi-weekly for 24
months following Mr. Cote's termination of employment within two years after a
change in control (defined as the acquisition by a person or group of more than
50% of the combined aggregate voting power represented by the Company's then
outstanding shares; or certain mergers and asset sales; or a liquidation or
dissolution), except that nothing is due if his termination is because of his
death, disability or for cause.
8
In fiscal 1996, the Company entered into an agreement with a trust
which, at that time, owned an insurance policy issued on the lives of the
Gedalio Grinberg and his spouse. The insurance policy provides for a death
benefit of $27 million. The trustees of the trust are the three children of Mr.
G. Grinberg and his spouse, namely, Efraim Grinberg, Alexander Grinberg, and
Miriam Phalen. Under the agreement, the trust assigned the insurance policy to
the Company as collateral to secure repayment by the trust of interest free
loans made by the Company to the trust in amounts equal to the premiums on the
insurance policy (approximately $740,000 per annum). The agreement required the
trust to repay the loans from the death benefit proceeds of the policy. At
January 31, 2003 the Company had loaned the trust $5,186,860 under this
agreement. On April 4, 2003, the agreement was amended and restated to transfer
the policy (which at that time had a cash surrender value of $4,595,591) from
the trust to the Company in partial repayment of the then outstanding loan
balance which, as of that date, was reduced to $591,269.
See "Compensation Committee Interlocks and Insider Participation" for
information regarding certain business relationships between the Company and Mr.
Silverstein's law firm.
EXECUTIVE OFFICERS
For detailed information concerning Richard Cote, Gedalio Grinberg and
Efraim Grinberg, see the listing for each under the heading "Election of
Directors" above. The names of the other executive officers of the Company (and
their respective ages as of the filing date of this report) are set forth below
together with the positions held by each during the past five years.
NAME AGE POSITION
---- --- --------
Eugene J. Karpovich 56 Senior Vice President and Chief
Financial Officer
Frank V. Kimick 36 Vice President, Treasurer and Assistant
Secretary
Timothy F. Michno 46 Secretary and General Counsel
Mr. Karpovich joined the Company in 1998 as CFO for the Movado brand.
From 2000 to 2001 he was Vice President-Financial Planning for the Company. He
was promoted to Senior Vice President and Chief Financial Officer in October
2001. Before joining the Company, Mr. Karpovich had been the CFO of the watch
company Wittnauer International, Inc., a subsidiary of Westinghouse Electric
Corporation, Inc., where he was employed for 23 years.
Mr. Kimick joined the Company in 1996 as Assistant Treasurer and in May
2001 was promoted to Vice President - Treasurer. Mr. Kimick is responsible for
worldwide treasury operations, banking relationships and all aspects of cash and
risk management. Before joining the Company, Mr. Kimick had been the Treasurer
for Sunshine Biscuits, Inc. and held several treasury and consulting positions
at other organizations.
Mr. Michno joined the Company in April 1992 and since then has served
as its Secretary and General Counsel. He has been engaged in the practice of law
for the past 20 years, immediately prior to joining the Company and since 1986,
as an associate at the New York firm of Chadbourne & Parke. From 1988 to 1991 he
served as a resident outside counsel to Fortune Brands, Inc. (formerly known as
American Brands, Inc.), a consumer products company.
9
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded to, earned by
or paid to the Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company who were serving as such as of the
end of the Company's last fiscal year (collectively, the "Named Executive
Officers") during fiscal 2003, 2002, and 2001 (each fiscal year ending January
31) for services rendered in all capacities to the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
-------------------------------------- ----------------------------
Restricted Number of
Other Annual Stock Securities All Other
Name and Compensation Awards Underlying Compensation
Principal Position Year Salary ($) Bonus ($) ($) ($)(1) Options (#) ($)
--------------------------------------------------------------------------------------------------------------------------------
Efraim Grinberg 2003 778,847 200,000 - 11,077 0 108,386 (3)
President and Chief Executive 2002 760,866 150,000 - 12,323 400,000 (2) 108,850
Officer 2001 640,483 400,000 - 10,638 0 95,202
Gedalio Grinberg 2003 675,000 150,000 - 0 0 438,580 (4)
Chairman of the Board 2002 650,000 100,000 - 1,000 0 430,352
2001 650,000 250,000 - 1,000 0 349,762
Richard Cote 2003 415,385 200,000 - 5,908 0 43,400 (6)
Executive Vice President 2002 400,000 120,000 (5) - 41,023 240,000 (2) 43,400
Chief Operating Officer 2001 400,000 300,000 - 7,037 30,000 45,889
Eugene J. Karpovich 2003 207,693 65,000 - 1,354 15,000 13,400 (7)
Senior Vice President 2002 165,742 40,000 (5) - 12,971 5,000 12,211
And Chief Financial Officer 2001 152,981 50,000 - 1,272 2,500 10,894
Timothy F. Michno 2003 221,385 45,000 - 1,720 5,000 14,150 (8)
Secretary and 2002 208,000 35,000 - 1,664 5,000 13,800
General Counsel 2001 208,000 62,000 - 1,664 4,500 13,800
-----------------
(1) At January 31, 2003 the aggregate number of shares of restricted stock
held by each of the Named Executive Officers and the aggregate value
thereof (based on the closing price of the Company's Common Stock as of
January 31, 2003) were as follows: Mr. G. Grinberg: none; Mr. E.
Grinberg: 1,632.89 shares, $29,947; Mr. Cote: 2,305.91 shares, $42,290;
Mr. Karpovich: 732.80 shares, $13,440; and Mr. Michno: 241.82 shares,
$4,435. All of such shares are phantom stock units ("Stock Units")
granted under the Company's Deferred Compensation Plan for Executives
("Deferred Compensation Plan") except for 538 shares which Mr.
Karpovich elected to receive in lieu of 20% of the cash bonus that
otherwise would have been paid to him in respect of fiscal 2002 ("Bonus
Stock"). Dividends were and are payable on the Bonus Stock which became
unrestricted April 15, 2003. The Stock Units vest 20% at the end of
each calendar year beginning in the calendar year in which awarded,
except that, for participants 65 years or older, vesting is 100% at the
end of the calendar year in which awarded, and except that 1,469.81 of
the Stock Units held by Mr. Cote were vested when credited to his
account as a result of his election, made in accordance with the terms
of the Deferred Compensation Plan, to receive Stock Units equal in
number to the shares he would have received in lieu of 20% of the cash
bonus that otherwise would have been paid to him in respect of fiscal
2002. Those 1,469.81 Stock Units became unrestricted on April 15, 2003.
Mr. E. Grinberg was
10
awarded 945.94, 907.56 and 756.04 Stock Units in calendar years 2000,
2001 and 2002, respectively. Mr. Cote was awarded 559.03, 479.91 and
403.22 Stock Units in calendar years 2000, 2001 and 2002, respectively.
Mr. Karpovich was awarded 117.63, 98.15 and 100.12 Stock Units in
calendar years 2000, 2001 and 2002, respectively. Mr. Michno was
awarded 169.95, 120.20, and 106.15 Stock Units in calendar years 2000,
2001 and 2002, respectively. No dividends accrue in respect of the
Stock Units.
(2) All the options granted to Mr. E. Grinberg and Mr. Cote in fiscal 2002
were granted March, 16 2001 subject to shareholder approval of
amendments to the Company's 1996 Stock Incentive Plan, which were
approved at the 2001 annual meeting. The exercise price for one quarter
of those options was set at the market price for the Common Stock on
the grant date with the balance of those options exercisable at prices
between 20% and 50% more than the grant date market price. The options
vest in one third increments on each of the first three anniversaries
of the grant date and represent the total expected to be granted to
them until fiscal 2006.
(3) Includes a $3,400 matching contribution made by the Company in respect
of fiscal 2003 for the account of Mr. E. Grinberg pursuant to the
Company's Employee Savings and Investment Plan ("401(k) Plan"). Also
includes a matching cash contribution of $60,000 and a non-cash
contribution of 756.04 Stock Units valued at $15,000 (based on the
closing prices of the Company's Common Stock on the grant dates) for
fiscal 2003 to his account under the Company's Deferred Compensation
Plan. Also includes $29,986 in total annual premiums paid in respect of
certain life insurance policies purchased for Mr. E. Grinberg by the
Company. Under his arrangement with the Company, Mr. E. Grinberg is
entitled to the cash surrender value in respect of certain of these
life insurance policies and his beneficiary is entitled to the
applicable benefit without, in either event, reimbursement to the
Company of any premiums paid by the Company under such policies.
(4) Includes $228,180 in total annual premiums paid in respect of certain
life insurance policies and one travel accident policy purchased for
Mr. G. Grinberg by the Company. Under his arrangement with the Company,
Mr. G. Grinberg is entitled to the cash surrender value under these
life insurance policies and his beneficiary is entitled to the
applicable benefit without, in either event, reimbursement to the
Company of any premiums paid by the Company under such policies. Also
includes a $3,400 matching contribution made by the Company in respect
of fiscal 2003 for the account of Mr. G. Grinberg pursuant to the
Company's 401(k) Plan. Also includes $142,000 accrued by the Company in
respect of a Death and Disability Benefit Plan agreement with Mr. G.
Grinberg. See "Contract with Chairman" below. Also includes a matching
cash contribution of $52,000 and a non-cash contribution of 655.24
Stock Units valued at $13,000 (based on the closing prices of the
Company's Common Stock on the grant dates) made by the Company for
fiscal 2003 to Mr. G. Grinberg's account pursuant the Company's
Deferred Compensation Plan.
(5) Mr. Cote and Mr. Karpovich each elected to receive, in lieu of 20% of
the cash bonus that otherwise would have been awarded for fiscal 2002,
restricted stock which is reported under the "Restricted Stock Awards"
column.
(6) Includes a $3,400 matching contribution made by the Company in respect
of fiscal 2003 for the account of Mr. Cote pursuant to the Company's
401(k) Plan. Also includes a matching cash contribution of $32,000 and
a non-cash contribution of 403.22 Stock Units valued at $8,000 (based
on the closing prices of the Company's Common Stock on the grant dates)
for fiscal 2003 to his account under the Company's Deferred
Compensation Plan.
(7) Includes a $3,400 matching cash contribution made by the Company in
respect of fiscal 2003 for the account of Mr. Karpovich pursuant to the
Company's 401(k) Plan. Also includes a matching cash contribution of
$8,000 and a non-cash contribution of 100.12 Stock Units valued at
$2,000 (based on the closing prices of the Company's Common Stock on
the grant dates) for fiscal 2003 to his account under the Company's
Deferred Compensation Plan.
(8) Includes a $3,400 matching contribution made by the Company in respect
of fiscal 2003 for the account of Mr. Michno pursuant to the Company's
401(k) Plan. Also includes a matching cash contribution of $8,600 and a
non-cash contribution of 106.15 Stock Units valued at $2,150 (based on
the closing prices of the Company's Common Stock on the grant dates)
for fiscal 2003 to his account under the Company's Deferred
Compensation Plan.
11
CONTRACT WITH CHAIRMAN
Under a Death and Disability Benefit Plan Agreement with Mr. G.
Grinberg, dated September 23, 1994, in the event of Mr. Gedalio Grinberg's death
or disability while employed by the Company, the Company will pay to his spouse,
if she is then living, an annual benefit equal, as of fiscal 2003, to $351,500
(increased October 1 each year by an amount equal to two percent of the benefit
that would have been payable in the prior year). Benefits are payable for the
lesser of 10 years or the life of Mr. Grinberg's spouse, and are payable only
from the general assets of the Company. Neither Mr. Grinberg nor his spouse may
assign the Agreement or any of the benefits payable thereunder and none of the
benefits are payable to the estates or any of the heirs of Mr. Grinberg or his
spouse.
The Agreement provides that it automatically terminates in the event of
the termination of Mr. Grinberg's employment with the Company for any reason
other than his death or disability and further provides that it is not to be
considered a contract of employment. For purposes of the Agreement "disability"
means the inability of Mr. Grinberg to perform the duties pertaining to his job
because of accident, sickness or other illness as determined by a majority of
disinterested directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was at all times during fiscal
year 2003 comprised entirely of Directors who at no time were executive officers
or employees of the Company. The Compensation Committee for fiscal year 2003 was
comprised of Margaret Hayes Adame, Alan H. Howard, Donald Oresman and Leonard L.
Silverstein. Mr. Silverstein is a partner at the law firm of Silverstein &
Mullens, a division of Buchanan & Ingersoll, P.C. That firm rendered legal
services to the Company during fiscal 2003. No executive officer of the Company
has ever served as a member of the board of directors or compensation committee
of any company whose executive officers include a member of the Board of
Directors or the Compensation Committee.
12
FISCAL 2003 STOCK OPTION GRANTS
The following table provides certain information regarding grants of
stock options made during fiscal 2003 to the Named Executive Officers pursuant
to the Company's 1996 Stock Incentive Plan. Each such option granted in fiscal
2003 becomes exercisable with respect to one-third of the underlying shares
subject thereto on each anniversary of the date of grant thus becoming fully
exercisable on the third such anniversary.
GRANT
INDIVIDUAL GRANTS DATE VALUE (1)
--------------------------------------------------------------------- --------------
% OF
TOTAL
NUMBER OF NUMBER OF
SECURITIES SECURITIES
UNDERLYING UNDERLYING
OPTIONS OPTIONS GRANTED EXERCISE OR BASE GRANT DATE
GRANTED TO EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME (#) FISCAL YEAR ($/SH) DATE ($)
----------------- ---------- --------------- ---------------- -------------- -------------
Gedalio Grinberg 0 0 - - 0
Efraim Grinberg 0 0 - - 0
Richard Cote 0 0 - - 0
Eugene Karpovich 7,500 2.97 19.47 March 11, 2012 76,500
7,500 2.97 25.00 March 11, 2012 67,125
Timothy F. Michno 2,500 1.00 19.47 March 11, 2012 25,500
2,500 1.00 25.00 March 11, 2012 22,375
(1) The grant date present values set forth in the foregoing table
were arrived at using the Black-Scholes option pricing model based on the
following assumptions: volatility of 46% based on weekly closing prices of the
underlying Common Stock for the period ending January 31, 2003; a risk free rate
of return equal to 5.38% based on the yield on a U.S. Government Zero Coupon
Bond with a maturity equal to the expected term of the option prior to exercise
(i.e. 7 years); a dividend yield of 0.62%; and a grant date of March 11, 2002.
This schedule does not take into account provisions of the options providing for
termination of the option following termination of employment,
nontransferability or vesting over a period of three years. The dollar amounts
under this column are the result of calculations using a certain option pricing
model based on the foregoing assumptions and, therefore, are not intended to
forecast possible future appreciation, if any, of the Company's Common Stock
price.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning exercises of stock options
by the Named Executive Officers during the last fiscal year and the fiscal
year-end value of shares of Common Stock represented by unexercised stock
options held by each of the Named Executive Officers as of January 31, 2003.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED VALUE FISCAL YEAR END (#) AT FISCAL YEAR END ($)
ON EXERCISE REALIZED ------------------- ----------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- --- ----------- ------------- ----------- -------------
Gedalio Grinberg............ 0 0 0 0 0 0
Efraim Grinberg............. 0 0 415,836 296,664 1,897,379 336,006
Richard Cote................ 0 0 212,000 258,000 218,880 378,720
Eugene J. Karpovich......... 0 0 5,967 21,033 16,441 18,061
Timothy F. Michno........... 2,250 26,010 8,455 12,733 30,573 29,869
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth information with respect to shares of Common
Stock that may be issued under the Company's equity compensation plans as of
January 31, 2003.
Number of securities
Remaining Available For
Number of Securities to be Weighted-Average Future Issuance Under
Issued Upon Exercise Of Exercise Price of Equity Compensation
Outstanding Options, Warrants Outstanding Options, Plans(Excluding securities
Plan category and Rights Warrants and Rights Reflected in Column (a))
------------- ----------------------------- -------------------- --------------------------
(a) (b) (c)
Equity compensation plans
approved by security
holders (1)................. 2,265,569 (2) $17.4996 (3) 601,911 (4)
Equity compensation plans
not approved by
security holders (5)........... 25,809 Not applicable Not applicable (5)
--------- -------------- --------------
Total.......................... 2,291,378 $17.4996 601,911
--------------------
(1) Includes the 1996 Stock Incentive Plan and the Deferred Compensation
Plan.
(2) Includes 2,231,315 options outstanding under 1996 Stock Incentive Plan
and 34,254 phantom stock units issuable as 34,254 shares of Common
Stock under the Deferred Compensation Plan.
(3) Weighted average exercise price of options outstanding under the 1996
Stock Incentive Plan.
(4) Includes 584,747 shares available for issuance under the 1996 Stock
Incentive Plan as options and other share based awards, and 17,164
shares available for issuance under the Deferred Compensation Plan.
(5) Includes the Stock Bonus Plan described in Note 11 to the Company's
consolidated financial statements included in the Company's Form 10-K
filed for the year ended January 31, 2003. Although there is no
specified limit on the number of securities that may be issued under
the Stock Bonus Plan, participation is limited only to Company
employees who are not eligible to participate in the Deferred
Compensation Plan, and the Board of Directors has limited total annual
grants under the plan to a number of shares equal in value to up to 1%
of the annual base salary of all participants. Since plan inception,
that number has averaged 7,594 shares annually. Consequently,
relatively few shares have been, or are expected to be, issued under
the Stock Bonus Plan. All shares granted under the plan vest five years
after grant date or upon the participant's attaining age 65, if sooner.
14
COMPENSATION COMMITTEE REPORT
General
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for reviewing and approving the Company's compensation policies
affecting senior management, reviewing significant employee benefit programs and
reviewing and administering the Company's 1996 Stock Incentive Plan. The
Committee is comprised of Ms. Margaret Hayes Adame, Mr. Donald Oresman, Mr.
Leonard L. Silverstein and Mr. Alan H. Howard, all of whom are non-employee
members of the Board.
The compensation policies established by the Company and which were in
effect during fiscal year 2003 are designed to enable the Company to attract,
retain, motivate and appropriately reward a group of highly qualified
individuals who are expected to contribute to the Company's continued success.
The Committee believes that the relevant market for executive and management
level talent includes not only those companies comprising its Industry Peer
Group but also other companies engaged in other business activities in other
industries. The three primary components of executive compensation are salary,
cash bonuses and stock based awards, including stock options and stock grants.
The Committee reviews each component of executive compensation on an annual
basis.
To assist the Committee in its evaluation and approval of the Company's
compensation policies for fiscal 2003, the Committee analyzed historic
compensation data relative to the Company's executive and mid-level management
and reviewed an analysis of option plan provisions regarding vesting and
exercise periods prepared by a recognized compensation consulting firm. That
analysis compared those provisions in the Company's stock incentive plan with
the same provisions contained in similar plans that have been adopted by other
publicly traded companies.
Base Salaries
Base salary levels for members of the Company's senior management team
are reviewed by the Committee in light of the Committee's assessment of the
responsibilities relative to the position under consideration, as well as each
individual's background, training, experience and by reference to the
competitive marketplace for comparable talent. Annual increases in base salary
levels, if warranted, are reviewed with reference to the executive officer's
performance and the performance of the Company as a whole. Executive performance
is evaluated by the Committee by reference to the extent to which specific
individual and departmental goals and objectives are met. These goals and
objectives vary from department to department and, within any single department,
from individual to individual. Corporate performance is measured by the
Committee by reference to the Company's achievement of pre-tax profit goals and
other financial performance targets set at the beginning of the fiscal year. For
fiscal 2003, the Committee accepted the Company's recommendation to not
implement a general increase in base salary levels above fiscal 2002 levels.
Cash Bonuses
Cash bonuses, the second key component of executive compensation, are
intended to provide incentives to senior management in the short term to achieve
certain operating results, which are generally determined at the beginning of
the fiscal year and, typically, tied to net income results. By thus placing a
significant percentage of each executive officer's compensation at risk, this
approach creates a direct incentive for executive officers to achieve desired
performance goals. Certain mid-level managers are also eligible to receive
bonuses, which are used as an additional, incentive-based element of
compensation dependent on corporate performance and individual merit.
Based on the Company's overall performance in fiscal 2003 and the
extent to which it achieved its key operating results, the Committee authorized
funding of the bonus pool at a 60% level for the fiscal year and the payment of
individual bonus amounts in line with the achievement of those corporate
results. Individual bonus amounts were also determined by reference to
subjective criteria and the extent to which individual performance objectives
were achieved.
15
Equity Based Plans
Equity participation is the third key element of the Company's
executive compensation program and is afforded to executive officers and certain
employees primarily through stock options and/or other stock based awards
granted under the Company's 1996 Stock Incentive Plan (the "Incentive Plan"). In
addition to the Incentive Plan, equity participation is also afforded to
executives and certain key employees who participate in the Company's Deferred
Compensation Plan as well as to all other employees, not eligible to participate
in the Deferred Compensation Plan through the Company's Employee Stock Bonus
Plan, adopted in fiscal 1999 ("Stock Bonus Plan").
Options, and to a lesser extent stock awards, have been awarded under
the Incentive Plan on the basis of the position held by the grantee,
contributions already made by the person meriting recognition and, more
importantly, the Company's expectations of the contribution the person will make
over the long term to the Company's growth. All options granted under the
Incentive Plan have an exercise price equal to or greater than the market value
of the stock on the date of grant. In fiscal 2003, approximately 43% of all
stock options granted had an exercise price more than 22% above the grant date
market value. Stock options granted under the Incentive Plan generally vest
yearly over three or five years and expire ten years from the date of grant. In
addition, almost all shares of Common Stock granted under the Incentive Plan are
subject to vesting requirements. Thus, option and stock grants are designed to
retain executive officers and enhance shareholder value by aligning the
financial interests of each executive officer or other key employee with the
interests of the Company's shareholders over the long term.
Under the Deferred Compensation Plan, participants' salary deferrals,
up to either five or ten percent of base salary, are fully matched by the
Company. Eighty percent of the match is in the form of cash and twenty percent
is in the form of rights to Common Stock representing the number of shares
(including fractional shares) of Common Stock that such twenty percent portion
of the matching contribution could purchase based on the closing price of the
Common Stock at the end of the calendar quarter in which the contribution is
made. Vesting in Company matching contributions is 20% per year. Distributions
are made beginning in January following termination of the participant's
employment and are in ten annual installments unless the Company determines to
make them in a lump sum.
Under the terms of the Stock Bonus Plan, the Company determines after
the end of each fiscal year, depending on financial performance and subject to
Compensation Committee and Board approval, whether to make a contribution of
shares to the plan from its treasury shares, up to an amount equivalent in value
to up to 1% of the total base salaries of all participants in the plan. For
fiscal 2003 the Company contributed 5,791 shares to the plan representing one
half of one percent (0.5%) of total base salaries of all plan participants. Each
participant vests in 100% of their pro-rata portion (based on salary) of such
contribution after five years or upon attaining retirement age if sooner. All
distributions to plan participants are in the form of shares of Common Stock of
the Company, with cash payments for any fractional share amounts.
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR FISCAL 2003
The compensation paid to the Company's Chief Executive Officer ("CEO")
in fiscal 2003 consisted primarily of salary and bonus. No options or other
stock awards under the Incentive Plan were granted to the CEO last year.
In accordance with the Committee's determination to accept the
Company's recommendation to not implement any general increase in base salary
levels, the CEO's annual salary for fiscal 2003 was not increased above the
annual base salary amount paid the previous year (although because there were 27
pay periods in fiscal 2003 as compared to 26 in the prior year there was a
slight absolute increase).
The bonus paid to the CEO for fiscal 2003 was approved by the Committee
based upon its assessment of the CEO's individual performance and the profitable
performance of the Company, including the attainment of key performance measures
despite continued general economic weakness. The performance measures used by
the Committee in making its determination were, primarily, continued positive
cash flow, reduction of operating expenses, maintenance of strong gross margin
and achievement of significant sales and net income results.
16
POLICY REGARDING DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1 million for compensation paid to the CEO and the four other most highly
compensated executive officers of the Company. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Company's 2001 Executive Performance Plan which was adopted in fiscal
2002 is structured such that annual incentive bonuses and long-term equity-based
compensation paid thereunder for the Company's most senior executives should
constitute qualifying performance-based compensation under Section 162(m).
However, the Compensation Committee recognizes that unanticipated future events,
such as a change of control of the Company or a change in executive personnel,
could result in a disallowance of compensation deduction under Section 162(m).
Moreover, the Compensation Committee may from time to time award compensation
that is non-deductible under Section 162(m) when in the exercise of the
Compensation Committee's business judgment such award would be in the best
interest of the Company.
COMPENSATION COMMITTEE
Margaret Hayes Adame
Alan H. Howard
Donald Oresman
Leonard L. Silverstein
17
PERFORMANCE GRAPH
The performance graph set forth below compares the cumulative total
shareholder return of the Company's Common Stock for the last five fiscal years
through the fiscal year ended January 31, 2003 with that of the Broad Market
(CRSP Total Return Index for the NYSE Stock Market) and a peer group index
comprised of the following five companies: Swiss Army Brands, Inc., Fossil Inc.,
Gucci Group NV, Tiffany & Co. and Friedmans Inc. (the "peer group"). Data for
Swiss Army Brands, Inc. is included through August 28, 2002, the last date its
stock traded publicly. The returns of each company in the peer group index have
been weighted according to the respective issuer's stock market capitalization.
Each graph assumes an initial investment of $100 on January 30, 1998 and the
reinvestment of dividends (where applicable).
[PERFORMANCE GRAPH]
Legend
Symbol CRSP Total Returns Index for: 01/1998 01/1999 01/2000 01/2001 01/2002 01/2003
------ ----------------------------- ------- ------- ------- ------- ------- -------
________ - Movado Group, Inc. 100.0 118.7 89.0 65.6 84.3 87.9
-- -- -- * NYSE Stock Market (US Companies) 100.0 121.0 125.2 138.0 124.2 100.6
-------- + Self-Determined Peer Group 100.0 162.2 286.7 270.3 272.3 253.5
18
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
The Company's By-Laws set forth procedures requiring that any
shareholder wishing to bring business before an annual meeting of shareholders,
including the nomination of candidates to the Board of Directors, give timely
written notice to the Secretary of the Company. To be timely such notice must be
delivered personally or mailed to and received at the Company's principal
executive offices not less than 60 or more than 90 days before the annual
meeting, except that, if less than 70 days notice or prior public disclosure of
the annual meeting date is given to shareholders, notice by a shareholder is
timely if received not later than the close of business on the 10th day after
the date notice of the annual meeting was mailed or public disclosure thereof
was made.
Shareholders' proposals intended to be presented at the 2004 Annual
Meeting of Shareholders must be received by the Company no later than January
23, 2004 for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the Annual Meeting other than
that referred to herein. If any other business should come before the Annual
Meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies received and not theretofore revoked in accordance
with their best judgment.
Upon the written request of any record holder or beneficial owner of
Common Stock or Class A Common Stock entitled to vote at the Annual Meeting, the
Company, without charge, will provide a copy of its Annual Report on Form 10-K
for the year ended January 31, 2003, as filed with the Securities and Exchange
Commission. Requests should be directed to Frank Kimick, Treasurer, Movado
Group, Inc., 650 From Road, Paramus, New Jersey 07652.
BY ORDER OF THE BOARD OF DIRECTORS
Timothy F. Michno
Secretary and General Counsel
Paramus, New Jersey
May 22, 2003
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED
TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
19
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MOVADO GROUP, INC. NOTICE OF ANNUAL MEETING OF
650 FROM ROAD, PARAMUS, NJ 07652 SHAREHOLDERS TO BE HELD JUNE 18, 2003
Dear Shareholder:
The Annual Meeting of Shareholders of Movado Group, Inc. will be held at
10:00 a.m. on Wednesday, June 18, 2003, at the Company's executive offices,
650 From Road, Paramus, NJ, for the following purposes:
1. To elect seven directors to the Board of Directors.
2. To ratify selection of independent public accountants.
Only holders of Common Stock and Class A Common Stock of Movado Group, Inc.
of record at the close of business on May 9, 2003 will be entitled to vote
at the meeting or any adjournment thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN THE
PROXY/VOTING INSTRUCTION CARD BELOW, DETACH IT FROM THIS LETTER AND RETURN
IT IN THE POSTAGE PAID ENVELOPE ENCLOSED IN THIS PACKAGE. The giving of such
proxy does not affect your right to vote in person if you attend the
meeting. The prompt return of your signed proxy will aid the Company in
reducing the expense of additional proxy solicitation.
BY ORDER OF THE BOARD OF DIRECTORS
May 23, 2003 TIMOTHY F. MICHNO
General Counsel and Secretary
- DETACH PROXY CARD HERE -
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Please Sign, Date and Return [X]
[ ] the Proxy Promptly Using the Votes MUST be indicated
Enclosed Envelope. (x) in Black or Blue ink.
1. Election of Directors
FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS [ ]
listed below [ ] for all nominees listed below [ ]
Nominees: Gedalio Grinberg, Efraim Grinberg, Margaret Hayes-Adame, Richard
Cote, Alan H. Howard, Donald Oresman and Leonard L. Silverstein
*Exceptions ___________________________________________________________________
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED.
FOR AGAINST ABSTAIN
2. To ratify and approve the selection by the Board of
Directors of Pricewaterhouse Coopers LLP as [ ] [ ] [ ]
independent public accountants for the Company for
the fiscal year ending January 31, 2004.
To change your address, please mark this box. [ ]
If you plan to attend the meeting, please mark this box. [ ]
In their discretion the Proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournment or postponement
thereof.
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SCAN LINE
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The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors,
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
Date Share Owner sign here Co-Owner sign here
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MOVADO GROUP, INC. PROXY/VOTING INSTRUCTION CARD
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MOVADO GROUP, INC. FOR THE ANNUAL MEETING ON JUNE 18, 2003
The undersigned appoints Timothy F. Michno and Frank Kimick, and each
of them, with full power of substitution in each, the proxies of the
undersigned, to represent the undersigned and vote all shares of Movado
Group, Inc., which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders to be held on June 18, 2003, and at any
adjournment or postponement thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is given,
this proxy will be voted FOR proposals 1 and 2.
MOVADO GROUP, INC.
P.O. BOX 11346
NEW YORK, N.Y. 10203-0346
(Continued, and to be signed and dated on reverse side.)
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